Alcoholic Drinks Market
Emerging Markets
Poland
Contents
Page
Reporting Methods
.. .. .. .. .. .. .. .. .. .. .. .. .. ..
4
Executive Summary
.. .. .. .. .. .. .. .. .. .. .. .. .. ..
5
Country Overview
Poland at a glance
Geography
Population
Political Overview
Economic Overview
Social Overview
..
..
..
..
..
..
12
13
14
15
16
19
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
The Retail Environment
Overview
.. .. .. .. .. .. .. .. .. .. .. .. .. ..
Legislation
.. .. .. .. .. .. .. .. .. .. .. .. .. ..
Structure
.. .. .. .. .. .. .. .. .. .. .. .. .. ..
Top 10 Grocery Retailers 2007
.. .. .. .. .. .. .. .. .. .. ..
Retail Consumer Expenditure on Alcoholic Drinks 2003-2007 ..
Retail Distribution of Sales of Alcoholic Drinks .. .. .. .. .. ..
Typical Wholesaler & Retailer Off-trade Mark Ups .. .. .. .. ..
Selling Margins of Typical Selected Segments .. .. .. .. .. .. ..
20
20
20
21
23
23
24
24
Poland Regulatory Environment
Legal Drinking Age
Drink Driving
Advertising
Opening Hours
Labelling
Taxation & Duties/Levies
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
25
25
25
25
26
27
Alcoholic Beverage Market
Market Observations
.. .. .. .. .. .. .. ..
Total Market x Value x Volume 2007 .. .. .. ..
Per Capita Consumption 2003-07
.. .. .. ..
Market Share x Segment x Vol. x Value 2003-07
Segment share 2007
.. .. .. .. .. .. .. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
28
29
30
31
32
2
Page
Segment Analysis
Beer
- Beer continues to grow uninterrupted
- Beer Segment: Value & Volume 2003-2007 ..
- Beer Segment: Volume x Distributor 2003-07 ..
- Structure of the Market
.. .. .. ..
- % Share 2007 x Brewery
.. .. .. ..
- Beer Segment: Share x Package Type .. .. .. ..
..
..
..
..
..
..
33
33
34
35
35
35
Wine
- Wine underdeveloped
.. .. .. .. .. .. .. .. .. .. ..
- Wine Segment: Value & Volume 2003-2007 .. .. .. .. ..
- Wine Segment: Volume x Local vs. Imported 2003-07 ..
36
36
37
RTDs
- Continue to grow steadily . .. .. .. .. .. .. .. .. .. .. .. ..
- RTD Segment: Value & Volume 2003-2007 .. .. .. .. ..
- RTD Segment: Volume x Local vs. Imported 2003-07 ..
39
39
39
Spirits
- Underlying shift away from Spirits
.. .. .. ..
- Spirit Segment: Value & Volume 2003-07
.. .. .. ..
- Spirit Segment: Volume x Local vs. Imported 2003-07
- Spirit Segment: Category volume x Share 2007 .. .. ..
..
..
..
..
40
40
41
43
.. .. .. .. .. .. .. ..
43
Vodka
- Continues to dominate Spirit Sector
Whisk(e)y
- Whisky: Consumption x Volume x Type 2003-07
- Whisky: Type x % Volume Share 2007
.. .. ..
- The Irish Whiskey Market in Poland
.. .. ..
- Irish Whiskey: Brand Sales 2003-07
.. .. ..
- Irish Whiskey: Prices x Brand
.. .. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
45
46
47
47
48
Liqueurs
- In decline
.. .. .. .. .. .. ..
- Liqueurs: Consumption x Volume x Type 2003-07 .. .. ..
- Cream Liqueurs: Brand Sales in Poland 2003-07
.. .. ..
- Cream Liqueurs: Brand x Price in Roubles per bottle 2007..
49
49
50
51
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
Opportunities in the Polish Market
.. .. .. .. .. .. .. .. .. .. ..
52
Further Useful Sources
.. .. .. .. .. .. .. .. .. .. ..
53
3
Reporting Methods
This report has been prepared to assist understanding of the alcoholic drinks market in
Poland. It is not intended as an in-depth study of the market but rather a top-line
guide for Irish manufacturers to enable them to understand the market opportunity
that Poland may represent. As such it tries to give a picture of:
-
Poland today from a political, economic and social point of view and the
overall environment in which business is carried out.
Top line trends in the market place in terms of the retail environment and the
consumption of alcoholic drinks
Legislative requirements and Taxes pertaining to the alcoholic drinks market
Pricing structure for typical category brands by channel
Market share information by segment, by value, volume and per capita.
It then examines the Spirits market, which includes Vodkas, Whiskeys, and Cream
Liqueurs, in more detail, as these are the products most likely to be produced in
Ireland for export to Poland and outlines possible opportunities within the Polish
Market for Irish producers of alcoholic drinks.
Finally sources of further useful information are listed for when considering entering
the Polish alcoholic drinks market.
The data has been collected from a number of sources and these have been accredited.
Most data is collected as a result of educated calculations made on the basis of trade
comment rather than an actual accurate collection of information. As a result data is
reported in different units of measure and for purposes of comparison we have tried to
standardise these to millions of litres and the local currency, the new Zloty (PLN).
However in terms of detailed data for the spirit segment, volume has been quoted in
000’s 9 litre cases as per the statistics reported by The IWSR Report 2008. In terms
of value, we have used Euromonitor figures, which will show different growth rates
because of the data collection methods used: generally trade comment/interview
rather than any reliable statistical source. Nevertheless, the actual trends appear to be
in line with each other throughout the research used. Euromonitor are suggesting that
there will be a continued growth in Poland between 2007-2012 and are forecasting a
CAGR for that period of 2.3% in total volume but no increase in value. The decrease
in value is forecasted to be in the beer and spirits categories. The total market growth
for the period 2007/12 is forecast at 12.1%.
4
Executive Summary
Polish Overview
 Poland is one of the largest states in Central Europe with a mainly mixed and
agricultural quality terrain. Its’ location in the centre of Europe gives it ready
access to the rest of the continent.
 There are over 860 cities in Poland yet the urban population occupies only 7% of
the country’s total area. Families are seeking cheaper and more comfortable
housing in the outskirts of urban centres, because of lower road traffic and air
pollution and these areas are often classified as rural.
 The population was estimated at just below 38m in 2007 and with a low birth rate,
it is estimated to continue to decline and age.
 Since accession to the EU in 2004, substantial restructuring and reforms have
ensured that Poland will continue to enjoy sustainable economic development.
 The unemployment rate has declined, down to 11.4% ,2008 (from 20% prior to
EU membership) but the Government is not seen as having tackled the issue of
joblessness, rather that EU membership has grown the economy. More effective
labour market policies will take time to work and many people are likely to
remain unemployed for some time yet.
 Economic growth is forecast to slip in 2008 to 5.3% (from 6.6% in 2007) with an
even lower growth of 4.2% predicted for 2009.
 More than 1m Poles have left Poland to work in Europe, not only for the higher
salaries but also the better career opportunities. The remittances the émigrés are
sending home has certainly boosted the amount of disposable income available in
Poland.
 In 2008, as construction has declined in the UK and Ireland, some construction
workers are returning to Poland to help construct the roads and developments that
the EU funding is stimulating.
 Poland is set to become the largest net receiver of EU transfer payments following
the agreement reached on the EU budget for 2007-13 and is expected to receive
€91 billion over the 6 year period.
 The financial sector has a high level of foreign ownership, which together with a
sizeable share of non-performing loans on banks’ balance sheets suggests a likely
fragility in the sector.
 Poland is expected to adopt the Euro in 2013, which should help firms borrowing
in euros, who are currently threatened by the potential volatility of the zloty.
 The Agricultural sector accounts for only 4.6% of GDP and remains a serious
cause for concern. Under the existing laws for land ownership small holders are
unwilling to sell their farms preventing the consolidation that will be essential if
agricultural productivity levels are to improve.
 Inward investment has changed the landscape of the manufacturing sector.
Multinational companies dominate exports particularly in industries such as
electronics and automobile production. A big attraction is the cheap but wellqualified work force. While wages are rising, Poland’s wages are still on average
about one fifth of those in Germany.
 Poland’s transportation system is abysmal with just 3% of all roads meeting EU
standards. The poor road system slows the movement of both goods and people
5




and this is one of the first areas the government has ambitious plans to improve
with EU funding.
Poland produces about 23,500 barrels of oil per day and demand is forecast to
grow by as much as 50% by 2020. The refineries are badly in need of
modernisation if they are to increase production levels.
EU accession required Poland to liberalise its natural gas market and it has
divested and unbundled state-owned companies to comply.
Germany is Poland’s biggest trading partner and accounts for 19% of exports and
over 22% of imports. Poland also has strong trade relations with Italy, France and
Russia.
Poland intends to integrate further with NATO and has become a strong ally of the
US. (It supported the US on Iraq, causing tensions for it within the EU). Divisions
between Poland, France and Germany also worsened when Warsaw blocked the
draft EU constitution in 2004.
The Retail Environment
 Poland is the third largest Eastern European grocery retail market in terms of
value at €35.93 billion, behind Russia and Turkey in first and second place
respectively.
 Poles are extremely price sensitive and will display swift changes in consumer
consumption habits depending on the state of the economy.
 Poles tend to entertain and drink at home therefore the bulk of alcoholic drink
purchases are made from off-trade outlets. They purchase on impulse and this
would appear to have held back the sales of alcoholic drinks within supermarkets
and hypermarkets, which are really only present in urban areas.
 Independent retail outlets are the major distribution channel for alcoholic drinks.
 On-trade outlets have not yet made significant inroads into consumption.
 The Polish government has introduced a new law to protect small local retailers,
which has increased bureaucracy and consequently slowed down retail expansion,
particularly for international retailers.
 Retailers who want to open a store with a sales area larger than 400 sq. m. must
receive approval from local authorities, or if the sales area is greater than 2,000sq.
m., from province authorities.
 Local authorities regulate trading hours. Convenience stores open late during the
week.
 The retail structure is not likely to see dramatic change in the longer term and the
market remains fragmented. Private independent stores predominate and other
formats include supermarkets/hypermarkets and Cash & Carry/warehouses.
 The top 9 retailers account for 40% of the market.
 Poland has the fastest growing private label market in Europe – currently over
10% of total grocery sales.
 48% of shoppers are over 50 years of age, with another third in the 30-49 age
group.
 There are very few off-trade chains in Poland, though with the introduction of
shopping malls, independent chains of specialists are predicted to grow.
6
Regulatory Environment
 The legal drinking age in Poland is 18 years but consumption of alcohol by those
under 18 years is common.
 Drink driving is a major problem in Poland and in order to tackle this the
Government introduced a new law that makes drink driving a criminal offence.
 Advertising alcoholic drinks was forbidden until 2001. Following new
regulations beer is now allowed on TV from 2000-2300 hours and may be
advertised on billboards for an additional fee.
 Alcoholic Drinks advertisements must include information on the dangers of
drinking alcohol and that it is forbidden to sell alcohol to people under 18 years of
age: this information must cover at least 20% of the advertising area.
 Producers of alcoholic drinks with a content of 8-18% pure spirit are allowed to
promote mass events sponsored by them.
 There are no restrictions on opening hours at a national level but the local
government has the power to introduce restrictions on opening hours.
 Each off-trade outlet is required to have up to three types of sub-licences
depending on the alcoholic content of the beverages sold. The sub-licences can be
purchased separately, however for an outlet to offer a full range, all three sublicences are required.
 Shopkeepers are also responsible for informing the police about alcohol related
incidents near their store and failure to do so can lead to an outlet’s licence being
revoked.
 Imported products require a label in Polish stating the ingredients listing, use by
date, net weight, country of origin, alcoholic content (if applicable), as well as
name and address of producer and importer.
 Excise tax and VAT have traditionally been among the highest in Europe.
 The excise tax on spirits in 2007 was PLN4,400 (approximately €1,160) for one
hectolitre of pure alcohol. This is over twice the EU minimum rate. While the
excise tax is about 18% lower than Germany it is higher than that of the other
neighbouring countries.
 Poland adopted the EU import rates on alcohol drinks on accession to the EU.
 In addition, manufacturers of alcoholic drinks have to obtain banderols – a stamp
that proves all taxes for a product have been paid and that the manufacturer has a
right to sell it in Poland. These are different for each type of alcohol and banderol
prices depend on alcohol content and pack size. Banderols for imported and
domestic products also differ. Beer is the only alcoholic beverage that does not
require a banderol.
7
Alcoholic Beverage Market in Poland
 Consumer expenditure grew from €20bn to €159 bn in 2006 and sales of alcoholic
drinks grew faster in 2006 and 2007, than in the previous three years.
 There has been an underlying shift from spirits to lower strength alcohol, beer and
wine. Still the vast majority of Poles drink to get drunk.
 Attention is shifting towards higher priced alcohol drinks.
 Multinationals now lead sales of alcoholic drinks thanks to acquisitions and
organic growth.
 The growth in alcoholic drinks is expected to continue to grow up to 2012. The
forecast is that value for money products will push sales of beer, while consumer
habits will be beneficial for clear spirits. Brown spirits and wine will also see
some growth but they are still too highly priced in relation to vodka or beer.
 Global brands are most likely to attract urban dwellers with a high level of
education and disposable income.
 The Polish habit of meeting at home to drink, together with low levels of
urbanisation, mean that the on-trade is unlikely to offer as much opportunity for
growth as would seem possible at first sight. Beer will probably continue to be
the most popular on-trade drink.
 The total volume of the Polish Alcoholic Drinks market in 2007 was estimated to
be €3,9990.3 million litres, with a total value of PLN37,833.2 million.
 Per Capita consumption continues to increase stands at 105; beer would appear to
be fuelling the growth.
 The market is dominated by beer and it accounts for 83% Volume, spirits 7%,
Wine 6% and RTDs 4%.
Beer
 Despite the fact that the price of Beer in Poland is significantly higher than in
neighbouring countries, the beer market has grown uninterrupted since 1993 and
continued to grow by 7% in 2007, with a forecasted growth of 3% for 2008.
 It is forecasted that beers will continue to grow in Poland by CAGR of 2.4% in
volume and remain relative constant at –0.1% in value terms during the period
2007-2012.
 The total beer market in 2007 was 3,030.3 million litres, with a value fo
PLN20,460.3 million.
 Beer is drunk mainly by up to 45 year old men but some flavoured beers are
becoming popular with women.
 Tyskie is the largest brand with a market share of 15.5%, followed by Zubr with
12.5%. Lech has third place with 7.2%.
Wines
 The wine segment in Poland is underdeveloped and there are still very few offtrade specialists.
 The total volume of the wine segment in 2007 was 245.6 m. litres up 2.7% with a
total value of PLN2,494.2 m.
 Still light wines are all imported and are the most dynamic sector up 10.3% while
local wines grew by 7.8%. Sophi/Soffia, Egri Bikaver and other cheap brands
dominate the market.
8


Sparking Wine increased slightly in 2007 after years of decline/static growth,
driven mainly by imported brands. Better economic conditions, improved quality
and packaging along with rising disposable income and various brand line
extensions and marketing activities are contributed to the growth.
Poland is one of the fastest growing markets in Central Europe for wine and there
is already some evidence of trading up to the middle priced segment.
RTDs
 Total volume of the RTD sector in 2007 was 151.7 m. litres up 5.7%, with a value
of PLN1,3279 m (+6.3% on previous year)
 RTDs have been growing steadily from a very low base, but high excise tax is
holding up their development.
 RTDs are in the main drunk by very young females.
 The vast bulk of RTDs are imported line extensions with Bacardi Breezer and
market leader and Smirnoff Ice in second place.
 Local brand extensions include Sobieski Impres and Bols Fusion.
Spirits
 The spirits market in 2007 was 280.7 m litres up 2.8% on 2006 with a value of
PLN 13,550.7 m. +1.7% on previous year.
 There has been an underlying shift from spirits to lower strength alcohol but
nevertheless the domestic vodka market increased by +10% in 2007.
 The culture of drinking clear spirits means that the market for brown spirits is still
in its infancy. Nevertheless whisky showed healthy growth in 2007, albeit of a
very low base.
 The spirits market share in terms of volume is split: 92.2% Vodka, 3.8%
Liqueurs, 1.8% Whisky, 1.6% Brandy and 0.6% Others.
Vodka
 Vodka dominates the Spirit sector with over 92% share of volume and
consumption, which grew by 10% in 2007, is forecast to grow by a further 5% in
2008.
 Over 96% of the total vodka consumption in Poland is local, however imported
vodka is growing of a very low base.
 The Local Vodka market is split into bands by price Premium (over PLN 35) and
standard (under PLN 35)
 Vodka is always drunk neat and is normally drunk by older people – young people
normally drink beer or wine.
 There was a strong incentive for the newly privatised Polish factories to launch
new brands, as all expenses can be set against tax and consequently the flood of
new brands continues.
 There are over 200 national Vodka brands in Poland, with a further 800 “regional”
or “traditional” brands available from local producers in large cities.
 The legal market is believed to be over 2 million cases, with a further 6 million
unregistered and 2 million carried back from the East.
9
Whisk(e)y
 The Whisky category continues to grow in Poland and rose by 40% in 2007
 Scotch has 75% share of the Whisky sector and grew by 37.3%, with Malt scotch
growing faster at 57.1% year on year
 US Whisky has 15% of the whisky sector and grew at 57.7%.
 Canadian has less than 1% share of the whisky sector and grew by 40% in line
with the category in 2007.
 Irish Whiskey has 4% of the whisky sector and was slightly ahead of the overall
segment in terms of growth in 2007 at 58.6%.
 The market has been growing due to the larger disposable incomes, good on-trade
promotions and rapid development of retail outlets. It is also a result of many
more, younger Poles switching from Vodka.
 Although sales are growing Poles still drink twice the amount of Vodka in a week
as they drink Whisky in a year!
 The unofficial market virtually disappeared when prices went down in 2004.
 Whisky is drunk by 25-30 year old educated men and is normally mixed with a
soft drink (mainly Coke.)
 There has been fierce price competition between Ballantines and Johnnie Walker
Red in the Polish market to gain market share and intensive promotions continue
in the category.
 The Irish Whiskey market is divided into 5 bands: Ultra Premium, Super
Premium, Premium, Standard and Low Price.
 Tullamore Dew dominates the Irish Whiskey Sector in both the premium and
standard segments.
 Price points are somewhat confused presently with premium whiskies retailing at
lower prices sometimes than standard whiskies.
Liqueurs
 The Total liqueur category in Poland is estimated at 1,076 m 9 ltr. Cases in 2007
and has been declining at a rate of -4% CAGR 2003-2007. Local liqueurs are
mainly fuelling the decline, while categories of imported liqueurs continue to
grow, albeit off small volumes.
 Women normally drink local liqueurs with a coffee.
 Imported liqueurs are usually sold in top restaurants/hotels/bars and are used for
mixing.
Cream Liqueurs
 The Cream Liqueur market in Poland is estimated at a volume of 260.0 thousand 9
ltr. cases, declining at a rate of –7.1%% CAGR 2003-07.
 Local brands hold 79% of the category and it is dominated by the local brand
Krem with 73%% share (however it is losing share steadily at a rate of –12.9%
CAGR 2003-07.) The other local brand of note is Canari with 6% share.
 Of the imported brands Sheridans is the leader with 9.2% share and Baileys is in
second place with 7.3% giving Diageo a total share in the cream liqueur market of
16.5%.
 Carolans holds 2.5% share.
10



The remaining 2% of the market is shared out amongst Tolon Tolon Cream
liqueur 0.8% and Amarula at 0.6%, the balance of 0.5% is divided between other
cream liqueurs.
Local brands are selling in smaller bottles generally, but at a price point of a
quarter or less than the imported brands.
The cream liqueur market however shows a move towards premiumisation when
not buying local.
Opportunities in the Polish Market
 As Poland develops and the EU funds start to be spent in the coming years on the
infrastructure there is no doubt that the economy will continue to grow and
disposable income will continue to grow presenting a large opportunity for
alcoholic drinks.
 As the world economy has slowed down in 2008, particularly in Ireland and the
UK, a number of the young well educated Poles are electing to return home and
try their chances back in Poland.
 These returning émigrés, together with the emerging well-educated urban
dwellers, are likely to continue to embrace international brands and are likely to
continue to move away from Vodka, perhaps towards whiskey. However, as
Poles currently drink as much Vodka in a week, as they drink Whisky in a year,
the growth in this market is likely to be slow. Nevertheless, the strongest brands,
at this early stage of the market development, are likely to be the most successful
in the long run and explains why Scotch and US brands are competing so strongly
at this stage.
 As a proportion of the returning émigrés are likely to be returning from Ireland –
there is definitely an opportunity to tap into their “Irish” experience in the
foreseeable future and promote Irish whiskey in Poland.
 The Polish preference for a liqueur with coffee may also offer the opportunity to
introduce “Irish Coffee” as a way to extend this behaviour to whiskey.
 The strong preference for beer is unlikely to change dramatically in the near
future because of the Government’s reluctance to reduce excise duty on other
alcoholic drinks, but the market may also present an opportunity for brands such
as Guinness or lagers as younger drinkers seek variety and fashionable
international brands.
 There is no doubt that with strong distributors, Irish Brands developed solely for
the Polish market, such as St. Patrick’s, could gain a good foothold in this market
and that approach may offer an opportunity for Polish “ Irish Brands” at different
price points in both the whiskey and cream liqueur market.
 While the Private Label market is so strong in the grocery market, there is an
opportunity to tap into the lower income target audience, with private label
brands for whiskey and cream liqueurs. These would however have to be very
keenly priced for the price sensitive Poles and may mean diminishing returns in
terms of margin and may not be economically viable in the long run.
 As far as the on-trade is concerned in Poland, the major cities should be
concentrated, on as they offer good opportunities for promotional brand activity
and will be accurately targeted at the growing middle class in the main urban
centres.
11

The greatest opportunity in terms of volume however is firmly fixed in the
Independent Sector of the Grocery Retail trade, which accounts for over 50% of
the value of alcoholic drinks sold in Poland. Any distributor appointed should be
strong in this channel for the foreseeable future.
12
Country Overview
Poland at a glance
Population
Population density
Area
Currency
GDP (PLN million)
GDP Per capita (PLN)
Inflation
Unemployment
Capital City
Language
Government Type
Head of State
Ruling Party
Head of Government
VAT
38,157,600 (2006)
122.03 people/sq.km.
312,685 sq. kms
New Zloty (PLN = 100 groszy)
1,057,850.00
27,723.58
4.1% (2008)
11.4% (2008)
Warsaw
Polish
Republic
Lech Kaczynski
Civic Platform in coalition with Peasant Party
Donald Tusk (2007)
22%
13
Geography
Poland is one of the largest states in central Europe and extends from the 400km
Baltic coast, bordering Russia and Lithuania in the North, to the Czech and Slovak
borders 1,200km to the South and from Germany in the West to Russia, Belarus and
Ukraine in the east. The Country’s terrain is of mixed and mainly agricultural quality.
The capital is Warsaw and the other principal cities are Gdansk, Lodz, Krakow,
Katowice, Posnan and Wroclaw.
14
Population
The population of Poland is 38.16 m (2006) and is predicted to decline over the next
fifteen to twenty years. (2007 estimate 37.97 m.; 2025 est. 36.34 m) As in much of
Europe, Poland is beginning to suffer from an ageing population. It has a population
bulge in the 24-55 years age group with over 44% of the population in this age group.
The over 55 years age group accounts for 24.1% while the 15-24 years age group is
slowing down in terms of growth and stands at nearly 15.7%. In 2006, 51.5% of the
population were female, and 48.5% male.
There were 860 cities in Poland in 2006 yet the urban population occupies only some
7% of the country’s total area. The most densely populated areas are Upper Silesia
and Warsaw. In the more affluent and bigger cities such as Warsaw, there is a visible
trend of families moving away from the city centres to the outskirts. These outskirts
are often classified as rural areas. The cheaper and more comfortable housing,
combined with lower road traffic and air pollution, are the main factors driving Poles
away from urban areas.
Since 2004, following the opening of the labour market in a number of EU countries,
official statistics show that over one million Poles left Poland. There are several
reasons for the high migrations rates. The main one is the large difference in salaries
between Poland and Western Europe as well as the poor structure of the public sector.
In state controlled companies pay rates are only distantly tied to labour efficiency,
while in state institutions they depend mainly on job seniority. Poland probably
remains the only country in the world where miners earn more than doctors do! It is
therefore not surprising that the latter look for better job opportunities overseas.
Another reason for emigration is the lack of job prospects and the high price of
apartments. For people unable to find employment in their hometown, it is often
tempting to move to London or Dublin instead of Warsaw because in large Polish
cities where job accessibility is the highest, rental costs consume the bulk of monthly
earnings. In addition, Western Europe also offers much better career opportunities
because of Poland’s underdevelopment in research and high tech enterprises.
15
Political Overview
Poland is a parliamentary republic and has enjoyed a democratic constitution since
1990, which provides for the prime minister and the president to share executive
powers. The president is elected by popular vote for a five-year term.
The National Assembly has two chambers. The Diet (or Sejm) has 460 members,
elected for a four-year term. Of these, 391 members are elected by proportional
representation in multi-seat constituencies and 69 are selected in a national
constituency by proportional representation among parties obtaining more than 7% of
the popular vote. The Senate has 100 members elected for a four-year term in 40
multiple-seat constituencies.
In July 2006, the former Prime minister Kaziemierz Marcinkiewicz resigned after
only two months in power. Jaroslaw Kaczynski, the identical twin brother of the
President, replaced him but despite his attempts to reassure investors of a stable
environment in Poland, parliament was dissolved and early elections were held in
October 2007 for both houses of Parliament. In these elections, the PiS came second
to the PO, and Donald Tusk leader of the PO became the prime minister and his
coalition government, incorporating the centrist Peasant Party, won the vote of
confidence a week later on November 24.
As a result of prevailing political instability, Poland’s economy has struggled to stamp
its authority on the country’s unruly public finances and investors have been
disappointed with Poland’s lacklustre approach to structural reform. However, it is
believed that the process of reform is likely to be more pronounced under Donald
Tusk’s leadership. Nevertheless, there are still worries within Poland about the
increasing levels of support enjoyed by ultra-conservative anti-EU parties that are
opposed to further economic reform and integration.
16
Economic Overview
Poland acceded to the EU in May 2004 and is enjoying full access to the world
economy’s largest single market. Substantial restructuring and reforms have ensured
that Poland now enjoys sustainable development, low inflation and a positive current
account balance for the first time in the recent past. Although Poland has made good
progress, there are a number of issues, including high unemployment.
The economy’s record was disappointing during the first half of this decade. The
poor performance can be attributed to a combination of factors including a wave of
restructuring, particularly in the export-oriented firms, lagging openness to trade, an
obsolete infrastructure and a large government sector. However, a cyclical recovery
has been driving the economy through 07 and early 08. For the first time in years,
Poland has enjoyed a pattern of balanced growth, rising employment and a small
current account deficit. Large transfers from the EU and greater integration with EU
trading partners have helped to boost investment. Continued growth will require
additional increases in investment to raise employment and productivity. In turn this
means that domestic savings and foreign investment inflows must exceed current
levels, which may be difficult to achieve in the next couple of years (2009-10)
because of the global economic downturn. There is no doubt that the competition for
investment and export market shares will be intense in the medium term.
Economic growth is forecast to slip from 6.6% in 2007 to 5.3% in 2008, with a 2009
forecast of 4.2% growth. While consumer price inflation is expected to grow from
2.5% in 2007 to 4.4% in 2008, fuelled by rising wages and higher food prices.
(Source: IGD.com)
The country’s lax fiscal policies have been tightened. However, policies to cut labour
supply have failed. More effective labour market policies will take time to work and
many people are likely to remain unemployed in the near future.
Many pieces of Polish legislation are not yet compliant with EU law and its
administrative capacity is still unable to meet the demands of the EU entry and
businesses still have to comply with some of the new requirements. Poland is set to
become the largest net receiver of EU transfer payments following the agreement
reached on the EU budget for 2007-13 and is expected to receive €91 billion over the
6 year period.
The financial sector is characterized by a high level of foreign ownership, which
together with a sizeable share of non-performing loans on banks’ balance sheets,
suggests a likely fragility in the sector. The potential of the volatile zloty to threaten
the balance sheets of firms borrowing in euros also provides an additional cause for
concern. It is expected that Poland will adopt the Euro in 2013.
Agriculture performing poorly
The agricultural sector accounts for 4.6% of GDP and remains a serious cause for
concern. Productivity levels are well below those of more developed agricultural
producers and even Polish retailers are reluctant to sell domestically produced food.
Farms tend to be far smaller and more labour intensive than those in other western
17
countries and the cash-strapped Polish authorities have few resources to subsidise
domestic producers to the levels enjoyed by other EU and US producers.
Nevertheless, because of the uneconomic size of the farms, the rural population has
become dependent on government transfers that make up one third of their income.
Under the existing laws for land ownership, small holders are unwilling to sell their
farms, preventing the consolidation that will be essential if agricultural productivity
levels are to improve.
Manufacturing growing
Inward investment is changing the landscape of the manufacturing sector. Since
2000, Poland has become a major producer of high-end consumer electronics. The
country already produces about 20% of Europe’s flat screen monitors and the
government estimates that by 2010 around 75% of television sets will be Polish-made.
Poland’s location in the centre of Europe gives it ready access to the rest of the
continent. A big attraction is the cheap but well-qualified work force. Poland’s
wages are still just a fifth of those in Germany. Multinational companies dominate
exports, particularly in industries such as electronics and automobile production. Car
manufacturers, however, export more than 95% of their output, and thus they are
extremely vulnerable to the emerging downturn in foreign markets.
Investment in services by both foreign and domestic firms has been booming.
Abysmal transportation systems
Poland’s transportation system is abysmal with just 3% of all roads meeting EU
standards. Gauged in terms of density, the country’s motorways are also a sixth of
that of other countries in central Europe. These weaknesses slow the movement of
both goods and people but with EU aid set to rise from 2% of GDP to 4% of GDP the
government has ambitious plans for improvements in transportation.
Energy
With proven oil reserves of only 96 million barrels, Poland produces about 23,500
barrels per day. The country’s oil demand is expected to increase by as much as 50%
by 2020. While Poland has a refining capacity for 350,000 barrels per day, the
refineries, which were built in the 1960s and 1970s, are badly in need of
modernisation.
There is an estimated 5.8 trillion cubic feet of natural gas reserves in Poland and more
exploration is actively being conducted. Natural gas, however is uneconomical for
power generation in Poland compared with coal. Coal exports, which go primarily to
customers in Europe and the former Soviet Union, have historically been a major
source of foreign exchange. The EU accession treaty requires Poland to liberalise its
natural gas market. Along with divesting and unbundling state-owned natural gas
companies, the government is required to open the natural gas market to outside
competition, thereby allowing customers to choose their own supplier. Poland’s
national supplier relinquished its monopolistic position in the natural gas market in
2004.
Trading partners
Germany is by far Poland’s biggest trading partner and accounts for 19% of exports
and over 22% of imports. In the rest of the EU, trade with Italy (4.5% Imports and
18
4.5% exports) and France (4.3% exports, 4.2% imports) is also strong, while Russia
continues to be a strong source of imports at 7.5%.
International Alignments/Disputes
Poland intends to integrate further with NATO and has become a strong ally of the
USA. (It supported the US on Iraq, causing tensions for it within the EU, especially
with France.) Divisions between Poland, France and Germany also worsened when
Warsaw blocked the draft EU constitution in 2004.
Despite the loss of eastern territory to Russia and the Ukraine after World War II,
Poland has never sought to regain this territory.
19
Social Overview
The major social issue in Poland is the impoverishment of rural communities and the
high level of unemployment in many urban areas, which also leads either to an
unacceptable level of poverty or migration, particularly by older people, to rural areas
where the cost of living is much lower or emigration by younger, well educated Poles
overseas. While a proportion of these émigrés will return, there is no doubt that their
search for career opportunities is contributing to the ageing profile of many towns and
rural communities as well as a substantial ‘brain drain.’
20
The Retail Environment
Overview






Poland is the third largest Eastern European grocery retail market in terms of
value at €35.93 billion, behind Russia in first place at €140.5 bn. and Turkey at
€50.6 bn) and 19th in terms of Global markets. (IGD.com).
Poles are extremely price sensitive and will display swift changes in consumer
consumption habits: during good economic times sales will soar and during bad
economic times sales will decline steeply. Nevertheless they are shifting their
attention towards higher priced alcoholic drinks.
Poles tend to entertain and drink at home therefore the bulk of alcoholic drink
purchases are from off-trade outlets.
Independent retail outlets are the major distribution channel for alcoholic drinks in
Poland and independent stores are very strong compared to neighbouring
countries such as Hungary or Slovakia.
Poles mainly purchase alcoholic drinks on impulse and this would appear to have
held back the progress of sales of alcoholic drinks within supermarkets and
hypermarkets. Supermarkets and hypermarkets tend to be present only in urban
areas.
On-trade outlets have not as yet made a significant inroad into consumption
patterns and are not yet growing at a significant rate even in main urban areas.
Retail Legislation





The Polish government has introduced a new law to protect small local retailers.
Retailers seeking to open a store with a sales area larger than 400 sq. m. must
receive approval by local authorities. Plus, the opening of a store with a sales area
larger than 2,000 sq. m. requires approval by the province authorities.
Authorities will grant approvals under this new law on a case-by-case basis,
following thorough analysis on possible economic and environmental impacts.
In the short term, the new law may lead to increased bureaucracy and
consequently to a slowdown in retail expansion, particularly for international
retailers and foreign hypermarkets look set for another fight with officials over
this new law. They have already had previous run-ins over attempts to restrict
opening hours and allegations of labour abuses, which were subsequently
confirmed.
However, in the longer term, the retail structure is not likely to see any dramatic
changes.
Local authorities regulate trading hours. Convenience stores open late during the
week.
Retail Structure

The Polish retail market remains fragmented with private independent stores
predominant. The structure includes independents, supermarkets/hypermarkets,
Cash & Carry/Warehouses.
21






The top 9 retailers account for 40% of the market with the balance being made up
of independents and small groups. Jeronimo Martins has the major share with
over 8%.
Poland has the fastest growing Private Label market in Europe. Private Label
products started to appear in 2001/2 and today market share stands at over 10%.
Private Label is particularly strong in Jeronimo Martins with 74.6% of total sales
being private label.
48% of shoppers are over 50 years of age, with another 33.3% of all shoppers in
the 30-49 age group.
There are still very few off-trade chains in Poland.
The growing power of retail chains and warehouses has forced beer manufacturers
to establish their own distributors and one, Sobieski, plans to develop its own
retail chain and make further acquisitions. It is expected therefore that the number
of warehouses will decline over the next 5 years.
Top 10 Grocery Retailers 2007
Retailer
2007 (€m)
Metro*
Jeronimo Martins
Tesco
Spolem**
Auchan
Carrefour
Lidl & Schwarz
Lewiatan
Eurocash*
Leclerc
Rewe*
3,336
2,932
2,167
1,771
1,643
1,757
1,677
928
694
566
443
Grocery Sales (€m)
% Change
Grocery
Grocery
Retail
Sales
Market
(07 vs 06)
Share %
+24.2%
3.84%
+39.5%
8.16%
+39.9%
6.03%
-2.0%
4.93%
+9.9%
4.57%
+47.8%
4.89%
+34.2%
4.67%
+85.6%
2.58%
+46.2%
0.84%
+16.0%
1.58%
+11.9%
0.31%
* Grocery Retail Market share excludes Cash & Carry operations.
** Spolem operates as a co-operative network made up of
over 4000 independent stores.

No. of
Grocery
Stores
76
1,045
301
>4,000
32
349
340
1,846
2,675
21
36
(Source: IGD Datacentre/IGD Estimates 2007)
Metro
- Metro entered the Polish market in 1994 via the organic growth of its cash
and carry format under the banner Makro.
- Poland is the largest international market for Metro Group.
- In 2007, total group sales in Poland increased by 25.7% following the
opening of 11 new stores, with strong performances from its Real and
Saturn banners.
- Following Metro’s acquisition of Casino’s Geant Hypermarkets for €779m
in 2006, the retailer announced a sales increase of +52.6% for its Real
hypermarket chain. 2007 sales stood at €1,381m.
22
-
Metro also operates 42 Media Markt consumer electronics stores in
Poland.
In 2007, its Media Markt stores generated a turnover of €998m, with a
further nine new store openings.

Jeronimo Martins
- Jeronimo Martins entered the Polish market in 1995 with the acquisition of
Eurocash which it divested in 2003.
- In 1997 JM, operating as Jeronimo Martins Dystrybucja (JMD) acquired
Biedronka, which operated 48 stores.
- Biedronka is the largest discount chain in the country, operating a
considerably higher number of stores than its competitors, Lidl and Plus.
- In February 2008, JM announced intentions top open up to 100 stores by
the year-end.
- The retailer is also considering expanding the Biedronka chain into
Romania and the Ukraine. It is also speculated that the retailer plans to
enter Russia.
- The retailer aims to generate annual turnover of €3 billion by 2009, in
order to consolidate its market-leading status.
- In 2006, it entered a joint-venture with the national Association of
Pharmacies, with a view to establishing a pharmaceutical business in
Poland.

Tesco
- Tesco entered Poland in 1995, via acquisition of the Savisa SA Chain and
has achieved hypermarket leadership through rapid organic growth and the
acquisition of HIT from Dohle in 2002.
- In recent years, Tesco has implemented a multi-format strategy in Poland.
In 2005, it focused on smaller formats and opened its first 1,000 sq.m.
store in late 2005.
- In April 2008, it was reported that Tesco would invest €117m in opening
50 new stores under the multi-format strategy.
- Tesco plans to roll out Clubcard to the Polish market in 2008, giving the
retailer deeper understanding of its customer base and shopping trends.
- Stores acquired from Casino for €105m. in 2006 have performed well,
following store conversions to the Tesco format. Sales uplifts average
40%.

Spolem
- Spolem operates as a co-operative network made up of over 4,000
independent stores.
- In 2006, it announced plans to consolidate its operations in an attempt to
boost business efficiency. The revamping is a joint venture between the
co-operative’s owners.
- However, the National Trade Agency (KAH) in charge of overseeing th
consolidation process, went bankrupt in late 2007.
- Centrally consolidated stores would have benefited from united advertising
campaigns, including promotional leaflets, discounts and joint purchasing.
- The group is now the subject of interest from a number of retailers,
including Ruch, Eurocash, Emperia and Kolporter.
23

96% of stores in the Spolem Group are located in prime locations in town
and city centres across Poland.
Auchan
- Auchan entered Poland in 1996, via organic growth.
- In 2001, it acquired Billa from Rewe (re-branded Elea) and a 45% share in
supermarket chain Robert, which had filed for bankruptcy in 2000.
- In Poland, Auchan has developed a concept half way between Cash &
Carry and a hypermarket.
- The stores focus on low pricing and offer a limited product range, with
around 25,000 lines.
- Auchan operates petrol stations in the vicinity of its hypermarkets.
- It also operates 19 Immochan commercial centres in Poland.
- The retailer regards Poland as a long-term investment and had embarked
on a €1bn. Investment plan, focusing on the construction of two or three
new hypermarkets per year, housed in shopping centres.
Sales of Alcoholic Drinks in the Retail Sector continue to grow and while there was a
significant increase in 2006, this is forecast to slow down somewhat in 2007 and
2008.
Retail Consumer Expenditure on Alcoholic Drinks 2003-2007 (e)
PLN million
2003
2004
2005
2006
2007(e)
Total
20,009.8
20,305.5
21,017.9
23,332.5
24,828.9
% growth vs prior
year
CPI inflation
1.5%
1.5%
3.5%
11.0%
6.4%
n/a
n/a
2.4%
2.4%
2.3%
(Sources: Euromonitor International, and Datamonitor; 2007 is estimated.)
Off-Trade (Retail) Distribution of Sales of Alcoholic Drinks
The Independent sector is the most important in terms of the sale of alcoholic drinks
in Poland in terms of both value and volume for each sector of the market, which
means a distributor with a strong network in this channel is vital to success.
Format
Supermarkets/Hypermarkets
Independent food stores
Convenience stores
Discounters
Specialists
Direct Sales
Others
2007
Beer
RTDs
Wine
Spirits
Off Trade
Value
%
Off Trade
Volume
%
Off Trade
Volume
%
Off Trade
Volume
%
Off Trade
Volume
%
27.3
52.6
3.3
4.6
6.5
0.4
5.3
100.0
23.8
57.3
3.9
7.4
4.5
0.3
2.8
100.0
45.1
41.0
3.4
1.3
5.3
0.3
3.6
100.0
38.4
45.7
2.0
5.1
7.3
1.1
0.4
100.0
26.9
54.0
2.1
5.1
9.2
0.6
2.0
100.0
(Source: Euromonitor International)
24
Typical Wholesaler & Retailer Off-Trade Mark-ups
by Selected Sectors
% Share
Lager
RTDs
Still Wine
Whisk(e)y
Wholesaler
Retailer
8.0
18.0
9.0
20.0
15.0
25.0
11.0
21.0
(Source: Euromonitor International)
Selling Margins of Typical Selected Sectors
2007
%
VAT
Excise
Import Tax
Retailer
Distributor
Manufacturer
Total
Typical Beer
Brand
Typical Wine
Brand
Typical Spirit
Brand
18.0
20.8
0.0
12.5
5.1
43.5
18.0
4.3
1.6
16.4
8.6
51.1
18.0
48.1
0.0
14.2
6.7
12.9
100.00
100.0
100.0
(Source: Euromonitor International)
25
Polish Regulatory Environment
Legislation
Legal Drinking Age
 The legal drinking age in Poland is 18 years.
 Alcohol consumption among Poles under the legal drinking age is very common.
Some 94% of those under the age of 18 admit to drinking alcohol, while more
than 30% have been drunk to the point of passing out at least once in their life.
Drink driving
 The maximum allowable level of alcohol in the blood when driving is 0.2 mg/ml.
Drink driving is a major problem in Poland, with around 22% of road accidents
caused by drivers under the influence of alcohol. In 2000, in order to tackle this
issue the government introduced a new law that makes drink driving a separate
criminal offence. Prior to this, drink driving was regulated alongside other driving
offences, such as speeding.
Advertising
 Regulation concerned with the prevention of alcoholism cam into force in 1982
and since then it has been amended over 30 times.
 The advertising of alcoholic drinks was forbidden until 2001. Since then beer
commercials were allowed on television from 2300-6000 hrs. Following new
regulations, beer commercials are now allowed on TV from 2000-2300 hrs.
 Beer may also be advertised on billboards for an additional fee paid to the
government, that equals 10% of advertising expenditure. Revenues from this fee
are used for financing after-school sports classes for children and teenagers.
 Manufacturers and distributors of wine and spirits often stress that such legislation
favours beer manufacturers.
 Advertisings of alcoholic drinks must include information on the dangers of
alcohol consumption and stress that it is forbidden to sell alcohol to people under
the age of 18. This information must cover at least 20% of the advertising area.
 Producers of alcoholic drinks, with a content of 8-18% of pure spirit, are allowed
to promote mass events sponsored by them by making announcements in
newspapers, magazines, posters and on tickets, invitations and information boards.
Opening hours
 There are no restrictions on opening hours on a national level. Nearly all of-trade
outlets are open 24 hours a day and the majority of 24-hour petrol stations also
sell alcohol. However, each off-trade outlet is required to have a special licence
from the local government to sell alcohol. The local government also has the
power to introduce restrictions on opening hours.
 2002 brought standardisation to off-trade retail legislation and an increase in the
price of alcohol licences. Retailers with a show area smaller than 200 sq. m. are
no longer forced to have separate stands for alcohol. Local boroughs decide on
the number of licences.
 The full licence includes three kinds of sub-licences with different cost levels.
Licences to sell beer and alcoholic drinks up to 4.5% alcohol content cost
26




€125 per annum. A licence to sell alcoholic drinks between 4.5% and 18%
alcohol content cost €125 per annum, while a licence to sell alcoholic drinks
with over 18% alcohol content costs €500 per annum.
The sub-licences can be purchased separately. However for an outlet to offer
a full range, all three sub-licences are required.
If an outlet performs well, fees are increased for the second year of operation.
- By 50% where alcohol turnover exceeds €10,000 per annum.
- By 100% where the turnover exceeds €30,000 per annum
- By 300% where the turnover exceeds €60,000
- By 500% for outlets where the turnover exceeds €100,000.
These regulations were criticised by retailers’ associations and Unions, as they
believe the split of fees is unfair, leaving mid-sized specialists paying the same
fees as supermarkets/hypermarkets, which have a much greater annual
turnover in terms of alcohol. To meet the needs of small players, the
Government therefore agreed to divide the licence payment into three
instalments.
Shopkeepers are also responsible for informing the police about alcohol
related incidents that occur near their store. These might include drunken
violence or drinking in prohibited places. Failure to do so can lead to an
outlet’s licence being revoked.
Labelling
 Imported products require a sticker (in Polish) stating the ingredients listing, use
by date, net weight, alcohol content (if applicable), country of origin as well as
name and address of producer and importer.
27
Taxation and Duty/Levies






Excise tax and VAT on alcoholic drinks have traditionally been among the highest
in Europe and consequently unit prices for beer, wine and spirits were also among
the highest in Europe.
High excise duties on spirits were intended to generate substantial revenue for the
government and protect domestic production but had the opposite effect. In
addition to constraining imports, it constrained foreign investment in the domestic
production of spirits.
Until late 2002, up to 75% of the average bottle of spirit’s price was made up of
excise tax, import duty and VAT. The high prices encouraged contraband and
parallel trade. A 30% reduction in excise tax introduced in October 2002 fuelled
vodka sales and boosted government revenue.
The excise tax on spirits in 2007 was PLN4,400 (approximately €1,160) for one
hectolitre of pure alcohol. This is over twice the EU minimum rate which is €500.
While the excise tax is about 18% lower than Germany it is higher than that of
neighbouring countries.
Poland adopted the EU import rates on alcohol drinks on accession to the EU.
Additional costs are involved for manufacturers in obtaining banderols.
Banderols are a stamp proving that the manufacturer has paid all taxes for a
product and has a right to sell it in Poland. These are different for each type of
alcohol. Banderol prices depend on alcohol content and pack size. Banderols for
imported and domestic products also differ. Beer is the only alcoholic beverage
that does not require a banderol.
Taxation and Duty Levies on Alcoholic Drinks 2007
PLN
Beer
Spirits
Excise Tax
6.86 f
4,550
Import Duty
Free
Free
VAT %
22.0
22.0
Wine
136.0 e
32.0 a
13.1 b
15.4 c
18.6 d
22.0
(Source: Trade associations, Euromonitor International store checks)
Notes:
a: Champagne and other sparkling wine
b: Still wine not exceeding 13%abv
c: Still wine exceeding 13% abv but not exceeding 15%
d: Still wine exceeding 15% abv but not exceeding 18%
e: per hectolitre
f: per hectolitre and for 1 Plato degree
28
Alcoholic Beverage Market in Poland
Market Trend Observations
Rising sales and spending growth
Wages grew in Poland between 2003 and 2007, as foreign investment increased and
private business stimulated the demand for management and skilled workers. (People
living in cities earn 10-20% more than the average.) Further more it has been
estimated that nearly 2 million Poles who went to Great Britain and Ireland since EU
accession, have transferred about €8.3 million to their families and friends. This has
boosted Polish consumer spending considerably. Consumer expenditure grew from
€20 bn in 2003, to €159 bn in 2006 and sales of alcoholic drinks grew faster in 2006
and 2007 than in the previous 3 years. At the same time it is certain that the
emigration of so many Poles, the majority of which are in the 18-29 age range, has
dragged the overall domestic spirit consumption down.
Poles drink to get drunk!
There has been an underlying shift from spirits to lower strength alcohol, beer and
wine. Still the vast majority of Poles drink to get drunk, although this is gradually
changing.
Demand for higher priced, aspirational products.
Polish consumers are shifting their attention towards higher-priced alcoholic drinks.
Super-premium alcoholic drinks enjoyed the highest growth in 2006 over the previous
year and premium brands of spirits are in demand. In addition consumers with
average incomes or lower than average incomes also displayed need for higher priced
products. In response, manufacturers of vodkas moved economy vodkas into higher
price bands.
Multinationals in the Lead
Entry into the EU in 2004 boosted sales for international brands as import duties were
removed.
Multinationals now lead sales of alcoholic drinks thanks to acquisitions and organic
growth. On the one hand, drinks giants such as Diageo strive to win Polish
consumers on the back of international brands while on the other hand, Pernod Ricard
turned the domestic Wyborowa brand into a global trade mark while at the same time
paying scant attention to the home market and paying the price for that in market
share.
Growth expected to continue
The growth in alcoholic drinks is expected to continue to grow over the next 3 years
as disposable incomes continue to grow. The forecast is that value for money
products will push sales of beer, while consumer habits will be beneficial for clear
spirits.
29
Brown spirits and wine will see some growth from a low base but they are still too
highly priced in relation to vodka or beer. This growth is likely both in terms of
international and local and regional brands.
Global brands are most likely to catch the attention of urban dwellers with a higher
level of education and higher than average disposable incomes and it is these
consumers that multinationals are likely to target.
On-trade is underdeveloped due to cultural habits
The on-trade in Poland is underdeveloped compared to other European countries and
mark-ups are extremely high. Poles meet at home, not in pubs or restaurants like
many people in Europe and consequently vodka and other spirits are mainly drunk at
home. This cultural habit, together with low levels of urbanisation mean that the ontrade is unlikely to offer as much opportunity for growth as would seem possible at
first sight. As can be seen in the table below Beer is the most popular alcoholic drink
in the on-trade and it is likely that this will continue to be the most popular on-trade
drink.
Sales of Alcoholic Drinks by Sector x On-trade vs. Off-trade Split: Volume 2007
Off Trade
%
Total
On-Trade
%
Total
Total
%
Total
2,453.5
11,086.3
74%
54%
852.8
9,374.1
26%
46%
3,306.3
20,460.3
100%
100%
105,925.1
543.0
70%
%
45,811.2
784.9
30%
16%
151,736.3
1,327.9
100%
100%
244.3
2,183.4
97%
81%
7.2
310.8
3%
9%
251.6
2,494.2
100%
100%
249,885.8
9,633.5
89%
71%
30,844
3,917.3
11%
29%
280,730.2
13,550.7
100%
100%
Beer
Volume Million Litres
Value PLN million
RTDs/High strength
pre-mixes
Volume 000 Litres
Value PLN million
Wine
Volume Million Litres
Value PLN million
Spirits
Volume 000 Litres
Value PLN million
(Source: Euromonitor International, Feb 2008)
30
Market Indicators
Total Market Value and Volume
The total volume of the Polish Alcoholic Drinks market in 2007 is estimated to be
3,9990.3 million litres, with a total value of PLN 37,833.2 million. (Source: Euromonitor
International.)
Alcoholic Drinks Per Capita Consumption
Per Capita consumption for alcoholic drinks continues to increase, as wages and
disposable income continue to grow.
Beer would appear to be fuelling the growth probably as a result of price and much
greater opportunity for TV advertising.
Per Capita Consumption of Alcoholic Drinks 2003-2007
2003
2004
2005
2006
2007(e)
Population (m)
38.6
38.5
38.5
38.2
38.0
3,228.8
3344.4
3,505.3
3,727.3
3,990.3
83.64
86.9
91.0
97.6
105.0
Beer Vol (m ltrs)
2,659.0
2,709.7
2,861.2
3,060.3
3,306.3
Per Capita (ltrs)
68.9
70.4
74.3
80.1
87.0
257.1
273.2
263.5
273.1
280.7
6.7
7.1
6.8
7.1
7.4
246.5
250.6
249.7
250.3
251.6
6.4
6.5
6.5
6.6
6.6
66.2
110.8
130.9
143.5
151.7
1.7
2.9
3.4
3.6
4.0
Total Alcoholic
Drinks Vol
(m ltrs)
Per Capita (ltrs)
Spirits Vol (m ltrs)
Per Capita (ltrs)
Wine Vol (m ltrs)
Per Capita (ltrs)
RTDs Vol (m ltrs)
Per Capita (ltrs)
(Source: Bord Bia / Euromonitor International)
31
Segment Share Trend 2003-2007
Market Share by Segment x Volume
100%
90%
80%
70%
RTDs
60%
50%
Wine
40%
Spirits
30%
Beer
20%
10%
0%
2003
2004
2005
2006
2007
(Source: Euromonitor International)
Market Share by Segment x Value (PLN million)
100%
90%
80%
70%
RTDs
60%
50%
Wine
40%
Spirits
30%
Beer
20%
10%
0%
2003
2004
2005
2006
2007
(Source: Euromonitor International)

As can be seen from the above two charts, Market share for beer has continued to
grow in terms of volume and value over the past five years.
32
Segment Shares 2007
2007 Segment Share x Volume
6% 4%
7%
Beer
Spirits
Wine
RTDs
83%
(Source: Euromonitor International)
2007 Segment Share x Value
7% 4%
Beer
Spirits
36%
53%
Wine
RTDs
(Source: Euromonitor International)





The Polish Alcoholics Drinks market is dominated by beer.
In 2007, beer grew by 8% in terms of volume and accounts for a whopping 83%
of volume but only 54% of value.
Spirits account for 7% of volume but 39% in terms of value.
Wine also has a slightly greater share in value (7%) terms than volume (6%).
RTDs are practically equal in terms of volume and value (4% vol. vs. 3.5% val.).
33
Segment Analysis
Beer
Beer continues to grow uninterrupted
Poland is the fourth largest beer market in Europe and unlike Vodka the beer industry
was privatised relatively quickly and without controversy.
The price of beer in Poland is significantly higher than that of neighbouring countries
and consequently some estimate that an additional 10% of Beer is being carried back
from Germany and the Czech Republic.
Despite this the beer market has been growing uninterrupted since 1993 and grew by
7% in 2007
With a substantial amount of emigration since accession to the EU, Polish breweries
are now exporting a substantial amount of beers and in 2007 1.2 million hectolitres of
beer are estimated to have been exported (an increase of 189% over 2006).
Euromonitor International forecast that beers will continue to grow in Poland by
CAGR of 2.4% in volume and –0.1% in constant value terms during 2007-2012.
000HL
2003
2004
2005
2006
2007
2008
F’cast
Beer Total (HL)
% vs. prior year
27,135
-Local
% vs. prior year
27,135
- Imported
% vs. prior year
Min
28,800
30,300
32,710
35,050
36,170
6.1%
5.2%
6.2%
7.2%
3.2%
28,620
30,115
32,470
34,700
35,750
5.5%
5.2%
7.8%
6.9%
3.0%
180
185
240
350
420
-
2.8%
29.7%
45.8%
20%
CAGR
03-07
CAGR
06-07
6.6%
7.2%
6.3%
6.9%
N/A
45.8%
(Source: IWSR 2008)
Beer Segment: Value & Volume 2002-2007
Total Beer
20,60.3
CAGR
02-07
3.4%
CAGR
06-07
6.0%
3,306.3
5.5%
8.0%
2002
2003
2004
2005
2006
2007
Value PLN m.
17,329.4
17,463.1
17,738.0
18,434.6
19,304.0
Volume m ltrs
2,531.9
2,659.0
2,709.7
2,861.2
3,060.3
(Source: Euromonitor International, Feb 2008)
34
Beer Segment x Brand x Volume x Distributor 2003-2007
Brand Name
2003
2004
2005
2006
2007
CAGR
03-07
CAGR
06-07
Distributor
27,135
28,620
30,115
32,470
34,700
6.3%
6.9%
635
425
400
380
-
14.5%
18.9%
Grupa Zywied
3850
4,200
4,360
4,350
-
12.6%
9.9%
Belgia
Lubelskie Perla
Kompania
Piwowarska
Grupa Zywiec
Dojlidy
950
750
8,745
1,200
850
9,145
1,250
870
11,200
1,250
880
11,445
-
-
11.7%
13.6%
22.0%
Carlsberg
Okocim
Belgia
Lubelskie Perla
Komp.
Piwowarska
9,050
830
9,990
900
10,075
946
10,670
955
-
-14.4%
-
-7.1%
-
Other Local
2,325
1,910
1,014
2,540
34,700
96.6%
Min
180
185
240
350
7.75
5.65
4.50
4.15
2.85
1.35
0.40
323.35
-
1266.1
%
45.8%
34.7%
Local Total (HL)
Brau Union
Polska
Carlserg Okocim
Imported Beer
Grolsch
Budweiser
Guinness
Franziskaner
Corona
Bitburger
Asahi
Other Beer
Grup Zywiec
Komp.
Piwowarska
CEDC
CEDC
CEDC
CEDC
CEDC
CEDC
CEDC
AN.KA
-
(Source: IWRS, 2008)




The total beer market volume in 2007 was 3,060.3 million Litres of beer with an
value of PLN20,460.3 million.
Beer is drunk mainly by up to 45 year old men, but some flavoured beers are
becoming popular with women.
Poland is the only country outside the Czech Republic where Pilsner Urquell is
brewed under licence.
Tyskie (Kompania Piwowarska – owned by SAB Miller) is the largest brand in
Poland with 15.5% market share followed by Zubr (owned by Redds) with 12.5%
market share. Lech has third position with 7.2% (also owned by SAB Miller)
35
Structure of the Market
Brands (Breweries)
Warka, Lezajk, EB, Browary Warszawskie, Van Pur,
Kujawiak and Zywiec (Grupa Zywiec)
Tyskie and Lech (Kompania Piwowarska)
Debowe, Mocne, Zubr
Bosman Szczecin, Kaszelan Sierpce, Brzesk
Dolnoslaskie, Piast, Okocim, (Carlsberg Okocim
Group, Harnas
Brok
Dojilidy
Perla, Zwierzyniec, Coolman (Lubelskie Perla)
Owners
Heineken
SAB Miller
Redds
Carlsberg
Holsten
SAB Miller
% Share 2007 x Brewery
% Share 2007
36.6
40.4
14.2
4.3
Brewery
Grupa Zywiec
Kompania Piwowarska
Carlsberg Okocim
Browary Belgia
Beer Segment: Share by Package type
Type
Bottles
Cans
Keg
2006
%
51.0
40.0
9.0
2007
%
47.0
45.0
8.0
(Source: IWSR)
36
Wine
Wine underdeveloped
The wine segment in Poland would appear to be somewhat underdeveloped. There
are still very few off-trade specialist chains in Poland.
Bodega Marques Vinoteka has launched shops in Krakow, Wroclaw and Warsaw.
And the shops are located in places with the right environment, such as the Old Town
in Krakow. There are also specialist wineries located in shipping malls, such as La
Pasion du Vin (9 shops in total).
Eurominotor predict that the emerging network of wine specialists should enjoy
growth in the next 4-5 years. Wines are predicted to grow by 1% in volume over the
CAGR 2007-2012, with a total increase of 5.1% for the period. (The figures
produced by the IWSR on the other hand, suggest that wine consumption has declined
by –2.2% over the past 5 years as can be seen in the second table below).
However, as has been seen in other emerging markets, wine consumption is often
stimulated as economies develop and it is predicted that growth will be encouraged in
Poland as a result of a) an increase in the number of shopping malls which stimulate
the development of specialist retailers, plus b) better educated customers (with more
disposable income and more exposure through travel) are expected to be interested in
more sophisticated variants of alcoholic drinks, including wine, both still and
sparkling.
Wine Segment: Value & Volume 2002-2007
2,494.2
CAGR
02-07
0.9%
CAGR
06-07
0.5%
251.6
2.7%
2.7%
Total Wine
2002
2003
2004
2005
2006
2007
Value PLN m
2,179.5
2,291.7
2,343.8
2,375.4
2,428.0
240.7
246.5
250.6
249.7
250.3
Volume m ltrs
(Source: Euromonitor International)

The Total Volume of the Wine segment in 2007 was 251.6 m. litres up 2.7% on
2006 with a total value of PLN2,494.2m.
37

Wine Segment x Volume x Local vs Imported: 2003-2007
000’s 9 litre cases
2003
2004
2005
2006
2007
2008
F’cast
28,759
28,292
27,013
26,793
26,369
-2.0%
-1.6%
-4.6%
-0.8%
-1.6%
21,195
8,098
20,030
8,729
19,390
8,901
17,928
9,783
17,009
9,783
Still Light Wine Total
% vs. prior year
- Local
- Imported
6,800
7,400
7,650
7,850
8.8%
3.4%
6,800
7,400
Sparkling Wine Total
% vs. prior year
- Local
- Imported
4,307
CAGR
03-07
06-07
-2.2%
-0.8%
16,125
10,244
-5.4%
4.8%
-5.1%
7.7%
8,460
8,829
5.6%
7.8%
2.6%
7.7%
4.4%
7,650
7,850
8,460
8,829
5.6%
7.8%
4,362
4,285
4,304
4,377
4,445
0.4%
1.7%
1.3%
-1.8%
0.4%
1.7%
1.6%
3,950
358
4,000
362
3,920
365
3,900
404
3,935
442
3,950
495
-0.1%
5.4%
0.9%
9.3%
Fortified Wine Total
% vs. prior year
- Local
- Imported
10.50
10.75
9.50
8.50
10.50
16.00
0.0%
23.5%
2.4%
-11.7%
-10.6%
23.5%
52.4%
10.50
10.75
9.50
8.50
10.50
16.00
0.0%
23.5%
Light Aperitifs
% vs. prior year
- Local
- Imported
1,675
1,686
1,541
1,430
1,519
1,571
-2.49%
6.2%
0.7%
-8.6%
-7.2%
6.2%
3.4%
745
930
730
956
670
871
614
816
655
864
655
864
-3.2%
-1.8%
6.7%
5.9%
Other Wines
% vs. prior year
- Local
- Imported
16,500
15,300
14,807
13,421
12,427
11,508
-6.8%
-7.4%
111%
155%
23.8%
-16.0%
1.8%
15,300
-
14,800
7
13,414
7
12,420
7
11,500
8
nil%
11.5%
Total Wine (HL)
% vs. prior year
- Local
- Imported
29,293
CAGR
16,500
-
(Source: IWSR 2008)




Still light wines are all imported and were the most dynamic sector, up 10.3%
while local wines grew by 7.8% in 2007. Sophi/Soffia, Egri Bikaver and other
cheap brands dominate the market.
Poland is one of the fastest growing markets for wine in Central Europe and there
is already evidence of some trading up to the middle-priced segment.
In 2007, the reasonably priced wines from the New World enjoyed increased
sales. The leading and largest brand Carlo Rossi gained a further 45% reaching
nearly 500,000 cases.
The Sparkling wine market increased slightly after years of decline/static growth.
Better economic conditions, improved quality and packaging along with rising
disposable income helped the category to gain some market share. Various brand
line extensions and marketing activities also contributed to the positive results.
38

The sparkling wine market, which is predominately local in Poland, grew by only
by 0.9%. But imported sparkling wine grew of a low base at 9.3% in 2007.
39
RTDs
Continue to grow steadily
While RTDs have been growing steadily from a very low base, high excise tax is
holding up the development of the RTD market in Poland and this situation is unlikely
to change in the foreseeable future. However, 2007 showed positive development
even in RTDs both in terms of the local brand Sobiski Impress and the imported
Barcardi Breezer. RTDs are in the main drunk by very young females.
RTDs Segment: Value & Volume 2002-2007
1,327.9
CAGR
02-07
28.4%
CAGR
06-07
6.3%
151.7
30.3%
5.7%
Total RTDs
2002
2003
2004
2005
2006
2007
Value PLN m
380.6
600.0
954.1
1,140.7
1,249.6
Volume m ltrs
40.5
66.2
110.8
130.9
143.5
(Source: Euromonitor International)

Total volume in 2007 for RTDs was 151.7 million litres with a value of PLN
1,327.9 million – an increase of on average 6% for both value (6.3%) and volume
(5.7%).
RTDs Segment x Volume x Local vs Imported: 2003-2007
000’s 9 litre cases
2003
2004
2005
2006
2007
2008
F’cast
Total RTDs
% vs. prior year
-
Brand line ext
Other RTDs
-
Local Brand line
ext
Imported
-
Other RTDs
Local
Imported
149.50
CAGR
03-07
CAGR
06-07
340.00
249.00
228.0
256.25
227.0
14.4%
12.4%
127%
-26.8%
-8.4%
12.4%
-11.4%
-
-
149.5
Min
335.0
5.0
243.0
6.0
222.7
5.3
252.75
3.50
225.0
2.0
14.0%
n/a
13.5%
-34.0%
149.50
70.0
265.0
55.0
188.0
70.70
152.0
80.0
172.75
-
3.7%
13.2%
13.7%
Min
Min
5.0
5.0
6.0
6.0
5.30
1.30
4.0
3.50
1.50
2.0
-
-34.0%
15.4%
-50.0%
-
(Source: IWSR 2008)



RTDs highlight the issues in using data collected in Poland, which is often based
on trade comment/interviews and store checks and which we have found can have
a substantial differential depending on which organisation is reporting.
Euromonitor above have reported continuing growth in volume for RTDs in 2007
at +6.3% while IWSR are reporting an increase of near double that at 12.4%.
The vast bulk of RTDs are imported line extensions with Bacardi Breezer the
market leader and Smirnoff Ice in second place.
Local Brand extensions include Sobieski Impress and Bols Fusion.
40
Spirits
Underlying shift away from Spirits
The Spirits market in 2007 was 280.7 m litres up 2.8% on 2006 and with a total value
of PLN 13,550.7 million up 1.7% on the previous year. In terms of value the CAGR
has been kept at a much lower rate of growth for value at 2.4% compared to volume at
6.7% because of the removal of import duty on accession to the EU.
There has been an underlying shift from spirits to lower strength alcohol but
nevertheless the domestic vodka market increased by an astonishing +10% in 2007
(IWSR 2008).
The culture of drinking clear spirits means that the market for brown spirits is still in
its infancy. Nevertheless whisky showed a healthy growth in 2007 albeit of a very
low base.
Spirits Segment: Value & Volume 2002-2007
Total Spirits
13,550.7
CAGR
02-07
2.4%
CAGR
06-07
1.7%
280.7
6.7%
2.8%
2002
2003
2004
2005
2006
2007
Value PLN m.
12,020.3
12,914.8
13,426.6
13,155.5
13,319.6
Volume m ltrs
203.3
257.1
273.2
263.5
273.1
(Source: Euromonitor International)
41
Spirits Segment x Volume x Local vs Imported: 2003-2007
000’s 9 litre cases
2003
2004
2005
2006
2007
2008
F’cast
Total Spirits
% vs. prior year
- Local
- Imported
31,076
CAGR
03-07
CAGR
06-07
1.6%
9.7%
32,038
31,091
30,178
33,102
34,782
3.1%
-3.0%
-2.9%
9.7%
5.1%
30,152
924
30,762
1,276
29638
1,453
28,437
1,741
30,796
2,306
32,200
2,582
0.5%
25.7%
8.3%
32.4%
Whisky
% vs. prior year
- Local
- Imported
242
348
373
425
595
685
25.2%
40.0%
43.8%
7.2%
13.9%
40.0%
15.1%
45
197
31
317
20
353
24
401
30
565
35
650
-9.6%
30.1%
25.0%
40.9%
Gin/Genever
% vs. prior year
- Local
- Imported
178
192
166
150
171
177
-1.0%
14.0%
7.9%
-13.5%
-9.6%
14.0%
3.5%
170
8
180
12
155
11
137
13
155
16
159
18
-2.3%
18.9%
13.1
23.1%
Vodka
% vs. prior year
- Local
- Imported
28,500
29,350
28,485
27,767
30,526
32,187
1.7%
9.9%
3.0%
-3.0%
-2.5%
9.9%
5.4%
28,202
298
28,850
500
27,868
846
26,921
846
29,372
1,154
30,867
1,320
1.0%
40.3%
9.1%
36.3%
Tequila
% vs. prior year
- Local
- Imported
30
29
28
25
34
39
2.8%
32.7%
-3.3%
-3.4%
-10.7%
32.7%
14.7%
30
29
28
25
34
39
2.8%
32.7%
Brandy
% vs. prior year
- Local
- Imported
708
693
665
550
534
499
-6.8%
-3.0%
-2.1%
-4.4%
-17.3%
-3.0%
-6.5%
395
298
360
305
252
298
200
334
185
314
-17.7%
5.2%
-20.8%
12.1%
435
273
(Source: IWSR 2008, calculations based on trade comment.)
42
000’s 9 litre cases
2003
2004
2005
2006
2007
2008
F’cast
Rum/Cane
% vs. prior year
- Local
- Imported
111
CAGR
03-07
CAGR
06-07
1.5%
34.5%
100
92
87
117
133
-9.9%
-8.0%
-5.4%
34.5%
13.7%
70
41
60
40
56
36
50
37
70
47
77
56
Nil
3.9%
40.0%
27.7%
Liqueurs
% vs. prior year
- Local
- Imported
1,275
1,295
1,246
1,132
1,076
1,005
-4.1%
-4.9%
1.6%
3.8%
-9.1%
-4.9%
-6.6%
1,228
47
1,243
52
1,175
71
1,051
81
969
107
877
128
-5.7%
22.8%
-7.8%
32.3%
Bitters/Spirit
Aperitifs
% vs. prior year
- Local
- Imported
32
32
36
41
46
54
9.8%
13.0%
+/-
12.5%
13.9%
12.2%
17.4%
3
29
3
29
4
32
3
38
1
45
1
53
-26.0%
11.6%
-70.0%
18.4%
Aniseed
% vs. prior year
- Local
- Imported
-
-
-
0.25
2.5
2.75
Nil
900.0%
-
-
-
900%
40.0%
-
-
-
0.25
2.5
2.75
Nil
900.0%
0.75
0.95
1.00
1.00
1.00
1.00
7.5%
Nil
20.0%
83.3%
-18.2%
66.7%
13.4%
0.75
0.95
1.00
1.00
1.00
1.00
7.5%
Nil
Other Spirits
% vs. prior year
- Local
- Imported
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
RTD
% vs. prior year
- Local
- Imported
150
340
249
228
256
227
14.4%
12.4%
10%
5.5%
5.9%
-8.1%
-7.0%
70
270
55
194
72
156
81
175
80
147
Nil
4.0%
-
13.2%
12.0%
Fruit Eaux de Vie
% vs. prior year
- Local
- Imported
150
(Source: IWSR 2008, calculations based on trade comment.)
43
Spirit Segment x Category Volume Share 2007
1.6%
1.8%
0.6%
3.8%
Vodka
Liqueurs
Whisky
Brandy
Others
92.2%
(Source: IWSR 2008)
Vodka
Continues to dominate Spirit Sector
000’s 9 litre cases
2003
2004
2005
2006
2007
2008
F’cast
Vodka
% vs. prior year
- Local
- Imported
28,500
28,202
298
29,350
28,485
27,767
30,526
32,187
3.0%
-3.0%
-2.5%
9.9%
5.4%
28,850
500
27,868
846
26,921
846
29,372
1,154
30,867
1,320
CAGR
03-07
CAGR
06-07
1.7%
9.9%
1.0%
40.3%
9.1%
36.3%
(Source: IWSR 2008)




Vodka continues to dominate the Spirit sector with over 92% share of volume and
the consumption of vodka continued to grow in 2007 by 9.9%.
Over 96% of the total Vodka consumption in Poland is not surprisingly locally
produced, however imported vodka is growing, all be it of a very low base and
recorded a growth rate of 36.3% in 2007/06 and a CAGR of 40.3% 2003-07
Some consumers are trading up and consequently the value of the vodka market is
growing.
The Local Vodka market is split into bands by price Premium (over PLN 35, and
Standard (under PLN 35).
44





Vodka is always drunk neat and is normally drunk by older people – young people
normally drink beer or wine.
There are over 200 national Vodka brands in Poland, with over 800 further
“regional” or “traditional” brands available from local producers in large cities.
The legal market is believed to be over 2 million cases, with a further 6 million
unregistered and 2 million carried back from the East.
There was a strong incentive for the newly privatised Polish factories to launch
new brands, as all expenses can be set against tax and consequently the flood of
new brands continues.
Smirnoff has been produced in Poland under licence since 1994.
45
Whisk(e)y
Whiskey Consumption x Volume x Type: 2003-2007
000’s 9 litre cases
2003
2004
2005
2006
2007
2008
F’cast
Total Whisky
% vs. prior year
- Local
- Imported
Scotch Whisky
% vs. prior year
- Blended Scotch
- Malt Scotch
US Whisky
% vs. prior year
242
CAGR
03-07
CAGR
06-07
25.2%
40.0%
348
373
425
595
685
43.8%
7.2%
13.9%
40.0%
15.1%
45
197
31
317
20
353
24
401
30
565
35
650
-9.6%
30.1%
25.0%
40.9%
166.50
267.50
294.25
329.25
452.00
515.25
28.4%
37.3%
60.6%
10.0%
11.9%
37.3%
14.0%
165.25
1.25
265.50
2.00
291.50
2.75
325.75
3.50
446.50
5.50
508.75
6.50
28.2%
44.8%
37.1%
57.1%
22.15
36.20
43.50
55.00
86.75
102.75
40.7%
57.7%
63.4%
20.2%
26.4%
57.7%
18.4%
4.75
4.75
2.50
3.50
4.0
-1.4%
40.0%
28.4%
Nil
-47.4%
40.0%
14.3%
8.00
10.25
14.50
23.00
27.75
48.7%
58.6%
70.2%
28.2%
41.5%
58.6%
20.7%
31.05
20.25
24.00
30.00
35.00
-9.7%
25.0%
-31.8%
-34.8%
18.5%
25.0%
16.7%
31.00
0.05
20.25
Min
24.00
Min
30.00
Min
35.00
Min
-9.6%
-99.5%
25.0%
Nil
Canadian Whisky
% vs. prior year
3.70
Irish Whiskey
% vs. prior year
4.70
Other Whisky
% vs. prior year
- Local
- Imported
45.2
45.0
0.2
(Source: IWSR 2008)
46
Whiskey x Type Volume Share 2007
4%
5%
1%
15%
Scotch
US
Canadian
Irish
Other
75%
(Source: IWSR 2008)










The Whisky category continues to grow in Poland and rose by 40% in 2007
Scotch has 75% share of the Whisky sector and grew by 37.3%, with Malt scotch
growing faster at 57.1% year on year
US Whisky has 15% of the whisky sector and grew at 57.7%.
Canadian has less than 1% share of the whisky sector and grew by 40% in line
with the category in 2007.
Irish Whiskey has 4% of the whisky sector and was slightly ahead of the overall
segment in terms of growth in 2007 at 58.6%.
The market has been growing due to the larger disposable incomes, good on-trade
promotions and rapid development of retail outlets. It is also a result of many
more, younger Poles switching from Vodka.
Although sales are growing Poles still drink twice the amount of Vodka in a week
as they drink Whisky in a year!
The unofficial market virtually disappeared when prices went down in 2004.
Whisky is drunk by 25-30 year old educated men and is normally mixed with a
soft drink (mainly Coke.)
There has been fierce price competition between Ballantines and Johnnie Walker
Red in the Polish market to gain market share and intensive promotions continue
in the category.
47
The Irish Whiskey market in Poland
The Irish Whiskey market in Poland is divided into five bands: Ultra Premium, Super
Premium, Premium, Standard and Low Price.
Irish Whiskey Brand Sales 2003-2007
Brand Name
000’s 9 Litre cases
RSP
2007
(Est)
PLN
2003
2004
2005
2006
2007
CAGR
03-07
CAGR
06-07
Distributor
Irish Whiskey
-
4.70
8.00
10.25
14.50
22.40
47.8%
60.0%
Premium
-
-
0.25
2.70
0.50
0.60
-
58.6%
100
(70 cl)
-
-
-
0.40
0.50
-
25.0%
Brown-Forman
Polska
-
-
-
0.10
0.10
-
Nil
Veld-21
-
4.70
8.00
10.25
14.00
22.40
47.8%
60.0%
59.99
(70 cl)
112.50
(70 cl)
-
0.80
2.50
4.00
7.30
12.00
96.8%
64.4%
3.90
5.50
6.10
6.00
9.35
24.4%
55.8%
Min
Min
0.15
0.70
1.05
-
50.0%
Tullamore Dew
12 yr
Other Irish Prem.
Standard
Tullamore Dew
Jameson
Other Irish
Standard @ 60
(Source: IWRS 2008)


The Irish Whiskey sector is dominated by Tullamore in both the premium and
standard segments.
In terms of price points these are somewhat confused presently averaged out over
70cl. bottles. Premium Whiskies retailing at PLN 100 while standard whiskies
are retailing at two levels: Jameson at a higher price than the premium whiskey at
PLN 112.50 and Tullamore Dew at PLN 59.99.
48
Brown-Forman
Polska
Wyborowa SA

When we look at prices from the IWSR then the following brands and price points
at point of sale were observed
Brand Name
000’s 9 Litre cases
Irish Premium
Bushmills 10 year
Connemara
Greenore
Jameson 1780
Tyrconnell
Standard
Bushmills
Bushmills Black
Clontarf
Jameson
Magilligan
Paddy
Tullamore
2007-2008
New Zloty Per
Bottle
Bottle Size
70cl
70cl
70cl
70cl
139.99
132.00
140.00
111.00
115.00
70cl
70cl
70cl
70cl
70cl
70cl
70cl
59.99
79.99
57.43
189.00
115.00
57.95
(Source: IWSR Store checks)
49
Liqueurs
In decline
The Total liqueur category in Poland is estimated at 1,076 m 9 ltr. Cases in 2007 and
has been declining at a rate of -4% CAGR 2003-2007. Local liqueurs are mainly
fuelling the decline, while categories of imported liqueurs continue to grow, albeit off
small volumes. Women normally drink local liqueurs with a coffee. Imported
liqueurs are usually sold in top restaurants/hotels/bars and are used for mixing.
Liqueurs Consumption x Volume x Type: 2003-2007
000’s 9 litre cases
2003
2004
Total Liqueurs
% vs. prior year
- Local
- Imported
1,275
Traditional H.S
Liqueurs
% vs. prior year
Amaretti
% vs. prior year
2006
2007
CAGR
03-07
CAGR
06-07
-4.1%
-4.9%
1,295
1,246
1,132
1,076
1.6%
3.8%
-9.1%
-4.9%
1,228
47
1,243
52
1,175
71
1,051
81
969
107
-5.7%
22.8%
-7.8%
32.3%
234.00
239.50
230.75
189.75
162.25
-8.7%
-14.5%
2.4%
-3.7%
-17.2%
-14.5%
5.00
4.55
4.75
11.00
21.8%
131.6%
Nil
--9.0%
4.4%
131.6%
24.00
19.00
20.25
21.25
-2.0%
4.9%
4.3%
-20.8%
6.6%
4.9%
2.30
2.45
15.40
18..75
75.0%
21.8%
15.0%
6.5%
528.6%
21.8%
302.20
310.00
265.60
260.00
-7.1%
-2.1%
-13.2%
2.6%
-14.3%
-2.1%
557.25
507.40
464.25
419.00
-7.0%
-9.7%
-0.9%
-8.9%
-8.5%
-9.7%
2.50
10.50
6.00
6.50
2.0%
8.3%
58.4%
320.0%
-42.9
8.3%
0.30
0.50
0.25
0.25
-
Nil
-
66.7%
-50.0%
Nil
161.95
161.10
166.00
177.25
16.4%
6.8%
67.9%
-0.5%
3.0%
6.8%
5.00
Liqueur Ranges
% vs. prior year
23.00
Coffee Liqueurs
% vs. prior year
2.00
Cream Liqueurs
% vs. prior year
348.35
Advocaat/Egg Liqs.
% vs. prior year
562.20
Low Strength
Flavoured Vodka
% vs. prior year
Cocktail/Punch
Liqueurs
% vs. prior year
Other Liqueurs
% vs. prior year
2005
6.00
-
96.45
(Source: IWSR 2008)
50
The Cream Liqueurs Category Brand Sales in Poland
Brand Name
000’s 9 Litre
cases
RSP
2007
Est New
Zloty
2003
Canari
Other Cream
Liqueurs
Cream
Liqueurs
Imported
Sheridans
Baileys
Carolans
Tolon Tolon
Amurula Cream
Other Cream
Liqueurs
2005
2006
CAGR
03-07
2007
-2.1%
205.00
-11.8%
-7.6%
212.35
190.00
-12.9%
-10.5%
Polmos
6.00
9.50
15.00
17.0%
57.9%
Vinpol
-
-
-
-
-
10.35
15.45
38.00
43.75
55.00
51.8%
71.49
(70 cl)
65.00
(70 cl)
44.99
(70 cl)
0.95
1.25
17.15
19.00
24.00
26.3%
Diageo
5.00
8.50
14.50
16.50
19.00
124.2
%
36.9%
15.2%
Diageo
3.00
3.50
4.30
5.40
6.50
21.3%
20.4%
BrownForman
Polska
50.00
(70 cl)
54.99
(70 cl)
-
-
-
-
2.30
-
-
ANKA
0.10
0.90
1.20
1.65
1.80
9.1%
Racke
1.30
1.30
1.85
1.20
1.40
106.0
%
1.9%
302.20
310.00
265.60
260.00
-13.2%
2.6%
-14.3%
-2.1%
338.00
286.75
271.00
221.85
13.00
(50 cl)
13.10
(35 cl)
-
330.00
280.00
265.00
8.00
6.75
Min
-
25.7%
16.7%
(Source: IWSR)





Distributor
CAGR
06-07
-7.1%
348.35
Total Cream
Liqueurs
% vs. prior year
Cream
Liqueurs
Local
Krem
2004
The Cream Liqueur market in Poland is estimated at a volume of 260.0 thousand 9
ltr cases, declining at a rate of –7.1%% CAGR 2003-07.
Local brands hold 79% of the category and it is dominated by the local brand
Krem with 73%% share (however it is losing share steadily at a rate of –12.9%
CAGR 2003-07.) The other local brand of note is Canari with 6% share.
Of the imported brands Sheridans is the leader with 9.2% share and Baileys is in
second place with 7.3% giving Diageo a total share in the cream liqueur market of
16.5%.
Carolans holds 2.5% share.
The remaining 2% of the market is shared out amongst Tolon Tolon Cream
liqueur 0.8% and Amarula at 0.6%, the balance of 0.5% is divided between other
cream liqueurs.
51
Cream Liqueur Category x Brand x Price in New Zloty per bottle
Brand Name
000’s 9 Litre cases
Cream Liqueurs Local
Canari
Creams
Creme
Impresja
Krem
Lancut
Tarpan
Cream Liqueurs
Imported
Amarula Cream
Baileys
Baileys
Bakers Field
Carolans
Carolans
Dooleys
Holiday
Millwood
Sheridans
2007-2008
New Zloty Per
Bottle
Bottle Size
-
35cl
50cl
50cl
50cl
50cl
70cl
70cl
14.55
12-16.00
18.99
14.69
12.99
-
70 cl
50cl
70cl
70cl
70cl
70cl
70cl
70cl
70cl
59.0
44.95
67.70
34.95
47.99
29.99
24.99
72.95
(Source: IWSR Store checks)

As can be seen from the above price check, local brands are selling in smaller
bottles generally, but at a price point of a quarter or less than the imported brands.
The last recorded price for Krem was in 2004 at PLN12.00 when Baileys was
priced at PLN61.99. Sheridans is the most expensive over all at PLN 72.95 yet
enjoys the highest category share of the imported cream liqueurs, which shows the
move towards premiumisation when not buying local.
52
Opportunities in the Polish Market










As Poland develops and the EU funds start to be spent in the coming years on the
infrastructure there is no doubt that the economy will continue to grow and
disposable income will continue to grow presenting a large opportunity for
alcoholic drinks.
As the world economy has slowed down in 2008, particularly in Ireland and the
UK, a number of the young well educated Poles are electing to return home and
try their chances back in Poland.
These returning émigrés, together with the emerging well-educated urban
dwellers, are likely to continue to embrace international brands and are likely to
continue to move away from Vodka, perhaps towards whiskey. However, as
Poles currently drink as much Vodka in a week, as they drink Whisky in a year,
the growth in this market is likely to be slow. Nevertheless, the strongest brands
at this early stage of the market development are likely to be the most successful
in the long run and explains why Scotch and US brands are competing so strongly
at this stage.
As a proportion of the returning émigrés are likely to be returning from Ireland –
there is definitely an opportunity to tap into their “Irish” experience in the
foreseeable future and promote Irish whiskey in Poland.
The Polish preference for a liqueur with coffee may also offer the opportunity to
introduce “Irish Coffee” as a way to extend this behaviour to whiskey.
The strong preference for beer is unlikely to change dramatically in the near
future because of the Government’s reluctance to reduce excise duty on other
alcoholic drinks, but the market may also present an opportunity for brands such
as Guinness as younger drinkers seek variety and fashionable international brands.
There is no doubt that with strong distributors, Irish Brands developed solely for
the Polish market, such as St. Patrick’s, could gain a good foothold in this market
and that approach may offer an opportunity for Polish “ Irish Brands” at different
price points in both the whiskey and cream liqueur market.
While the Private Label market is so strong in the grocery market, there is an
opportunity to tap into the lower income target audience, with private label brands
for whiskey and cream liqueurs. These would however have to be very keenly
priced for the price sensitive Poles and may mean diminishing returns in terms of
margin and may not be economically viable in the long run.
As far as the on-trade is concerned in Poland, the major cities should be
concentrated, on as they offer good opportunities for promotional brand activity
and will be accurately targeted at the growing middle class in the main urban
centres.
The greatest opportunity in terms of volume however is firmly fixed in the
Independent Sector of the Grocery Retail trade, which accounts for over 50% of
the value of alcoholic drinks sold in Poland. Any distributor appointed should be
strong in this channel for the foreseeable future.
53
Further Useful Sources
Trading in Poland:
Bord Bia – Irish Food Board,
Clanwilliam Court,
Lr. Mount Street,
Dublin 2,
Ireland
Telephone: 00 353 1 668 5155
Fax: 00 353 1 668 7521
Contact: Cathryn Hargan or James O’Donnell
Data on the Polish Market:
IWSR
Euromonitor International
Datamonitor
IGD
Trade Press:
Alkohol I Handel
Beverage World
Drinks International
Food & Drink Polska
Foodweek and Liquor Week
Poradnik Restauratora
Puis Biznesu
Rynki Alkoholowe
Rynki Zaganiczne
Rzeczpospolita
Supermarket Polska
Warsaw Business Journal
Wine & Spirits International
World Drink Trends
Zycie Handlowe
54