Poland

Market Overview

Bord Bia, Frankfurt

November 27th 2008

Polish Market Overview

• Population: 38.5 million.

The main cities are Warsaw (1.6m), Lodz

(783,700) and Krakow (734,400)

• Language: Polish (Official)

• Currency: Polish Zloty

• Joined the EU in May 2004

• One of the lead economies in Central

and Eastern Europe due to its high

population.

Market Overview

• Great wealth gap between the country and the other Western Countries. GDP per capita €7,774.08 (2007) v Germany €28,012 (2006)

• GDP growth rate predicted to be 4.7% in 2008 (IGD, 2007)

• Inflation rate: 3.1% for 2008 (IGD, 2007)

• Unemployment one of the highest in Europe,12.1% but is falling (IGD, 2007)

• Consumer spending increasing (+18.9% 2007 v 2006)

• VAT on goods and services: 7%

• VAT on Food: 3% for unprocessed, 7% for other foodstuffs

Irish Food Export Performance

Source: CSO Food and Drink Statistics 2007

Vegetables and Fruit

1.5%

Meat

25.2%

Fish

8.3%

Live Animals

0.2%

Beverages

10.9%

Miscellaneous Edible

41.4%

Dairy

1.2%

Animal feeds

5.9%

Coffee,tea, cocoa, spices

1.8%

Sugars

3.5%

Total

Exports:

€46.7mn

Irish Food exports to Poland 2007

Key Consumer Trends

in the Market

• Solid growth in retail sector: 11.9% in 2006 (IGD, 2007).

• Per capita spending high in large cities (60% higher than national average), weak in poor rural areas.

• Roughly half of retail sales in Poland are generated through the food retail sector.

• Polish consumers are known to be extremely savvy and price conscious.

• A recent law (2007) has come into force in Poland restricting the future size of Hypermarkets, so compact hypermarkets are becoming popular (IGD, 2007).

• 20% of Consumer expenditure is on food and non alcoholic beverages (IFE, 2008).

Retail Grocery Market

• Grocery Retail Value: €38.9 billion (Agri Food, 2008)

• Hypermarkets leading store format, 15% of national distribution. Tesco

is the leading player. Others include Metro Group (Real), Carrefour,

Auchan, Schwarz Group (Kaufland).

• Metro experienced a 9.4% growth in sales in 2006 to reach €2.687

billion (IGD, 2007).

• Supermarkets - Tesco, Carrefour, Intermarche, Polomarket, Rewe

• Discounter: Dominated by Biedronka (Jeronimo Martins), Schwarz

Group (Lidl), Dansk Supermarked, Auchan’s Atak. Aldi Nord has

recently entered the market (2007).

• Discounters have had heavy growth with Biedronka’s sales up 18.9% in

Q1 2007.

Retail Market by Type

Grocery Market by type

Supermarket

30%

Hypermarket

36%

Cash and Carry

2%

Discounter

32%

Source: IGD 2007

Retail Grocery Market

• Independent neighbourhood stores play an important role in national

food supply especially in small towns and poor rural areas as well as

cities.

• Kiosks - huge number spread across the country. State owned Ruch

chain leading player (10,000 throughout Poland).

• Cash & Carry sector: Dominated by German Metro (Makro, Real),

Rewe’s Selgros, Emperia Holding, Eurocash.

• Piotr i Pawel and Bomi are 2 premium supermarkets to have

experienced growth in recent years with Piotr's sales up 17% to 216

million in 2006.

Market Share of Top Ten Retailers

Metro

19%

Spolem

13%

Biedronka

(JM)

12%Tesco

12%

Auchan

10%

Carrefour

8%

Eurocash

6%

Rewe

5%

Schwarz

Group

9%

Lewiatan

6%

Source: IGD, 2007

Retail Market Structure

Top 10

83,900191.52%+12.2%520525Leclerc

194,000344.20%+3.5%1,4381,475Auchan

418,0001253.47%+15.77%1,1891,189Carrefour

356,0002203.65%+54.3%1,2501,250Lidl &

Schwarz

70,000350.24%+17.0%661661Rewe

644,000>2,6000.74%+15.5%507507Eurocash

800,000>4,0005.27%+2.2%1,8071,807Spolem

416,751742.67%+9.4%2,6873,447Metro

+4.2%

+18.4%

+27.2%

% Change

Grocery

Sales (06 vs

05)

500

1,583

1,715

Grocery

Sales

(€m)

452,9529055.00%1,715Jerónimo

Martins

435,2511444.62%1,583Tesco

260,000>1,3001.46%500Lewiatan

Sales

Area

(sqm)

No. of

Grocery

Stores

Grocery

Retail

Market

Share* (%)

Total

Sales

(€m)

Retailer

Source: IGD Analysis, Country Presentation, Poland

Private Label

• First appeared in 1998

• Accounted for 16% of sales in 2006

• Number of SKU’s increased 80% since 2004

• Considered as a product with very low quality or for ‘poor people’

1.7

(3.0)7.2

(8.6)

10.3

(12.0)

10.5

(9.8)

13.4

(15.6)

17.7

(18.1)

44.4

(47.7)

49.7

(50.8)

74.4

(72.7)

0

10

20

30

40

50

60

70

80

Jeronimo

Martins

Casino Tengelmann Carrefour Metro Tesco Ahold Auchan Rewe

% Private Label

Private Label Share % (2006)

Source: IGD Analysis Country Presentation Poland 2007

Foodservice Trends

• Increasing disposable income and changing consumer habits drove

growth in consumer foodservice in 2006.

• Consumer foodservice is highly fragmented but domestic companies

dominate the market and this is through lower prices and tailored

offerings. Outlets such as Da Grasso, Sfinka Polska and Pizza

Dominium were the most successful in 2006.

• Independent outlets are the most dominant in terms of numbers and

they cover the entire range from economy to premium. Despite not

having the economies of scale of large chains they often offer lower

prices.

• There is low urbanisation in Poland and the numbers living in urban

areas is almost unchanged since the early 1990’s (62%); reasons for

this relate to an ageing population and high unemployment - cost of

living is lower in rural areas. This could be a limiting factor in consumer

foodservice.

Adopted from Euromonitor Data 2007

Foodservice Trends

• There is expected to be expansion into the smaller cities in Poland for

specialist coffee shops and casual dining full service restaurants, but

they should bear in mind the lower purchasing power in smaller cities.

• Eating out is not part of Poland’s traditional lifestyle and there is a belief

that home cooking is better quality than food in restaurants.

• There has been a number of failures on the Polish market for

international chains eg Burger King withdrew after losing the price war

with McDonald’s in 2001. However in 2007 they re-entered the market

with AmRest running the outlets. There are currently 7 outlets.

• Dunkin Donuts also withdrew due to their prices being too high.

Subway blame disappointing performance on their high costs.

• The Euro 2012 soccer championship to be held in Poland and Ukraine

is expected to benefit foodservice with a higher disposable income

resulting from investment and will also benefit the economy overall.

Adopted from Euromonitor Data 2007

0

50

100

150

200

250

300

350

BP

McDonald's

Statoil

Shell Select

Da Grasso

TelePizza

Sphinx

KFC

Pizza Hut

Pizza Dominium

Flerynka

Coffee Heaven

Mr. Hamburger

Green Way

Hort Café

Café Nescafé

Others

0

5

10

15

20

25

30

35

40

No of Outlets

Share

Adapted from Euromonitor Data 2007

Chained Consumer

Foodservice Brands

by market share and number of outlets

Foodservice

Establishments

• Sfinks Polska SA

– The largest restaurant network in Poland operating three brands:Sphinx, Chlopskie Jadio and WOOK Restaurant. It is the third largest foodservice company in Poland in terms of turnover.

– Sphinx offers meat, salads, pasta, pizza, and desserts.

– 108 establishments in Poland, Hungary, Czech Republic, Romania 102 of which are in Poland.

– Took over premium restaurant chain Chlopskie Jadlo in 2006

– Chlopskie Jadlo offers traditional Polish cuisine in peasant surroundings

– Currently 12 restaurants in operation

– WOOK offers authentic Chinese food in

3 restaurants in Poland.

Chlopskie Jadlo Peasant Style Restaurant

Foodservice

Establishments

• Green Way

– Polish vegetarian restaurant and bar chain

– founded in 1997 as a healthy eating restaurant

– 31 Greenway restaurants throughout Poland

– 1 in Austria, 1 in Norway

– Menu includes lentil soup, spinach dumplings, vegetarian

enchiladas, fruit filled pancakes, vegetable juices and smoothies.

– Greenway markets also sell products free from meat and animal

derivatives

– www.green-way.pl

Foodservice

Establishments

• Pizza Dominium

– started in Warsaw 1993

– offer handmade, original Italian pizzas,

soups, snacks, salads, pasta and

sandwiches

– over 50 restaurants in cities throughout

Poland

– planning to expand into Romania with

their restaurant chain.

Other Foodservice

Establishments

• Coffee Heaven

- Leading Eastern European Coffee Chain found in Poland, Czech

Republic, Latvia, Bulgaria, Slovakia

- Sells sandwiches and snacks as well as coffee

- First opened in Poland in August 2000

- Currently has 48 coffee houses in Poland

www.coffeeheaven.eu.com

Reasons for targeting Poland

• Largest Eastern European market currently for Irish food exports

• Total retail market +45% for 2005-2015 (€41.1bn)

• Solid growth market >10% per annum

• High penetration of premium segment for alcoholic beverages (32%)

• Significant immigrant population returning from Ireland with knowledge of

Irish brands

Barriers/challenges in supplying

Polish market

• Market for high end premium products is small

• Foodservice market fragmented

• Very low per capita consumption of beef (5.2kg per annum)

• Price conscious consumers

Bord Bia services 2009

• Beverage category report including market visit and buyer meetings (May 2009)

• Bord Bia market mentor available for Eastern Europe market and trade related queries:

Kieran Fahy

Sarospatak ut 32

1125 Budapest

Hungary

Tel: +36 706 144871

Email: Kieran.fahy@freemail.hu