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Poland Food and Drink Report Q4 2009
Business Monitor International, Sep 2009, Pages: 84
The Poland Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Poland's food and drink industry.
In the CEE Business Environment Rating (BER) matrix for Q409, Poland improved its position by two spots and is now placed sixth, out of the 14 key regional markets. Although its short term attractiveness is impacted by current economic conditions, Poland still enjoys the benefit of a large population, high per capita consumption of both soft and alcoholic beverages and a relatively sound economic base, which should allow it to weather financial difficulties better than most of its CEE counterparts. In fact, figures released by the country’s central statistical office showed that retail sales rose by 0.9% y-o-y in June, although H209 is likely to witness slower growth. Overall fast-moving consumer goods (FMCG) sales are expected to decelerate to 2%, from around 9% posted in 2008.
Around the same time, leading Polish pasta producer Makarony Polskie announced its intention to more than double its annual sales over the next two to three years, by pursuing acquisitions. Consolidation was also evident in the meat processing sector, with domestic poultry producer Drosed reportedly being close to acquiring Tarczynski, a domestic red meat producer. We expect consumption across beef and veal, pork and poultry to remain largely flat in 2009, although we are encouraged by the continued export opportunities Poland's accession to the EU has provided meat companies. Meat processors reported a 15% profitability increase in Q109, although rising prices of raw materials will have an impact later in the year. Additionally, profitability will suffer in H209, as consumers shop more carefully.
Alcoholic drinks players are pursuing similar strategies, with international beer conglomerate SABMiller agreeing to increase its majority position and buy the outstanding stake in Poland's leading brewer Kompania Piwowarska. Piwowarska is its biggest European revenue earner, with SABMiller likely to beef up its capital expenditure in the Polish brewer and thus increase competition in the sector. On a regional basis, Polish Central European Distribution Corporation (CEDC) – a regional spirits big hitter – increased its equity position in Russian Alcohol Group (RAG), which holds a 15% share in Russia’s spirits industry. Given its expansive vodka range and its lack of overreliance on the premiumend spirits, RAG will continue to enjoy a degree of flexibility that has ensured its dogged performance in 2009 so far. Nevertheless, rising unemployment, higher costs of borrowing and falling consumer confidence will be major factors shaping the development of the beverages market in the coming months. Similarly, Polish mass grocery retail (MGR) players are exploring new avenues in a bid to address the downturn. In addition to some increasing their offering of private-label goods, leading retail chains such as Biedronka, Tesco and Carrefour are foraying into airplane tickets, car insurance and lottery sales.
Still, this may not be enough to prevent some repositioning of market shares, with a merger involving Biedronka and either of the Polish businesses of German discounters Aldi and Lidl possibly on the cards. From the point of view of both Aldi and Lidl, a merger with Biedronka would probably be a game changer as it would dramatically boost their market positions in one of CEEs most promising economies.
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