Bulgaria Food and Drink Report Q3 2012

The Bulgaria 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 Bulgaria's food and drink industry.

Factors such as high unemployment and disinflationary pressures will combine to depress the development of premium food and beverage sectors in Bulgaria in the coming months, as the exportoriented country suffers from external headwinds. The longer term attractiveness of the country’s food and drink market will remain predicated on its economic performance, but also hampered by a negative demographic outlook, complete with the lack of an aspirational consumer base.

Headline Industry Data (local currency)
- 2012 per capita food consumption: +1.54%; forecast compound annual growth rate to 2016:+2.34%

- 2012 alcoholic drinks sales: +0.69%; forecast compound annual growth rate to 2016: +1.47%
- 2012 soft drinks sales: +1.91%; forecast compound annual growth rate to 2016: +4.44%
- 2012 mass grocery retail sales: +2.08%; forecast compound annual growth rate to 2016: +4.61% Key Industry Trend Qatar and Bulgaria Eyeing Agricultural Partnerships: In May 2012, local press reported that Qatar and Bulgaria were aiming to establish joint companies in the field of agriculture, specifically in regards to sheep- and cattle-breeding, fishing and bee-keeping. As part of the talks covering a range of other industries, Bulgarian poultry producer Gradus signed a memorandum of understanding (MoU) with Qatar’s Hassad Food. Indeed, agriculture – in addition to logistics and information technology (IT) – were recently highlighted by Kiril Petkov, General Manager of Bulgarian Development Company.as Bulgaria’s most competitive industries from the point of view of investment potential. Smoking Ban Threatening On-Trade Sales of Alcoholic Drinks: Bulgaria is poised to introduce a full smoking ban from the start of June 2012, which is viewed as potentially devastating for the on-trade alcoholic drinks industry, as well as for food establishments in general. According to the Bulgarian Association of Hotel and Restaurant Owners, Blagoy Ragin, which recently took part in protests against the ban, the move will reduce the turnover of domestic food and drink establishments by BGN300mn, which will inevitably lead to bankruptcies. Protesters have called for the ban to be postponed for a few years, in light of the current economic situation.

Key Risks To Outlook Downside Economic Risks Persist: We warn of downside risks to our already modest economic performance expectations for Bulgaria, largely on account of its reliance on exports to Europe to fuel growth. Early estimates of a very strong contraction in exports, weak government spending growth and our bleak fixed investment outlook are also part of downside risks to our current growth outlook. SHOW LESS READ MORE >

BMI Industry View 7

SWOT Analysis 8

Bulgaria Food Industry SWOT 8

Bulgaria Drink Industry SWOT 9

Bulgaria Mass Grocery Retail Industry SWOT 10

Business Environment Ratings 11

BMI’s Core Global Industry Views 11
Table: BMI’s Core Views 21

CEE Food & Drink Risk/Reward Ratings 22
Table: Food & Drink Risk/Reward Sub-Factor Ratings, Q312 (scores out of 10) 23
Table: CEE Food & Drink Risk/Reward Ratings, Q312 26

Bulgaria’s Food & Risk/Reward Ratings 27

Macroeconomic Outlook 28
Table: Economic Activity 33

Industry Forecast Scenario 34

Consumer Outlook 34

Food 37

Food Consumption 37
Table: Food Consumption 38

Confectionery 39
Table: Confectionery Volume/Value Sales 40

Canned And Processed Food 42
Table: Canned Food Value/Volume Sales 43
Table: Meat 43
Table: Jams & Jellies 44
Table: Pasta 45
Table: Baked Products 46

Dairy 47
Table: Dairy 48

Drink 51

Alcoholic Drinks 51
Table: Alcoholic Drinks Value/Volume Sales 52

Soft Drinks 53
Table: Soft Drinks Value/Volume Sales 54

Hot Drinks 59
Table: Hot Drinks Value/Volume Sales 60

Trade 62
Table: Trade Indicators 63

Mass Grocery Retail 64
Table: Mass Grocery Retail Sales 65
Table: Grocery Retail Sales By Format 66

Food 67

Key Industry Trends And Developments 67

Qatar And Bulgaria Eyeing Agricultural Partnerships 67

Bulgaria Continues To Increase Agricultural Output 67

Organic Foods As Niche Growth Area 68

Difficult Economic Conditions Provide Opportunities For Consolidation 68

Market Overview 68

Food Consumption 68

Food Production 69

Leading Players 69

Confectionery 71

Canned Food 72

Trade 72

Agriculture 73

Organic Farming 74

Drink 75

Key Industry Trends And Developments 75

Bulgarian Wine Remains Of Interest 75

Smoking Ban Expected To Affect Alcoholic Drinks Sales 75

Soft Drink Industry Remains Under Strain 76

Brewer Offload Malt Production Plant To Focus On Core Beer Production 76

Consolidation In The Café Industry 76

Companies Breach Regulations 77

Market Overview 78

Alcoholic Drinks 78

Beer 78

Wine 80

Spirits 81

Soft Drinks 82

Hot Drinks 85

Mass Grocery Retail 86

Key Industry Trends And Developments 86

Delhaize Closing Underperforming Bulgarian Stores 86

Consolidation In MGR In Line With Wider Regional Trends 86

Discount Players Invest In Expansion In Bulgaria 87

Companies Experiment With New Store Formats 87

Large Retailers Accused Of Pressurising Local Producers 88

Market Overview 88

Leading Retailers 89
Table: Structure Of The Mass Retail Grocery Market By Number Of Outlets 92
Table: Structure Of The Mass Retail Grocery Market By Value 92
Table: Value Sales By Individual Outlet Type (2011) 93

Competitive Landscape 94
Table: Key Players In Bulgaria’s Food Sector 94
Table: Key Players In Bulgaria’s Drink Sector 95
Table: Key Players In Bulgaria’s Mass Grocery Retail Sector 96

Company Monitor 99

Food 99

Unilever Bulgaria 99

Kraft Bulgaria 100

Nestlé Bulgaria AD 101

Ital Food Industry AD 102

Drink 103

Zagorka (Heineken) 103

Carlsberg Bulgaria 104

Kamenitza (StarBev, formerly InBev Bulgaria) 105

Devin 106

Mass Grocery Retail 107

Metro Cash & Carry Bulgaria 107

Rewe Bulgaria (Billa and Penny Markt) 108

CBA Bulgaria 109

Piccadilly (Delta/Louis Delhaize) 110

Lidl Bulgaria 111

Demographic Outlook 112
Table: Bulgaria's Population By Age Group, 1990-2020 ('000) 113
Table: Bulgaria's Population By Age Group, 1990-2020 (% of total) 114
Table: Bulgaria's Key Population Ratios, 1990-2020 115
Table: Bulgaria's Rural And Urban Population, 1990-2020 115

BMI Methodology 116
Table: Rewards 116
Table: Risks 117

Weighting 117
Table: Weighting 117

BMI Food & Drink Industry Glossary 118

Food & Drink 118

Mass Grocery Retail 118

BMI Food & Drink Forecasting & Sourcing 120

How We Generate Our Industry Forecasts 120

Sourcing 121