Bulgaria
Market Overview
Bord Bia, Frankfurt
November 27th 2008
Bulgarian Market Overview
•
Population: 7.26 million
– Sofia (Capital) 1,148,400
– Plovdiv 342,000
– Varna 311,800
– Burgas 189,300.
•
Language: Bulgarian
•
Currency: Lev €1 = 1.96 BGN
(ECB, October 2008)
•
Joined the EU on 1 January 2007
Market Overview
•
GDP Growth - real growth rate 6.2% 2008(e) (IGD, 2008)
•
Inflation rate: 4.5% (2008(e)) (IGD, 2008)
•
Unemployment: 8.5% (2008(e)) (IGD, 2008)
•
Grocery Retail Spending per capita is increasing; up from €581 in 2004 to €981
in 2008 (e) (IGD, 2008)
•
VAT: 20%
•
VAT on Medicines: 7%
•
Bulgaria’s middle class has been expanding since the 1990’s and now accounts
for 10% of the population. However the wealthiest 10% of Bulgarian’s earn 27%
of total salary, making Bulgaria’s generally price sensitive (IGD, 2008).
Irish Food
Export Performance
Irish Food Exports to Bulgaria (2007)
Total value
of exports:
€4.3 million
Beverages
28%
Meat
2%
Dairy
15%
Vegetables and
Fruit
13%
Sugars
4%
Misc. edible
products
37%
Source: CSO Food and Drink Statistics 2007
Other
1%
Key Consumer Trends
in the Market
•
Solid growth in retail sector: 22% growth between 2006 and 2008(e).
•
Per capita spending is increasing but is still significantly lower than in Western
Europe.
•
Over half of retail sales in Bulgaria are generated through the food retail sector.
2006
(€)
2007
(€)
2008 (e)
(€)
Total Retail Market (billions)
11.22
12.20
13.80
Grocery Retail Market (billions)
5.89
6.43
7.20
Grocery Retail Spend/capita
786
878
981
Source: IGD Country Presentations, 2008
Retail Grocery Market
•
Grocery Retail Value: €7.20 billion and was number 8 in the list of top
Eastern European markets (Russia, Turkey, Poland, Romania, Czech
Republic, Hungary and Ukraine) and number 64 globally (IGD, 2008).
•
Small grocery stores are the most popular retail format with 60% of all
value. This has held steady since 2003 (IGD, 2008).
•
Discounters: only entered the market in 2006 and account for just 1% of
total retail sales value. Penny Markt largely makes up this 1%.
•
Sunday trading is not prohibited but stores are generally only open
Monday to Friday 10am to 8pm and Saturday 10am to 2pm.
Retail Grocery Market
•
Supermarkets: Fantastico (Bulgaria) is the third largest retailer with
over 32 supermarkets and cash and carry’s. They are in process of
launching their new brand “Delicatessen” which is a premium range
(IGD, 2008).
•
Cash & Carry sector: Dominated by German chain Metro. The Metro
group had sales of €441 million in 2007 and grew sales by 17.% in
2007. They currently have 8 stores but is the best known retailer in the
country due to its high advertising spend.
•
Hypermarket: Kaufland (part of the Lidl and Schwarz group) is the 2nd
most important retailer in the country with over 35 stores and a further
12 planned, despite having only entered the market in 2006.
Source: IGD Country Presentations, 2008
Top Retailers 2007
Retailer
Total
Sales
(€m)
Grocery
Sales
(€m)
% Change
Grocery Sales
2007 v 2006
Grocery
Retail
Market
Share*(%)
No. of
Stores
Sales Area
(sqm)
Metro
441
441
+17.6%
-
8
63,730
Lidl & Schwarz
318
318
+191.7%
4.9%
35
140,000
Fantastico
203
198
+17.8%
3.1%
32
92,000
Rewe
169
169
+22.4%
2.6%
29
29,000
CBA
168
168
+34.4%
2.6%
170
52,500
Piccadilly
110
110
+17.8%
1.7%
12
23,800
Maxima
40
40
+37.9%
0.6%
23
103,500
Elemag
22
22
+4.8%
0.3%
3
6,100
Source: IGD Analysis, Country Presentation, Bulgaria, 2008
Retail Market Share
Fantastico
14%
Rewe
11%
Lidl & Schwarz
22%
CBA
11%
Piccadilly
7%
Metro
31%
Source: IGD Analysis Country Presentation Bulgaria
Elemag
1%
Maxima
3%
Private Label
Private Label Share % (2007)
% Private Label
15.01
14.51
10
4.99
4.84
4.35
3.58
0.79
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Source: IGD Analysis Country Presentation Bulgaria, 2008
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Foodservice Trends
•
•
•
•
•
Bulgaria’s foodservice market is growing but the pace at which it is
growing has slowed in the past year due to the economy.
High oil prices and new laws aimed at raising the standards of
foodservice to those of EU levels have held back the market.
Pizza saw the highest segment growth in 2005 across full service
restaurants, fast food outlets and in 100% home delivery/takeaway
sector. However, the chains saw no progress at all.
Fast food suffered one of the most unprofitable years in business in
2005 particularly McDonald’s saw a fall in turnover and transactions.
It is believed that while growth in the market will slow, there are still
huge opportunities for growth in the coming years.
Source: Euromonitor, 2007
Foodservice Trends
•
•
•
Tourism is expected to continue to influence the foodservice sector. 4.5
million foreign tourists visited in 2005. The increase is leading to rapid
expansion of foodservice around tourist destinations. Some 70% of all
visitors will eat at a restaurant while there so has led to growth of full
service restaurants.
In Sofia, the capital, there is a greater presence of chains though
independents continue to dominate. An increase in the number of
shopping malls is helping this growth as well with companies such as
“Happy Bar & Grill”, “Pizza Hut” and “Onda Coffee Break”
Consumer foodservice market was worth US$1,370mn in 2005 or €1.1
billion with over 348 million transactions conducted.
Source: Euromonitor, 2007
Chain Consumer Foodservice
Brand Shares (2005)
by number of outlets and market share
90
30
80
25
70
60
20
50
15
40
30
10
20
5
10
O
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's
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Source: USDA Report on Consumer Foodservice Bulgaria, adapted.
0
No of Outlets
Share
Foodservice
Establishments
•
Onda Coffee Break
– First company to enter and launch in the
specialist coffee shop sector and was still
the only company operating in this sector
in 2003.
– In 2005 they opened three more outlets,
all in Sofia.
– Despite higher prices, it attracts people
for the innovative coffee, tasty food,
excellent service and modern interior.
– They may face challenges in the future
as more competition continue to enter
the market. (Starbucks due to enter the
market in November 2008.)
Source: Euromonitor, 2007
Foodservice
Establishments
•
Happy Bar & Grill
– In 2005 accounted for the largest
share of the chained consumer
foodservice market at 26.8% and had
20 outlets in Bulgaria.
– Have an extensive bar menu and
specialise in cocktails.
– Food menu options include: grilled
chicken and pork dishes.
– www.happy.bg
Source: Euromonitor, 2007
Foodservice
Establishments
• Trops House
– Offers traditional Bulgarian food
– Established in 1994
– Operates 8 fast food outlets, and 3 delicatessens.
Reasons for targeting Bulgaria
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•
•
Strong growth in GDP +6.2% (2007)
Rising personal income levels
Increased foreign tourism is increasing the demand for western produced
high quality goods
Barriers/challenges in supplying
Bulgarian market
•
•
•
Distance to market and increased logistic costs
Local language barrier (Bulgarian). Can hinder trade enquiries and delay
progress
Low disposable income €3,646 per capita per annum
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