Hungary
Market Overview
Bord Bia Frankfurt
November 27th 2008
Hungarian Market Overview
•
Population: 9.9 million.
The main cities are Budapest (1.7mn),
Debrecen (204,300), Miskolc (175,700)
(IGD, 2008).
•
Official Language: Hungarian
(also known as Magyar)
•
Currency: Hungarian Forint
€1 = 261 Forints (ECB, October 2008)
•
Economy is one of the weakest among
the new EU countries.
•
Huge budget deficit (10% of GDP),
rising inflation (due to foreign exchange
differences), and tax hikes forecast
(IMF, 2007).
Market Overview
•
GDP Growth - real growth rate 2.6% 2008(e) (IGD, 2008)
•
Inflation rate: 3.41% 2008 (e) (IGD, 2008)
•
Unemployment 7.3% 2008 (e) (IGD, 2008)
•
VAT on medicine: 5%
•
VAT on basic consumer goods, books, 15%
•
VAT on everything else (including food): 20%
Irish Food
Export Performance
Food Exports from Ireland to Hungary 2007
Total
Exports:
€8.4mn
*Other includes
fish,, tea coffee
and extracts,
sugars and
animal feed
stuffs
Beverages;
36%
Miscellaneous
edible products;
48%
Other; 9%
Vegetables and
Fruit; 3%
Source: CSO Food and Drink Statistics 2007
Live Animals;
3%
Meat; 1%
Key Consumer Trends
in the Market
• Retail spend per capita is relatively unchanged in the period 2006-2008.
2006
(€)
2007
(€)
2008 (e)
(€)
Total Retail Market (billions)
21.90
23.00
24.00
Grocery Retail Market (billions)
11.32
11.50
11.66
Grocery Retail Spend/capita
1,134
1,155
1,172
Source: IGD Country Presentation Hungary, 2008
Retail Market Share 2007
Other; 21%
Tesco; 15%
Coop
Hungary;
11%
Real
Hungaria RT;
3%
Lidl; 4%
Auchan; 5%
Tengelmann;
7%
Rewe; 8%
Source: IGD Country Presentation Hungary 2008
Metspa; 10%
Delhaize; 8%
CBA; 8%
Retail Market Structure
Top 10
Retailer
Total
Sales
(€m)
Grocery
Sales
(€m)
% Change
Grocery Sales
2006 v 2005
Grocery
Retail Market
Share *(%)
No. of
Stores
Sales Area
(sqm)
Tesco
1,855
1,855
+16.9%
16.13%
109
469,160
Coop Hungary
1,590
1,590
+7.2%
11.48%
3,000*
1,700,200
CBA
1,405
1,405
+1.6%
12.22%
2,886
1,154,400
Real Hungaria RT
1,149
1,149
+1.1%
9.99%
2,315
833,500
Cora-Louis
Delhaize*
1,110
1,110
+1.5%
8.78%
218
422,800
Metro
1,002
767
-5.3%
-
13
102,000
Spar International
976
976
+22.3%
8.49%
191
236,041
Auchan
865
852
+5.1%
7.41%
10
150,000
Rewe
443
443
+1.6%
3.85%
158
121,660
Lidl
370
370
+124%
3.22%
120
156,000
Source: IGD Analysis, Country Presentation, Hungary
Retail Grocery Market
•
•
•
•
•
•
Over 48% of retail sales in Hungary are generated through the food
retail sector (IGD, 2008).
Hypermarkets (26% of the market): Tesco leading player (€1,254mn
sales) followed by Auchan (€865mn), Delhaize’s Cora (€384mn) and
SPAR Austria (total sales €976mn).
Supermarkets (15% of the market) dominated by domestic operators:
CBA (€2,044mn), Real Hungaria (€713mn), COOP Hungary (€840mn),
Delhaize’s Cora (€626mn), and Tesco (€446mn).
Small grocery stores (29% of the market) - important channel especially
in small towns and rural areas and in Budapest: CBA Kereskedelmi.
Discounters (18% of the market) dominated by Rewe’s Penny,
Tengelmann’s Plus, Delhaize’s Profi (€154mn) and Lidl (Schwarz
Group) (€370mn).
Cash & Carrys dominated by German Metro
Source: IGD Country Presentation Hungary, 2008
Private Label
•
Accounts for 22% of retail sales (2006)
Private Label Share % 2006
100
90
% Private Label
80
70
85.6
(83.5)
60
50
45.2
(30.0)
40
30
32.7
(30.8)
20
23.2
(21.8)
23.1
(23.6)
23.0
(23.2)
10
20.8
(20.6)
18.7
(16.0)
17.1
(18.8)
5.7
(6.8)
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Source: IGD Country Presentations Hungary, 2008
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Foodservice Overview
2005
(USD)
2006
(USD)
2007
(USD)
Total Food Spending, net (millions)
19,955
19,795
24,561
Foodservice Sales net (millions)
3,503
3,517
4,456
350
352
448
Foodservice Sales net/capita
• + 28% foodservice sales per capita in the period 2005-2007.
Source: Planet Retail Grocery Retailing in Hungary 2008
Foodservice Trends
•
•
•
•
Hungary had seen positive developments in its foodservice sector in
the first half of 2006, but restrictive government policies introduced
reduced disposable income and led to the decline in foodservice in the
second half of 2006.
The increase in VAT from 15%-20% in 2006 was one such policy
which resulted in higher foodservice prices.
Chained street stalls/kiosks saw widespread expansion in 2006. This is
due to the low entry and royalty fees and the products offered are
generally non-sophisticated, with reliable prices and high flexibility.
Often located close to large hypermarkets, DIY stores and cash and
carry’s.
Decrease in domestic purchasing power is a worrying trend and is
expected to affect future growth. This will disproportionately affect the
independent outlets as opposed to chains.
Source: adapted from Euromonitor, Consumer Food Service Hungary, 2007
Foodservice Trends
•
•
•
The Foodservice sector is heavily dependant on international tourism
as Hungarians do not habitually eat out. Forecasted growth in visitor
numbers is expected to fuel growth in foodservice both for international
chains and for full service restaurants offering traditional fare.
Business lunches are also helping growth with an increase in the
number of home delivery companies, fast food and FSR outlets which
offer food to workers. The increase in “hot meal vouchers” allowable
under Hungarian law from HuF 6,000 per capita per month to
HuF10,000 has helped.
Obesity is a major issue in Hungary with 29% of women and 38% of
men overweight and 1 in 5 adults considered obese. This is fuelling
demand in low fat, low calorie products. This has been seen in both the
prepacked consumer foods as well as in menu offerings in foodservice
outlets.
Source: adapted from Euromonitor, Consumer Food Service Hungary, 2007
Chained Consumer
Foodservice Brands
by number of outlets and share
2500
45
40
2000
35
30
1500
1000
25
No. of Outlets
20
% Share
15
10
500
5
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Source: adapted from Euromonitor, Consumer Food Service Hungary, 2007
Foodservice
•
Fornetti Kft
– Central and Eastern Europe's leading franchise
in fresh baked pastry sector
– Were ranked number 3 in top European
Franchises from a study by Franchise Europe.
– Production capacity in 6 countries up to 7,000
tonnes per month.
– www.fornetti.hu
•
Don Pepe
– A pizzeria style restaurant which also offers a
range of pork, poultry, steak, pasta vegetarian
and salad dishes.
– First established in 1990.
– Has won 4 Best of Budapest Awards in the
category “Best Pizza” in 2000, 2004, 2005 and
2006.
Reasons for targeting Hungary
•
•
•
High concentration of organised trade, predominantly Western owned
relative to other Eastern European countries
Tesco is leading retailer
Growing consumer interest in purchasing originally sourced products eg
high quality meat products, whiskey etc
Barriers/challenges in supplying
Hungarian market
•
•
•
•
•
One of the weakest economies in the EU with budget deficit of 10% GDP
(vs 3% EU requirement)
Rising inflation due to foreign exchange movements
VAT rate increase from 12 to 15% on basic consumer goods and from 15
to 20% (2007) on food has affected sales
Disposable income also set to fall in 2009
Lowest per capita consumption of beef in EU (3.2kg) 2007
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