Latvia
Market Overview
Bord Bia, Frankfurt
November 27th 2008
Latvian Market Overview
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Population: 2.27 million. The main cities are Riga (capital) (733,900), Daugavpils
(110,000), Liepaja (83,648).
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Language: Latvian
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Currency: Latvian Lat €1 = 0.7096 LVL (ECB, October 2008)
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Joined the EU in 2004
Market Overview
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Country has a GDP approximately a third of Germany’s. GDP per
capita €10,286 (2008(e)) v Germany €30,546 (2008(e)) (IGD,2008)
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GDP Growth - real growth rate 6.6% 2008 (e) (IGD, 2008)
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Inflation rate: 10.5% (2008(e)) (IGD, 2008)
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Unemployment: 6.8% (2008(e)) (IGD, 2008)
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Consumer spending increasing with the Grocery Retail Spend per capita
increased from €615 in 2004 to €1,138 in 2008(e) (IGD, 2008)
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VAT: 18%
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VAT on Medicines: 5%
Irish Food Export Performance
Irish Food Exports to Latvia (2007)
Total value of
exports:
Beverages
95%
€1.89 mn
Feeding Stuff
for animals
0.1%
Source: CSO Food and Drink Statistics 2008
Fish
4%
Meat
1%
Key Trends in Latvia
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The new government that was elected in December 2007 has made “helping Latvia
achieve European living standards” a priority, and also to lower inflation (IGD, 2008)
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Consumer spending in Latvia is growing the fastest of the Baltic States. Has more
than doubled since 2005: €3,413 (2005) v €6,898 (2008e)
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Latvia is set to adopt the Euro but currently no date has been set for its adoption
(IGD, 2008).
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45% of retail sales in Latvia are generated through the food retail sector.
2006
(€)
2007
(€)
2008 (e)
(€)
Total Retail Market (billions)
4.34
4.99
5.68
Grocery Retail Market (billions)
2.02
2.30
2.55
Grocery Retail Spend/capita
890
1,018
1,138
Source: IGD Country Presentations, 2008
Retail Grocery Market
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Grocery Retail Value: €2.55 billion
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Market is characterised by a large number of hard/soft discount stores
and smaller supermarket stores.
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Discounters have seen growth in recent years which was driven by
market entry of Maxima LT and its Saulite chain of soft discount stores.
Iki were the most recent entrants to the market and they are using the
“Leader Price” banner to drive growth (IGD, 2008).
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Domestic retailers are restricted to neighbourhood stores and smaller
supermarkets. Elvi, Neda and Mego are all examples of this.
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Hypermarkets growth has been affected by the roll out of Maxima LT’s
and Rimi Baltic's larger store formats. Rimi in particular are using the
compact hypermarket to achieve growth.
Retail Grocery Market
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Maxima are the number one retailer in Latvia and they have a strong
reputation for their private label ranges. Currently operate 125 stores
among their three fascias - Maxima X, Maxima XX, and Maxima XXX.
They have a strong focus on the fresh food offer, with 50% of their floor
space given to it in their larger stores (IGD, 2008).
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Rimi are the second largest retailer. Until October 2006 it was a joint
venture but now ICA have bought out Kesko Foods. They planned to
open 15 new stores in 2008 but by the end of the first half of the year
they had only opened 2 new stores (IGD, 2008).
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Elvi are the largest domestic player and in 2005 was named “Baltic
Brand of The Year”. They grew at a rate of 40% in 2007 and were
seeking 30% growth in 2008. Elvi is a franchise.
Retail Market Share
Other
43%
Maxima
23%
Nelda
3%
Iki
4%
Elvi
6%
Source: IGD Analysis Country Presentation2008
Rimi Latvia
21%
Retail Market Structure
Top 5 2006
Retailer
Total
Sales
(€m)
Grocery
Sales
(€m)
Grocery
Market
Share (%)
No. of
Stores
Sales
Area
(sqm)
Maxima Latvija
587
587
25.5
121
130,000
Rimi Latvia
544
544
23.7
94
127,550
Elvi
155
155
6.7
75
93,750
Iki
110
110
4.8
33
38,000
Nelda
87
87
3.8
17
22,500
Source: IGD Analysis, Country Presentation, Latvia 2008
Foodservice
Establishments
Lido
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Lido are a Latvian owned self-service chain with 8 outlets in different
sizes. Sales in 2006 were LVL 22 million or approximately €31mn
Target customers who prefer traditional Latvian food.
Opened Lido Recreation Centre in 1999 which seats over 1,000 guests,
is situated on 4 hectares, has an attached amusement park and is now
a tourist attraction in Riga.
Foodservice
Establishments
• McDonald’s
– McDonald’s Latvia was recently sold by the McDonald Corporation
to Premier Capital.
– There are 6 outlets in Latvia and in 2006 the reported sales were
5.925 million Lat or around €8.4 million. This was growth of 42%
from 2005 which shows the increasing popularity of international
fast food chains (Market Leader, 2008).
Reasons for targeting Latvia
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•
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GDP €8,725 per capita (2007) +10.3% v 2006, the fastest GDP growth rate in
Europe (Source: Investment Development Agency Latvia)
Stable currency. The Latvian LAT is pegged to the Euro 1 LAT = €1.42
Beverages opportunity: Irish alcoholic beverages make up 95% of Irish exports to
Latvia
Barriers/challenges in supplying
Latvian market
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•
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Small population (2.3m)
Low disposable income €3,736 per capita/p.a.
Local language barrier
Distance to market
Bord Bia services 2009
•
Bord Bia market mentor (Mr. Kieran Fahy) available for Eastern Europe market and
trade related queries:
•
Services include: Itinerary Development, Category Analysis, Media review and
translation services, Product Price auditing and tracking, Product retrieval, Buyer
networking, Distributor searches
Kieran Fahy
Sarospatak ut 32
1125 Budapest
Hungary
Tel: +36 706 144871
Email: Kieran.fahy@freemail.hu
Also: Liam MacHale
Bord Bia
Wöhler Str. 3-5
60323 Frankfurt, Germany
Tel +49 69 710 423 255
Email: liam.machale@bordbia.ie