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Poland Food and Drink Report Q1 2008
Business Monitor International, Dec 2007, Pages: 71
The Poland Food Drink Report provides independent forecasts and competitive intelligence on Polands food and drink industry.
In a move that came as a relief to international mass grocery retail (MGR) operators in Poland, in June the country’s Senate voted against a law that would impose construction restrictions on hypermarkets. The Senate ruled that such restrictions were not needed to prevent unfair competition with small shops. This proposed law was being pushed by the populist, rural-based Samoobrona party, which claimed that large hypermarkets were driving small, independent retailers out of business. However, opposed to these reforms argued that they would break both Polish and EU competition rules, and could also encourage corruption among local officials. Considering that the government has been mulling over ways to restrict the growth of large multinationals for some time, this ruling is a victory for Poland’s international operators. However, there are still a number of other potential restrictions under consideration, such as limits on trading hours, mandatory Sunday closings and restrictions on trade agreements, prices, promotions and advertising and regulations concerning margin levels, indicating that international operators will still have some legislation to contend with.
Despite the government’s best efforts, it seems that a growing share of the country’s MGR sales will continue to go to a shrinking number of retailers. Not only are more Poles being converted to modern forms of retailing, but there are now fewer major operators, as the industry is experiencing a wave of consolidation. The other big news this quarter for the country’s MGR industry was that in July, Carrefours acquisition of the Ahold store network in Poland was finally cleared by the competition authority, in another victory for the country’s multinationals. The only condition was that Carrefour agree to sell nine of its stores in the country, in cities where it was felt that competitiveness would be threatened. This brings Carrefour one step closer to achieving its stated goal of becoming Polands largest food retailer, and taking a greater share of an MGR industry that the author estimates will be worth US$58.14bn by 2011.
In other food and drink news this quarter, French dairy major Danone opened its second distribution centre in Poland which is dedicated to fresh dairy products. The company has leased a 4,000 square meter facility in Chorzow, to meet the growing demand in the south of the country, outsourcing the management to global logistics specialist Kuehne + Nagel who already run Danone’s other Polish distribution centre, located in Blonie. This indicates the attractiveness of the Polish market to outside
investors, which has been reflected in the current investment boom. On the basis of its comparatively low labour costs, Poland offers a strategic entry point to external investors looking to exploit its unfettered access to most EU markets. Net capital inflows should increase further over the forecast period as the external economic recovery proceeds and absorption of EU funds improves. This should help fuel the strong economic growth experienced by the country in recent years, which in turn will help fuel growth in both the MGR and food and drink industries.
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