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Editorial Review 
Detal Dzisiaj 2009-2010
MAY
A difficult year behind us, and what next?
We would like to summarise the latest assessment of FMCG retail chains. Progressive consolidation is not visible to the same degree that it was in the previous listing, but what does strike the eye are the clearly lower sales growth rates of various players and in the case of certain firms, an actual drop and sales values.
The latest TOP 50 ranking of FMCG traders does not paint an over-optimistic picture. The companies that made it into this ranking generated sales worth just under PLN 111 m. To be sure this is more than last year, however the growth rate has dropped considerably: last year it was 26 percent, currently it is slightly below 11 percent.
Last year undoubtedly belonged to discounters and our latest ranking clearly confirms this trend. Jeronimo Martins Dystrybucja is outdistancing its rivals operating in different formats at lightening pace and the rate of growth of its supremacy is intensifying with increasing dynamism: still a year ago, Biedronka, which was also in first place then, had a 7 percent advantage over its immediate rival, the Emperia Group, but in the current ranking, this supremacy has shot up to 40 percent. The Bomi Group, which has logged 65 percent sales growth is maintaining its record rates of sales growth; a year earlier it was even higher because it was 85 percent but last year it was a year of particularly intensive consolidations for the Group. The PHUP Gniezno with its Nasz Sklep chain also managed to maintain its sales growth rate of over 40 percent. Rossman significantly increased its sales rate, from 26 to 41 percent, which is no surprise taking into account the rate of development of new outlets. A near 30 percent sales growth rate was also maintained by the traders’ and entrepreneurs’ associaion Stowarzyszenie Kupców i Przedsiębiorców Razem. Polska Grupa Supermarketów (Polish Supermarkets Group) which comprises the Top Market, Delica and Minuta 8 chains, is coping very well; a year ago this operator’s sales rate registered growth of over 30 percent, while currently it is 49 percent.
Unfortunately, for every sixth player, last year was a setback. The lowest sales rates or, in fact, negative rates - were registered particularly by companies in the lower half of the table. That, unfortunately, proves for the umpteenth time, that networks with have strong and developed back-up – e.g. those associated with wholesale or specialising in tried and tested formats as in the case of Jeronimo Martins – have it better; no other country in Europe has such a strong single discount firm as has Poland.
Some market players are predicting that the current year will be ”interesting” by which they mean that it will be no easier than last year. However, the latest sales results – for March - have brought some optimism; while at the beginning of the year Poles were still very careful with their spending, in March they relaxed somewhat more audaciously and retail sales went up by nearly 9 percent, and what’s most important for FMCG retail traders – in March, Polish consumers also bought more food: its sales rose by over 7 percent in comparison with the beginning of the year.
The last year, which was difficult, resulted in LSS Społem and the Zatoka z Wybrzeża network dropping out of the table. Currently one needs revenues in the order of PLN 100 m to make it into the TOP 50 while just a year ago it was sufficient to have sales revenues of PLN 85 m to make it into the table.
Heading for segmentation
Consolidations in wholesale or retail as well as mergers of distribution firms with retail chains are impacting on the Polish wholesale market. It should be expected that following the trend of western European countries, the distribution market in Poland will also split up into segments specialising in serving specific customers and these types of processes will contribute to an improvement in the quality of service in wholesale.
The shrinking process affecting the wholesale market, as can be observed in the past few years, is gaining in momentum. At the moment there are over 4000 wholesalers dealing in comestibles, however analysts estimate that acute competition and the recent drop in retail sales will lead to the collapse of a few hundred more distributors. In the opinion of Maciej Stefunko, the sales director of the firm Tradis: - In several years time, the number of wholesalers should drop by 30-50 percent because with such fragmentation, some of the entities will have problems with economic effectiveness. First and foremost, it is the smaller wholesalers, who concentrate on independent retailers that are disappearing from the market. Big firms which, due to the scale of their operations are in a position to negotiate lower prices with producers and by the same token offer traders lower prices, are the winners. This situation is inducing some wholesalers to join forces so as to retain their market positions or to seek strong partners who will allow them not only to increase the scale and area of their operations, but also give them purchasing strength vis-a-vis suppliers. – For many businesses, fusions of one sort or another are no longer a question of “I could, but don’t have to” but one of life or death. The economic slowdown is making banks more cautious in proffering loans and business partners are reducing their stocks of mutual trust. In such circumstances, having a strong partner in the shape of a larger group is worth its weight in gold – explains Maciej Stefunko.
To attract new customers and retaain their existing ones, wholesalers are putting their money on making comprehensive offers which include: choice of goods, high quality service, timely deliveries, attractive promotional initiatives, and loyalty programmes. However, as Magdalena Figurna stresses: - Today, it’s not enough to concentrate on price and range of goods, it is also important to accurately identify and satisfy specific customer needs and to support them in their business activities. On the list of tasks to accomplish in the immediate months ahead, the biggest wholesaling enterprises have added territorial expansion, expansion of goods’ ranges, fine-tuning customer service systems, opening further warehouses, expanding the their ranges of private label brands, developing training programmes addressed to independent retailers.
Instant meals worth PLN 482 m
In the period February 2009-January 2010, consumers bought nearly 44 m kg of instant dishes (both meat and vegetable varieties, frozen) spending over PLN 482 m on the pleasure. In comparison with the analogous period the year before the sales levels of these products grew by 8.7 percent in terms of value, while in terms of sales volumes it remained stable.
The instant meals’ and frozen meals’ markets are developing most dynamically. They are registering sales growths of 26.5 and 25.5 percent respectively in terms of value. However, these are decidedly smaller markets in comparison with the instant meat-and-vegetable dish market which was worth over PLN 366 m last year.
We can include beans among the most popular types of dishes in the category of instant meat and vegetable dishes – which accounted for 20.9 percent of sales values, followed by tripe – 20.8 percent, gołąbki (stuffed cabbage leaves) – 15.1 percent, dumplings – 12.7 percent and meatballs – 10.5 percent. In turn on the ready-made and instant meals’ market the decidedly biggest segment is that of macaroni – 62.6 percent in terms of sales values, which in the past year clearly lost out in significance in relation to the mashed potato segment – which had an increase in share value of 3.2 percentage points taking it up to 36.2 percent in the period February 2009-January 2010.
Private labels leading the way
The category of paper products consists of products such as toilet paper, kitchen towels, tissues, cosmetic tissues, and paper napkins. In the period March 2009 – February 2010 the category’s sales values stood at PLN 1.2 bn, which was 13 percent higher than the result for the analogous period the year before.
The biggest segment constituting over 60 percent of the market, is that of toilet paper whose 12 percent sales growth undoubtedly contributed to the growth of the entire category. However it was not the only segment to register the greatest sales rates in the period under consideration: kitchen towels, which have a market share of about 18 percent and tissues with a 6 percent share achieved sales growth of over 20 percent in terms of value.
Carlsberg beer the Leader
The Distribution Leader in the current round was Carlsberg beer in 0.5 l bottles. On the day of the survey it was available in 79 percent of the shops that were monitored. This result comprised a 97 percent rate of availability in the modern channel (supermarkets, hypermarkets) and a 67 percent rate in traditional shops. This product was available in 100 percent of the supermarkets that were visited. This is the first variety of beer which scored sufficient points to secure for itself this title this year.
In 2010, the Distribution Leader title has already gone to: Winiary’s custard cream, Danio mousse, Pepsi Cola, and Nałęczowianka mineral water. Carlsberg beer, with its score of 79 percent, attained the same rate of availability in the shops as Pepsi, whose result was presented in “DD” 6/2010. Our present victor was also the best displayed product in this round, with an FCE score of 5.3.
In this round of our survey, only two other products could boast of more than a 50 percent rate of availability in the shops - Knorr Bulionetka, the beef stock cube from Unilever and Poala Domowy Sok malinowy (Home-made raspberry juice) from Hoop. These products achieved identical scores - 55 percent.
The most frequently advertised categories of milk
The Top 15 most screened commercials in the period 29.03.-11.04.2010.
The current ranking of the most screened commercials compiled by TNS OBOP covers the period March 29 - April 11. Out of the top 15 campaigns 12 related to the food category as broadly understood, and three to so-called products for external use.
And so, in first place came Actimel, whose spots in the period under survey were screened 445 times, and the GRP viewing figures’ indicator was 561.8. Second place is also taken by Danone – this was Activia’s campaign which, in screening 374 spots, achieved a GRP score of 525.3. One more campaign of this producer made it into this ranking – Danio mousse, which took 8th place. The 213 spots that were screened in the period under consideration gave it a GRP of 312.95. But that’s not all the milk-based products that made it into this ranking. In 5th place was the Monte desserts campaign, and in 10th was Jogobella yoghurt from Zott. The Monte dessert spots were screened 212 times giving it a GRP of 359.82. The GRP indicator for Jogobella yoghurt was 305.25, it having had 168 spots screened on television.
APRIL
Crisis has struck
Our latest ranking of the TOP 50 retailers shows that consolidation processes on the Polish retail market are progressing and the number of small independent shops is constantly diminishing. The past year, in line with earlier forecasts, showed to a greater extent than in 2008, the effects of the crisis which are visible in weaker financial results.
The earlier forecasts of economists who from the start of the economic slowdown maintained that its effects would become apparent after 2009 and not 2008, have come true. In principle, the glaring difference, when we compare the Trade TOP 50 results published a year earlier with the current ones, a negative sales rate is apparent with certain players. It has touched one in five firms while in the previous report all entities returned a lesser or greater – but positive nonetheless – sales growth. – This year the market will remain difficult – says Ryszard Tomaszewski, the chairman of Tesco Polska. – Last year, despite the crisis there were still several positive factors in evidence – greater accessibility of consumer credit, pay rises, tax reliefs or reduced social security contributions.
The ranking shows that the increasing number of network shops clustered in groups and holdings of Polish parentage that is visible on the Polish market, are for the most part paying dividends. It’s enough to look at the results of Grupa Bomi, Polska Grupa Supermarketów, Stowarzyszenie Kupców i Przedsiębiorców Polskich Razem or Grupa Emperia, which are not only consolidating their positions on the market but are also registering very clear sales growth rates and further to that – they are climbing up the ranking. As transpires from the report of the Akademia Rozwoju Systemów Sieciowych Network Systems Development Academy – ARSS), there are currently 120,000 food shops in Poland half of which are associate in one way or another with some network – franchises, agencies, partnerships or other forms. It may also be for example one’s own chain – that’s the way Biedronka, Lidl and Kaufland are developing, and also some chains of specialist stores. The remaining half according to ARSS data consists of independent outlets. In turn, the reverse proportions obtain in Western Europe – for example in Germany, 87 percent of the shops belong to various networks, and in France it is 86 percent. It may be assumed these proportions will never be quite like that here, but we are moving in a similar direction.
Discounters, which in recent times have been reaping bumper harvests, are coping extremely well on the Polish market. This can be seen, among others, in the financial results of Biedronka which increased its sales by a third. Lidl’s sales in Poland also rose by about 10 percent. Moreover, estimates suggest that the Aldi chain had an absolutely record increase in its sales rates but that stems from a specific situation - the operator opened its first outlet in February 2008 developed very slowly in its first 12 months, and only in the past year did it step on the road of a fairly dynamic increase in the number of outlets, and hence, by extension, of sales.
Strategies under observation
Multi-format strategies are becoming more typical in the international development of big large format store chains. These chains are in principle capital groups which simultaneously manage networks of hypermarkets, supermarkets, discounters and local groceries (both privately owned and belonging to chains).
The multiformat strategy is becoming increasingly typical for the international development of great networks of large format stores. In effect, such networks are really capital groups which simultaneously manage networks of hypermarkets, supermarkets, discounters and local shops, both their own and franchised ones. The multiformat strategy facilitates the achievement of a number of advantages within the framework of the group, which include:
• achieving economies of scale, especially in relation to purchasing policy and logistics;
• attaining advantages stemming from far-going standardisation in trading processes;
• having the benefit of synergy effects, which exist between various shop formats; in particular this applies to policy on stock management which subsumes the spectrum of private labels, relations with suppliers, logistics;
• greater opportunities for investments and introducing technical and organisational innovations;
• the development of various forms of integration – both vertical and horizontal;
• high-level effectiveness in marketing activities;
• the better utilisation of resources, including human resources, and also knowledge of the market and about managing various shop formats.
The multiformat strategy is conducive to rapid growth in market share and assuming leading positions on local markets. Unfortunately, the multiformat strategy also has its weak sides which can make themselves felt through the slowing down of the decision-making process which could weaken flexibility in reacting to changes in the environment.
We do not anticipate the standardisation of formats
Due to a mult-format approach we can reach both customers valuing the ability to do their shopping rapidly, and people who like to spend more time on shopping, residents of big cities and of smaller places – said Artur Kawa, chairman of the board of Emperia.
- What are the virtues and defects of owning various shop types and formats (convenience, supermarkets, delicatessens) and different organisational formats (own shops and franchises) within the framework of one firm or group?
- Having a big portfolio of brands and formats has a number of virtues, both for the Group itself and its partners. Due to the scale of our activities we have, for example, the possibility of effectively shaping our trading conditions in negotiations with producers. We offer them access to several thousand varied outlets throughout Poland, supplemented by knowledge about the segmentation of customers. That facilitates the choice of goods and enhanced sales, guaranteeing advantages to all participants of the logistical process. Due to our “multiformativity”, we can reach both those customers who value the ability to do their shopping quickly, and those who like to spend more time on it, to big city residents and to smaller places. The simultaneous development of several franchise concepts in one group enables us to propose in each of them various types of marketing activities and different promotions. Due to that, we give Polish traders the possibility of choice of format which suits them best. Among the weaker aspects of “multiformativity” are the negligibly higher operating costs and the need of greater proactivity in managing the concept. However, with the scale of activities of the Emperia trading group, these factors are, in principle, not felt. The advantages are many times bigger.
- Will Emperia bę heading towards unification (cutting down on the number of variants so as to achieve synargy in various planes of activity), maintain the status quo or cultivate variety?
- I do not anticipate the unification of our formats, we see no need to change anything in this respect. We are happy with the current solution. It strengthens the whole Emperia trading group and brings our partners success.
Less for more
In the period March 2009-February 2010 vs March 2008-February 2009, Poles drank fewer carbonated beverages than in the analogous period a year earlier, but at the same time, they spent somewhat more on them, albeit a figure that approximates to the one of a year ago.
Sales of carbonated beverages, being the fourth biggest comestible category in terms of sales values (after beer, vodka and juices/nectares/non-carbonated drinks) year on year remain stable. However, if we take a closer look we can see that in terms of sales volumes, a negative trend is in evidence while for sales values it is positive. This meands that year-on-year, Poles drank less carbonated drinks than in the analogous period a year earlier though for a comparable amount of money to what they paid the year before (data from the Panel Handlu Detalicznego (Retail Trade Panel) for the period March 2009 – February 2010 v March 2008 – February 2009).
The same for more
In 2009 the beer market in Poland attained almost PLN 13.4 bn in value, and over 25 m hl in volume. Comparing these figures to 2008, we can see an increase in value of 4 percent with a simultaneous stabilisation of sales volumes. This means that consumers buying the same amount of beer as last year, paid more for it.
In terms of alcohol contents, the domination by 1.3 percentage points (taking it up to 73 percent share volume in the market) was increased by the full light beer segment at a strength of 5 to 6.2 percent alcohol volume. Strong beer – of over 6.2 percent alcohol accounts for 20.1 percent of the light beer market – 0.5-5 percent alcohol- 6.2 percent, while low alcohol or alcohol-free beer – below 0.5 percent – accounts for 0.7 percent of the market. A very interesting segment, whose share is 3.6 percent is that of flavoured beers which is developing very dynamically – in terms of share volume it has grown 11.1 percent, while in share value the increase has been 28.6 percent as compared to the previous year.
Nałęczowianka flows through to first place
We have this year’s first Distribution Leader from the mineral water segment. The winner was the non-carbonated Nałęczowianka, in 1.5 l bottles, which attained the highest distribution rate - 73 percent – out of the products surveyed in this round. This result was made up of an 81 percent rate of availability in the modern channel and 67-percent rate in traditional outlets.
This water also took the title in 2008 with a 76 percent rate of availability in the shops (“DD” 15/2008). A year later, Nałęczowianka came close to winning again when it came second (“DD” nr 10/2009) with a 74 percent rate of availability coming in just behind Tyskie beer. Nałęczowianka was also the best displayed product in this round, scoring an average of 7.0 facings. Its results have therefore been stable over the course of several years.
Second place in the ranking was taken by the carbonated drink 3 Cytryny (3 Lemons), produced by the firm Zbyszko. On the day of the survey it was available in 70 percent of the shops that were visited. This result comprised: a 70 percent rate of availability in the hypermarkets and supermarkets, and a 69 percent rate of availability in traditional shops. Unfortunately, like last year, it failed to take the Distribution Leader title despite a high rate of availability. On that occasion it was outdistanced by Lipton tea from Unilever, which achieved an 86 percent rate of availability in the shops („DD” nr 11/2009).
Knorr and Danone most widely represented
The Top 15 most screened commercials in the period 15.03.-28.03.2010.
The current ranking of the most screened commercials compiled by TNS OBOP for the period 15-28 March this year, the top spot went to the Knorr brand group campaign. The next two places were taken by Danone products – Danio (mousse) in 2nd place and Activia in third.
An increasingly plastic world
Offering the possibility of paying by card in a small local grocery might have been regarded until recently as a gesture of good will towards the customer. Today it is a standard facility which the customer expects, and if he doesn’t find it, he will take his custom to the competition.
Most adult Polish citizens already have bank cards, but opportunities for paying with plastic can be uneven. Bank cards are becoming an ever more popular form of payment, but this relates chiefly to big cities where terminals taking bank cards are standard. In small towns and rural areas, the saturation level with this technology remains inadequate. Shops have bank card facilities or accept payments only above a certain level. In this field there is much to do not only by financial institutions but also by customers themselves because it’s demand that generates supply. According to the Central Statistical Office (GUS) nearly 15 m Poles live in rural areas so it can be estimated that, together with small towns, their number will fluctuate round the 50 percent mark. Thus the market’s potential is very big – emphasises Grażyna Zawisza, head of the Bank Card Department of MultiBanku.
Jakub Kiwior, the director of Visa Europe in Poland gives other data which speaks of how far we have yet to travel. – In our country there are still many retail outlets which could take bank cards. For example – for every 1000 residents there are, on average, 4.9 POS terminals while the European average is about 15 per 1000 – he stresses. He confirms that cards are already quite common in our country – there are over 22 m Visa cards alone – both in geographical terms, and branch terms, though a greater saturation of retail outlets that accept plastic occurs in the bigger cities.
Though the number of outlets accepting cards has been growing most dynamically in recent years, there is still much to do in this field. – Insofar as in the big cities and conurbations cards are commonly accepted, the situation is a lot worse in smaller places; the number of outlets accepting cards is a lot lower. Meanwhile, in the latest survey of MasterIndex carried out towards the end of last year, in response to the question concerning behaviour in situations where there is a lack of possibility to pay for purchases by bank card, every fifth respondent said that they don’t make the purchase but go looking for a shop or service outlet which accepts bank cards. Also, every fifth respondent said that they do not encounter such problems because they choose those places where one can always pay in that way. That means that acceptance of bank cards is a perfect way not only of increasing the value of the shopping basket in the shop, but also the perfect tool to build customer loyalty, especially in smaller places. And in building such competitive advantage on a daily basis, we support trade-services outlets – stresses Sebastian Krzyk, chief of the department of the acceptance network of the Polish division of MasterCard Europe SPRL.
The MasterIndex report also tells us that 23 percent of Poles prefer to pay by bank card for purchases of up to PLN 50, and 44 percent prefer this form of payment for purchases of a higher value. The fact that the network of outlets accepting bank cards is systematically growing is surely cause for optimism.
Shopping behaviour of Poles 2010
Over 40 percent of Polish consumers choose self-service outlets in which to do their shopping and they spread this out over various days in the week with increasing frequency. Poles are also increasingly resilient to marketing techniques applied by producers – such conclusions flow from the latest survey by Pentor Research International dedicated to the shopping habits of Polish consumers.
The growing domination of general groceries and department store sales via self-service outlets, has been unchangingly recorded since 2005. 42 percent of the Polish population does their shopping in self-service shops, while 19 percent prefers shops with counter service. The eldest members of the population and those on the lowest levels of income are most deeply attached to traditional shops. Most Poles still tend to do their shopping in the vicinity of their homes, especially when it comes to their everyday needs. The favourite shops are those which can be reached on foot within ten minutes. 79 percent of Poles do not walk more than ten minutes for their shopping.
A further interesting observation relates to the days of the week in which articles of everyday use are bought by shoppers. In recent years the best takings were achieved by shopkeepers on Friday afternoons and Saturdays – the time of week when a fair group of consumers stock up for the whole of the coming week. Clearly, however, for many buyers the one off spending of excessive amounts of money is becoming problematic or ineffective. For about three years, there have been more and more who buy as and when necessary – spreading their shopping over various days of the week, seeking bargains in a greater number of outlets, they also appreciate smaller shops. Here the domination of Friday or Saturday as shopping days is maintaining itself. What’s worth noting is that the oft-criticised Sunday trading is registering marginal significance on a countrywide scale. Only two out of a hundred Poles admit to big shopping sprees on Sunday.
There is much to indicate that Poles recognise marketing techniques aimed at inducing them to buy given products with increasing ease. We increasingly more effectively identify their logic and mechanisms, we more rationally assess the profitability of actions communicated officially as shopping opportunities. Commencing in 2007, the number of Poles who bought a product encountered in a shop under the influence of a promotion, the purchase of which they did not plan earlier. Also the number of consumers susceptible to being induced by promotions to buy new brands of goods which they would not have bought earlier, is dropping. For producers this spells increasing difficulties in getting through to customers with new products, which have to break through consumer barriers of “initial trial” . The number of Poles who visit select shops especially because of promotional initiatives organised there is also shrinking. The greatest reservations with regard promotions concerns men and older consumers.
84 percent of sales from April to August
The ice cream market in Poland was worth over PLN 1.1 bn in the period February 2009-January 2010 and remains stable in comparison with the analogous period a year earlier. Ice cream is a very seasonal category which registers sales growth in the spring and summer months. Though in practice ice cream is available in shop refrigerators the whole year round, 84 percent of its annual sales come in the period April to August.
Ice creams are a very seasonal category, registering sales growth spurts in spring-summer time periods. Though these products are available in shop refrigerators virtually all year round, 84 percent of annual sales come in the period April – August. We are also witnessing the high sensitivity in ice cream sales due to the weather. This might be seen in the slight drop in the number of litres of ice cream sold in the past year (as compared to the analogous period a year earlier) since, as we might recall, last summer was not among the warmest.
The most important segment in this category are family ice creams characterised – as the name itself suggests – by their larger volume – which is enough to go round in the family circle. They represent 50.2 percent of sales volumes and in the past year, they were the only size type to have increased their sales by 3.3 percentage points. The second, almost equally important segment, are impulse buy ice creams, which include cornets, ices on sticks, ice cream in wafers, in tubs. They account for 42.7 percent of the category’s sales volumes. In third and fourth place are ice cream cakes and desserts – with a share volume of 7 percent, followed by frozen ices.
Yellow cheese worth PLN 1.35 bn
Cheese sales take a surprisingly high position in Poland. This category, which consists of blue, yellow, fresh and processed cheeses, was the third biggest category in the period February 2009-January 2010 among all food categories monitored by Nielsen.
The segment of cheeses that Poles go for most frequently is that of yellow cheeses whose retail sales volumes in the period under consideration weighed in a 77 700 tonnes, which represents 4.2 percent growth in relation to the analogous 12 month period. This segment is worth over PLN 1.35 bn. Sales of this type of cheese run chiefly through the modern channel. Supermarket outlets themselves generate 45.8 percent of the sales values in yellow cheeses.
A further significant segment which shows stable sales both in terms of value and volume are processed cheeses. These cheeses sell twice as few amounts as the mentioned yellow cheeses – precisely 33 000 tonnes in the period February 2009-January 2010. The most popular type of packaging in this segment are cheeses in blocks – 41.8 percent of sales volumes , followed by sliced cheeses whose sales volumes have dropped considerably - by 4.1 percentage point in relation to the previous year, generating currently ¼ of the sales volume of the category. Cheeses packed in plastic boxes are gaining in importance – a relatively new position on Polish shop shelves – which in the period under analysis accounted for 6.9 percent of the category’s sales volumes.
Pepsi Cola – highest level of accessibility
The Distribution Leader in the latest round of our on-going survey was Pepsi Cola (in 2 l bottles). Its rate of availability in the shops on the day of the survey was 79 percent, which means that it’s an improvement on the score it achieved last year (“DD” 16/2009). Its rate of availability in the shops last year was 8 percent lower which had then given it second place, just behind Delicje Szampańskie (jaffa cakes) from Kraft Foods.
The second most widely available product on the day of the survey was Nescafé Classic instant coffee in 200 g jars from Nestlé with a 78 percent rate of availability in the shops. Over two years ago, in “DD” 7/ 2008, this same product, albeit in 100 g jars, was available in 80 percent of the shops which gave it the title of Distribution Leader. It was very close to winning this title this time round as well! Additionally, the average number of facings – 8.3 guaranteed Nescafé coffee second place among the best displayed products in this round.
Another product which was available in over 70 percent of the shops was Apap, 6 tablet packs from US Pharmacia. Last year (”DD” 2-3/2009) our market researchers registered a lower rate of availability – of 61 percent – in all the outlets visited. This product, as one of a few in this round of our survey can boast a 100 percent rate of availability in the hypermarkets.
Tasty titbits in the limelight
The Top 15 most screened commercials in the period 01.03.-14.03.2010.
The latest ranking for the most frequently screened TV commercials in the period March 1-14, 2010, comes as no surprise. Yet again it is dominated by food products. The only representative of the household chemicals category is the washing agent Vanish Oxi Action, while the OTC category is represented by Nurofen.
MARCH
Small fry in retreat as convenience stores march on
The number of convenience shops in Poland is growing while that of traditional shops with counter service continues to shrink. According to a recent report published by Nielsen, of the small outlets on the market, only those are likely to survive which will be modern, convenient and adapted to consumer demand.
Last year, again, the number of shops in Poland fell significantly, even worsening the trend of 2008. The drop for 2008 vs. 2007 was 5 percent (the number of shops shrank from 170 343 to 161 848), and 2009 vs. 2008 brought a drop of 6 percent (from 161 848 to 152 227). The fall in the number of shops is driven by the plight of groceries and grocery-industrial shops. Since 2007, the number of grocery stores fell 17 percent while that of grocery-industrial shops fell by 19 percent. The number of small shops operating in these two segments dropped by 27 percent while medium sized shops registered a 1 percent drop in numbers; but large stores enjoyed 8 percent growth in numbers. As a result of shop closures, the significance of traditional trade dealing in food and chemical products is on the wane. In the traditional channel the lower number of visits to bakeries and traditional food stores is also noticeable.
Among the shops that are closing down, the smallest ones, with one worker, often the owner of the outlet, predominate; they can offer only a very narrow range of products. Shops with counter service are undergoing a sharp drop – while for years, the more comfortable mixed format - of self service and counter service – has been increasing its market share.
The feminine face of business
The number of women holding high positions, indeed often the highest positions, in Polish trading companies is growing. Apart from knowledge, among the characteristics which make management by women easier, the one most commonly quoted is empathy.
Polish trade has many faces and ever more of them belong to the fairer sex. It is estimated that at the present moment in time in the management boards of listed companies 1.9 percent are women. Naturally, in the case of smaller entities, this figure is greater and in recent years it has been growing systematically – says Bożenna Kolba, chair of the Ogólnopolskie Stowarzyszenie Kupców i Drobnej Wytwórczości (the All-Poland Association of Traders and Small Producers).
Barbara Marciniak, chair of Spar Polska, estimates that there are many women in management posts in Polish trade, however, men still dominate . It frequently occurs that at talks, I am the only woman in a fairly numerous gathering – she says.
Małgorzata Więch, development director and member of the Partnerskio Serwis Detalicznego (Partnership Retail Service) management board, sees quite a few women in her entourage who are managing trading enterprises, stresses that the top posts in firms are held more frequently by men than by women. – I think it’s a carry over from history stemming from a division of social roles that had been consolidated for years. Luckily we are departing from this model ever more frequently. Women are effectively achieving career success and in many cases, they outdo men in their sense of responsibility and commitment. The effect of this is the increasing number of women serving on management boards of enterprises, including trading ones – says Małgorzata Więch.
In the opinion of Beata Gesche, the managing director and management board member of Stokrotka, in comparison with other European countries, in Polish trade there are relatively quite a few “woman in power”. – Women in the management cadres of international networks in which I worked, are a rarity. It’s different in Poland – there are decidedly more women in company headquarters. It is difficult for me to assert whether generally the number of women in the trade sector is growing but in the teams that I had the pleasure to have led, the number of women in key positions is systematically growing – observes Beata Gesche.
Certainly, to manage people, certain defined predispositions and skills are a necessity.- Honesty, diplomatic skills, optimism,solidness, industriousness, good example, justified enthusiasm, a liking for people, finding in them what’s best, not looking for flaws where there are none, courage, noticing the good sides in every situation – enumerates Marzena Gradecka and adds: - Moreover, women have in themselves a certain caring instinct, possibly genetically coded in them, and that in turn translates into empathy in relation to subordinates. As we know, the ability to empathise is a strategic attribute in motivating workers and building team relationships – says the chair of PGD. Małgorzata Więch stresses that it’s worth being aware of one’s competences , but also not to be afraid of surrounding oneself by people better than oneself. – The important thing is strength of character and a degree of charisma, which enables a manager to pull a whole team behind themselves. Respect for people and self-assurance makes for building a positive atmosphere and winning the sympathy of one’s entourage – she says. Barbara Marciniak has similar observations: - My ten years and more of experience in management confirms that apart from knowledge and experience, the most important is the ability to communicate effectively with people and the ability to take decisions. One must know how to listen to people. A happy worker is one who has clearly defined aims and tasks to fulfill and feels that he/she is part of a whole team working for the firm’s success. As the boss, in various conversations concerning mergers or trading matters, I always underline that people are one of the more important capital resources of the firm. Unfortunately, this capital is still not always appreciated and appropriately assessed – observes the chair of Spar Polska.
Fresh breath ever fresher
Toothpaste and toothbrushes are categories which, together with mouth washes, comprise the oral health care (OHC) market. In the period January–December 2009, the sales values of the toothpaste category came to almost PLN 651 m, while the sales values of the toothbrush category came to over PLN 190 m. Toothpastes are the biggest category on the OHC market.
Toothpastes are the biggest category of the OHC market. The category’s sales values in the period January-December 2009 came to almost PLN 651 m, which means growth of 12.9 percent in relation to the analogous period a year earlier (January – December 2008). In terms of volume, over 10.5 m litres of toothpaste were sold in 2009 which signals 5.6 percent growth in relation to 2008.
In the share out, due to package sizes, the biggest in terms of value and volume is the 125 ml sized package segment. It accounts for 41.8 percent in terms of share value and 53 percent in share volume of the entire toothpaste category. The value of the 125 ml package segment vs 2008 fell by 4.7 percentage points – in terms of volume by 1.8 percentage point vs 2008. The second biggest segment in terms of value is that of the 75 ml packages. In 2009, this segment accounted for 34.1 percent of the toothpaste category’s value, registering the fastest growth in share – of 5.5 percentage points vs 2008.
Fruit jellies pushing out caramels
The confectionery market, according to MEMRB research, registered 3.4 percent volume growth and 7 percent growth in value in 2009; by the same token, it sold 37 673 tonnes of products worth PLN 984 m. The biggest part of the market is occupied by hard sweets (caramels) – their share volume being 42.7 percent and their share value being 36.5 percent.
In the segments of this category we can include caramels, dragees, fruit jellies, as well as chewy sweets, sugar coated sweets and toffees. The biggest part of the market is made up of hard sweets (caramels) – their share volume is 42 percent, with a share value of 36.5 percent which represents a drop of 2 percentage points in market share over the course of the year. The loss of share by this segment is to some degree the result of the dynamic development of fruit jellies which, in the period under analysis, grew in volume by 14 percent to finally boast a 23 percent share in the whole category and thus, simultaneously, represent 1/5 of the whole market in terms of value. A significant role in terms of shares for the sweets category is also played by dragees – in value this segment accounts for 30 percent of the market while in terms of volume its share is 20 percent , nonetheless in comparison with 2008 there is a 1.7 percent drop in sales volumes.
Danio wins again!
The latest round of our Distribution Leader survey was won by Danio vanilla in its 150 g tubs, produced by Danone. Its 93 percent rate of availability in the shops is most impressive. If we look at the scene through the optic of previous years, we will notice that this is not the first time that Danio has come top in our on-going survey. It had already won this title in 2008 (see “DD” no. 9/10 2008), albeit with a somewhat lower – 84 percent – rate of availability.
A high rate of availability in the shops was also registered by Zupa Winiary Żurek in 51g sachets from Nestlé. The 75 percent rate of availability in the shops is also one of the higher scores achieved by this category over the course of sseveral years.
And so, for example, last year (“DD” 8/9 2009), when the soup Knorr Nudle, Amore Pomidore, instant in a sachet was under survey, in achieving the same level of availability (i.e. 75 percent), Unilever, like Nestlé’s soup now, achieved the highest score and by the same token the title of Distribution Leader.
Third place in this round went to Unilever and the product „Knorr Fix Soczysta karkówka z pieca” in 30 g sachets which achieved a 68 percent rate of availability.
Looking at the results of our survey in previous years it turns out that in the current round several products can boast growth tendencies. Dr. Oetker’s vanilla custard improved on its last year’s result by 12 percent (“DD” nr 5/2009) currently achieving a 65 percent rate of availability. Also the yoghurt “Jogurt 7 zbóż, śliwka” in 150g tubs, from Bakoma, with a 61 percent rate of availability registered a much better result than last year’s 53 percent (“DD” 1/2009). Monini, whose olive oil was available in 26 percent of the shops visited during the survey, is also enjoying growth.
Out of the ten products looked at in this round, five of them registered 100 percent rates of availability in the hypermarkets. The producers of these products are: Danone, Nestlé, Dr.Oetker, Procter&Gamble, Monini.
Hegemony of food category campaigns
The Top 15 most screened commercials in the period 15.02.-28.02.2010.
The ranking of the most screened television commercials as compiled by TNS OBOP for the period 15 to 28 February, once again highlights the domination of of our television screens by food category commercials. The exceptions proving the rule, one might even think the rule itself, are the campaigns of only three products belonging to other categories. In first place in the current ranking is the campaign for Dr.Oetker’s Pizza Rigga.
It’s easier with partners
Kiosks and newsagents remain important formats on the trading map of Poland despite their drop in numbers and in the sales of certain product categories. Nonetheless, operators of these types of outlets continue to invest in the development of their networks and not infrequently even bring in new concepts in cooperation with partners who help in managing specific categories of goods.
The past year did not much pamper kiosk and newsagent operators. – It was undoubtedly a difficult year for the branch. Taking into account the market conditions, we are pleased – we managed to achieve average sales growth per outlet of over 4 percent – says Mateusz Wiśniewski, the chairman of Kolporter Sieć Handlowa. Operators are unrelenting in coming up with fresh ideas. One of them is the next idea of Kolporter – Top Press – that was called into being last year. – Within the framework of a contract to run for several years with Imperial Tobacco, we shall be developing the network of Top Press newsagents together, whose outlets will be in shopping centres and other attractive locations. This year we are planning to open together with this firm over 50 new newsagents. The evaluation after several months of the Top Press brand’s existence is very encouraging – the new brand met with customer approval and this is best seen in the interest in developing the network on the part of serious business partners – says Mateusz Wiśniewski.
No one needs convincing that kiosks and newsagents are a significant distribution channel for FMCG producers. – For products belonging to categories such as candy bars, wafers, chewing gum, dragees, or sugars, the checkout area is of significance. That’s the domain of impulse buys. It would be difficult to imagine a well organised impulse buy area – in the case of kiosks and newsagents in the checkout areas, without the bestsellers such as Snickers, Mars or Twix. Though kiosks do not constitute the bedrock of sales in the sweets market, one cannot in any way forget about the distribution and display of impulse products in this channel – says Marek Klinger, category manager at Mars Polska.
Kiosks and newsagents – as emerges from data supplied by Nielsen for 2008-2009 – are generating nearly 8 percent of the sales values for the chewing gum and hard sweets categories. As noted by Marek Okrzesik, the head of the category management for Wrigley Poland, sales of this type of product via this channel dropped by 1.5 percent in 2009 as compared with 2008, but it should be remembered that the number of kiosks according to Nielsen shrank by 10 percent last year.
Turnover up, margins down
Nasz Sklep, the franchise chain belonging to Grupa Kapitałowa Specjał, was set up 10 years ago. Currently it has over 1330 branches which achieved revenues of PLN 2.2 m last year. That’s 30 percent more than a year earlier. Despite its dynamic development, the chain is nonetheless grappling with certain problems.
Markets belonging to the Nasz Sklep chain can be encountered in the central and southern parts of the country. Shops trading under this sign operate in the provinces of Lubelskie, Małopolskie, Łódzkie, Podkarpackie, Śląskie, Świętokrzyskie, Opolskie i Dolnośląskie. Their combined sales space is about 175 000 m2. - In 2009 we achieved revenues in the order of PLN 2.2 bn. Rising sales rates in shops belonging to the chain were about 7 percent on average over the course of the year. Last year the turnover of the whole network increased by 30 percent. Such a rate was associated primarily with the record increase of the chain’s retail outlets. In 2009 321 outlets joined us – recounts Jan Sałata, the deputy chairman of PSH Nasz Sklep. Most of the 1331 markets are small local groceries with sales space of about 50-70 m2. However, certain outlets are even 400 m2 in area. The average sales for the whole chain are about PLN 12 571 per square metre per year. – The average margin of the chain’s outlets are about 19-20 percent. Recently however we have been observing a tendency to reduce margins due to intensifying competition offered by discounters and signs of crises in households – remarks Jan Sałata.
In the opinion of Jan Sałata, rising operating costs, however, do not remain without impact. – In recent times there has been a visible deterioration of business ratios precisely because of rising exploitation costs which are not fully compensated by increased turnover – says the deputy chairman of the Nasz Sklep chain. One idea for enhancing profits with the simultaneous retention of low prices is to sell private label products. Currently, in the portfolio of the Grupa Specjał (special group), there are 190 such products. – It is an assortment which we are developing all the time. Some of the products are produced in Poland while some come from abroad on the basis of international contracts made in cooperation with the CBA chain – explains Jan Sałata. – Depending on the region and location they account for 2-5 percent of the sales of a given shop – he adds. Such data finds reflection in the opinion of a shopkeeper in Krosno. – We have a fairly wide selection of private label products in our assortment, but it does not play a significant role in the shop’s sales rates. In this vicinity, however, a more expensive assortment of well known producers on the market sells better – explains Płaza.
In the immediate future a change of image awaits the Nasz Sklep chain and further progress in the computerisation of operations. The money for this is to come from the company’s own resources, EU subsidies and in the future, possibly, from the Warsaw Stock Exchange. For the time being, the company’s authorities speak of this cautiously, as they also do about the further development of the network itself
Grocery outlet
A grocery discounter run by a group of producers who wish to create an outlet for their products in addition to established trading networks, is to open in Rawicz in mid-March. The shop, 400 m2 in area, shall offer its customers an assortment of over 1000 items of grocery and household chemicals.
The shop will be offering customers an assortment of food and household chemicals . The food assortment is provided by the founder firms, such as the fat producing plant Zakłady Tłuszczowe Bielmar Sp. z o.o., the regional dairy cooperative Okręgowa Spółdzielnia Mleczarska Top-Tomyśl and the instant meal producer Leszczyńskie Przedsiębiorstwo Przetwórcze Rewis Sp. z o.o. The supply of the household chemicals and cosmetics assortment is taken care of by the wholesaler Przedsiębiorstwo Handlowe Davi Sp. z o.o. The first pilot shop is to be run by Producent, set up by the cooperative Spółdzielnię Handlową Przemysłu Spożywczego Producent, whose chairman is Rufin Sokołowski, and who is also the chairman of the cooperative Leszczyńskie Przedsiębiorstwo Przetwórcze Rewis Sp. z o.o., which belongs to this company and which produces instant meals. The cooperative was set up by 12 founder firms whose products will be sold in the Producent shop without margins and at prices set by the producers themselves. This is to bear fruit in the shape of offering customers competitive prices in relation to the biggest networks. Product prices will be about 20 percent lower than if they were sold via retail chains. An additional 96 suppliers will be cooperating with this cooperative in this enterprise but their goods will be encumbered with margins unless they decide to join the cooperative as members which ties in with an entry fee of PLN 200 and the need to buy one share worth PLN 3000.
Stable yellow fats
In the period December 2008-November 2009, consumers bought a combined total of over 281 m kg of yellow fats (margarines, butter, spreads) of a total value of over PLN 2.7 bn. In relation to the previous 12 month period, the category remained stable both in terms of sales values and volumes.
Margarines and spreads continue to constitute the core of the category’s sales volumes – nearly 70 percent in the analysed period. In terms of sales values their market share came to over 53 percent. Both this segment and that of butter whose sales volumes constitute nearly a third of the category’s sales and remains stable both in terms of sales value and volume in comparison to the analogous period a year earlier.
The dominant position of margarines and spreads in terms of sales value stems among others from the fact that for butters the biggest segment remains that of small packages – of up to 249 g - 73 percent in the period December 2008- November 2009. On the other hand, for spreads and margarines it is big packages of over 400 g - 59 percent in the period December 2008- November 2009 – sold mainly in tubs. However, in the period under review both for margarines and spreads, and equally for butter, consumers had been reaching for medium sized packages (250-399 g) with increasing regularity. Their share value in the butter segment increased by 1.8 percentage point while in the margarine and spreads segment it went up 1 percentage point at the expense of the remaining types of packages in the case of both these segments.
…And the winner is Winiary’s custard
Winiary’s cream flavoured custard from Nestlé took the Distribution Leader title for the first time. Its rate of availability in the shops on the day of the survey was 76 percent which was sufficient for it to overtake nine other producers representing well-known brands. In the hypermarkets, this product registered a 100 percent rate of availability.
Hoop Cola was available in 69 percent of the shops included in the survey and this is a significantly better result than the one registered in our surveys in previous years – in “DD” 15-16/2006 and “DD” 2/2007 it was 39 percent. In ”DD” 1/2008 its rate of availability in the shops rose to 53 percent and then rose further in 2010 – to 69 percent. This product has proved to be the best displayed out of all the products that were under survey – the average number of facings was 7.0. Close behind it with an average number of facings of 6.6 was the firm Mlekovita with its Wypasione 2% milk.
The third most widely available product on the day of the survey was Jogobella strawberry yoghurt with extra big pieces of fruit – available in 65 percent of the shops. That’s a higher distribution rate than that registered by other products in the yoghurt category in 2009, oscillating between 18 percent – registered by Müller Mix Choco Stars yoghurt – “DD” 13/14 and 59 percent – Bakoma natural yoghurt – “DD” 8/9.
Screens filled with food and OTC categories
The Top 15 most screened commercials in the period 01.02.-14.02.2010.
The current ranking of the most screened commercials compiled by TNS OBOP is for the period February 1–14, 2010. In this period, television viewers had the opportunity to acquaint themselves primarily with food and OTC producers’ offers, while there was not even one household chemical category commercial in this ranking.
FEBRUARY
A challenge and a reshuffle
The past year evinced fairly dynamic changes on the Polish drugstore market – the drugstore chains Drogerie Aster from Gdynia and Drogerie A’propos, commenced cooperation, a new network Eurodrogerie organised by the company S.C. Ewa has appeared on the scene and Polska Grupa Drogeryjna (Polish Drugstore Group), set up in mid-2008 by Grupę Eko Holding, closed its first year of activity. The last 12 months however were not among the best for trading networks in general, and that includes drugstores. However, this year is expected to be better.
The past 12 months, however, have not been the easiest for trading networks in general, and that includes drugstore networks as well. But this year is supposed to be better. – A drop in sales rates is not anticipated in our chain. We are banking on the crisis being behind us and a return to the sales rates of 2008. We hope that Polish shopkeepers will be uniting so as to stand four square against the big shops with foreign capital – says Czesław Mulka, chairman of the Drogerie Koliber Sp. z o.o. management board.
Some networks have managed to emerge from last year’s turbulence on the market safe and sound. Joanna Jankowska, purchases’ specialist at the drugstore chain Polska Sieć Drogerii Vica, was positive in her evaluation of last year’s performance: - Turnover increased by about 30-40 percent on the 2008 figures. We plan opening two outlets this year. We wish to devote 2010 above all to enhancing our image and by the same token train up staff. It is very important for us that our sales staff members become professional advisors to our customers. We are also planning to introduce our own loyalty programme which will enable us to supplement our marketing activities to date and by the same token meet the expectations of our most demanding customers.
The Vica chain representative also emphasises the superiority of drugstores over hypermarkets and supermarkets: - Customers increasingly frequently choose drugstores belonging to the traditional market which offer a professional service. The professional assistance of a salesman builds up confidence and sympathy among customers, which gives us an advantage over the big stores – says Joanna Jankowska. An antidote to harder times could lie in joining forces. In November 2009, the Interchem S.A. company from Gdynia – the biggest distributor of cosmetic and chemical articles in Poland which owns the Drogerie Aster S.A drugstore chain from Gdynia, signed cooperation agreements with the firms Dom Pod Jagnięciem Iwanicki, Gurgul, Kowalczyk Sp. j. and DPJ Drogerie which runs the Drogerie A’propos network. One cannot rule out the acquisition of the firm DPJ and the A’propos networks which it manages, which does not mean that the latter will disappear from the market. – With time, there could be a change of structure and some of the A’propos drugstores could start operating under the Drogerie Aster logo and conversely. This type of decision will be taken on the basis of observing the markets in which given outlets operate. The A’propos drugstores were more geared up for selling cosmetics with large quantities of coloured cosmetics and select goods, while Drogerie Aster had superiority in household chemicals - explains Krzysztof Thomas, director of development at A’propos.
The most profitable goods
Running a shop is an economic activity in which the end and uppermost effect sought is profit. However, not all goods have the same shares in generating the achieved margins. That is why we asked retailers, for the 13th time, which goods are the most profitable in their opinion. They chose such products in the “Product of the Year” competition organised by “Detal Dzisiaj”.
In a survey commissioned by “Detal Dzisiaj” and carried out by the Millward Brown SMG/KRC research institute in the period 20 November–7 December 2009, the respondents were 500 shopkeepers and shop managers. The telephone interview method – CATI – was used to carry out the survey in 25 hypermarkets and 25 supermarkets, 50 discounters, 75 big grocery stores, 100 medium sized shops, 175 small shops and in 50 cosmetic- chemical shops. These shops were chosen on the basis of a countrywide random sample and they were located in towns of over 200 000 residents, in towns of 50-200 000 residents, in places of 10-50 000 residents, and in small places and villages of under 10 000 residents.
The pollsters conducting the survey asked their respondents 32 questions: please say what brand (here the name of one of 22 categories of food and 10 categories of chemicals-cosmetics) is the most profitable in your shop? The pollsters would tick the name of the product mentioned by the retailer on a pre-prepared list of brands available on the market and included in the countrywide TGI consumer survey. Additionally, within the framework of each category, respondents could indicate the brands and goods not on the list. Furthermore, every product was described by such parameters as: brand, type, variant, package size. These additional parameters differed depending on whether it was a comestible, chemical or cosmetic product. All in all, retailers mentioned 3036 goods which deserve the title Product of the Year.
Like in previous years, several firms managed to produce a leader in more than one of the 32 categories under survey. And thus:
- Procter&Gamble DS Polska Sp. z o.o. maintained its status of last year and was represented on the list of the most profitable goods in the same four products: – Vizir washing powder, Head&Shoulders shampoo, Blend-a-Med toothpaste and Gillette razor blades;
- Nestlé Polska S.A. also maintained its previous year’s status and on the list of the most important goods it is represented by three products: Winiary soups, Winiary mayonnaise and Winiary custard. These are the same products in the same categories. Additionally, the firm Cereal Partners Poland Toruń-Pacific Sp. z o.o. held poll position in the breakfast cereals category – the product in question being Corn Flakes;
- Unilever Polska Sp. z o.o. also retained its status and on the list of the most profitable goods it is represented by three products: Saga tea, Domestos toilet detergent, and Algida ice cream, which compensated for the loss of last year’s Product of the Year status in the margarine/butter mix spread category to Śniadaniowa margarine from Zakłady Tłuszczowe Bielmar Sp. z o.o.;
- Nivea Polska S.A. increased its status in relation to last year by one winner – Nivea deodorant. Nivea face cream repeated last year’s success and won again.
The Top 10 ranking of all products shows the number of votes which were given to each of the various products irrespective of the category they were assigned to. The most votes were collected by Kujawski\rapeseed\plastic bottle\1 l cooking oil. It was recognised as the most profitable and recommended both in the traditional and modern retail channels. The second place in terms of the highest number of votes was taken by Tiger\ready to drink\can\250 ml energiser. It must be noted however that upon totting up the various sizes of breakfast cereal packages of Corn Flakes it is this Nestlé product that edges into second place with a one point lead over Tiger. The highest among the chemical products was the Ludwik washing up liquid and in the OTC category it was the pain relief Apap.
Little sweet nothings for PLN 1.2 bn
The praline category which includes homogenous and mixed varieties of pralines, and jellies and chocolate-coated marshmallows (ptasie mleczko), registered a relatively dynamic sales rate in the period November 2008–October 2009: +5 percent in terms of sales volumes and +9 percent in value.
The annual result for pralines is 32 119 tonnes of purchased products which found reflection in sales values of PLN 1.1572 bn. In this result, over half is the due to sales via the modern channel. It was the hypermarkets and supermarkets that were chosen by consumers as the places to buy all manner of pralines , constituting by the same token 23 and 30 percent of sales values and 23 and 40 percent in sales volumes respectively. At the same time, a much greater dynamic is more visible in traditional channel sales which increased in volume by 6 percent and by 11 percent in value. The most significant type of shop within the framework of this group are grocery stores whose share in the figures of zlotys spent on pralines came to 18 percent (14 percent share volume). On the other hand, the place chosen most seldom for buying pralines are filling stations and kiosks. Their share in sales values is a mere 3 percent and 0.1 percent.
To be among the best
In the previous edition of “Detal Dzisiaj” we presented products which in 2009 attained a high rate of availability in the shops and won the title of Distribution Leader. Just to recall, the highest rate was registered by the cigarette brand L&M, Lights (Blue) from Philip Morris, the Lion candy bar from Nestlé, the Kasia brand margarine from Unilever, the processed variety of Gouda cheese in 150 g slices from Hochland and the Kujawski cooking oil in 1 litre bottles ZT Kruszwica.
Though most of the products which attained high rates of availability managed to win the Distribution Leader title, sometimes it does occur that a product – despite its availability rate being high - did not manage to win this title. Such a situation only occurs when in a given round of our on-going survey there is another product with an even higher rate of availability. That is why we decided to present all the products that were checked out and whose rates of availability in the shops came to no less than 78 percent and thereby give them the recognition they deserve and draw attention to them.
An example of this is offered by Tchibo Family ground coffee, which scored with a very high rate of availability – of 85 percent – but the leader in its round of our survey turned out to be L&M, Lights (Blue) cigarettes from Philip Morris, which achieved a 90 percent rate of availability. Thus we are left with nothing but to wish them such results every time!
In our ranking the most frequent (because it happened four times), were categories of confectionary represented by players such as Nestlé, Mars Polska, Cadbury Wedel, Kraft Foods. The beer branch was also strongly represented by firms and brands such as: Carlsberg’s Harnaś beer in 0.5 l cans; Kompania Piwowarska’s Tyskie beer in 0.5 l cans; Grupa Żywiec’s Żywiec beer (5.6% vol.) in 0.5 l bottles.
Increased advertising outlays in 2009
The Top 15 most screened commercials in the period 01.01.-31.12.2009.
The beginning of the calendar year is traditionally a time for summing up. This also applies to advertising outlays of FMCG firms which last year allocated more than in 2008 on advertising their wares on television. According to TNS OBOP data, the advertising expenditure of the entire FMCG sector in 2009 came to PLN 5 211 099 780 which was the biggest amount spent out of all the sectors that were surveyed.
In the annual ranking of the most screened commercials in the period 1.01.-31.12.2009, compiled by TNS OBOP, there were four products from Danone – two of which – Actimel and Activa took two leading positions; Actimel was first with 4988 broadcast commercials in the period under survey and had a ‘watchability’ rate of 8925.32 GRP, while Activia was second with 4676 broadcast commercials and a ‘watchability’ rate of 8089.10 GRP. Danone’s two remaining products which were classified in the annual ranking were – Danonki in sixth place, a commercial that was screened 3392 times and which had a ‘watchability’ rate of 4820.66 GRP, and Danio mousse in seventh, which was screened 3405 times last year and which had a ‘watchability’ rate of 4772.28 GRP. Third place in this ranking went to Nurofen Ultra Forte, which was screened 7434 times and had a ‘watchability’ rate of 6276.03 GRP. Other para-pharmaceuticals which were promoted on television last year were also the Strepsils Intensive tablets – in eighth place with a ‘watchability’ rate of 4670.92 GRP generated by 3403 screenings of its commercial, and in twelfth place – the pain relieving tablets - Apap. This product had 2389 spots screened in the period under consideration with a ‘watchability’ rate of 4332.56 GRP.
JANUARY
Not the worst of years, but there will be fewer stores opening
Over 240 delicatessen chain store branches are already on the Polish market and this year about 70 more are set to appear on the delicatessen map. Operators have breathed a sigh of relief because the crisis year of 2009 was not so bad for them after all. But the expansion plans they have adopted for this year are somewhat more circumspect.
Even though the past year was not one of the easiest for delicatessen chains, most operators still invested in the development of this format; indeed, some of them did so more intensively than in previous years. The great number of delicatessens is driven, to a large extent, on the very dynamic expansion of Milea branches, which appeared on the market some two years ago and annually opens about 45 shops in residential estates offering top-notch products. Operators active on this market for years and developing delicatessens in the supermarket format or larger - Alma, Bomi, Piotr i Paweł or Delima – have also expanded their areas of operations. The biggest number of new branches among these ‘old hands’ on this market were opened in 2009 by Piotr i Paweł – with 16.
The map shows the basic difference in strategy in building a network between operators investing in the large format delicatessen supermarkets opened above all in provincial capitals, eg Alma, Bomi or Piotr i Paweł – and firms which put their money on local stores selling prime quality goods which are being opened in small and medium-sized towns, like for example, Milea. This division is likely to stay as witness the example of Alma which considered the option of moving into smaller towns but finally concluded that such markets do not offer prospects for this format of delicatassen.
The plans for 2010 are somewhat more modest. Only Milea has planned more branch openings this year – 52 in total, while Bomi intends to sustain last year’s rate of growth and like in 2009 invite customers to visit a further five new shops. Piotr i Paweł is planning about ten new branches, among others in Łódź and Inowrocław. Further branch openings - in Gdańsk and Warsaw – have also been announced by Alma. Still in the first half of the year, there will be two Delima delicatessens (formerly Stokrotka Premium) opening in Jastrzębi-Zdroj and Suwałki. Most probably this year, one outlet under the Delica sign will also be added to the map.
They sell a service, not goods
Despite drawing the attention of marketers, it remains a very small segment of our trading landscape – retailers who run traditional shops can still not feel under threat. Internet trading in FMCGs accounts for barely 0.5 percent of the trade as a whole in this category.
Among the most interesting conferences in which one could participate during the FMCG Forum organised by Blue Businness Media, whose main patron was the editorial board of “Detal Dzisiaj”, undoubtedly one can count the conference E-Tailing. It was devoted to internet trading in FMCG products. Although it attracts the attention of marketers, it remains a very small fragment of our trading landscape – thus retailers who operate via traditional shops can still sleep soundly and not feel under threat. The share of the whole internet trade in Polish retail is estimated to be 2 percent and the share of the FMCG sector in this is an estimated 0.5 percent. The sale of FMCG products via the internet is currently being done primarily by proxy of internet shops, whose operators declare that in truth they are selling delivery services. Of course one must pay for such services so it will certainly be difficult for virtual shops to compete with traditional shops on prices. The biggest challenge for FMCG internet shops is the range of goods on offer and the completeness of the delivered orders. Experience shows that consumers do not stand for having substitute products being forced onto them in place of the ones they ordered. On the other hand, from the perspective of an internet shop which runs mass operations, in processing orders, it is very difficult – due to organisational and cost-related reasons – to agree upon such individualised orders, eg over the telephone.
At the conference the question was also raised about the sense of FMCG producers making direct sales via the internet. The participants tended to the conclusion that that such a solution only has sense in relation to niche products of the most exclusive nature such as hand-made pralines and other chocolate products or diet supplements.
How much do they charge – how much do they earn?
Placing suggested prices on food packagings is the cause of serious controversy. In its assumptions this idea is to civilise Polish trade and show how much do this market’s various players really earn – starting with farmers, producers and middle-men, down to retailers. The latter group, however, is rigidly opposed to this idea.
In the opinion of representatives of the National Council of Agricultural Chambers (Krajowa Rada Izb Rolniczych), which is lobbying for the obligatory stamping of food products with suggested prices, such a solution, at least to some degree, would show consumers how the final price is arrived at which they must pay at the till. And it transpires that all the margins along the way from the producer to the shop shelf can come to even 80 percent of the end price on the product. That’s what’s happening in the case of vegetables, fruit, dairy products and meat. However, in the opinion of this sector’s organisations, tampering with margins by diktat from on high is open interference in the free market. Andrzej Faliński, the director-general of the Polish Trade and Distribution Organisation (POHiD) believes that this idea is absurd. In his opinion, there is no chance for one product to cost the same price throughout the country. Logistical costs, transport, pay levels, or shop operating costs e.g. in Warsaw and in a small place in the eastern part of the country are very different. In the same way the prices in hypermarkets and in small provincial shops differ radically.
Some producers do not disguise their displeasure either. No wonder. Such a solution would deal them a blow every time, when a price adjustment became essential. It relates to the additional costs involved in such items as producing new packaging. But if parliament were to introduce new regulations on suggested prices, the biggest losers would be the traditional shopkeepers.
Moderate optimism
Trade branch representatives are looking to the future with neither excessive fear nor great expectations. In their opinion, 2010 will be, to a large degree, reminiscent of the last twelve months – it will be a difficult period for the FMCG sector, however it will also be one that gives greater opportunities for enhanced profits. We will have to wait until the end of the year to see how it will all work out.
Stimulants in ever increasing use
The quickening pace of life, stress and hurry are making Poles reach for stimulants such as coffee and tea ever more readily. This finds reflection in the volume of beverages of this type that are being consumed. In the past year (December 2008-November 2009), Poles drank over 13.5 bn cups of coffee, which translated into expenditure in the order of PLN 2.9 bn which is twice the amount we spend on tea. In terms of volume, the category of coffee is close to 83 000 tonnes a year while the annual sales volumes for tea attained the level of 25 000 tonnes.
Roast coffee (ground and in beans) continues to enjoy the greatest popularity. In terms of value, it constitutes 53 percent of the market, and 75 percent in terms of share volume (in the period December 2008–November 2009). Somewhat less frequently, Poles go for traditional instant coffee – its shares being 37 and 13 percent respectively. The 3-in-1 variety of coffee (as well as the 2-in-1, ice coffee etc) is of far lesser significance, as well as cappuccino which together account for 11 percent in the market share value and 12 percent in share volume. Over the course of the past year the shares of the various coffee market segments remained stable, which means that consumer preferences have not succumbed to radical change.
Like the coffee market, the tea market too has its leader and as might easily be imagined its black tea which accounts for 60 percent of the market’s share value and 70 percent of its share volume (in the period December 2008–November 2009). The second biggest segment in terms of importance is that of herb teas – their shares come to 23 and 16 percent respectively. Ever more frequently, Poles also go for green tea – 7 percent in share value, 6 percent in share volume, and fruit teas - and 5 percent respectively.
Improving year by year
The column ”Distribution Leader” has been hosted by ”Detal Dzisiaj” for many years. In 2008 the highest results among products which gained the Distribution Leader title were the cigarette brand L&M Lights (Blue) from Philip Morris – 90 percent. Just behind them, on 89 percent, came Lion - the candy bar from Nestlé, Kasia margarine, whose rate of availability in the shops was the best of all Unilever products monitored by us in 2009, Gouda processed cheese in 150g slices from Hochland, and Kujawski cooking oil in 1 litre bottles from ZT Kruszwica.
In this year’s ranking sweets, with four entries, are the most numerous items to appear. They are represented by finalists such as: the Lion candy bar from Nestlé, the Pawełek candy bar with toffee filling from Cadbury Wedel, Delicje Szampańskie pomarańczowe (orange flavoured jaffa cakes) from Kraft Foods, Kinder Jajko z niespodzianką (egg with a surprise) from Ferrero.
Another category, somewhat more powerfully marking its presence in our ranking, was beer, the winning brands being Harnaś from Carlsberg and Tyskie from Kompania Piwowarska, as well as cigarettes represented by the brands: Viceroy Blue, Classic from British American Tobacco and L&M, Lights (Blue) from Philip Morris.
Two places on the podium for beer in December
The Top 15 most screened commercials in the period 01.12.-31.12.2009.
The current ranking of the most broadcast commercials encompassing the campaigns for the period from 1 to 31 December 2009. In this ranking, as compiled traditionally by TNS OBOP, the two top spots went to beer: Żywiec – in first place with 666 screenings in the period under consideration with a viewing rate of 923.85 GRP and Warka – in second place with 630 screenings and a viewing rate of 898.27 GRP. In third place was the Stepsils Intensive tablet campaign with 816 screenings of its commercial and a viewing rate of 816.96 GRP.
Another product in the OTC category which has appeared in the current ranking is Nurofen Ultra Forte – 15th with 660 transmissions of commercials in the period under survey with a viewing rate of 599.78 GRP. The intensiveness and measurable effects of these two campaigns are evidence of the vehemence of the market struggle for “pain-ridden” customers – every winter in the period of increased rates of susceptibility to influenza, colds and throat infections – seems to be a task made easy.
Among the articles aimed at improving consumer moods (in this instant, more that of the female variety) and make more effective the workings of the organism, there has appeared a product in the yoghurts category – the probiotic yoghurt Activia – in 4th place. The level of “watchability” of 367 commercials transmitted in the period under review was 599.78 GRP.
DECEMBER
Strong despite a drop
Open markets, despite their slight fall in number, are keeping well – customers still go to such outlets willingly and producers are far from disregarding this distribution channel.
Both regular and seasonal markets continue to have a big infrastructural role to play in trade despite the Central Statistical Office (GUS) figures which show that in the past few years (2006-2008) the number of regular marketplaces in Poland is falling imperceptibly – from 2297 at the end of 2006 to 2261 at the end of 2008, that is by 1.6 percent. In comparison with 2007, the drop came to 1 percent. If we take into consideration a broader period of time - 2004-2008 – we can see an even greater drop in their number and the total surface area of marketplaces in Poland – by over 3 percent - This process will certainly progress, however, their total disappearance from the scene is unlikely. Polish consumers cntinue to see marketplaces as important ports of call for their grocery shopping – says Patrycja Nalepa, a retail trade analyst from PMR Publications.
According to the GUS “Internal Market in 2008” report, at the end of 2008 there were 2261 marketplaces registered in local council offices throughout the country of which those with petty traders were in the decided majority - 2029. The biggest fall was registered in Śląskie province (Silesia) where their number dropped by nine. That had bearing on the drop in the total surface area of regular marketplaces in this province, by 1.1 percent. In 2008, the provinces of Mazowieckie, Śląskie and Wielkopolskie held 33.7 percent of the total number of the country’s regular marketplaces; this was a drop of 0.5 percentage points in relation to last year. At the same time, as was underlined in the report, their share in the overall figure of regular marketplace trading space was 39.2 percent and was 1 percentage point lower than a year earlier. In the markets there were about 111 000 regular petty-trade sales outlets of which 73 700 were open every day. A supplement to the regular network of marketplaces were the seasonal markets – in this case in turn there is a visible dynamic growth trend. In 2008, there were 8262 of them that were registered which means that growth in relation to last year is 24.4 percent. An even more dynamic rate is visible when we compare the years 2006-2008 – in that period, their number increased from 6203 to 8262, that is, by 33.2 percent.
Stregth in unity
The low level of education and the reluctance of farmers to join forces in production groups is a big problem for the Polish countryside. Here, even individual farmers and growers can offer commodities at prices that are much lower than in the traditional shops – says Karol Tylenda, chairman of the management board of Podlaskie Centrum Rolno-Towarowe.
- How many operators are you currently cooperating with and what infrastructure do you have at your disposal?
- We have about 300 entities operating with us on a permanent basis. The space we have to offer is already one hundred percent leased by them. We need 30 percent more space. That is why last year we built several dozen pavilions with over 40 still being built. Additionally, we intend to create a further 1000 square metres or so of trading space. We will then have a total of about 10 000 square metres of space available in a variety of formats: in the hall, the pavilions or for cars adapted to serve as trading space. This latter form of trading is currently adopted by over 30 farmers. Each has his regular pitch thanks to which it is easier to maintain peace and order, especially on busy days. Soon, at the request of our customers, we shall also have 24-hour chemist shops here. There will also be a gardening wholesaler and a modern meat hall conforming to all sanitary norms. It should be handed over for use at the beginning of April next year. All of this stands on the 11 hectares of land belonging to us.
- Where is the money coming from for these investments?
- Traders participate in the costs of the pavilions. We sign 5 year lease and right to trade contracts with them, which later can be converted into open-ended term contracts. We also have our own resources. As I said, the site is 100 percent leased out so the company’s finances are in good shape. We borrow the remaining part of the money from the bank. Currently, we are cooperating with a cooperative bank. However, we don’t want to overdo it, and over-invest. Especially these days it would be exceptionally dangerous. That’s why we are developing quietly and without rushing it.
- The trading space is one thing, but what’s the situation regarding road infrastructure? Good and convenient access is very important in this business.
- We have the benefit of a good location. Access here is quite good and additionally, the local roads and junctions will be modernised next year. We also have a big car park. That helps in attracting both traders and customers.
- In that case, who comes to do their shopping here?
- We have both wholesaling customers, in other words caterers, hoteliers and shop owners or distributors, as well as retailers. A significant proportion of our individual shoppers are old age pensioners and people on disability benefit. Our sales staff must therefore be ready to serve all manner of customer. Usually wholesale trade lasts from 3 to 6 in the morning, later the individual shoppers begin to arrive. We try to attract more people, that is why we advertise ourselves in the local media, chiefly on television. We also have visitors from abroad, chiefly from Lithuania and Belarus. For the latter we even organised special tables at which they can stand and trade.
We’re not a wolf in sheep’s clothing
We’re not a wolf in sheep’s clothing which supplies you with products and the next moment opens a shop next door to you and offers far more competitive terms – said Luis Amaral, the Eurocash Group chairman, at a gala celebration of ABC’s tenth anniversary.
Functioning as part of a network gives shops many benefits. Above all, Eurocash wholesalers have special prices for ABC shops which other customers do not have. Shops have the opportunity to make use of offers on frozen products distributed by the firm Jago with rebates of up to even 10 percent. In placing orders by internet, additionally, one may get a 3 percent rebate on top of that. The possibility of ordering on attractive; terms salads made by the firm Grześkowiak has also been introduced. Due to economies of scale, we also managed to produce attractive offers not just within the scope of supplies earmarked for selling goods. The new offer of landline telephones from Netia for shops congregated in the network are very good conditions, likewise the offer of buying a car from a dealer within the framework of which Eurocash conditions are transferred onto the shopkeepers. Shops can also take advantage of preferential rates on an entire insurance packet and to make use of the tax advisory services of the firm Dziesięcina. For the past year the music in shop project is being implemented which enables reducing the fees paid for using music, which are paid to the artists’ association ZAiKS. - ABC is the biggest network in Poland – declares Łukasz Chady and quotes the following figures: - Today the network comprises 3400 shops. The doors to ABC shops open 365 million times a year. The turnover rate of the ABC network in 2009 comes to PLN 5.3 bn. The network’s sales space amounts to 278 000 square metres. One of our competitors – the Real network has twice the sales space of the ABC network while achieving similar sales rates. I think they are in considerable difficulty. I think that is also why the Metro Group is trying to redirect its activities towards the traditional market through wholesalers and draw from them the resources for their activities.
And it is precisely on the strategies of joining up or not joining up wholesalers with retailers that the representatives of the Eurocash Group look at, whose chairman Luis Amaral, in his opening speech addressed to ABC shopkeepers at the congress underlined:- The mission of our business is solely wholesale activity. It was our strategic decision to develop only the wholesale segments, without going into retail. Our aim is to ensure that you are competitive on the market and we shall never compete with you. So you won’t see shops of which we are the owners next door to your shops and also you will not see your customers in our warehouses. It is important for you to know who we are. We are not a wolf in sheep’s clothing, who supplies you with goods and the next moment opens a shop right next door to you and offers considerably more competitive conditions. We are always for you, never against. When it’s a time for war, one has to know what side he’s on. In this war we are on the side of traditional retail which competes evry day with modern trade.
A fragrant PLN 900 m
Mass sales of deodorants in Poland in the period September 2008–August 2009 were estimated to come to over 86.1 m unit items worth nearly PLN 900 m by MEMRB International Poland. In comparison with the analogous period a year earlier, the size of the deodorants’ market (counted in unit items) increased by 8 percent while its value went up by 11 percent.
The popular deodorants for women segment constitutes the greater part of this market, generating 59 percent of the category’s sales values and 60 percent of its sales volumes. Deodorants for women are enjoying a better growth rate which came to 13 percent in value and 9 percent in volume while sales of deodorants for men are growing at the rates of 9 and 7 percent respectively. If we compare with each other the sales shares of ordinary deodorants and anti-perspirants, then there is a noticeable increase in customer interest in anti-perspirants which, put in terms of single items in the period under consideration sold 20 percent more than in the analogous period the year before, while sales of ordinary deodorants dropped 2 percent. However, taking into consideration the form of deodorant, the most frequent purchases are spray-on deodorants which generate 59 percent of the whole category’s sales volumes. The second segment in terms of size is that of roll-on deodorants - 21 percent which are characterised by the most dynamic growth rate – 20 percent. Equally dynamic in this period was the development of the small deodorant segment of natural spray deodorants, increasing its sales rates by 19 percent in terms of volume in comparison to its analogous performance a year earlier.
Mature market
Washing up liquids are a mature category with stable sales volumes. The only thing that could somewhat threaten the traditional liquids is the growing significance of dishwasher products.
Washing up liquids are a mature cetegory with stable sales volumes. This is confirmed by Karol Czupryński, Brand Manager of the Fairy Liquid and Lenor fabric conditioner brands at Procter&Gamble: - The market of washing up products is stable – we have not observed any significant drops or particular growth rates – he says. Comparing the period July 2008 – June 2009 to the analogous period a year earlier, the category’s sales volumes according to Nielsen remained virtually unchanged, while sales expressed in zlotys rose by 7 percent which signifies an average price increase per litre. – The category increased its value in the past calendar year by about 7 percent while a year ago this growth was just over 5 percent. As far as volumes are concerned, that is sales in litres, the rate here is much lower – only 0.2 percent year-on-year. This situation could be caused by the greater demand for dish-washer products which are becoming increasingly common - observes Anna Rogalska, Marketing Manager at PZ Cussons Polska.
Among the dish-washing products as a whole over 74 percent of sales values are accounted for by hand dish-washing products while dish-washer products accounted for just under 26 percent, however its this latter category that is registering clear growth. The segment with the biggest share in the category of dish-washing products are the 751-1000 ml packages which – as emerges from research carried out by Nielsen – in the period July 2008– June 2009 increased its share value by 3.4 percent and its share volume by 2.7 percent as compared to the analogous period a year earlier.
A broad offer for retailers and consumers alike
The Top 15 most screened commercials in the period 26.10.-8.11.2009.
The ranking of the most frequently broadcast television commercials in the period 26 October–8 November, offers a cross-section of the entire FMCG segment. In the current ranking of TNS OBOP there were spots for all sorts of assortments – starting with juices and drinks, also those to be served hot, through milk products, vegetable products, macaroni, sugar, shampoo and para-pharmaceuticals.
NOVEMBER
It�s their window of opportunity
The year now drawing to a close was exceptionally propitious to the development of discounter chains. So it�s no wonder that the magic number of 2000 outlets was finally passed. In the current period, which is not all that easy, trade is coping quite well as a whole, while the discounter segment is doing exceptionally well. Consumers, looking for savings, are increasingly willing to visit discounters � which responded rapidly to the demand by opening new outlets. The growing significance of discounters is visible in surveys too. According to Nielsen, the share of discounters in living expenses rose to 13.2 percent in 2008, which brought them up to level pegging with the hypermarket segment. Slower but still upward was also the trend for the chemicals category which now have a 10.1 percent share of the market.
This year�s GfK Polonia report shows in turn that modern channels are playing an increasingly important role with rural households and it is particularly people living in the countryside who opt for discounters. In the opinion of most market observers, the market share of discounters will continue to grow in the coming years and even when the crisis passes into history, they will sustain their strong and stable position on the market. This is corroborated by the plans of the current market players. The Jeronimo Martins Group intends to invest about PLN 1 bn in the development of the Biedronka chain next year. The network, currently numbering over 1400 shops, is already present in both big and small towns throughout Poland. As emerges from the survey of customer awareness and preferences in relation to trading networks published in February 2009 by GfK Polonia, Biedronka is the most deeply rooted chain in shoppers� minds and remains the leader in terms of brand awareness � while in spontaneous surveys of trading network awareness it was Biedronka that scored best with 25 percent of respondents naming it in first place.
The Danish-owned chain Netto, is not letting up in its rate of development either. Kent Petersen, the chairman of Netto Polska, assures that in spite of the crisis, the chain�s revenues are being achieved according to plan, and there is no reason to worry; indeed, he has further announced that next year they will open 30 new branches. What�s more, the operator who is currently present chiefly in north-western Poland, does not rule out expansion into new regions of the country. The firm is currently primarily seeking locations in the provinces of Dolno�ląskie, Kujawsko-Pomorskie, Lubuskie, Opolskie, Pomorskie, �ląskie, Wielkopolskie and Zachodniopomorskie.
In February 2008, the group of discounters operating on the Polish market was joined by the German-owned Aldi. In line with the policy of most German operators, it is not disclosing its plans, but, looking at its development to date, it is difficult to assume that it could pose a serious threat to the networks alreasy ensconced here for several years. In the course of over a year Aldi has opened slightly over 30 shops. The much slower rate of development than had initially been touted may be due in large measure to difficulties in acquiring convenient locations.
There is no doubt that the potential for the further development of discounters in Poland remains considerable. Of course it cannot be assumed that the Polish market will ever reach such a degree of saturation with discounters as is the case, for example, in Germany or Norway, where there are respectively 200 and 250 outlets per million inhabitants (in Poland that figure does not go above 50 outlets), but the example set by Biedronka shows that there is something to fight for.
Franchise business still in vogue
Franchising is enjoying ever greater interest in our country, so it�s no wonder that on the franchise map of Poland there are increasing numbers of players while those that already ensconced are gaining in strength. It is in trade, particularly in the FMCG sector, that franchising is developing most dynamically. As would emerge from data supplied by Profit System, last year close on a thousand and a half new grocery and hardware stores came into existence. The number of franchise networks, their partner and proprietary outlets, is growing from year to year.
In the opinion of specialists and players on the franchise market, the world recession did not threaten this system. � The crisis in Poland is (no more than) a delicate slowdown. Defensive branches, such as that of foodstuffs, are not feeling the pinch in terms of revenues; the customer has simply moved over to cheaper lower quality products. At times of crises, all methods which increase security in running a business are good. Franchising is just such an idea for minimising risk in difficult times. Over the past year quite a few takers ready to start their own businesses, who recruit themselves from the managerial cadres of corporations, are coming to the fore. Corporations are experiencing difficulties and have released quite a few experienced people into the market. Such �managers-shipwrecks� are not interested in franchising by accident - says Arkadiusz Słodkowski, chairman of the consulting firm Profit System which monitors the franchise market in Poland, adding that despite the crisis, the growth trend in franchising has been maintained.
Equally in Łukasz Chady�s opinion, franchising is a sufficiently good and effective solution for it to be able to develop despite the crisis. � Its trump is also a question of finance � partners who join the franchise system get a number of benefits for which they themselves would have to pay a great deal � stressed Łukasz Chady, the ABC brand supervisor at Eurocash Cash&Carry. Another trump in franchising that cannot be overvalued is also the possibility of building up a business under a known brand on the market. In the opinion of Łukasz Chady, success in franchising is primarily influenced by a clearly defined franchise offer, precisely setting out the rules of cooperation. � And of course the implementation of these principles. The success of abc is possible precisely because franchisees entering the network know what sort of support they�ll have from us, and how it should be utilised in operating on the market. Our franchise style is very flexible, which means that every shop adapts itself to what its customers expect � says Łukasz Chady.
A branch for tough-guys
I hope that in the nearest time ahead there will be neither an increase in excise duty nor the introduction of prohibition, nor sales of alcohol only after 1 pm. If we have survived so many ructions, then we will manage in the future as well. It�s not a branch for everyone, only for the tough guys, said Andrzej Szumowski, the deputy chairman of Wyborowa (vodka company) and chairman of the Polish Vodka Association.
- What, apart from consolidation, do you regard as particularly important this year for the production sector and trade in strong alcohols in Poland?
� Undoubtedly the most important event of that sort was in 9 percent increase in excise duty at the beginning of the year and the crisis. Especially the first of these messed up production and trade. When the minister of finance announced his decision � in November and December last year, there was a stampede of wholesalers placing orders. That�s an understandable phenomenon. Lower rate excise duty purchases give the opportunity of earning on alcohols after the higher excise duty rates come into force. The ordered bottles filled the storage space in warehouses and shops alike. That�s why, when the excise duty went up, the sales rates of producers to wholesalers and retailers went down. Retailers began to sell their reserve stock. At the moment the market is slowly calming down but the effects of last year�s buying spree are still being suffered by producers. The excise duty hike also caused further unfavourable conditions from the viewpoint of the producers and the State Treasury �growth of the grey economy in this sector. That also has an effect - a drop in orders. This could have been foreseen. When it comes to competing for customers, prices differing by literally groszes, and that�s what�s happening with lower quality alcohols, an increase in excise duty is tantamount to these consumers moving over into the grey economy for their supplies. The world crisis also did it�s bit of course.
� What sort of results do you expect this year at the end of December as compared with last year?
� First prize for the person who knows. We have the pre-Christmas period ahead of us hence there should be an increase in alcohol sales. Apparently the symptoms of the economic crisis are abating � it could be that this will lead to an increase in the consumption of more expensive alcoholic beverages.
� Have you noticed a drop in margins or the number of outlets selling strong alcohols?
� As far as the drop in the number of shops offering strong alcohols is concerned, we have not noticed any such reduction in their number at home. Alcohol is attractive to retailers: it is fast moving on the shelves, attracts customers, and helps increase the sales rates of other groceries. In Poland it won�t do to put only vodka on the table. You have to offer a snack with it. When it comes to margins... Here everything depends on the price of the alcohol and, obviously, the price which a customer will take. Vodka at a price of PLN 20-22 carries profit of a mere couple of zlotys which goes to the producer, the wholesaler and the retailer. In the case of the cheapest alcohols, the earnings come from sales volumes. But if we are to speak of known, expensive brand products, then earnings are indeed higher. Only that there are outlets where only single bottles of such beverages are in stock.
� What do you expect in the immediate time to come?
� I hope that it will be neither an increase in excise duty nor the introduction of prohibition or licensing hours with alcohol sales from 1 pm. Having survived so much turbulence in the past, we�ll also cope in future. It�s not a branch for everybody, only for tough-guys.
Whisky getting frisky
At the sales outlets monitored in Nielsen�s surveys, the value of the strong alcohols� market crossed the PLN 11.4 bn threshold in the period August 2008�July 2009. The biggest and still growing category on the strong alcohols� market is whisky � which accounted for 4.1 percent of the overall sales in the period under consideration.
The analysis of strong alcohols encompassing categories like: vodka, brandy, cognac, whisky, gin, rum, liqueurs, are thus evincing sales volume growth of 11.6 percent, taking them up to 269 m litres. When buying stronger alcohols, Poles usually go for vodka � indeed, 91.3 percent of the strong alcohol market�s sales values. The remaining categories account for a mere 8.7 percent of the sales values.
Split honours
For the first time this year, two products have attained identical rates of availability in the shops in our ongoing survey. As a result, the title of Distribution Leader goes to two products: Winiary Pomysł na soczyste skrzydełka z miodem (Winiary idea for juicy wings with honey) from Nestlé, and Gostyń concentrated milk. On the day of the survey, both products were available in 70 percent of the shops.
Comparing the distribution rates of the two leaders in the various channels, we can see that the Nestlé product was slightly more available in hypermarkets (it was only absent in one outlet) and lower in supermarkets (Gostyń concentrated milk � 81 percent rate of availability). However, a fundamental difference can be seen in the medium and small traditional shops: in the medium sized shops, Winiary�s Pomysł na� scored decidedly better while in the small shops it was Gostyń concentrated milk. Analysing the average prices in the various channels, we can see a greater degree of divergence in the prices of the Winiary product � the difference in the average prices between hypermarkets and big stores (the most expensive channel for this product) came to 22 percent, while for the Gostyń product it was 10 percent.
Apart from the Leaders, only Masło ro�linne (plant-based butter) scored an over 50 percent rate of availability both in modern and traditional distribution channels � 81 and 52 percent respectively. The availability rate of this ZT Kruszwica product stretched from 88 percent in hypermarkets to 44 percent in small shops.
For every season and every occasion
The Top 15 most screened commercials in the period 12.-25.10.2009.
The current ranking of the TOP 15 most screened commercials in the period 12-25.10.2009, is dominated by edible perishables � from dinners and flavour-enhancing additives, down to sweets � both for dessert and for pleasure � and those essential thirst quenchers. This time only two commercials represent the OTC category � Strepsils tablets (second place) and Nurofen Ultra Forte (seventh place). Actimel Danone came sixth while the Garnier Mineral deodorant came eighth � because after all our external ambiance is no less important to what we carry inside.
Foot gently on the brake
The number of supermarkets in Poland is still growing and has gone over the 2000 mark. However, the forecasts for their further increase in number are somewhat more cautious than a year ago. Though in this crisis period the triumphs are being celebrated primarily by two other modern trade channels � discounters and hypermarkets, that does not mean that supermarket operators are abandoning development plans for this format in their networks. As our most recent ranking shows, the supermarket segment remains very dynamic. Within the framework of one chain, the opening of new branches sometimes comes in pair with closures of less remunerative outlets.
More shops, more sales
At the end of 2008, there were nearly 386 000 shops in Poland, which means growth in comparison with 2007 of nearly 4 percent. 97 percent of the entrepreneurs whose basic type of activity is trade employed no more than an average of nine workers in 2008, according to the latest figures published in the Central Statistical Office (GUS) report entitled �The Internal Market in 2008�.
According to the Central Statistical Office (GUS) report entitled �The Home Market in 2008�, of the 3.7 m businesses entered in the REGON register, at the end of 2008, over 2.8 m were trade service sector enterprises, which makes it 76 percent. Nearly 40 percent of the overall figure of registered service enterprises belong to the trade sector.
In the course of 2008, the number of entities carrying on service-based activities grew by 1.4 percent, however, in the case of trading enterprises, there was a slight drop in the number of enterprises � of 1.2 percent as compared with 2007. But that does not alter the fact that in Poland, trade continues to play a significant role in the national economy, lying in second place � behind industry - in terms of the factors making up the GDP. Within the framework of �Trade and Repairs�, the structure of enterprises carrying on trading activities last year shaped up as follows: 23.9 percent was made up of enterprises whose basic type of activity is wholesale � growth of 0.1 percentage point, while the 64 percent held by retail trade signified an 0.7 percentage point drop. Among enterprises as a whole, for which the basic type of activity is trade, in 2008, 96.9 percent was made up of enterprises employing no more than ten workers. The share of this group of enterprises has declined by 0.2 percentage points as compared with 2007.
In 2008, retail sales, in terms of current prices, struck the PLN 564.7 bn mark. Retail sales outlets sold goods worth PLN 544.5 bn of which PLN 146.5 bn went on food and non-alcoholic beverages, PLN 47.5 bn went on alcohols and tobacco products, and PLN 350,4 bn on non-edible goods. Growth in fixed retail prices was registered in 2008. The retail sales rate in fixed prices as achieved by both trading and non-trading enterprises was 5 percent higher than a year earlier. Higher than the average growth rate � by 10 percent � were the sales registered by non-edible consumer goods. Sales of alcoholic beverages and tobacco products rose by 2.4 percent in comparison with the year before.
Any time is a good time for consolidation
Wholesalers, who strive for aims with prospects, are consolidating. The front-runners of Polish chemical-cosmetics wholesale have firmly committed themselves to these processes. Here its not so much the crisis that is at issue but the implementation of a long-term development strategy � said Dariusz Pasek, the sales director of Grupa Południe Sp. z o.o.
- How is the history and today�s status of the Grupa Południe to be viewed?
- The beginnings of Grupa Południe�s activities go back to 1997. The group is made up of 13 chemical-cosmetics wholesalers. We cater for over 33 000 independent chemical and cosmetics retailers � both those belonging to chains and independent ones. We have over 60 contracts signed with Polish and foreign producers. To date our remit embraced the southern and central areas of Poland, however, latterly we have expanded out into northern Poland as well � as from last July the wholesalers Jareks from Ko�cierzyny has been operating as part of our group. That is the continuation of the process of bringing together further wholesalers within the Grupy Południe framework. Earlier, in July 2008, two were joined by the firm Ania from Rzeszów, in July this year it was the firm Hazbi from Łowicz with a branch in Łód�.
- Is the process of amalgamating other wholesalers within the framework of the Group in plan?
- I do not hide that we are talking to further firms. Looking at the market we see that it is a generally binding trend- every one is joining forces and wants to fight in alliances. Grupa Południe is based on family firms, mostly established in the 1990s. Hence they are stable entities with a specified position on the market. We have come together so as to make better purchases � together we achieve better turnover rates, so we are more competitive , and our negotiating potential is greater. This carries over into an ability to give retailers and sub-wholesalers an interesting and flexible offer.
The thief of kitchen time
Sales of ready-made meat and vegetable dishes registered growth in both value and volume by 12.7 and 6.1 percent respectively in the period June 2008�May 2009. This category is already worth over PLN 366 m � a sum that sufficed to purchase over 40 million kilogrammes of this category�s products. This is not surprising given the �shrinking� day for most working people.
The best selling type of dish remains beans which accounts for 17.9 percent of the category�s sales volumes though it does ever so slightly lose out if we compare it with the analogous previous year figures. Dumplings, on the other hand, are gaining in share. A further category of the ready-made dish market are instant dishes. The category so defined is demonstrating dynamic two-figure growth trends both in sales volumes and values. In the period June 2008-May 2009, the instant dishes market was worth PLN 53 m with sales volumes reaching 4.4 m litres. These dishes in their vast majority are packed in containers. In the analysed period, 98.3 percent of the category�s sales volumes were actually dishes packed in containers which constitutes growth in the significance of this type of packaging of 1.3 percent at the expense of those dishes which come in sachets.
Strong private labels
The category of cakes generated sales of 65 209 tonnes which brought in revenue of PLN 1.1 m in the period September 2008�August 2009, according to MEMRB data. Compared to the analogous previous year figures, this represented growth of 5.8 percent in sales volumes and 10.4 percent in value.
The cake category includes biscuits and related products - sponge cakes (with jelly and/or chocolate topping), tea biscuits, gingerbread/honey cake, digestives. It is precisely the segments of tea biscuits and sponge cakes that make up the biggest parts of the market of cakes , reaching in the analysed period 64.5 percent in terms of value and only 5 percentage points less in terms of volume. The biggest rate of growth in the analysed 12 month period characterised two relatively small segments, that is, sponge cakes and digestive biscuits, which grew in terms of value by nearly 30 percent.
Kasia � the new-baked Leader
The baking margarine Kasia is now Unilever�s third product this year to have become the Distribution Leader. In �DD� 8-9/2009, the most widely available product was the Knorr Nudle Amore Pomidore (tomato noodle soup) � registering a 75 percent rate of availability in the shops, while in �DD� 11/2009 Lipton Yellow Label scored an 86 percent rate of availability. Kasia�s result is also the best out of all Unilever products included in our ongoing survey this year.
The 89-percent rate of availability in the shops comprised the full 100 percent presence in the monitored hypermarketds and supermarkets and the 81-percent rate of availability in traditional shops. The average price of Kasia was PLN 2.20, and of course it was cheapest in the hypermarkets, where on average it was 15 percent cheaper than in all other outlets. Kasia has already been the Distribution Leader in 2005 and 2008.
Second place was taken by the universal seasoning Vegeta (75 g), which was avasilable on the day of the survey in 83 percent of the shops. This is 15 percentage points better than that achieved by the 200 g version - see �DD 16�/2009. The distribution rate of Vegeta fluctuated between 75 percent in small and big shops, and 94 percent in hypermarkets.
Chicken stock from Winiary (6 cube packets) were available in three out of four of the shops visited. The difference in the average price on this product between hypermarkets and small shops came to 19 percent � i.e. PLN 1.60 and 1.93 respectively.
Autumnal para-pharmaceuticals and sweets
The Top 15 most screened commercials in the period 14.09.-27.09.2009.
Autumn is in full swing, so its no wonder that the current ranking of commercials is dominated by spots for OTC medicines and sweets which � apart from their qualities in terms of taste and flavour � not infrequently have a therapeutical role to play in autumn. In this ranking, the crown goes to Ferrero Polska with five commercials. Ssecond place goes to GlaxoSmithKline with two spots. The category of sweets also included Kraft Foods� Prince Polo chocolate wafers commercial � which came 12th, while in the OTC medicines category Reckitt Benckiser�s Nurofen Ultra Forte � came 4th, and US Pharmacia�s Gripex tablets came 13th. However, since man doesn�t live by madicines and sweets alone, the ranking produced by TNS OBOP also includes � albeit only five, but still� � food commercials falling outside the OTC and sweets categories.
OCTOBER
We are planning a chain of 1200 shops
The Musketeer Group, which brings together independent entrepreneurs managing the Intermarché and Bricomarché supermarket chain stores, has launched a new logistics base. The centre is in Panattoni Park in Mysłowice, Silesia. That is the Group�s second countrywide distribution centre which has come in response to the challenge coming from the network�s rapid expansion.
The Musketeer Group has had a logistics centre at its disposal in Poznań since 1996 and together with its newly opened base it belongs to the Musketeer Group�s ten distribution centres in Europe. The new centre, 28 500 m2 in area, will be supplying Intermarché shops in south-west and central Poland, with a further target aim of extending its span to the south-eastern region as well.
The new hall is now the fifth building making up the Panattoni Park in Kosztowach in Mysłowice. The investment was financed by the company Panattoni Europe, which is part of the Panattoni Development Company, one of the world�s biggest commercial property developers. The Musketeer Group is leasing warehouse space on the strength of a ten year contract with an option to have it extended. In turn, the current running of the warehouse has been entrusted to an outside operator � the firm ND Logistics. � We took into account the high quality of logistical solutions offered by this operator, the good infrastructure of the region and access to a well-qualified workforce � says Wojciech Chudzik, chairman of the ITM Baza Poznańska management board. � We will be able to compare the pluses and minuses of the place functioning on an outsourced basis (in Mysłowice) and the base we manage ourselves (in Poznań).
Building a new centre is a response to the challenge arising with the network�s expansion. The Musketeer Group is the biggest franchise network in Poland in the category of supermarkets, which currently manages 141 Intermarché outlets, 67 Bricomarché stores(home and garden type stores) and 20 filling stations. In 2008, 24 more sales outlets arrived on the scene, (which included 16 Intermarchés). According to Jacques Schubert, the chairman of the ITM Polska management board, the company managing the Musketeer Group in our country, expansion shall continue: - Next year we plan to open 27 Intermarché stores, and the intentions for the end of 2011 speak of 230 outlets. A similarly dynamic rate of growth shall also be the part of the Bricomarché network � 12 stores were opened in 2008, in 2009 it will have been 15, and the plan for 2010 is 17 (by the end of 2010 we will thus have a network of 88 stores). Further plans are even more ambitious. � The target in the medium term perspective that we are setting our sights on is a network of 1200 stores � 800 Intermarché outlets and 400 Bricomarchés. Moreover, we want to develop our network of filling stations located next to the Intermarché stores � they are to be built next to all the stores under that logo, wherever the opportunity arises � adds Marek Feruga, member of the ITM Polska management board.
The new centre will meet the growing demand for storage space and the Intermarché chain�s supply needs. The location of the base was primarily determined by its convenient location � in the centre of the Silesian conurbation, near the main arterial routes (the A4 motorway and S1 highway) and near current and planned sales outlets. � Due to the proximity of major roads in certain instances we can deliver supplies more rapidly from our base in Mysłowice, even to those shops which are closer to our base in Poznań. With fresh products, a rapid delivery service is of inordinate importance with regard to quality of service provided to the shops � says Wojciech Chudzik. The need to build a new base became apparent the moment the warehouse in Poznań reached its capacity limit in the 2007/2009 period. With constant development and opening further branches in mind, the board decided on a new investment. The whole process � from the decision to the opening of the building � took 12 months. Wojciech Chudzik: - The two bases is not the end of the story. Their number will be adapted to the needs stemming from the rate of growth. The example of the base in Mysłowice showed that in the course of about a year, we are able to carry it through, the whole process � from the initial decision to the opening of the base. We have prepared several variants for future operations in this field of endeavour, and we will be developing them.
The results so far give grounds for optimism. Last year, the Musketeer Group achieved sales of over PLN 2 876m in Poland, of which PLN 2 350m was accounted for by Intermarché. That�s 14 percent more than in 2007. The entire Group, operating in eight European countries, achieved sales of EUR 34.8bn in total. That signifies growth of 6.4 percent in relation to the previous year. � Last year, together with Belgium, Poland contributed in the greatest degree to the Group�s 9.5 percent sales growth outside of France � said Michael Pattou. � This year�s sales in Poland should be a further 16 percent higher.
Like in an Italian restaurant
A shop manager cannot spend all day in the stockroom or office and concentrate solely on taking deliveries and ordering stock. He should come out from behind the counter and establish direct contact with his customers � argues Marek Wawrzak, chairman of the management board of the Poziomka shop chain, un an interview with �Detal Dzisiaj�.
- The Poziomka network came into being in 2004. In five years it has grown into a network of over 170 shops operating under that logo. Are you planning further equally dynamic development in the immediate future?
- It would be easiest to say that we want to open a further 100 or 200 shops. But we want to do nothing by force. We want it to be a natural process. The network will be developing naturally � also in those provinces where we�ve been absent so far (the network currently operates in the following provinces: Mazowieckie, �więtokrzyskie, Lubelskie and Łódzkie � ed.). Above all we are after the southern part of the country. We are particularly looking for places where our product range would accord well with local customer needs. We don�t want to start any revolution in in the way we have run our network to date. But I wouldn�t be surprised if the number of Poziomka shops were to double in the immediate future.
- What sort of partners are you on the lookout for your network?
- We don�t want to press-gang anyone. We are seeking people who are aware, people who know what they want to achieve. The point is we are seeking people who come to our network not just because they want a job, but who want to run a business. For us, the measure of success is a situation in which after a certain time, our franchisees open further shops under the Poziomka logo.
- What conditions must a shopkeeper fulfil to join your network?
- The most important factors are loyalty and mutual trust. Without that there can be no success. Questions such as sales space or location recede into the background (the average sales space of a Poziomka shop is 55 m2 � ed.). The stable financial condition of a given shop is also important. Signing a franchise agreement carries obligations for both sides. Shopkeepers gain financially on this, their profits rise, but on the other hand they must abide by certain standards, avail themselves of a defined assortment of goods, and honour contracts signed with specific contractors. He who breaks these rules must leave our network. But that is increasingly seldom seen. Most shopkeepers come to us in full awareness of our rules. For them, joining our network is not the last plank of survival but only the chance to run a successful business. It is far easier to cooperate with people like that. I also regard that as our great success.
- How is your network coping with the current market situation: on the one hand there is the economic slowdown, on the other the large format store chains which are gaining in strength?
- This crisis seems to be embedded in the human psyche, but we do not see it. In contrast to appearances, we have even noticed a quickening pace in our shops. Customers are buying what they usually buy, they are not shrinking away from good quality products, although they are spending their money more sensibly. Thus the most important thing is for our customers to find the products they need on our shelves every time.
- And the competition from big networks?
- Single shops will find it increasingly difficult to stay the course on the market although some will do so for sure. About one or two in ten will survive. We even manage to increase our profits in the neighbourhood of large format stores. People like and want to do their shopping close to home. I myself do my shopping in a nearby shop. I�ve got everything I need there. That is actually the basis of success � a comprehensive and varied choice adapted to the tastes of local customers. The customer must have a choice. In this respect we are flexible. The ranges of goods in the various shops may vary among themselves. It is also important that the customer has good contact with the shop assistant. Everyone should have the possibility of saying what�s missing in the shop, and what are the products they expect to find. We can then put it on the shelves. We are open to innovation. But space must always be made on the shelves for basic products which generate the highest sales rates.
- You speak of good contacts with customers. How important is this to running a shop?
- We devote a lot of time to staff training, for personnel to be sensitive to customer needs. A shop manager cannot spend all day in the backroom, or in the office, and concentrate solely on taking deliveries and placing orders. He should come out from behind the counter and establish direct contact with his shopper. We would like it to be in our shops like it is in Italian restaurants � the owner greets his guests outside the shop, invites them inside and asks �How can I help you?�.
Panty liners � the category�s driving force
According to MEMRB data, the female hygiene product market attained a value of PLN 703 m for sales of almost 2.9 m single items of sanitary towels, tampons and panty-liners in the period September 2008�August 2009. In comparison with the previous survey period, the category�s sales have gone up 4 percent in value and 3 percent in volume.
The biggest part of these hygiene products is accounted for by sanitary towels which had a sales share value of 65 percent and a volume share of 54 percent. The second biggest segment in terms of sales values is that of panty-liners which took 37 and 20 percent of the market respectively. This was also a segment which contributed most to the category�s growth � the sales rate for these products was twice that of the whole hygiene products� market put together.
Nearly 90 percent of the market�s value has been carved up by three manufacturers: Toruńskie Zakłady Materiałów Opatrunkowych (TZMO) - 44 percent, Procter&Gamble - 33 percent. and Johnson&Johnson - 13 percent. The Bella brand (TZMO) was the most popular brand both in the segment of sanitary towels where its value constituted 53 percent of the sales, and in the panty-liner segment � which took 39 percent in terms of value. In the first three most frequently chosen sanitary towel types, there was also Procter&Gamble�s � Always brand - 24 percent in sales values and Naturella � 16 percent. On the other hand, among the panty-liner segment leaders were the brands Carefree (Johnson&Johnson) and Discreet (Procter&Gamble). In the tampons segment, the unchanging leader is Johnson&Johnson�s OB. brand, whose sales in the period under review came to 62 percent of this segment�s sales values.
Alkali batteries charging up � to nearly 12 percent
The battery market in Poland, understood to include both the alkali and zinc varieties, reached a value of almost PLN 230 m in the past year (that is, in the period July 2008�June 2009), which translates into over 142 m single batteries sold.
Sales in comparison to the same period last year, grew, both in terms of value and volume of units sold, by 7 and 3 percent respectively. This growth was mainly generated by the alkali battery segment whose year-on-year sales rates have been increasing by 11.5 percent, while zinc battery sales have dropped in the same period by 1.3 percent. In effect, the alkali battery segment has gained in importance, achieving over a 67 percent share in the battery market in terms of sales values and over 55 percent in sales volumes.
Heinz, Knorr and Mentos rule
The Top 15 most screened commercials in the period 31.08.-13.09.2009.
Heinz Ketchup, Knorr stock cubes and Mentos chewing gum are the three great winners in the most screened commercials� ranking. The interesting point in the ranking this time round is that only one non-food category item has made the list.
Hochland the Distribution Leader again
For the first time since 2005, the title of Distribution Leader has gone to a product from Hochland � the processed sliced Gouda cheese. The distribution rate it registered is the highest ever scored by Hochland in our ongoing surveys. In June last year, this same product was available in 75 percent of the shops that were monitored. Thus its distribution rate level has risen by 14 percentage points.
Heinz tomato puree in 200 gram jars was available in 78 percent of the shops. This product was the Distribution Leader in 2006-2008, and its current result is the best we ever registered. However, this time it was not the best result in the shopping basket under survey. The availability of Heinz tomato puree ranged from 63 percent in medium sized shops to 88 percent in the hypermarkets.
Hortex 100% juice, available in 73 percent of the shops, is this brand�s second product to have been surveyed this year. The registered result is
32 percentage.
SEPTEMBER
Ever brighter prospects
It is precisely from us that not just individual customers but above all small shopkeepers and stall holders operating in city centres that are taking their supplies. Street market trade is also reviving slowly, together with a resurgent conviction that cheaper and equally fresh products can be bought there as those in the shops � said Jan Kuros, chairman of the management board and director general of Beskidzki Hurt Towarowy S.A.
- Beskidzki Hurt Towarowy has been operating on the market for many years. Could you please tell us something about the company�s origins?.
- The company was set up in 1996 as part of the government�s programme of building up wholesale markets, initially as a limited liability company, but already in June of that year it was transformed into a joint stock company. Up to 2002 it operated under the name Beskidzka Giełda Towarowa (Beskid Goods Exchange), when its current name - Beskidzki Hurt Towarowy (Bedkid Goods Wholesale) � was adopted. In the beginning the only shareholder was the State Treasury, then part of the shares were acquired by the municipality and private investors.
- Did the exchange function at its present location from the start?
- No, earlier the company ran an open market in ulica Warszawska, almost in the very town centre of Bielsko-Biała (it had started at the beginning of the 1990s). In 1997, the programme of building the exchange in a new place was commenced, when the location was contributed by the municipality. The investment programme was very ambitious and not best matched to the market realities. Indeed, it was an unrealistic programme because it assumed the construction of ten trade halls on a ten hectare site. It was to have been an enormous market completely out of sync with the needs of this region. Financial problems (difficulties in attracting capital or drawing loans) verified the shape of this investment. One trade hall was built and another � a covered area built on the site of an unfinished trade hall project (which was the source of problems when it was ready for use). In December 1999, the exchange was moved to its present location.
- What are the current possibilities of Beskidzki Hurt Towarowy and to what degree are they being utilised?
- There are 68 box units in the main hall which are 100 percent let. Additionally, in 2008, a wooden shelter was built. The remaining operators trade from containers on the square and apart from that there is a Sunday market (clothes, footwear, hardware, furniture, partly food as well). The Sunday market is made up of about 700 stall traders. Each Sunday about 1000 to 2000 cars drive onto the BHT site and we have several thousand visitors. In periods of intensified trading (primarily the period September-December) these figures are considerably higher.
- Does the exchange bear visible signs of the effects of the crisis?
- Luckily, for the present, the symptoms of the crisis are hard to see. Above all, operators are not closing down their stalls. From conversations with them, it turns out that the economic slowdown does not represent a threat to their livelihoods, it might at most cause a transitory drop in sales rates. Beskidzki Hurt Towarowy is chiefly made up of small entities which are more flexible which, in times of crisis, is proving to be a valuable attribute.
Even in the current difficult market situation we can boast of one thing � although we are not a big market, we are achieving very good financial results. We were determined to get the company on track � pay off the previous loan, finance a new investment and at the same time we decidedly improved the image of Beskidzki Hurt Towarowy. It cost us a lot of effort but it brought effects. Together with building a new trade hall, even better prospects are looming into view before our market.
Cooperation on a win-win basis
Milk processors do not want the statutory regulation of prices and trading margins. At a difficult time for the milk branch, they are putting their money on high quality, innovative and functional products. They also see their chance for development through consolidation.
The continuing drop on the world�s market, as from autumn 2007, in dairy product prices, has not bypassed Poland. The dairy branch, to a great extent dependent on exports (it is estimated that about 20 percent of Poland�s dairy produce is sent abroad), in the face of threat of a considerable fall, was forced to bring down its prices. � The drop in dairy product prices on the world markets had a great impact on the situation in the Polish dairy branch for which export is a sort of safety valve. The decline in prices was also overlaid with the zloty�s very high foreign exchange rate, which only worsened the position of exporters. In consequence many firms were forced to keep very high volumes of stock in the expectation of change in market trends which � unfortunately � has not materialised to date or to selling products below their costs of production. Because of this, the financial situation of many firms succumbed to dramatic deterioration and also found its reflection in the price of milk purchase prices � is how the past year is characterised by Marcin Hydzik, chairman of the management board of Związek Prywatnych Przetwórców Mleka (The Private Milk Processors� Association). Additionally, for almost two years, the dairy branch has been struggling against a drop in demand for processed dairy products. In response to problems with sales, the selling prices of milk and its processed products have been reduced � which has had an effect on the revenues of the processors themselves and milk producers , but it has had no effect on consumer spending. Consumers have not felt these changes because retail trade, especially big trading networks, did not follow suit, and unlike the milk industry, did not reduce its retail prices. The differences between the selling prices of processed dairy products and retail prices inclined the state authorities to take up the theme of regulated trading margins and so-called recommended prices. However, this idea did not meet with everyone�s approval. Tomasz Głasek, the director of the sales department of OSM Piątnica, fears that regulated margins is a big step towards the destruction of Polish trade since it is usually the big trading networks that have many times lower margins and prices than small traders. And if their level is restricted, small shops will have to wind up their activities overnight. � Apart from that, how is such an undertaking to be organised? There are dozens of assortment groups on the market, hundreds of suppliers and thousands of products. Who and in what way will determine the margin and price levels? How and who will be checking them for compliance? � wonders Tomasz Głasek. And though there is a vast disproportion between dairy product selling and retail prices, and retail margins attain a high level, then the Private Milk Processors Association also takes the stance that statutory regulation of retail prices or margins will only have a knock-on effect with the costs being passed on to other links in the supply chain.
As the representatives of milk processors assure all distributors � irrespective of whether they are operating on the traditional or modern markets � their terms of cooperation are approximately the same. In the opinion of Maciej Roesler, the director general of the Polmlek Group: - Every form of cooperation, whether it is with wholesalers or retail chains, should be based on a win-win approach. Unfortunately, the relations of milk processors with representatives of distribution channels sometimes produce only one winner. � Cooperation with retailers takes most diverse forms. Unfortunately retailers prove incapable of cooperating with producers on all occasions, all too often they think only of themselves which in the long run cannot be of advantageous to either side. Within the framework of promotions, all too often we put our recommended price on the packaging and it is often the case that retailers take no note of this and sell at their own, much higher prices, which rebounds adversely on the shop�s and the producer�s credibility. Added to this, of course, come high fees which retail chains demand, causing a very real diminution of distributors� profitability rates � says Jacek Wyrzykiewicz, PR & Trade Marketing Manager Hochland Polska. Milk processors also draw attention to the unfavourable practice of retail chains, like shelf fees, additional fees for placing information about products in the shops� newsletters, the need to take back unsold goods, long settlement deadlines for the delivered products, all of which leaves much to be desired with regard cooperation. However, cooperation may also be looked at from another angle. � No one is forcing anyone to cooperate, we have a free market. Additionally, the high standards demanded by retail chains have positive impact on the level of service in total terms, thus with profit to all sides � explains Maciej Roesler.
The light segment takes over at 53 percent
The value of cigarettes (excepting the slim variety segment) sold in the period August 2008�July 2009, came to over PLN 16.2 bn. In comparison with the analogous period the year before, when the value of cigarettes sold came to not much more than PLN 15 bn, made it an 8.2 percent increase in value.
Here we are only talking about the value of cigarettes (excluding the slim variety) sold in the following retail outlets: small, medium and large grocery shops, kiosks, wine and cake shops, filling stations, and tobacconists. In the annual period ending July 2009, the number of cigarettes sold in these channels in Poland came to 44.2 bn single cigarettes, which is 8.6 percent less than in the analogous annual period ending July 2008.
Cigarettes of standard thickness constituted about 88.7 percent of overall cigarette sales values in the latter period, whereas a year earlier 90.4 percent of sales values were attributable to cigarettes other than the slim type. The sales values of these cigarettes are over PLN 14.4 bn, a figure sufficient to buy 39.6 m single cigarettes.
If we divide cigarettes by reference to their size, the biggest increase in sales values was enjoyed by the King Size variety, whose sales value share rose by 1.6 of a percentage point as compared to the previous year and constituted 76.2 percent of overall cigarette sales values. The second cigarette segment which year on year has increased its shares is that of the 100 mm length cigarettes which in the period August 2008�July 2009 constituted 11.3 percent of overall cigarette sales values, that is 1.4 of a percentage point more than in the analogous period the year before.
Analysing the changed cigarette sales share values in the various segments in terms of cigarette strength, we note that the strongest cigarette segment has lost out in relation to last year by 1.7 of a percentage point in its share and in the annual period ended July 2009, it constituted 35.5 percent of sales values of all cigarettes. In turn, the biggest cigarette segment of average strength (light) increased its sales share values in the whole category of cigarettes by 1.8 of a percentage point and in the last annual period constituted 53.4 percent of the overall cigarette sales value in Poland.
Nurofen and Tymbark on top
The Top 15 most screened commercials in the period 17.08.�30.08.2009.
At the top of the ranking compiled by TNS OBOP, in the period 17-30 August 2009, was the painkilling medicine Nurofen Ultra Forte. Coming fifth, which was an equally good showing, was the headache relieving medicine Etopiryny Kontrol, and two places further down the list came the spot for Strepsils sore throat tablets.
The end of August is still, however, a period of relatively warm weather, hence the high-riding positions in this listing of Tymbark�s drinks and lemonade, and of Caprio�s juices. The last days of the holidays are also one of the last opportunities to hold barbeque parties. That�s why there�s nothing to wonder at when seeing the high position of adverts of traditional barbeque additions � like Winiary mayonnaise, Heinz ketchup, and Warka beer. The remaining advertising spots that achieved distinction include commercials for the stain remover Vanish Oxi Action Intelligence Plus, the Nivea Volume Sensation series of cosmetics or the Łowicz brand Fasolowy Miks (pea mix).
A delicious champagne-and-orange flavoured Leader
A 78 percent rate of availability in the shops monitored in this round of our ongoing survey proved sufficient to secure the Distribution Leader title. In saying �proved sufficient� I have in mind the fact that there have already been rounds in this year�s survey in which the leaders achieved distribution rates of over 80 percent. Otherwise, the 78 percent rate of availability of Delicje Szampańskie (champagne-flavoured jaffa cakes) was a very good result.
This comprised an 88 percent rate of availability in the modern distribution channel and a 71 percent rate in the traditional channel. The registered distribution level of orange-flavoured Delicje Szampańskie (jaffa cakes) dropped in step with the decrease in shop floor space from 94 percent in the hypermarkets down to 56 percent in small shops. Comparing the average prices in the hypermarket channel with the remaining channels, the biggest noticeable difference is between them and the big shops � a 20 percent difference in the average price.
The second product available in over 70 percent of the outlets visited was Pepsi Cola. It achieved the highest rate of availability of all the products in this round�s shopping basket in the large format stores � 91 percent, and in smaller traditional shops (of under 300 m2 in size) its availability stood at 58 percent. The two litre bottle of Pepsi Cola was included in our survey for the first time. We have already checked out the one litre Pepsi Cola Light variety in June 2008 (�DD� 9-10/2008), which scored a 58 percent rate of availability in the shops.
40 percent less than forecast
The market saturation level is growing, the rate of expansion is falling � that�s how the past year could be summed up with regard to shopping centres in Poland. Developers have not had much luck in the last two years. In 2008, the development of this type of place was impeded by legal restrictions imposed on large format retail store development projects as from the middle of the year; and then, when the Constitutional Tribunal deemed these restrictions to be unconstitutional and everything was heading towards further untrammeled activity in this sector, along came the crisis which is the cause of suspensions and delays in the development of large format shopping facilities. For this reason the map only contains centres that were up and running by the end of July 2009 and it does not take into account, as was the case last year, completions/openings planned for the second half of the year because in numerous cases there are question marks hanging over the deadlines for such openings. Traditionally, our map presents shopping centres and parks and discount centres of a minimal trading space of 10 000 m2, and the listing does not contain merchants� centres which are groupings of outlets each outlet being several or more square metres in area.
As the latest report of Jones Lang LaSalle states, still in the first half of 2008, developers presented plans of intensive development even in towns of 40-50 000 inhabitants, and the forecasts for the size of trading space put into commission in 2009-2011 were twice as high as they are now. Currently, on the crest of the crisis wave, developers are increasingly frequently deciding on suspending their works in progress � as was the case for example, with Lublin�s Felicity or Rzeszów�s Millennium Hall � or a reduction in scale, particularly in the case of centres planned for places smaller than the eight main conurbations which, according to Jones Lang LaSalle account for over 60 percent of the leased premises in the shopping centres that are functioning.
In Poland, as emerges from the report prepared by Retail Research Forum in cooperation with the Polish Shopping Centres� Council (Polska Rada Centrów Handlowych) and DTZ, Cushman&Wakefield, Jones Lang LaSalle and Geni, that in the first half of 2009 over 227 000 m2 of modern retail premises in towns of over 100 000 residents were put into commission. The biggest developments opened in this period were: Galeria Malta in Poznań - 54 000 m2 of sales space, Cuprum Arena - 34 000 m2, Renoma in Wrocław - 31 000 m2, Mega Olimp - 31 000 m2 in Lublin, and Gemini Park in Bielsko-Biała - 27 000 m2. This year plans still include centres that are being built or finished, such as Galeria Przemy�l, Galeria Rumia, Galeria Jurajska in Częstochowa or Focus Park in Piotrków Trybunalski.
According to estimates by Cushman&Wakefield, at the end of Q2 2009, there will be 250 000 m2 of shopping centre space waiting for the resumption of site works. At this moment in time there are in total about 890 000 m2 of modern shopping mall space being built which is to be put into commission in 2009-2011.
Wide variety is the chief virtue
Interview with Iwona Stępień, deputy chair of the Centrum Handlu Hurtowego Obroki (Obroki Wholesale Trade Centre) management board.
- The Obroki Wholesale Trade Centre is the biggest wholesale food market in Upper Silesia. How did the Centre come about?
- Centrum Handlu Hurtowego Sp. z o.o. has been in existence since 2000, but its traditions go back to 1992, when the wholesale food market commenced trading activities under the name Katowickie Hale Targowe S.A.(KHT). The company KHT S.A. was set up by the Katowice municipal council, the bank Górno�ląski Bank Gospodarczy and the Centrala Zaopatrzenia Hutnictwa (Mining Supply Headquarters). In 1994 the name was changed to Katowicki Hurt Towarowy S.A. Upon the liquidation of the company in 1999, Centrum Handlu Hurtowego Sp. z o.o. was set up, its founder and sole shareholder being Centrala Zaopatrzenia Hutnictwa in Katowice. The Obroki Wholesale Trade Centre is a member of the Polish Wholesale Markets Association (Stowarzyszenie Polskie Rynki Hurtowe) and the World Union of Wholesale Markets, within the framework of which it conducts activities aimed at supporting, developing, promoting, and integrating the agricultural-food wholesale markets, bringing together the turnover in agricultural-food goods in Poland. As a member of the Regional Chamber of Commerce (Regionalna Izba Gospodarcza, we have also undertaken a number of activities aimed at promoting and supporting entrepreneurship in Silesia.
- It is the only such food products� supply base for traders for the whole enormous region of Silesia�
- Yes, our facility is very much needed by the region of Silesia. Every day the Centre is visited by about 2500 customers. The Centre�s undeniable virtue is its excellent location � in the immediate vicinity of the A4 motorway and the the fast through route Drogowa Trasa �rednicowa (one of the most important roads in Silesia). The whole site takes up 10 ha, of which the space available for let is 30 000 square metres. Trading-storage points are located in three halls and two shelters, and there is also a fruit-and-vegetable exchange.
- The agricultural exchange is usually a key infrastructural component of the wholesale markets. In the case of Obroki, however, it is of a supplementary character.
- At present, Obroki offers a broad range of processed products, though what we lack is a market of unprocessed agricultural products in the true sense of the word. On an area of 6700 square metres, we have the makings of an agricultural exchange but we want it to function in an analogous way to what obtains on other modern wholesale markets. The lack of space for further development is, however, a barrier.
- In that case is there a possibility of acquiring additional land with future development in mind?
- For a long time now we have been making efforts in that direction. To create a market corresponding to contemporary European standards, we should have at our disposal an area of at least 20 ha. We have taken steps aimed at acquiring the areas adjacent to us lying empty after the liquidation of the Kleofas mine. But what of it that in 2006 we won the tender to buy this land if for reasons independent of us they pulled the plug on the sale. However, we are not giving up on these plans since this land remains unutilised. It�s an ideal place for an investment such as ours.
- Fully thought out infrastructural solutions are usually the strong point of cash and carry outlets. In the direct neighbourhood of Obroki there is a Makro store � does it constitute strong competition?
- Cash and carry type chains will not satisfy all the needs of traders. The biggest virtue of wholesale markets is the wide range of goods on offer. An excellent example of this is the choice of tea and coffee � Obroki customers have 300 varieties to choose from which is of an incomparably greater size than what cash and carry outlets have on offer. To be sure, the competition beats us on the infrastructure count, but that stems from the fact that our halls are a memento of the Provincial Internal Trade Enterprise (Wojewódzkie Przedsiębiorstwo Handlu Wewnętrznego) headquarters of the 1970s. Nevertheless, we are doing everything to create, within the bounds of existing possibilities, the best possible conditions for operators and traders. In this respect, operators are increasingly demanding and take note of aspects such as ease of access or additional services. We admit that after Makro opened we lost a relatively big proportion of our customers, partly due to peoples� fascination by what�s new. Subsequently, however, many people trickled back. Many customers make part of their purchases in Makro, and partly from us, mainly due to the wide range of products we have on offer.
- Apart from the wide range of goods on offer does Obroki offer any other advantages to its customers?
- Our individual approach to customers is a very important attribute. It�s not only the possibility of doing one�s shopping in a less anonymous way, of basing this activity on contact with a fellow human being, but also a number of advantages of a more tangible character. The informal inter-dependencies that arise between parties that cooperate with each other for years allow for such solution as deferment of payments � while in cash and carry stores we typically pay at the till, with additional discounts and rebates.
Soya oil sales rose nearly 119 percent
The volume of sales obtaining on the edible oils and olive oil markets in Poland in the period June 2008�May 2009 settled at the level of 164.2 m litres, while the corresponding sales values reached PLN 975.5 m. This signifies the clear growth of this category both in volume and value in comparison with the period June 2007�May 2008 by 3.6 and 17.7 percent respectively.
Among the most important products on the cooking and olive oils market, apart from the latter variety, are rape-seed, sunflower and soya oils. The 3.6 percent growth of the whole category in terms of sales volumes in comparison with the analogous period a year earlier (June 2007-May 2008) was driven primarily by a significant growth spurt in olive oil sales � of 14.1 percent, and by the very dynamically developing though still quite small segment of soya oil � which enjoyed growth of 97.3 percent. In this period, rapeseed and sunflower oils maintained a somewhat stable level of sales volumes.
Analysing the market from the sales values perspective, one cannot but help notice the dynamic growth of 17.7 percent as compared with the analogous previous year�s figures (June 2007�May 2008) in cooking and olive oils, fuelled by growth in sales in all product varieties in this category (rapeseed, sunflower, soya and olive oil). However, in the period June 2008-May 2009 only soya oil�s 118.5 percent outpaced the overall market rate of growth, thereby giving this segment increased market share.
A branch resilient to crisis
The packaged pet foods market, entailing the cat and dog food segments, brought in receipts of PLN 1.2 bn in the period May 2008�April 2009, which purchased 182 000 tonnes of these products. The main driving force behind this market�s development was the dry dog food segment which accounted for 32 percent of its value and 41 percent of its volume in the period May 2008�April 2009, and in cash terms achieved 10 percent growth with a corresponding 4 percent growth in volume as compared with the previous year�s figures (May 2007�April 2008).
The unquestioned pet food market leader remains Mars Polska, which in the period May 2008�April 2009 held a 50 percent share of the market in terms of value and 41 percent in volume. That constituted treble the share value of second placed own brands and 7 percent more than their volume. The third and fourth places on the market were taken by Nestlé Purina and Royal Canin with shares (in terms of zlotys) of 10 and 6 percent respectively.
84 percent rate of availability of Harna�
As from 2005, Harna� beer has now won the Distribution Leader title for the second time. Its first victory came in September 2006 when this beer belongining to the Carlsberg portfolio was available in 65 percent of the shops visited on the day of the survey. Thus the current result is a considerable improvement and, indeed, its 84 percent rate of availability was the best achieved by any of the beers taken under the microscope this year.
Red Bull � the synonym of the energiser drinks� category in Poland � was available in 70 percent of the shops visited on the day of the survey. It was the only product in this round to have achieved a 100 percent rate of availability in the hypermarkets. In the remaining store formats, its rate of availability ranged from 38 to 81 percent (in small and big shops respectively).
Vanish, Danone and Clear dictated the terms
The Top 15 most screened commercials in the period 20.07.�02.08.2009.
The results of the ranking of the most screened commercials in the second half of July, brought surprising results � the top five contains three products belonging to the household chemicals category, one of which, Vanish from Reckitt Benckiser, came first. Such type of situation seldom occurs because usually the leading pack is dominated by food category commercials.
Household chemicals and cosmetics category product commercials constitute 1/5 of all the spots in the TNS OBOP ranking for the period 20 July�2 August of which the three spots in question � following first-placed Reckitt Benkckiser�s Vanish � were third-placed Clear shampoo from Unilever and fourth-placed Gillette Series shaving gel.
Customers delivered their verdicts
This is now the third edition of this competition. This year the surveyed categories took into account, to a greater degree than in previous years, service network outlets. The survey thus encompassed not just various formats of trading networks but also chains of hairdressing salons, cinemas, cafés and restaurants. Such an expansion of the various categories reflects to a larger degree the transformations in Polish society in which, despite the current market squalls, an ever increasing proportion of household budgets are designated for expenditure on services.
On the podium for the third time running
Auchan has now won the title of Master of Trade and Services for the third time. In the previous two editions it had won distinction in the category of Hypermarkets; this time the French chain had the distinction of representing the entire category of food stores. In this year�s survey, Auchan has outstripped its food store competitors in all areas that came under scrutiny. Above all, in the opinion of respondents, it offers the most convenient forms of payment and the best assortment of goods. This chain also got a good average mark. The Piotr I Paweł delicatessen chain which had won two years ago in the supermarkets category, this year was appreciated most for good service and, like Alma delicatessens, for its attractive displays of goods.
No change at the top
The battle for the title of MasterCard Master of Trade and Services in the category �My health and beauty� was, like last year, very hard fought. The winner finally proved to be Sephora. By the same token, this French chain selling perfumes and cosmetics for men and women retained the throne it had captured two years ago. The defeated contenders included the Rossmann drugstore chain and Douglas perfumeries. The Sephora chain, which belongs to the concern LVMH is most valued by Polish consumers for its attractive displays of goods and good locations with easy access. However, the general assessment given by Pentor Research International�s respondents to the leading trio were very close.
New quality
The category of �Leisure time-linked services� made its debut in this year�s MasterCard competition. The aim was to find the best chains of outlets in which we spend our free time most willingly. This category includes: cafes, cinemas, bookshops, restaurants and � for those who prefer active leisure � sports shops. The winner in this category was Empik, which left equally popular rivals on the battlefield, notably � Multikino and Helios/Kinoplex (cinemas) and the Coffee Heaven coffee shop chain.
Castorama dominates
Castorama became the winner in the category �My house and garden� in the MasterCard ranking. The British chain also won last year and two years ago, but the current victory is all the more precious because this year the category was expanded. In 2007 and 2008, Castorama was the leader in the do-it-yourself store MasterCard ranking. This year the category was treated considerably more broadly � besides builders� merchant chains, competition was also provided by brown and white goods trading chains, interior decor and furniture stores. Meanwhile yet again, the British giant showed everyone a clean pair of heels.
Change on the podium
This year, first place in the category of filling stations went to Orlen which by the same token displaced BP � the winner of the last two editions of the competition. The chain of filling stations at which drivers in the course of the last six months tanked up most frequently was at PKN Orlen outlets. But the chain�s victory, as in the case of other categories, was decided not by the frequency of visits to its outlets, which often stems from the size of the chain and its presence throughout the land, but the general assessment and assessments of quality in various categories.
Manufaktura the most popular
In the Mastercard and Weber Shandwick survey, in the category �My shopping centre�, first place in the ranking was taken by the much awarded (in various domestic and international competitions) Łód� Manufaktura, which respondents appreciated above all for its assortment of goods on offer. The assortment of goods also proved to be the strong points of Silesia City Center and Poznań�s Stary Browar shopping centres which took second and third place respectively. The Łód� Manufaktura, though, did not score the highest number of points in every specific section. It was appreciated primarily for the best range of goods on offer.
Leaders Apart
In the category �My clothes shop�, which apart from clothes, also took into account shoe shops and jewelry shops with knick-knacks, the best result was achieved � looking at the assessments of the various shops in particular segments � was the Apart chain. These shops are valued primarily for offering the best service. They also stand above their competitors in terms of good information about the chain addressed to consumers, their good locations and accessibility. Second place was taken by the W. Kruk chain which, according to respondents, has the best goods� display, while third place � the Wittche chain, was appreciated, among others, for offering advantageous forms of payment.
The winner.pl
In the category E-Zakupy (e-shopping) in which internet shops competed with each other in price comparisons and auction portals, the proud title of winner was taken by the webpage Allegro.pl. The victory of this, the biggest auction portal in Poland, is unquestionable - Allegro.pl got the highest ratings out of all the surveyed operations. The title of MasterCard Master of Trade and Services was won by Allegro among others because it offers a plentiful array of goods, as well as a convenient and efficient form of settlement.
AUGUST
It�s not enough to be a legendary brand
Twenty eight branches have opened since the chain sprang into action in February 2008. That�s not such a strong showing for a year and a half of activity. Considering that the choice of store � apart from its assortment of goods � is determined by its location, Aldi is in need of rapid territorial expansion. But that might not be so easy without acquisitions of already existing locations.
In line with the principles of most discounter chains of German lineage, Aldi remains one of the most secretive enterprises on the Polish market. So we visited one of its shops. In the Aldi branch at the address ulica Popiełuszki 10 in Skarżysko-Kamienne, there is more than ample space for customers � wide alleyways between the display shelving and cabinets give an impression of spaciousness, though at the same time, its as if for such a big expanse of space one does not get the impression of it being overloaded with products. Setting everything off in bright colours and with broad gaps between the furniture, this not only guarantees that customers with big trolleys can bypass each other without a problem, but allows one from the very entrance to take in a considerable part of the shop. The décor is somewhat modest � simple shelves and some assortments eg mineral waters or drinks, are frequently stacked in shrink packs on the floor or � in the case of household chemicals - stacked on cardboard boxes. The shop has three checkouts , service is restricted to a minimum � it�s difficult to find a staff member in the sales hall. At the time we visited the shop, one could have more likely spoken of standstill in business. During our visit, no more than fifteen shoppers came by. More of them came to look at the goods rather than bought them; every now and again, a customer would go to the till with several products, no one did big volume shopping. Traffic in the shop was decidedly light although the time of our visit was the middle of the week and the middle of the day, so that might have had something to do with it.
All things necessary for the house can be bought in our shop: starting with typical perishables and alcohol, all sorts of household chemicals, down to �cameras and computer equipment. That type of assortment � a fixed feature, as as might be imagined � is displayed on wall shelves and free standing cabinets. Furthermore, a considerable proportion of the shop consists of metal baskets set up between rows of shelves, in which goods relating to specific initiatives are displayed. Products at reduced prices are displayed in metal baskets near the entrance. But, as is often the case with discounters, you cannot speak of big selections in the various product segments. The inability to pay by credit card might also be a frequently encountered inconvenience in discounters.
Aldi�s situation in Poland is not easy as might be seen in the more modest number of branches that were opened than initially anticipated � since February 2008 when the chain opened its first Polish outlet, 28 Aldi discounters have appeared (the most, that is eight, in Silesia, four in the province of Wielkopolskie, three each in Łódzkie and Mazowieckie, and one each in Kujawsko-pomorskie, Lubuskie, Opolskie, �więtokrzyskie and Zachodniopomorskie). That�s not such a great showing for a year and a half of activity. Aldi itself, traditionally, refused to comment on its development plans and its impressions to date regarding its adventure on the Polish market.
Untouched by crisis
Stagnation on the property market is not in the least echoed by a slower rate of development this year, of countrywide do-it-yourself store chains. Indeed, in terms of development, last year was no different to previous years for most operators. The Polish DIY stores market is still far from saturation point and certain regions wholly remain blank spots on the map of builders� merchant shops. As in many other cases, in this case too this primarily relates to north-eastern Poland. However, despite the property market being in the doldrums and the economic slowdown, which has ushered in a greater tendency than before for Poles to save, operators are not abandoning their expansion plans.
What�s more, new formats are being developed � DIY discounters, which made an appearance on the Polish market relatively recently: the first to enter the market was the Brico Depot chain in 2006, which, like Castorama, belongs to the British Kingfisher Group, and a year later the first French-owned Bricoman store took a bow. These shops are characterised not only by lower prices in comparison with their old-established rivals that have been around for years, but also by their more compact sizes. Brico Depot is developing more robustly which currently has six branches, two of which were opened earlier this year, and what is worth emphasising, in less popular regions, that is, in the provinces of �więtokrzyskie and Zachodniopomorskie.
The last twelve months has also been a period of further growth of the DIY giants. Only the Praktiker and Nomi chains maintained their status quo as from the middle of last year. However, Nomi is planning two more outlets this year. Albeit Praktiker did open an outlet on 4 July 2009 in Zabrze, but its role boils down to that of a temporary substitute for its store that was destroyed by fire last December.
Leroy Merlin which, since last year�s round-up, opened seven outlets and is already planning further expansion, is maintaining its very dynamic rate of growth. Still this year, its next two branches are to open in Kraków and Warsaw. In part, this growth rate is due to Leroy Merlin Polska�s takeover of the firm Conforama Polska last year; in April, Leroy Merlin opened a branch in Janki near Warsaw, where still a year ago there was a Conforama store (the Janki branch is one of three locations which Leroy Merlin acquired by this takeover transaction).
Castorama remains the biggest chain in the hypermarkets class, and though Leroy Merlin is developing dynamically, there is nothing to suggest that it is about to overtake Castorama in the coming years because of its already existing very big superiority. Since our last year�s review, Castorama opened a further store in Wrocław (specifically in Bielany Wrocławskie), while a branch in Przemy�l is preparing to open. Two more OBI stores have also arrived on the scene.
The DIY chain with most branches in Poland remains Bricomarché which belongs to the Musketeer Group. It is leaving its rivals further and further behind as far as the size of the network is concerned. What�s more, it is not just the number of this chain�s outlets that is growing but also its growth rate � while from mid-2007 to mid-2008 Bricomarché expanded by nine outlets, in the last 12 months, the chain opened 16 more. The Musketeers are planning to open seven more DIY stores, among others in smaller places like Szamotuły, by the end of the year.
Wet or dry, they all fly high
In the longterm perspective, the category of sauces is registering double-figure growth in sales volumes. Sauces are understood to be both the dry and liquid/moist varieties, to be served hot or cold, and going over to their recipes, distinctions are made between, for example, all manner of Italian dressings, �fixes�, taco sauces etc. A category so defined, has been showing sales volume growth of 10.6 percent in the period June 2008�May 2009 as compared to the analogous period a year earlier, thereby achieving sales of 27.4 m kg.
The dominant segment in terms of volume is that of moist sauces which account for 78.2 percent of this category�s sales. However, they are losing in importance against dry sauces whose significance rose by 0.3 of a percentage point. In terms of value, dry sauces, which generate 59 percent of the entire category�s sales values, and which in the period June 2008-May 2009 was worth PLN 551 m, remain the leaders. This represented 16 percent growth in relation to the June 2007�May 2008 period.
Mayonnaise-based sauces and cold sauces (meaning dressings), evinced considerable growth rates in the period June 2008�May 2009 vs June 2007�May 2008, both in terms of sales volumes, which reached 20.8 percent, and sales values, which went up 24.2 percent. In the period under analysis, this category was worth nearly PLN 98 m which paid for the 6.7 bn litres that were sold.
A variety of flavours at stable prices
Chewing gum is a dynamically developing category. In the period May-June 2009, it registered growth of 8.7 percent in both sales values and volumes as compared with the analogous period the year before. These growth rates brought the category revenues of over PLN 810 m. The identical growth rates in sales values and volumes means that the average price of chewing gum was stable.
The most important segment in the category of chewing gum in paper wrappers which has a 53.4 percent sales volume share are nonetheless losing in importance by 9.9 percentage points. Chewing gums in bags, on the other hand, are gaining - - 4.6 percentage points in terms of sales volumes, and chewing gums in boxes � 3.5 percentage points and finally chewing gums in plastic bottles � 3 percentage points. Chewing gums in strips, having sales volumes of 3.2 percent, lost somewhat in importance over the past year � 1.2 percentage points to be precise.
Pawełek�s Leadership hat-trick
Cadbury�s Pawełek candy bar has made it a hat-trick as Distribution Leader, but the current result is the best of the three. In 2006, a 66 percent rate of availability in the shops was sufficient for it to reach for the title (�DD� 11/2006), while in 2008 it needed a 76 percent rate (�DD� 4/2008). The current result comprised a 94 percent rate of availability in the modern retail channel and a 79 percent rate in the traditional shops.
As many as five products out of the basket in this round of the survey registered 100 percent rates of availability in one or the other distribution channel. This was the top four and Okocim beer. Four products were in all the monitored hypermarkets, while the Pyszny Duet margarine was available in all the supermarkets. Anyway, out of all the products in the modern trade channel, the product from the firm Raisio registered the highest level of availability - 97 percent. The sauce for roasts from Winiary was available in 80 percent of the shops visited during the survey.
Tyskie, Tymbark and Etopiryna on the podium
The Top 15 most screened commercials in the period 06.07.-19.07.2009.
It�s high summer, so no wonder that the most screened commercials relate to beers and juices. But Etopiryna closed this ranking�s group of leaders. While Tyskie beer took the top spot, and Tymbark�s lemonade came second, both results being somewhat predictable for these branches at this time of year, they were joined on the podium by Etopiryna Kontrol.
JULY
The kid gloves myth
I don�t believe that everything can be solved in kid gloves. Without the cooperation of business-minded political circles, advantageous solutions for Polish trade cannot be secured � says Waldemar Nowakowski, the President of the Polish Chamber of Commerce.
- What aims and tasks have you set yourself as the new President of the Polish Chamber of Commerce?
- We want to participate to a greater degree in parliamentary committee work and accelerate the rate of integration of the trading community. I am holding talks on forming a Polish Trade Federation. That�s a good solution for our milieu because every member organisation of the federation will be able to retrain its autonomy. We also want to intensify cooperation with the National Chamber of Commerce (KIG) because we would like to take a bow at the Trade Committee. After talking to Andrzej Arendarski, we want to restart the work of this committee. We also want to cooperate with the Polish Traders and Distributors Organisation (POHiD). The next aim is to set up a Pro-Trade Foundation (Fundacja Na Rzecz Handlu). Work on this project was already inaugurated by the previous President of PIH, Małgorzata Więch. The Foundation is currently in the process of being registered.
- What will this Foundation be doing?
- It will be promoting trading solutions linked to IT infrastructure which will make stock and category management and merchandising more efficient. The Foundation will be producing studies and surveys of the situation in trade. It will also involve itself in helping the physically disadvantaged, ill people and needy children belonging to our milieu.
- Is the Polish Chamber of Commerce not capable of taking up these tasks by itself?
- The Foundation will have the possibility to acquire additional funds � like covenants from income taxpayers.
- The European Parliament elections are behind us. This occasioned a closer look at the work of EU institutions to a greater degree. What issues concerning retail trade and relations between traders and suppliers, and with consumers, should come within the purview of these institutions?
- EU institutions should urgently take up the issue of the architecture of trade. I see problems here not in carrying on trading activities but in town and country planning. There�s no such thing as calm policies here. This was left in the hands of each individual EU member country. This impacts on the elimination of smaller players on the EU trade and services market. That is not conducive to competition � quite the opposite, monopolies are cropping up. The European Union should also preoccupy itself with unfair competition. Current solutions in Poland in this area are far from perfect. Other countries are coping better with the enforcement of these regulations and punishing those lawbreakers.
- Since we want to take our cue from other European countries, do you not think that in Poland too, we have matured to the status obtaining in say France where the government wants to regulate supermarket food prices so as to appease the anger of farners who are protesting at the high margins imposed by the big retail chains?
- Price regulations are interventionism gone too far.
There�s no need for that in Poland yet. The market is fragmented and the competition between the networks is too strong to talk about their diktat.
- What�s your assessment of the effects of the WOH Act (the Large Format Stores Act) which you co-authored?
- It is difficult to appraise the effects of an act which, in practical terms, remains a dead letter because the Ministry of the Economy has not issued the necessary executive acts. It was too short a period for its effects to be assessed. I would never have expected the whole act to be rejected. I expected that some of its provisions would be up for amendment. It seldom occurs that a new act is abolished in full. Some of its provisions could have been amended, and otherwise we could have tried to live with it. Planning would have commenced in the municipalities which would have realised that the trading sector is not something you can manipulate at will. The uncontrolled development of large format trade fuels unemployment � and not just in the field of trade but also in agricultural production and processing. The export of goods from EU countries to Poland will grow. French or German chains have links with industry on their domestic markets and it is obvious that they will want to sell such goods in Poland.
- Has the act not spoilt relations and the atmosphere in Polish traders� circles? Time was when Wojciech Kruszewski, the chairman of PSH Lewiatan, called upon you not to abuse and exaggerate the links with that firm in your public activities.
- I don�t believe that everything can be done in kid gloves. Without cooperation with political milieu in economic matters it would be impossible to push through any solutions that would be advantageous for Polish trade. Unfortunately, lobbying is associated with something evil in Poland. Positive lobbying occurs when specialists from various branches speak out and seek good solutions. I agree that the trading community was divided with regard this act. Some traders who felt that the act was harmful to their interests simply did not understand this subject. They take a myopic view because they want to build a shop here and now, and the act makes their lives complicated. That�s very short-sighted. I will ask them after five years of trade further functioning without these regulations and we will see how many of these traders will still remain on the market. But what of it that I shall prove my point if the milk is spilt beforehand.
Do you expect a positive reception for the PIH given the controversies that surround your person due to that Act?
- No, I am not afraid of that because I am not defending my actions but solutions which have already been tried and tested somewhere. I was intentionally tossed into Lewiatan�s garden because it could be said that 2000 shops stand behind these regulations.
- This year we are celebrating the 20th anniversary of free trade � on January 1, 1989, the revolutionary regulations enshrined in the Economic Activity Act, as prepared a year earlier by the Rakowski government and nicknamed the �Wilczek Act�, came into force. What would you count as the biggest successes and the biggest setbacks of the past twenty years in the Polish trade sector?
- I am delighted at the road Polish trade has trodden. If not for those events of twenty years ago, I would not be here. One can always say that so many things could have been done better. Successive governments paid too little attention to the economy. I participated in this transformation from the beginning because I was setting up a firm as from 1989. Like other entrepreneurs, I had to go through various stages and difficulties, and overcome absurdities that crossed our path along the way. Here I am thinking of all the complications with VAT or the duty to run one�s financial operations by proxy of a bank. It�s obvious that with time no one would have been carrying about their money in a suitcase. In spite of that, Polish trade has developed very well. Of course we were helped by the expansion of international networks. We had something to model ourselves on and to draw conclusions from.
- As the chairman of the company Lewiatan Kujawy and the owner of real property used by retailers, have you noticed any impact of the economic slowdown on retail trade? Are your lessees approaching you for rent rebates?
- Yes, precisely that. They are coming to me with that sort of request. As a company, Lewiatan too is approaching its landlords with such requests. As far as the situation in the shops themselves is concerned, maybe there are no dramatic drops in sales levels, but there are no great growth rates as in previous years either.
- Is the crisis making people go for those reserves which in times of prosperity would never be given a second look? What else can savings be made on in the retail trade sector?
- There are barriers associated with the Labour Code. In other words, there�s not really much that can be saved on labour costs. The only optimistic news is that the scale of pay claims has abated. However, energy prices are on the up. One could think about energy saving installations but they are investments for which not everyone has the resources put aside. If they don�t have such resources and the firm cannot show the bank a clean bill of financial health, then its difficult to raise a loan or be given a leasing contract. Polish traders still lack knowledge. They would like to learn better stock management to release money from the shop that is frozen in goods. For that you need modern IT. That�s why PIH will be organising a series of training courses soon on the topic of sales� technology.
Slow but sure
The number of hypermarkets in Poland is rising continually, but their growth rate is continually declining. However, this does not mean that operators have completely abandoned the idea of developing large format stores.
Recent years have been characterised by the dynamic development of the large format store market. Perhaps not so much due to new outlets being opened � because these were and continue to be set up, but now no longer with such intensity as still a few years ago � but due to changes in ownership, the withdrawal of some operators from the market etc. Géant has disappeared from the Polish hypermarkets� map, and its shops now operate under the Real sign; Hypernova has also disappeared having been acquired by Carrefor, and MiniMal was transformed by Rewe into Billa. The past year was no longer so replete in significant changes but several dozen new outlets did come onto the scene.
Our map encompasses shops of a minimum of 2500 m2 in area irrespective of whether a given network is running discounters, supermarkets or delicatessens. Currently, operators are more avidly investing in smaller trading formats, but they are not wholly forsaking plans to open new hypermarkets. In the past 12 months � from last July � nearly 30 new hypermarkets came onto the scene, of which about 1/3 belong to the Kaufland chain. Apart from Kaufland, the biggest number of new outlets opened last year belonged to Tesco � five in all: in Gdańsk, Koszalin, Opole, Piła, and Wrocław. Real, all of whose outlets can be classified as hypermarkets, opened its latest in March at the CH Gemini Park shopping centre in Bielsko-Biała, while still in the latter half of last year its branches in Dąbrowa Górnicza, Opole and Słupsk, welcomed their first customers. Since our previous summary, the Carrefour chain has expanded by three more outlets � in Chełm and Mława last year, and in Kłodzko in March 2009. At the same time its outlets in Pabianice and Zamo�ć have disappeared from the map � in line with the decision of the Office of Competition and Consumer Protection (UOKiK), Carrefour was obliged to hive them off by the end of 2008. But this year, this operator is planning to open three new hypermarkets. The delicatessen chain Alma also opened three new large format stores since July 2008: in Lublin, Katowice and Sopot.
Auchan increased its number of hypermarkets over the course of the year by two � in Kołbaskowo near Szczecin and its second one now in Białystok. Both shops were opened towards the end of last year. This year it is planning to open a hypermarket in Kraków in November � in the Bonarka shopping centre. This Auchan hypermarket will take up nearly 19 000 m2.
Since last year�s ranking, E.Leclerc has opened one large format store � a hypermarket in Gdańsk�s Galeria Przymorze shopping centre in March, which is an investment of the E.Leclerc Group in Poland. This outlet of some 9000 m2 in sales area, is currently this network�s biggest branch on the Polish market. Currently the extention of the E.Leclerc hypermarket in Warsaw�s Ursynów district is in progress where, apart from the sales space, the shopping mall will be considerably enlarged and a four storey office block for let is also going up as part of the redevelopment.
Only the number of Bomi, Rast and Piotr i Paweł stores, which fulfil hypermarket criteria, has not changed since the middle of last year � their owners are not planning any further investments in such big outlets for the present.
Strong in retreat, slim on the offensive
Over the past year (June 2008�May 2009), the Poles smoked a combined figure of about 45.4 billion cigarettes, spending over PLN 16.2 bn on this pleasure. In comparison with the analogous period the year before, sales volumes in this category dropped by just under 6 percent, while sales values rose by nearly PLN 1.4 bn, which makes it an increase of 9.4 percent. Such a situation was largely the effect of increased excise duties. Higher cigarette prices are contributing to a growing number of people rolling their own cigarettes.
Over PLN 600 m on the mayonnaise products� market
The category of mayonnaises and cold sauces based on mayonnaise, and dressings, is developing dynamically at the rate of 10.3 percent in terms of sales values (April 2008�March 2009 vs April 2007�March 2008). However, if we take a look at sales volumes, then the category suffered a drop of 4.9 percent. That means that in the past year, the average Pole consumed fewer mayonnaise-type products but spent more money on them. All the chief producers on this market considerably raised their prices.
Strawberry Leader from Łowicz
The Distribution Leader title in the current round of our ongoing survey of the availability rates of products on shop shelves went to Łowicz strawberry jam produced by the firm Agros Nova. It was available in 81 percent of the shops monitored on the day of the survey. That is an identical distribution rate to the one registered by this very product last year (�DD� 5-6/2008). The runner-up position in this ranking was taken by the ground coffee Prima Finezja, which was available in 61 percent of the shops. Over a year earlier (�DD� 13-14/2008), this product was available in 55 percent of the shops. The remaining products checked out in this round were available in under half of the shops monitored in the survey.
Coca-Cola, Danone and Maspex in the lead
In the current TNS OBOP ranking, two beverage commercials - Coca-Cola and Tymbark (from Maspex)� placed themselves at the top of the table where they were also joined by a yogurt commercial. Only two spots out of 15 went to household chemicals� commercials this time round.
JUNE
Buying and selling
The TOP 50 FMCG PRODUCERS had sales returns of over PLN 94 bn last year, in other words, over PLN 11 bn more than a year earlier. That is nearly an identical growth rate to that of the previous edition of our ranking. We owe it not only to organic growth, increased excise duties, raw material prices and exchange rate fluctuations, but also to concentrations on the FMCG producers� market.
For the sixth time now, �Detal Dzisiaj� is presenting a ranking of the 50 biggest FMCG producers. The ranking was prepared on the basis of sales revenues which the firms achieved in 2008. In the case of firms involved in selling and producing beers, spirits and tobacco products, we presented in our ranking their sales revenues together with excise duties because that is the price occurring in retail outlets and that is the price producers and retailers must charge their customers. Also, our ranking differs from other listings available in publications which do not differentiate revenues net of excise duty and those grossed up by excise duty. Our ranking also contains information on product groups and the brands they are sold under, and the names of company bosses who, in taking overall management responsibility for their firms or capital groups, are contributing to their success or failure.
We are very grateful to those firms which gave us information � it means that they fully appreciate the possibility of presenting themselves to their trading partners � i.e. retailers.
Our ranking helps in getting to know who counts on the market and which positions producers of the best selling goods occupy in Poland. We are pleased to note that our ranking includes data that has not been published elsewhere. This is data divulged by firms exclusively to �Detal Dzisiaj�, as well as our own estimates which are subsequently quoted and duplicated by other publications.
This year�s ranking contains firms which in 2008 achieved sales levels exceeding PLN 505 m, which is over PLN 115 m less than in the previous year. This is symptomatic of the continuing concentration trend on the FMCG market and, to some degree, of its polarisation. On the one hand, the highest positions in our ranking are occupied by the huge concerns whose revenues are increasing due to their organic growth as well as acquisitions, and at the other end of the list come far smaller-scale firms clocking only organic growth rates.
In our ranking, as in previous years, there are no groups combining the production of alcohol with its import and distribution, and other products, for example Central European Distribution Corporation (CEDC), Sobieski Sp. z o.o., Ambra SA, Diageo Polska Sp. z o.o. � see the TOP Alcohol Wholesalers (�Detal Dzisiaj� 10/2009, p. 20).
The ranking has the aim of presenting the biggest FMCG producers sold in the shops, but in the case of certain firms it is impossible to give information on these goods alone since numerous firms are also engaged in production activities that do not fit the FMCG bracket. Very often, these are products for industry or for supplying producers. Such a situation concerns all brand goods firms which are also involved in supplying HoReCa sector goods, meat firms (whose earnings include fodder production), producers of sugar intended for retail and confectionery goods manufacturers, firms whose products could also be classified broadly as pharmaceuticals, e.g. Toruńskie Zakłady Materiałów Opatrunkowych SA (the Toruń Dressing Materials� Plant), i.e. firms also involved in retail even from beyond the FMCG sector, such as Tchibo Warszawa Sp. z o.o.
Our ranking does not differentiate between domestic and foreign sales earnings. In the case of some dairy sector firms, that would lower their positions in the ranking, but we cannot do so in many instances for lack of data.
We tried to present the sales revenues of entire capital groups set up by firms and concerns which have various products in their portfolios. We also totted up the revenues of firms which say they do not constitute capital groups, firms which function as separate commercial entities or that have not yet completed or actually have not even commenced formal consolidation processes, but where it is known that they are linked to one concern.
Such a situation prevails, for example, in the case of Imperial Tobacco Polska SA and Altadis Polska SA, Pepsi Cola General Bottlers Sp. z o.o. and Frito Lay Poland Sp. z o.o., Mars Polska Sp. z o.o. and Wrigley Poland Sp. z o.o., Kraft Foods Polska SA and Lu Polska and the firms associated with Nestlé and Danone.
The calendar years of some firms do not coincide with their financial years, so their sales revenues relate in part to both 2008 and 2009.
In the ranking, as last year, we did not include FMCG sector firms engaged in direct sales � i.e. those which bypass shops.
We wish firms like Fermy Drobiu Wo�niak Sp. z o.o., Nutricia Zakłady Produkcyjne Sp. z o.o., Okręgowa Spółdzielnia Mleczarska Piątnica, HJ Heinz Polska SA, Kimberly-Clark SA or Przedsiębiorstwo Handlu Zagranicznego Spółdzielni Mleczarskich Lacpol Sp. z o.o., which just fell short of making it into this prestigious TOP 50, a successful 2009 and their appearance in our ranking in 2010.
Above-zero profitability
The SOT economic principle holds: for it to be worthwhile, you must have profitability of over 2 percent. In the dairy industry, profitability rates are in the order of something slightly above zero � said Kazimierz Jankowski, the chairman of Spółdzielnia Obrotu Towarowego Przemysłu Mleczarskiego (Dairy Products� Trading Cooperative) in Białystok.
- How does the dairy products� market shape up at present in Poland?
- Our domestic market has grown together and functions in association with the markets of European Union countries which means that it is also open to products from other countries. That in turn presages the need for producers, wholesalers, and retail chain owners, to compete. Additionally, in the old EU countries there is enormous loyalty to domestic products and brands. That is not so strongly developed here. So it�s difficult for Polish producers to compete on foreign markets, and in Poland too, the struggle over brands is fierce. I dream of Poles who would respect their own brands like the French or Germans, for example, who even when abroad only buy their own domestic brands.
- Has the economic slowdown also touched the dairy sector whose products are, after all, staples?
- Dairy product consumption, as of all others, is dependent on the disposable income of the customer. We know the economic climate has taken a downturn now and this also finds reflection in the dairy product market. There is a slight if perceptible drop in sales rates, and demand is dropping even for dairy products. Such a situation creates pressure in the organised market on domestic dairy sector producers, who are beginning to sell their products on the edge of profitability. It is already completely unworthwhile for farmers to produce milk and sell it at cost price or sometimes even below it. That poses a serious threat to the domestic dairy market. That is why organisations concerned with distribution are consolidating so as to reduce their costs. We are also appealing to the government to take action aimed at protecting domestic milk producers.
- Does that mean that the consolidation of dairy product distributors is a necessity?
- Yes, and it has quantifiable advantages: it lowers costs for producers, improves distribution throughout the country, though logistics in itself is becoming more difficult � especially in this branch. It should be remembered that these products are most difficult to keep fresh. Distribution is a big cost today, and this burden is wholly passed onto the shop shelf. That�s why one must most emphatically care for the appropriate product range, its appropriate display, all for the sake of making it attractive for customers.
- What do shops expect when it comes to the assortment of dairy products?
- The health-giving properties of dairy products. Consumers pay attention to a product�s quality and durability, but above all, to its degree of naturalness, its origin and its health-giving properties. Price was always further down the scale of priorities albeit in today�s more complex situation it is beginning to play a serious role when it comes to product choice. Retailers also expect new products � innovative technologies targetted on pro-health values..
- Is trading in dairy products a profitable business?
- Economic principles preach that: for it to be worthwhile, you must have profitability of over 2 percent. Otherwise the game�s not worth the candle. In the dairy industry, profitability rates are in the order of something slightly above zero.
- Thank you.
Unchangingly popular
Additions to dishes such as are ketchups and sauces are enjoying unchanging popularity with Polish consumers. In the period April 2008�March 2009, they bought over 56.6 tonnes of ketchup for over PLN 371 m and over 20.9 tonnes of sauces on which they spent over PLN 221.4 m.
A stimulating 86 000 tonnes
In the period May 2008-April 2009, 86 000 tonnes of coffee worth PLN 3 bn were sold on the Polish retail market. Coffee was retailed everywhere � in hypermarkets, supermarkets, discounters, grocery stores, grocery-and-hardware stores and, albeit in fractional proportions, at petrol stations.
Lipton in mugs and at retailers
For the second time this year a product from Unilever�s portfolio has taken the title of Distribution Leader. After Knorr, Nudle, Amore Pomidore (�DD� 8-9/2009) taking the Leader�s title, now the highest place out of the products whose availability was subjected to analyses, has been taken by Lipton tea � with an 86 percent rate of availability.
Two winners - Heinz and Nestlé
The first place in the TNS OBOP ranking this time belongs to Pudliszki ketchup from Heinz, but Nestlé, which managed to take four spots with its Winiary brand in the TOP 15, should also be regarded as a winner.
The market will be growing
Despite the difficult economic situation and this year�s increase in excise duty on alcohol, the biggest alcohol distributors are looking to the future with optimism and predict the further development of wholesalers � both organic and as a result of further mergers and acquisitions.
Market analyses produced by Nielsen indicate that the value of the alcohols� market in Poland is invariably growing. From December 2007 to November 2008, alcohol sales came to PLN 25 bn which in comparison with the previous year signifies growth of 9.2 percent in terms of volume and a more startling 16.9 percent in value. In that period, Poles bought nearly 3 bn litres of assorted alcohols. The biggest share in the alcohols market in Poland is held by beer, with vodka securely ensconced in second place. The remaining categories of alcohol (such as wines, whisky, brandy etc.) are still of minor significance.
Among the tendencies characterising the wholesale alcohols market last year, we can again mention consolidation trends. Thus, for example, the Sobieski Group continued to take over further distribution firms (among others the Pomorze [Pomeranian] company Multihurt, the company - Maak � the HoReCa channel distributor of alcohols in the Mazowsze and Pomorze regions). Advadis carried out the consolidation of 10 companies that had been taken over in the previous period (Max-Beer, Mag-Mar, Bomark, Danpol-Bis, Empat, Ro&Ma, Star-Napoje Poznań, Inter-Hurt, Nibres, Mark-Pol), which distributed alcoholic products, beer and non-alcoholic beverages, and took over the assets of four companies (Gralex Sp. z o.o., FH Andrzej A. Nowaczyk, Przedsiębiorstwo Wip W. Winiarski, J. Pajor Sp. j. and Wist Sp. z o.o.), with which it signed contracts concerning the purchase of goods, packaging, transport facilities and leasing warehouse space. Due to these takeovers, Advadis brought a considerable part of Poland within its compass of operations � namely, the provinces of: Małopolskie, �ląskie, Dolno�ląskie, Opolskie, Lubuskie, Wielkopolskie, Pomorskie, Kujawsko-Pomorskie and �więtokrzyskie. � The past year was a watershed in the company�s history for a number of reasons. We have behind us a very difficult stage of integrating these acquisitions into one organism, and by the same token, building our position on the distribution market. The consolidation strategy that we adopted was successfully completed on 10 December 2008 and from that moment onwards we no longer operate as a capital group but as one uniform body � an independent distributor in the beers, alcoholic and alcohol-free beverages branch � says Grzegorz Wa�niewski, chairman of the Advadis management board. The company Waspol also took part in the consolidation processes. In November 2008, it finalised the acquisition of two leading regional distributors in the alcohols distribution branch. It bought 100 percent of the the firms Delta Sp. z o.o. from Ostróda and Retmark Dystrybucja Sp. z o.o. from Radzymin near Warsaw.
According to analysts, further intensive comsolidation processes will lead to the emergence of several big countrywide distribution groups which will account for most of the wholesale turnover in Poland. PMR estimates that in about three years the ten biggest wholesale firms will be controlling 40-50 percent of this market. Among these are also wholesalers specialising in alcoholic beverages. � The Polish wholesale market is waiting for further consolidations � believes Grzegorz Wa�niewski. And he is not isolated in his opinion. The representatives of the biggest alcohol distributors admit that despite the economic slowdown and the crisis that has been predicted for months, and perhaps because of that, the consolidation of the market will continue apace. � In a period of crisis, the market will re-order itself even more. Small firms will be disappearing as a result of mergers precisely in order to defend themselves against the crisis or due to their collapse caused by this very crisis � explains the Ambra director of sales, marketing and logistics. On the other hand, Agnieszka Fijałkowska, Waspol�s sales director, draws attention to the fact that albeit consolidation, as a market trend which has been clearly in the ascendant in the last few years, has slowed down due to difficulties in obtaining the necessary financial resources, the crisis will finally accelerate consolidation within the branch, though the opportunities for attractive acquisitions will only come to firms having the capital resources to hand. William Carey, the chairman of CEDC, also expects to see an intensification of consolidation processes. � It�s a good moment for seeking out market opportunities � companies which can currently be bought at bargain prices. For certain firms the sale of assets to stronger players could prove the best solution in what are difficult market conditions � adds William Carey.
Besides consolidation processes, the increased excise duties on alcohols as from January this year, which steeply drove up beer, vodka and wine prices, have had a significant impact on this branch. Additionally, the upward trend in foreign exchange rates is not conducive to alcohol importers � who are now announcing further price rises. However, increased excise duties and a weak zloty are not the only threat to the development of wholesale in alcoholic beverages. Distributors are also pointing at the growing risk of insolvency among their contractors, the growing number of small format retail chains which are moving ever closer to the places of residence of their consumers, and also the takeovers by cash&carry chains of retail shops for their wholesale trade operations. � A very big threat is posed by the dynamic development of modern chains with foreign capital back-up. A further significant issue for us is the consolidation of retailer purchasing practices whose terms of cooperation are ever more demanding � adds Agnieszka Fijałkowska to the growing list of processes that is making distributors anxious. On the other hand, the chairman of Advadis draws attention to another threat to the development of wholesale trade � the lowering of margins which, in his opinion, is occurring due to the fact that the market players are chiefly competing with each other in the field of prices rather than the quality of service.
Despite numerous threats and the difficult situation on the market, the biggest alcohol distributors are not in fear of the coming months and are announcing further development, among others through the expansion of their customer networks, the development of private labels, and by taking over other players. They also stress that their strong position on the market is above all the effect of flexibility in cooperating with their customers and rapid responses to their needs, a broad range of services and a plentiful assortment of goods, as well as attractive conditions for trading relations.
Promotion � the engine of trade
Do Polish customers pay any attention to the brand of fresh or cured meat they buy? What�s to be done to ensure that a given brand achieves a strong market position and enjoys consumer confidence? How is one to promote one�s products abroad? � those are only some of the questions which company chairmen from the meat producing sector must answer for themselves if they are to achieve success.
Unity is strength
The National Trade and Distribution Centre (Krajowe Centrum Handlu i Dystrybucji) was inaugurated in June. The chairman of this new consortium, Marek Bąk, stressed, the only chance of improving the situation in the meat branch is for meat production plants to start cooperating with each other. Hence the idea to set up an organisation which will simplify that task for them � that is the mission of KCHiD.
Strategy is of the essence
Meat processors are agreed � 2008 was one of the most difficult periods in the history of the branch from the moment of Poland�s accession to the European Union. Escalating costs of raw materials and the stronger zloty made operating conditions for meat sector firms more difficult, and contributed to its worsened condition. The steep rise in the prices of cereals which was sustained up to the middle of that year caused considerable increases in the price of fodder and that in turn caused the low level of livestock demand and its high prices.
Key liquidity
The biggest market players stood to gain most by the economic crisis. As Ryszard Smolarek, the chairman of the Łmeat�Łuków Meat Production Plant, observes, the key is for the firm to maintain financial liquidity. Running one�s own chain of stores is very helpful in this respect.
Development in spite of competition
Poles most avidly take their supplies of fresh meat, sausages and hams from specialist shops � according to GfK Polonia data. Chain stores are springing up under the brand names of their production plants and are attractive on account of their prices, broad-ranging choice of fresh and cured meats, and the possibility of direct customer-vendor relations which enhances confidence in the goods sold and bought
All for an easy life
Taking into account the general trend towards greater affluence in society and the unwillingness to sacrifice more time on preparing meals, there is a noticeable increase in the popularity of ready-made so-called convenience products, which entail both pre-packed meats with added value (especially popular in the barbequing season) and pre-packed (frequently ready sliced) cold meats.
Canned meat
Pates take pride of place on the canned meat product market. The most popular are those made out of poultry, followed by veal, pork-and-beef, and game. Meat preserves are a fairly stable category. Once avidly bought before holidays, they are increasingly losing their seasonal character and are becoming products which customers willingly select throughout the whole year.
The uses of concentration
Witold Choiński, chairman of the board of the Polish Meat Union (Związek Polskie Mięso) stresses that trading networks are very exacting partners: if a network does not reach agreement with one production plant, there are over a dozen more like it, queuing up to seize their chance of a deal. At the same time, he adds that it would be impossible to operate without such networks � because nearly 50 percent of fresh and processed meats are sold via this channel.
The secure identity of hypermarkets
Consumers are increasingly opting for smaller-sized shops located near their homes to do their shopping, but large format store operators are also developing smaller format outlets more intensively. However, that does not mean that we can speak of hypermarkets being hit by an identity crisis.
For the past two years, the biggest trading operators have been primarily putting their bets on the development of smaller format outlets while the growth rate of large format stores has clearly declined. Does that mean that the hypermarket format has lost its identity? � Certainly not � says Andrzej Faliński, the director-general of POHiD. � It has retained its specific �modus operandi�, in other words: large area, big range of products � some attain 90 000 indices, and that�s in Poland � variegated sections and price-quality levels, sales strategies that are variegated and available under one roof � from premium to discount offers, specific sales support strategies using economies of scale and compensating margins etc. That�s what the consumer wants though not every consumer wants the same thing � that is why we do not do all our shopping in one large format store. That�s obvious. The market is big and there are numerous ideas for retail business solutions that can coexist simultaneously.
As Artur Węgłowski, the sales director of Agros Nova, underlines: as far as formats are concerned, retail chains in Poland are resorting to solutions that have been tried and tested in other countries, but they adapt them to Polish market conditions. � The economic crisis which we are going through, is accelerating certain processes, for example the development of discounters which, in the recent months of crisis, have gained considerably in popularity. Poles are very price-sensitive and when times are hard they will analyse the price offers of trading outlets ever more carefully. Precisely because of such rational premises, they will be foregoing shopping in small shops in favour of discounters, hypermarkets and supermarkets in the immediate times ahead � he believes.
In Artur Węgłowski�s opinion, the modern channel, with its tried and tested formats in Poland, has already carved out for itself a strong position on our market and still has room for expansion though one should not expect it to have such a big share as it has in Germany, Great Britain or France. He also stresses that supermarkets, next to discounters, have a chance to significantly increase their customer numbers and sales rates at the expense of traditional small shops.
What might the future hold for hypermarkets on the Polish market? � Comparing the structure of retail in Poland with that in other European countries, the further development of the large format store channel is to be expected in the coming years � believes Paweł Wasiukiewicz. A similar opinion is shared by Andrzej Faliński: - This format has played a significant modernising role in trade and the market as such, together with the fact that it revolutionised Polish consumer awareness, after the period of �the only right� market-less economic system. It also played a role in clearing the road to the expansion of other trading formats, the expansion of modern production and supply technologies in the production sector, in marketing, logistics, communications etc. What is more, it created a certain type of shopping and style in offering products � big �horizontally and vertically� variegated offers. That means that it has an irreplaceable position on the market and will play a significant role.
20-percent sales growth
According to MEMRB International Poland data, in the period March 2008�February 2009, macaroni sales values lapped the PLN 725 m mark with the help of the 121 000 tonnes of the product that were sold. In comparison with the analogous period a year earlier the value of this market increased by over 20 percent while its sales volumes, counted in kilograms, increased by just under 5 percent. The most willingly bought formats of macaroni remain the short threads � 21 percent sales volumes, twists � 17 percent, spaghetti - 11 percent, as well as the thick sliced and ribbon varieties. However, Poles are increasingly going for �home made macaroni� (matchsticks, grated) and small format macaroni (stars, tiny shells etc.), which can be seen in their double-figure sales growth rates � currently, all told, they constitute about 7 percent of the market.
Healthily, fashionably, and comfortably
In the period April 2008�March 2009, in comparison with the analogous period a year earlier, the category of breakfast cereals registered growth of 11 percent while the muesli segment registered a more staggering growth rate of 48.6 percent.
The category of breakfast cereals comprises all types � wheat, rye, oats, corn etc. � of flakes, which come by themselves or with additions, �pure� or with yoghurt or chocolate coatings, and of course muesli - that is a rich mixture of various flakes and grains with additions. We can also subdivide breakfast cereals according to their target consumers: children�s cereals, family cereals in which we chiefly include corn flakes and multi-cereal mixtures, and so-called cereals for adults � meaning all types of fitness and wellness cereals with added cellulose and reduced sugar content, and muesli.
The highest growth rate in sales values in the year ended 31 March 2009 as compared with the year before was registered by muesli � which enjoyed growth of 48.6 percent. Such dynamic growth of the muesli segment meant that year-on-year it significantly gained in importance in relation to the turnover of the whole category and in spite of the fact that flakes still account for over 86 percent of the whole category, its development nonetheless is no longer so dynamic as was the case in earlier years.
L&M � tobacco�s dead-cert
It is already the second time this year that the Distribution Leader title was taken by a product from the cigarettes category. The best result in the current � 10th - round of our ongoing survey, was achieved by L&M cigarettes manufactured by Philip Morris, which were available in 90 percent of the monitored shops on the day of the survey. This is not a surprising result since L&M is the leading cigarette brand in Poland, and the category is the biggest in terms of sales values.
L&M cigarettes were available in 91 percent of the large format outlets, and its lowest rates of availability were registered in small shops � 81 percent and supermarkets - 88 percent. This year we have already surveyed the availability of three other brands of cigarettes: in �DD� 2-3/2009, Cristal cigarettes were available in 50 percent of the shops, in �DD� 5/2009, West cigaretes were available in 64 percent of the shops and in �DD� 6/2009, the Distribution Leader crown was taken by Viceroy (manufactured by British American Tobacco) which scored an 88 percent rate of availability in the shops.
Two thirds for the food category
In the current ranking of the TNS OBOP TOP 15 most watched television commercials, two thirds of the spots were food commercials, while five places were occupied by non-food categories of which two are pain-killers.
MAY
Progressive consolidation
In presenting one of our regular annual rankings � this time the TOP 50 FMCG Traders in Poland, we may note, as was the case a year ago, that the changes have largely been wrought by the unabating processes of consolidations. In the case of the TOP 50 FMCG Traders we see even greater changes than those that have occurred among the TOP 50 Retailers.
Mergers, takeovers, setting up holdings � in a word progressive consolidation processes � all, to a significant degree, impacts on the shape and composition of the TOP 50 FMCG trade table. As in the case of the TOP 50 retail traders table presented in the previous issue, it is worth bearing in mind that it would be closer reality to call the ranking the �TOP 50 retailers on the FMCG market�. As we already mentioned a none-too-small number of those present in the current ranking comprises whole groups of firms whose results comprise, for example, wholesale or the results of several companies each of which runs its own separate chain of stores. Since these firms usually do not distinguish retail sales in their overall results, it is impossible to separate them off from the results achieved through wholesale or non-trading activities which also belong to the activities of their capital groups as such. That�s how it is, among others, in the case of the firm Eurocash, which reports its wholesale sales and not the data on its various subordinate companies which it supplies with goods since the integration of Eurocash results with those of its subsidiary networks would mean a double count of the same sales. The situation is no different with the Emperia Group in which � apart from the revenues generated by Emperia Holding which belongs to the Group � there are others such as Lewiatan Holding and Euro Sklep, which also belong to the group and generate the same again and more in sales revenues. That is why, as was the case in previous listings, in such instances our ranking reflects the results achieved by the whole group. As in the ranking of the TOP 50 retailers, it is impossible to avoid giving anything other than estimated sales figures for part of the entities involved, � given that some firms continua to be evasive abort their specific results.
It is also worth reminding ourselves that a considerably higher position in this year�s ranking than last year does not have to signify so very much more dynamic sales growth rates but could be merely the effect of a regrouping of forces among other entities. For example, Ruch, with a similar result to last year�s ranking, moved up two places. This company is being doggedly chased by the next placed Kolporter in the table, but it must be remembered that in the case of Kolporter the results of the whole Capital Group come into play, which, apart from press distribution, is involved in numerous other activities , for example, courier services or display/exhibition services. The fact is that this year, Ruch too decided to launch its courier services so it�s far from certain that it will allow itself to be overtaken.
Who will drop out of the game?
The main tendency of the Polish FMCG wholesale market remains consolidation and there is nothing to suggest that that is about to change soon. There are currently approximately 5000 firms operating on the wholesale market. However, in the opinion of analysts, that figure will shrink to 2000 in the next three years.
The shrinking of the wholesale market will be the effect of an intensiva process of consolidation and the dropping out of the game of small local wholesalers which, due to their smaller scale of operations, will find it difficult to meet the challenge of aggressive pricing policies pursued by the biggest players. The main motive for mergers of wholesale firms is to increase their scales of activities and by the same token to strengthen their negotiating strength vis-a-vis producers. As a result, distributors are in a position to offer their customers, mainly small and medium sized shops, better prices and hence help them in the competitive struggle with the modern trade networks that are gaining in market share. On the other hand, the consolidation of distributors is a response to the mergers of producers and the increase in their negotiating muscle that has come in train.
The crisis, so loudly trumpeted in the media, turns out to be conducive to integration. � I will not try to hide that it�s not my idea but that of people belonging to the world of finance � that the crisis is the best time to invest in acquisitions � says Maciej Stefunko, the director of trade of the company Tradis. The intensification of consolidation processes, despite the unstable economic situation, is expected by William Carey, the chairman of CEDC, who also believes that it is a good moment to seek market opportunities � companies which could currently be bought at advantageous prices. The good atmosphere for talks abort possible joint-force initiatives is perceived by Ewa Mikołajczak, the director of the management board�s Office , and buyer for Rabat Pomorze: - In an uncertain economic situation the tendency to conduct this type of negotiations by market participants is considerably greater, which makes it easier to take up challenges. On the other hand, Sławomir Pięta, chairman of Kolporter Service believes that a good moment for acquisitions will only come in a year�s time.
Apart from acquisitions of other distribution firms, wholesalers are taking over already existing chains of shops or are setting up their own ones thereby assuring for themselves a steady market. However, the acquisition of retail chains by distributors is sometimes seen as negative by wholesalers who do not run such networks. The declining number of independent shops and networks not tied to distributors, restricts their sales opportunities. That is why firms which still do not run networks or are only associated with retail to a small degree are beginning to wonder whether wholesalers without their own retailing back-up will manage to survive on the market.
Besides moves towards consolidation, the latter months have been a period in which wholesalers have been investing in distribution centres, expanded their product ranges, introduced their private labels, and developer additional services for their retailing customers. � Increasing specialisation of various enterprises may be observed in specific fields. Wholesalers, besides basic services, are also trying to act as advisors to their customers to an ever increasing extent � says Magdalena Figurna, Head of the Communication Department Makro Cash and Carry Polska, in reference to market trends.
Among the threats to the development of the wholesale market, its participants mention, among others, the attachment of retailers to the bigger market players which closes selling possibilities to small wholesalers, the building of logistics centres by retailing chains, consolidations among producers who impose ever more difficult terms of cooperation, and also consolidations of retail purchasers � which like producers, are setting ever more demanding terms of cooperation. Maciej Stefunko points to the dynamic growth in the number and market shares of the discount and hard discount segments, and William Carey speaks of the most sensitive area in trade which is payment settlements.
According to the report of the firm Coface Poland, in the first three months of this year alone, 22 firms had to wind up their wholesale activities on the market. Specialists explain these business failures to date primarily by reference to unfavourable circumstances and management mistakes. But even so, the forecasts for small, independent wholesalers are not optimistic. � The current crisis will certainly worsen the situation of small shops whose customers will now incline more to shopping in hypermarkets and discounters offering lower prices. To offer them competitive prices, wholesalers will have to reduce their margins. Due to economies of scale, only the biggest distributors are in a position to offer the most advantageous terms, and firms which cannot meet this challenge in prices will be under threat of closure. The collapse of small local firms is also the unavoidable result of progressive consolidation both in distribution and retail � says Patrycja Nalepa, a retail trade analyst at PMR Publications. According to the PMR report for 2009, the market growth rate will be lower, at the level of 8 percent, which shall be influenced by the growing importance of large format stores and also the country�s worse economic climate.
14 percent sales growth
Combined sales of paper products, by which we understand toilet paper, tissues, kitchen towels and napkins, came to nearly PLN 1.1 bn in the period March 2008 � February 2009, which represented growth of 14 percent in comparison with the analogous previous 12 month period, and which was worth PLN 132 m.
Toilet paper
Toilet paper has for years invariably remained the dominant segment in the category of paper products � in the period March 2008- February 2009 sales of PLN 681.3 m were registered, which represented 64 percent of sales values in the category as such. In comparison with the analogous period the year before, toilet paper registered 17 percent growth in value which represented PLN 99.7 m.
Tissues - disposable hankies
By disposable hankies we mean tissues packed in plastic foil and in cardboard boxes. In the period March 2008-February 2009, their combined value was PLN 186.8 m, and compared to last year the disposable hankies market enjoyed 4 percent growth. Disposable hankies generate 17 percent of the sales values of the paper products� category as such, and are its second biggest segment.
Kitchen towels
In the period March 2008�February 2009, the kitchen towels� market registered sales of PLN 173.1 m. In relation to the previous year, this segment of the paper products� category has enjoyed the highest growth rates � 18 percent in value and 12 percent in volume (in terms of unit packages).
Tripe, beans and �gołąbki� (stuffed cabbage leaves) on top
The category of ready-made meat-and-vegetable dishes is characterised by a long eat-by date and usually doesn�t need special storage conditions. Over the past year, in the period April 2008�March 2009, Poles consumed nearly 40 000 tonnes of products belonging to this group, spending PLN 362 m on the pleasure. In comparison to the analogous previous year period, this signals sales volume growth of 7.2 percent and sales value growth of 15.3 percent.
Of the ready-made meat-and-vegetable dishes available, three segments are particularly popular with Poles � tripe, beans and gołąbki , and with this, in the beans segment, the most popular are beans a la Bretagne (fasolka po bretońsku). In total, over the past year, it has accounted for over half the whole category�s sales values and volumes. However, comparing it to the year before, only tripe has enjoyed evident growth in sales volumes, though it remains weaker than the development rate of the whole category. As a result, this segment has lost in importance. The position of the other two mentioned segments has also weakened both in sales values and volumes. Dumplings have also been of significance, having generated nearly ¼ of the category�s sales.
In the past year, goulash enjoyed double-figure growth � 11.5 percent in volume and 20.6 percent in value. But it remains one of the two least popular segments besides bigos (cabbage stew) in the category. Dumplings also represented a segment that developer robustly with sales values� growth of 15.2 percent, and growth in sales volumes of 17.7 percent.
Amore Pomidore � Knorr in 75 percent of the shops
The instant tomato soup Knorr Amore Pomidore, has become the Distribution Leader in this year�s 8th round of our ongoing survey. This Unilever product achieved a 75 percent rate of availability in the shops that were monitored. This result comprised an 84 percent rate of availability in the hypermarkets and supermarkets (which was the best result in this round with regard to modern trade outlets) and a 69 percent rate in the traditional channel.
The highest Knorr soup prices were charged in the big and medium sized stores where they were 6 percent higher than the average. Despite their improved rate of availability, Knoppers wafers did not manage to repeat their success of a year ago when, in attaining a 61 percent rate of availability, they grabbed the Distribution Leader�s title. Knoppers were available in three out of four large format stores and 65 percent of the traditional stores. Wódka Żołądkowa Gorzka (Bitter Stomach Vodka) registered a 66 percent rate of availability in the shops.
Yoghurts and Vanish in the lead
The Top 15 most screened commercials in the period 23.03.�05.04.2009.
In the current TNS OBOP ranking, out of 15 commercials, only one - Vanish � belongs to the chemicals� category. It came second in the ranking, squeezing in between two yoghurt firms on the winners� podium.
APRIL
Sharks and sprats
This year�s TOP 50 ranking of retailers differs considerably from last year�s results. Among the main reasons for this are the reshuffles in the table stemming from further consolidation processes on the Polish retail front.
We present our next consecutive TOP 50 ranking of retailers, although it would be more true to call it the TOP 50 enterprises operating on the retail trade market. That is because some of the participants in the ranking are in truth not retail network operators and there are whole groups of companies which often conduct wholesale or other activities not connected directly with trade, which after all also impacts on the results they have achieved. Since these firms usually do not separate out retail sales in their overall reports, it is impossible to separate out their wholesale or �extra-trading� results from those achieved exclusively by trading networks which belong to capital groups. That is why, as in previous rankings, we present the results achieved by the whole group. In the case of networks which publish their results in currencies proper to their parent companies � as for example is the case with the Metro Group, Castorama or H&M � the results in zlotys were calculated on the basis of the exchange rates at the end of the given company�s financial year. Part of the results were estimated since certain firms are still undecided about publishing their results while others � like Tesco � publish theirs later.
Just two years ago it was unthinkable that turnover of below PLN 200 m would give admission to the TOP 50. Now, sales in the region of PLN 150 m have secured the bottom place in the table. By the same token, however, there is a growing gap between the various players. Also, operators do not always owe their higher positions in this year�s ranking to significant improvement in their results � a case in point is that of Ruch, whose sales remain at a similar level to those of a year ago but mergers of firms among others, have resulted that it moved up from 10th place last year to 8th this year. The company is doggedly being chased by Kolporter, which is next in the table. But it should be remembered that in the case of Kolporter, the results of the whole Capital Group come into play which, apart from press distribution, it also carries on many other activities as for example courier services or exhibition activities. The fact is that Ruch too, has decided to launch a new offer on the market including courier services, so its far from certain that it will allow itself to be overtaken.
One of the biggest � nine rung - ascents in the ranking has been undoubtedly registered by the Bomi Group which just a year ago was in 42nd place as a company, and today, apart from delicatessens it has such networks as Rast, Sieć 34 and eLDe. However, if the measure of improvement of its position is to be not the number of places that have been vaulted over but the scale of sales growth, there is no doubt that the absolute victor is the Emperia Group. In last year�s ranking, still as the Eldorado Group, it was in 7th place. Since last year however, it has changed not only in name, because the Group is now composed of more companies and networks � apart from Stokrotka, Delima (formerly Stokrotka Premium) and Groszek, it also includes Lewiatan, Euro Sklep and Społem Tychy. That is why we decided on an estimated assessment of the Group�s sales values because, while Emperia Holding (the company managing the Emperia Trading Group) generated PLN 5.3 bn in sales, more than the same again is generated by the remaining companies not counting the holding�s sales � Lewiatan alone achieved sales of PLN 4.94 bn.
Auchan was treated somewhat differently due to its more complicated set up and accounting reports; we stuck to the formula to date of presenting the operator as Auchan Polska, and not as the Auchan Group. Auchan Polska manages 24 shopping centres in Poland four of which in partnership with Schiever Polska. Auchan Polska sales � 15 percent higher than a year ago � gave it 7th place in the current ranking. However, if Auchan�s purchasing headquarters in Poland were to be taken into account, which caters for the supply needs of not just Auchan hypermarkets but also those of Simply Market supermarkets (formerly Elea and A-tac stores), we would be looking at sales of PLN 6.15 bn (14 percent growth) which would give it 6th place.
The current ranking brought numerous changes in relation to last year�s, but even so it can be said with a high degree of probability that next year�s � considering the current squalls on the market � could be even more surprising. The basic doubt concerns the issue of whether the current sales growth rate proves sustainable which in the past year stood at 28 percent.
Whither the hypermarkets?
The time of hyper-excitement with hypermarkets, such as prevailed at the start of their entry onto the Polish scene has now receded into past. However, that does not mean that the demand for this format of store has exhausted itself, only that � when customers are ever more inclined to do their shopping in smaller outlets and look carefully into their wallets before spending their money � the hypermarkets must have a good idea as to how to sell themselves. And they have.
Against the backdrop of other European countries , Poland has a relatively low share of hypermarkets in the overall turnover flowing through its FMCG baskets, which, according to Nielsen�s data, remains at a stable level as compared with previous years and comes to about 15 percent while, for example, in Spain it is over twice that figure. The engine driving hypermarket development remains the opening of new outlets and in our country last year their number (about 270) was 9 percent higher than the year before. � However despite the dynamic development the average number of hypermarkets per million residents in 2007 it was seven and was clearly lower than in other European countries: Spain � 11, Hungary � 12, Slovakia � 19, the Czech Republic � 23. In consequence of the stable share of hypermarkets in the basket and the growth in the number of outlets there is a drop in average sales per outlet, which also has its reflection in consumer declarations � observes Paweł Wasiukiewicz, a Nielsen analyst.
The frequency of hypermarket shopping trips did not change in 2008 in comparison with 2007 � on average it is five times a month. As Paweł Wasiukiewicz notes, there has however been an increase in the number of shopping trippers to discounters: from six times in 2007 to eight times in 2008. Taking into account the economic slowdown which we have currently, it may be assumed that this year�s statistics will be even more congenial to discounter chains. That discounters have now got their �five minutes of fame� in this time of crisis is commonly remarked upon, but also the view is creeping in with increasing frequency that counter to appearances another winner in this turmoil could also be the delicatessen format.
Artur Węgłowski, the sales director of Agros Nova, stresses that delicatessen networks in Poland have made good use of the last few years to expand on the market. � Now I would sooner expect a slowdown or stagnation, but I do not see a threat to their existence. People on higher earnings, who are the customers of delicatessens have grown used to certain standards which they are loathe to drop. They will limit or arrest expenditure on durable luxury goods or services, but will spend the same on food that they have been spending to date.
Andrzej Faliński, the director general of POHiD, also stresses that it is his private opinion that: - Yes, the slowdown is promoting discount and discounted sales , but its not a bad time for delicatessen sales, that is top range and premium products. There comes into play here a certain mechanism based on two psychological savings methods: I have (or will have) less money, so I will go for discount range products at a large format store, or, I have less money so I will buy something extra so as to be certain that the money that is hard to come by is spent appropriately. That second psychological scenario is a powerful pulley in the development of so-called smart shopping by which one can optimise shopping but incorporates criteria not only of price, but also is based much more on salesman-customer interaction. Statistics and pronouncements of heads of firms may be summed up by the view that: the market has two dray horses � discount and deli. The biggest concern therefore is aroused by the middle range products � here there is the threat of decline in sales and here we may encounter the biggest volume of sales support activities with promotions taking the lead role.
How do the hypermarkets react to this threat? � Strong communication of price promotions at discounters is also drawing hypermarkets into battle for the image of �advantageous prices�. In connection with this, more and more chains are adopting similar pricing strategies � observes Grzegorz Sierzputowski, the category management and trading channels director at Nestlé Polska. This is confirmed by the latest strategies of large format store chain operators. - At Tesco we subscribe to the principle that only those firms can survive on the market which can quickest react to changes. When times were good we introduced a broad range of delicatessen, ecological and pro-health products � because such were customer expectations. In times of crisis we are broadening the assortment range by new cheap brands, competing with what the discounters have to offer because what is most important for customers now is the price. In both cases however, big stores offer customers more than delicatessens and more than discounters. At Tesco, customers have brand products, private label products or products of brands available only in our stores to choose from. Smart shopping skills allow for purchases of favourite products while spending less money. It is this type of shopping that we wish to promote in Poland � says Ryszard Tomaszewski, the chairman of Tesco Polska.
Growing in strength
Over the past year, sales of energiser and isotonic drinks increased by over 50 percent in Poland. In total, Poles bought nearly 100 m litres of such drinks, and the value of this market has crossed the PLN 770 m mark. That�s 30 percent more than a year earlier.
From among the people who said they consumed energising and isotonic drinks, over 40 percent named Tiger as the most popular brand, while 30 percent mentioned Red Bull. Further down came, among others, Powerade - 10 percent, Burn � 6.4 percent, and XL Energy Drink � 4.6 percent. These same firms are also in the lead in terms of money spent on television commercials. Red Bull allocated nearly PLN 13 m for this purpose in the period February 2008 � January 2009. Slightly less, about PLN 12 m, was spent by Coca-Cola in the same period, which produces the isotonic drink Powerade and the energiser Burn. In turn FoodCare, the owner of the Tiger brand, spent over PLN 8.3 m on advertising. The inter-dependence between the intensity of advertising campaigns and the market position of a given brand is thus very visible. In total, all producers allocated over PLN 36 m to television commercials.
OTC medicines on the offensive
Over a billion packets of OTC medicines were sold on the mass market in the period February 2008-January 2009 for nearly PLN 463 m. In comparison with the analogous period the year before the OTC medicines� market enjoyed sales growth both in terms of volume � by 2.6 percent, and value � by 7.9 percent.
Pain relief pills is the only segment which had suffered a drop in both sales volumes and values, by 1.9 and 1.4 percentage points respectively, as compared to the period February 2007 � January 2008. The remaining categories monitored by Nielsen, such as throat and cough tablets for sucking gastric flu tablets and vitamin mixtures achieved increased sales volumes and values. The situation on the OTC market confirms the tendency that has been evident for some time that the biggest category , which is that of pain relieving medicines, has been in decline, at an insignificant rate perhaps but continuous, in terms of both sales volumes and values.
Tymbark � the Distribution Leader once again
The Tymbark apple-and-mint drink from the firm Maspex Wadowice, has become the Distribution Leader once again. The previous time it managed this feat was in December 2008 (�DD� 21), when it was available in 83 percent of the shops that were monitored. The current result � 80 percent � is thus slightly worse though very high all the same.
Tymbark was available in 91 percent of the modern retail outlets � indeed, in all the hypermarkets and in 73 percent of the traditional stores. This year we had already surveyed the availability of one noncarbonated beverage � Hortex grape juice (�DD� 5/2009) which was available in 51 percent of the shops.
Maspex, Danone and Agros Nova in the lead
The Top 15 most screened commercials in the period 09.03.-22.03.2009.
This time, the biggest winners are juice producers � the winner being Tymbark from Maspex. In third place was Fortuna from the firm Agros Nova. They were separated by Danone�s Activia commercial which now traditionally stands on the podium.
Traceability in commerce
Producers, suppliers and traders are under obligation to operate a �krok wstecz � krok naprzód� (one step back � one step forward) identificatory system enabling the exercise of precise control of their food products. Traceability is doing fine in Poland, according to food sector specialists. Both reps of producers and retail chains assure that the system is not a fiction, that it works and enables the identification and rapid withdrawal of dangerous products from shops and warehouses.
Profitability above all
Włodzimierz Biały, the chairman of Ruch, has announced that the firm intends to emerge from the crisis as a strong player, so investments will be limited. However, he adds that Ruch will be going into projects associated with new services offered to private persons and enterprises � financial settlements, ePrasa (electronic press), courier services, ticket sales or a chain of cafes. Kolporter�s target is also to have one integrated logistics centre in every region.
An unpredictable year
In the assessment of Tomasz Witomski, the chairman of Gourmet Foods, the exclusive importer and distributor of Dilmah teas on the Polish market, the distribution of the firm�s products in large format stores has much improved in recent years, and therefore, now it is targeting the smaller shops. Last year was a further year of double-figure growth, but as its chairman emphasises, it is difficult to speak of expectations for this year.
A good year and what next?
Despite the economic slowdown, delicatessen chains are doing well and their operators are sustaining their development plans for this year. Alma�s plan for this year anticipate over 10 new branches in the biggest cities, among others, in Rzeszóo, Gdańsk, Opole, Kraków and Wrocław. In turn, the Bomi Group intends to further expand its chain of delicatessens and supermarkets, and its network of franchised stores with particular intensity, based on the experience of the Sieć 34 network.
A quick alternative
Not having the time, or not wishing to spend it on preparing meals, we go for the quick alternative of ready made dishes with increasing regularity. In the category of soups, the biggest segment is that of instant soups which holds a 73 percent share in sales values and 68 percent in sales volumes. Chinese soups account for over half the value of instant soup sales, and for a further 30 percent of instant soups in sachets.
Not just a pretty face
The facial care cosmetics category is worth over PLN 1 bn and incrased in value by 14.4 percent (that is, by PLN 132 m) comparing 2008 to 2007. The body care category of cosmetics is worth �a mere� PLN 311 m and this value grew year-on-year by 6 percent. So there�s nothing odd about the fact that face care cosmetics� manufacturers spent PLN 212 m on advertising their products on television in 2008. Analysing the locations where cosmetics are sold there is a noticeable drop in the significance of the hypermarket channel in sales shares, chiefly to the benefit of chemicals� chain stores.
Galeria Malta opens
The Galeria Malta shopping centre in Poznań, belonging to the Spanish property developer Neinver, is set for a grand opening towards the end of March. The biggest development of this kind in western Poland is located on an eight hectare site on the bank of Jezioro Maltańskie (Lake Malta). The centre takes up a total of over 150 000 m2, of which 52 000 m2 is to be its shopping-recreational part containing 200 assorted premises: shops, service outlets, a Multikino cinema complex and a fitness club.
Żabka�s Leap to a Freshmarket
Żabka Polska S.A. is setting up a new chain of shops under the name of Freshmarket. Despite the economic slowdown, the firm can boast of good financial results and wants to invest its surplus capital in its new project. The company also wants to fill a market niche which is not occupied by too many chains as yet.
The first branch was opened in Leszno on 28 March, and further investments are underway. There will be about 15 trading outlets of 250-400 m2 in size by the end of the year. A further 50 Freshmarket branches are scheduled for 2010. The firm estimates that the market could potentially sustain 1000 such shops. This year the firm is to invest PLN 40 m in the project. Work on the project lasted a year but deliberations on the possibility of entering a new segment and on whether there is at all any space on the market for initiatives of this kind were in progress for three years. Many analyses were made � including comparative studies with more developed markets � confirmed that there is still room in Poland for such an initiative. An additional factor which motivated the firm to work on this new project is that the Żabka chain has already reached maturity. Only 150 to 200 shops in this format can be opened a year, depending on the economic climate. On the other hand, as emerges from the firm�s analyses, 30 percent of the market is still made up of big and medium sized stores of 100-300 m2 in size, which are neither supermarkets nor discounters, nor, even more so, hypermarkets. Żabka Polska wants to absorb the realistically existing demand of 38 billion zlotys. But this demand is very scattered, since in this segment there are several hundred thousands of shops which remain unassociated or operate on the basis of soft franchises. There are no strong networks in this segment. The firm perceives room for delicatessens on the market but not in the premium segment, which is occupied by networks like Alma Market, Bomi or Piotr i Paweł. These shops also have considerably greater sales floor space. Żabka Polska, through Freshmarkets, wants to offer customers shops that are decidedly closer to them than networks such as Polomarket, Eko or Chata Polska. The firm will be seeking locations in shop parades and pedestrian thoroughfares, in fairly affluent and robust dormer towns. � We don�t want to engage in market rivalry in the sector of outlets of over 500 square metres. Everybody is fighting there � supermarkets and discounters � says Jacek Roszyk, chairman of the Żabka Polska S.A. management board. The Freshmarket concept anticipates customer car parks for 8-10 cars. The offer is aimed at professionally active people. As Jacek Roszyk assures, this target group for certain will not find its English-sounding name of the new network off-putting. The shops have an extended range of fresh products which are displayed along an aisle called Fresh. This is a clearly marked out area in the shop where the customer will find a whole spectrum of fresh products, including coffee, tea, sandwiches, instant meals � all that which will be in demand in the local community.
The assortment will differ even by 30 percent, depending on the location. The assortment will consist of 6000 to 7000 items. 30 to 40 percent of this assortment will consist of fresh products. The firm also anticipates the development of its own label. This will neither be a premium brand nor an economy one. It will be planned as a category leader in terms of price. The firm wants to start with undefined products such as herbs, fruit, vegetable, eggs. Further down the line, juices � to take an example � will be appearing. In the shop, apart from an alcohol counter, there will be two or three checkouts. The network wants to assure a quick flow of customers and eliminate the need to stand in queues, which has significant competitive advantage in relation to other formats. The forecast frequency of purchases made by customers is about four times a week. The shop arrangement by the entry envisages fresh cake stands, with bread, coffee, tea sandwiches and hot-dogs. � We do not want to force customers to cross the checkout line. That is why bread is not set out at the end. We are not deluding ourselves that the customer will come for bread and will buy something else along the way. Research shows that the customer will not come for fresh cakes or coffee when he has to cross the checkout line � says Jacek Roszyk. That is why the alcohol counter, and all impulse products and services belonging to the fresh club also come before the checkout line. The already mentioned Fresh aisle starts with a display of fruit and vegetables. Next there is a row of coolers with salads, fresh juices, fresh vegetables, dairy produce, frozen foods, ice cream, instant dishes, packed fresh and cured meat. At the end is a traditional counter with fresh and cured meat, cheese, olives, and salads sold by weight.
Let�s get on with it
- The history of the Posnanian Społem Food Cooperative goes back to 1910 when two shops in Poznan began trading under the name of Spółdzielnia Spożywców Zgoda. At the time, the cooperative numbered 105 members. What shape is the Społem of Poznań in today?
- In its 90 years of existence the Cooperative went through numerous transformations. Its period of greatness, statistically speaking, came in the 1970s and 1980s when cooperative ventures were ever-present on the retail market scene. There was practically no competition. At the time we had over 900 outlets and nearly 65 000 members. Today we are carrying on trading activities via 66 outlets in Poznań itself and two in Swarzędz, which subsume the grocery, meat and industrial product sectors. We are also renting out 38 commercial premises to other businesses. We employ 661 people, and have 1014 members in our cooperative, and in terms of the number of outlets, we remain the biggest trading network in Poznań.
- Does the 90 year stock of experience help the Cooperative compete with the considerably younger trading networks?
- Our tradition of many years� standing helps us because we have loyal customers and a rich stock of experience. We have been learning how to compete for 20 years now and I think the fact that we are celebrating our 90th anniversary this year in good financial and economic shape is proof that our application is yielding effects. The cooperative form of business is quite specific, and it is that which distinguishes us from other trading organisations. We concern ourselves with more than just economic activity. We also engage in self-government, socio-educational and cultural activities on a wide and far from negligible scale. For years we have been looking after �Spółdzielnie Uczniowskie� (cooperatives run by school pupils,) we run �Koła Seniora�Spółdzielcy� (Senior Cooperative Member Circles) and a Społem Chamber of Remembrance and Tradition. In the implementation of various cooperative enterprises we cooperate with a 136-member strong group of committed social activists.
- What do you lay most emphasis on in order to compete for customers effectively with other trading enterprises in the Wielkopolska region?
- Besides a broad assortment of goods on offer, at good prices and which are well displayed, we stake a lot on creating a good atmosphere in our shops. We want our customers to feel � with the help of professional and polite service � appreciated. Today we must meet modern standards in order to encourage customers to do their shopping at our outlets. In the course of systematic refurbishments and modernisation, the shop floor plan and fixtures and fittings are wholly transformed. This effect is achieved due to their fit-out with modern refrigeration facilities, shop furniture , air-conditioning, sound volume control and automatic doors. Last year we invested considerably over a million zlotys in our network. And all that, so as to ensure that our customers have a comfortable and pleasant atmosphere while they do their shopping.
The growing charm of the slim streak of smoke
In the period February 2008-January 2009, the slim cigarette segment was the fastest growing segment of the cigarette category as such. Its share in the category�s sales volumes increased by 7.1 percent, to 9.1 percent. The sales volume of slim cigarettes increased by 26.3 percent reaching the figure of about 4.3 bn cigarettes sold in this period. Also in terms of sales values it is the most rapidly developing segment since in relation to the previous 12 month period it increased by nearly 40 percent. This means that every tenth zloty spent on cigarettes in the past year went on the slim variety.
In the period from February 2008 to January 2009, 47.3 bn cigarettes were sold throughout Poland which, in comparison with the period February 2007�January 2008, represented a relatively stable figure in terms of sales volumes. Sales values in the same period stood at about PLN 15.8 bn, which represented growth of 13.6 percent in comparison with the preceding annual period which ended in January last year.
Against the backdrop of the entire category of cigarettes there are several segments that stand out, whose sales volumes in terms of the quantity of cigarettes sold is growing if we compare two annual periods, that is they are behaving differently to the whole category as such. These cigarettes are those of 100 mm in length (in the division of cigarettes in terms of their length). When we divide cigarettes by reference to their strength the biggest losers were the strongest ones � sales volumes of the strongest cigarettes fell by 6.1 percent. The shares of the weakest cigarettes remained stable. On the other hand, the share of the average strength segment increased in terms of the quantity of cigarettes sold.
65 percent sales in moisturisers
The body care product market divides into three segments: face care cosmetics, body care cosmetics and universal cosmetics. Sales of goods on this market in 2008, in terms of value, reached PLN 1.9 bn which translated into the number of unit packages came to 173 m items. The attained sales result also tied in with a dynamic sales increase in the category in relation to 2007. In terms of volume, this category increased by 6 percent while in sales values it developed at the rate of about 12 percent. The face care cosmetics market, whose sales volumes constituted 51 percent of the category�s sales volumes and 60 percent of its sales values developed respectively by 14 and 10 percent. The second of the major segments of this market, that is body care cosmetics, in which, besides cosmetics for children and adults � there are also cosmetics for hands and feet as well as sunbathing products, achieved sales values of PLN 684 m, which meant sales volumes of 67.5 m in terms of individual packages sold.
Analysing cosmetics sales in the various segments, it should be noted that the biggest sales values in face care cosmetics � which generates 65 percent of its sales, are moisturising products whose market developed at the rate of 13 percent in value and 12 percent in volume. Among the body care cosmetics for adults, sales stood at PLN 360 m, which represented 53 percent of sales in the whole segment with a growth rate of 10 percent.
Viceroy Blue � the Tobacco Leader
In this year�s sixth round of our ongoing survey of the best rates of availability of goods in the shops, Viceroy Blue cigarettes came top, being available in 88 percent of the monitored shops. They were most widely available in hypermarkets � 100 percent and in traditional shops � from 88 to 94 percent. The Viceroy Blue brand was least available in supermarkets � a mere 31 percent rate of availability.
Second place was taken by orange flavoured Fanta in the half-litre bottle with an 83 percent rate of availability. This beverage scored its lowest marks � which at 75 percent were not that low � in the small shops and in hypermarkets. On the other hand � and this is something that seldom occurs in our survey � in the medium sized stores of 40�99 m2 area, it scored a 100 percent rate of availability
Third place was taken by Żywiec beer, with an 80-percent rate of availability. Its availability rate declined in proportion to the size of the shop. Its highest rate � of 94 percent � was in the hypermarkets and supermarkets, and its lowest � 56 percent - in small shops, even though about 80 percent of beer sales come via the traditional channel.
Reckitt Benckiser � the Number 1
The Top 15 most screened commercials in the period 23.02.�08.03.2009.
Top spot in the TNS OBOP ranking this time was taken by the Strepsils brand which belongs to Reckitt Benckiser, with Vanish, another of that firm�s products, being in sixth place. The podium, as always, was also occupied by Danone and Unilever.
MARCH
Middle range loses the most
Polish traders are slowly beginning to feel the effects of the crisis. Shops are being hit not so much by slumping sales as by escalating costs.
Happily, food sector suppliers of basic products, being less exposed to the risks associated with exchange rate fluctuations, have not been affected by the crisis to the same degree as those working in segments seeking to meet more refined expectations. The still fair condition of the food sector is confirmed by Maria Kręcina, chair of the EuroSklep chain: - The conviction is finding confirmation that the crisis will touch the food branch the least. For the present, the economic situation in our firm is stable. However, that does not mean that we are ignoring the crisis because the effects of the economic slowdown are changing the market realities at some given moment.
Although shops are not losing customers, frequently their shopping baskets are not bulging quite so much, which is mainly caused by customers going for cheaper goods. A downward shift in assortment choice is in progress � customers are choosing select items, looking more keenly at somewhat cheaper goods than they used to do in the past. � The biggest losers are the middle range products � believes Zenon Szewczyk, chairman of the PSS Wadowice management board. � Albeit there are goods which are defending themselves on grounds of quality and are retaining their popularity, but where the difference between middle range and cheap goods relate not so much to quality as to packaging and marketing values (for example UHT milk), customers are turning to the cheaper varieties of goods.
The increased significance of cheaper products, including those offered under private labels, is also noticed by Teresa Jonas, chair of the Centrum Dystrybucji Błysk management board, which is eighth in �Detal Dzisiaj�s� ranking of the biggest chemical-cosmetics wholesalers: - Swept along by the media-made crisis and frequently in fear of losing their jobs, customers are beginning to take a prudent approach to budget planning which finds expression in �belt-tightening� measures and by the same token in seeking substitute premium shelf products. However that will apply to part of the assortment range. In recent years product quality has improved significantly and the way so-called own brand products are perceived, which in times of crisis will ease the shopping decision making process by end users. The customer is becoming increasingly aware that cheaper products do not diverge quality-wise from premium segment products.
It is also noticeable that customers are more careful in their buying � their shopping is more considered, accompanied by greater reflection on the pros and cons, they don�t chuck items into the shopping baskets on impulse quite as willingly. However, the crisis is only touching premium segment food products to a relatively small degree. The decrease in demand for luxury food items in PSS Wadowice shops is insignificant, and certainly smaller than the losses sustained by the middle range product segment. � Those who could afford expensive products have as a rule kept their high material status and can afford to continue buying premium goods � explains Zenon Szewczyk.
Many shops feel the pinch more because of rising costs than a drop in sales rates. This particularly concerns energy charges. In PSS Wadowice shops it is this area that �anti-crisis� activities are concentrated on. Zenon Szewczyk: - First and foremost we are using less lighting and heating. Our long-term plans involve the acquisition of energy-saving equipment (for example refrigerators), but for the moment we are concentrating on optimising our current energy consumption rates � we only switch on those installations that are essential and do not use them mindlessly. We have also made a reckoning of our equipment. The functioning of certain refrigerators put in by producers in the good old days has not proved necessary. We are cost cutting in these areas because we realise that seeking savings on personnel in the trading sector while simultaneously maintaining high customer service standards is extremely difficult.
The second route is the expansion of the assortment range � products are appearing in the shops in which so far they had made marginal appearances in their respective assortment groups or in which had been absent altogether. PSS Wadowice shops are introducing broader ranges of, for example, potted plants and basic textiles, counting on their customers being willing to buy these items while doing their basic food shopping, instead of buying them in specialist shops.
But the crisis is still not sufficiently painful enough to force trading firms to rethink their long-term strategies and make serious adjustments to their investment plans.
300 shops at filling stations
- Is your chain of filling stations registering an increasing share of FMCG sales as opposed to fuel-related products at your stations?
- Yes. Last year was a consecutive year of growth in the sales of these products. The results achieved confirm us in our belief that we have adopted the right strategy.
- Is your cooperation with the Piotr i Paweł chain a response to this need?
- Its a response to a need and an element of the said strategy. In many countries, Shell decided on cooperating with food stores of renowned brands. It enables us to merge the experience of two leaders in their respective market segments. The aim is always the same � to devise the product offer and service style best adapted to customer needs. Shell had been searching for a partner among the brand names present on the market. It turned out that a similar idea for expanding its activities was had by the Piotr i Paweł company from Poznań. Hence they agreed to cooperate. Since the Piotr i Paweł chain is a firm which managed to create a discernible brand, we saw that it would be an interesting partner in our pilot project. We have been cooperating for only a few months. It�s a bit too early to share concrete experiences. But the initial observations point at the potential for such cooperation.
- Are you planning on opening further shops in cooperation with such chains?
- Since there are shops at practically all of our stations, in the case of Piotr i Paweł we are talking more about their transformation than their start up. A pilot project is in progress for the present. That is why I would prefer to refrain from specifying our plans until they have crystallised. Of course it�s natural for such shops to be in locations where stations serve local customers who chance upon them for example on their way home from work. But the practice clearly shows that each location has its specificity and there are numerous exceptions to the rules governing planning. That is why an individual approach to every station is a necessity.
- What is the biggest barrier to the development of your chain and what is the supply rate of suitable locations?
- For certain the regulation of investment formalities is of significance. The question that is still live is that of unregulated zoning plans. The market is also highly saturated, so new locations must be evaluated with great diligence.
7 kilograms per head
Looking at the market of yellow fats, we may distinguish its two major segments: butter, and margarine and mixes � that is, all types of mixtures of fats. The yellow fats category continues to enjoy great popularity with consumers and is one of the biggest food categories in terms of sales values. In the period December 2007- November 2008 the yellow fats category was sixth in the food basket containing the categories monitored by Nielsen. The annual sales volumes of this category comes to over 282 000 tonnes, and its value is estimated to be over PLN 2 611 m (in the period February 2008-January 2009). If we were to derive the per capita totals from this data it would mean that the average Pole ate over 7 kg of yellow fats over the course of last year and by the same token spent over PLN 68.00 on the pleasure.
In terms of sales volumes the yellow fats market remains rather stable � with growth of 0.9 percent as compared with the analogous period the year before (February 2008-January 2009 vs February 2007-January 2008). It is worth stressing that sales volumes of butter rose considerably quicker than those of the whole category as such. This contributed to the increased share of this segment in the whole of this category�s sales by 1.1 percentage point finally achieving a share of 30.2 percent. By the same token, margarines and mixes, growing at a much slower pace, somewhat lost in importance.
Analysing the market from the sales value angle, we can see dynamic growth in the yellow fats category (February 2008-January 2009 vs February 2007�January 2008) by 9.1 percent, to which growth in both segments contributed. In the period February 2007-January 2008, in terms of value, margarines and mixes, in contrast to sales volumes, grew at a significantly faster rate than the category as such, and their share increased by 3.5 percentage points.
A seasonal PLN 265 m
Powdered desserts, though having a slight downward tendency in several segments, are keeping on a relatively even keel. In 2008, consumers spent over PLN 265 m on 15.9 m kg of powdered desserts.
In 2008, Poles ate nearly 16 000 tonnes of powdered desserts. The biggest share was registered by jellies whose sales volume stood at 42.2 percent. The achieved result in this group of goods means that they landed in shopping baskets more frequently than in 2007 � an increase of 10.5 percent. Custards came in second place � with growth of 32.3 percent. However, this group decreased its share in sales volumes by 5.1 percent. It was likewise with kisiels (a typical Polish dessert akin to jelly) whose share shrank by 5.3 percent and in 2008 came to 25.3 percent. On the other hand, ice creams remained without change. As in 2007, they achieved sales volumes of 0.2 percent. Last year, consumers spent a total of PLN 265.3 m on jellies, custards, kisiels and ice cream, which means a PLN 7.3 m increase on the 2007 figure. The biggest fall was suffered by jellies � by 1.7 percent, thereby settling at 40.1 percent. In the custards� group, there was a slight perceptible growth in sales values of 0.4 percent � giving it a 31.5 percent share of the market. Those with most reason to be pleased are kisiel producers. In this group, sales values increased by 1.4 percent, which translates into a more than 28 percent slice of the dessert market cake. Poles spent less on ice cream � a fall of 0.1 percent in relation to 2007 � with an 0.2 percent market share.
Still more Nestlé Corn Flakes
The best distribution rate in this round of our ongoing survey was achieved by Nestlé Corn Flakes (in their 250 g packets), which were available in 84 percent of the shops monitored on the day of the survey. That result is 9 percentage points better than the one this product scored in August 2008 (�DD� 13-14). Nestlé Corn Flakes were available in 94 percent of the modern trade outlets and in 77 percent of the traditional shops. Analysing the average prices of Nestlé Corn Flakes in the two distribution channels, we see that the biggest difference occurs between the hypermarkets and the medium sized groceries - 29 percent (PLN 3.11 and 4.01 respectively).
Second place in this ranking was taken by Saga instant tea, which was available in 71 percent of the shops. This result was made up of a 91 percent rate of availability in the modern channel (and in the hypermarkets it scored a 100 percent rate � which was the only such result in this round), and a 58 percent ratein the traditional shops. The availability of this Saga product had been examined in February 2007 which scored a 63 percent rate at the time. Thus, its current showing is 8 percentage points better. This year, however, Minutka tea (in 100 teabag packets), has also taken a bow in our survey, and had a 53 percent rate of availability in the shops that were monitored.
TOP3: Nestlé, Danone, Unilever
The Top 15 most screened commercials in the period 09.02.-22.02.2009.
In the current TNS OBOP ranking, the top three are Nestlé, Danone and Unilever. The firms putting out the most commercials in the rankings were Ferrero � with three � and Procter&Gamble and Unilever � with two each.
Bigger assortment, more additional services
The quantitative expansion of kiosk and newsagent networks, and the availability of the press in numerous grocery stores is making traders, in their struggles for customers, offer bigger assortment ranges of goods and more additional services.
Apart from newspapers and periodicals, kiosks and newsagents are introducing into their assortment ranges additional categories of goods. More often than not it is tobacco products, public transport tickets, mobile phone accessories, cosmetics and household chemicals, OTC medicines, food items, and stationery. Extending what�s they have on offer into non-press items is essential, primarily to survive on a highly competitive market, but also it is a response to customer expectations. � The appropriate selection of non-press goods is key to the success of the enterprise, especially as the margins achieved on these types of products are several times higher than the margins achieved on newspaper sales � says Mariusz Młodzikowski, the director-general of Eurokiosk.
The proportions of the various categories depend on the individual characteristics of the given outlet. For instance non-press items in the Eurokiosk network make up about 50 percent of the assortment range, however, frequently, in kiosks located by bus stops, this share is bigger due to the demand for tickets. � Everything depends on the location of the outlet. For example, if it�s a kiosk near a school, it is drinks, snacks, mobile phone accessories, mascots, stationery. Near offices, specialist publications and cigarettes or even document holders are more in demand � explains Mariusz Młodzikowski. However, irrespective of the location, the best selling categories in kiosks and newsagents are tobacco products and their accessories like lighters and matches. GSM phone charging up facilities, public transport tickets, sweets, small cosmetics items also enjoy a fair degree of customer interest.
The need to build up their assortment ranges is also appreciated by unaligned traders. In the kiosk in ulica Wawrzyniaka in Poznań�s Jeżyce district, the assortment is made up of categories like the press (one third of the entire assortment) cosmetics, stationery items, cigarettes, chewing gum, tights, OTC medicines and public transport tickets. The sales structure changes according to the time of day. � We open our kiosks at 6 am. At that time customers mainly buy newspapers and cigarettes. Later on they are more apt to buy cosmetics and tights � according to Alina Michalak, a kiosk owner in Jeżyce, who described the changing demand patterns to us. � I would very much like to run a kiosk only selling newspapers and periodicals, but currently it would be impossible to survive on selling newspapers alone. � added Alina Michalak. It is likewise at the Poznań newsagent�s Gazetka which, besides newspapers and periodicals offers cigarettes, batteries, candy bars and Coca-Cola. � All items sell at an even rate, only in summer sales of cold drinks rise appreciably � pointed out the owner of Gazetka in discussing the seasonal nature of certain products.
Newsagent networks and individual traders are introducing into their assortment ranges a number of additional services aimed at attracting customers to their own outlets rather than to those of their competitors. For example, both big networks like Ruch, Kolporter, Eurokiosk and Inmedio, and owners of single outlets are installing Totalizator Sportowy (Sporting Totalisator) lottomats (lottery number dispensers). In the opinion of the owner of Gazetka: - Totolotek (the totalisator) is a very good way of attracting customers. An interesting way of increasing turnover is also the introduction of ticket sales for sporting and cultural events. For example, in Gazetka, customers may buy tickets for Lech Poznań matches and in Ruch outlets with the logo �Bilety w Ruchu� and in select Kolporter outlets, tickets for numerous cultural and sporting events available on the market in Poland may be purchased. The Transkasa bill paying service is offered by select Kolporter outlets, while photocopying services, photo developing, hot drink and toy vending machines are offered � depending on the space available and demand at the given outlet of the Eurokiosk network. Kolporter is charting a new development course � on-line sales. Up to now, the Internet shop kolporter.pl was undergoing tests, offering customers over 85 000 books, nearly 68 000 records, 6000 films and 2000 games. Last year its revenues came to PLN 2 bn.
This could be a year for change
The brown and white goods� large format stores� market is continually growing, but less dynamically than before. To what extent the current economic slowdown will impact on the further activities of trading networks remains to be seen in a year�s time, but for the present, operators are announcing further expansion.
Looking at the market of electromegamarkets it could be said that the most dynamic time of expansion is surely behind us, but this doesn�t mean that stagnation has now set in. The biggest operators are still opening new branches, except not at such an intensive rate as in previous years.
The market leader, as far as the size of the network is concerned, remains RTV Euro AGD. At the same time, the chain has to its credit the largest growth in the number of outlets in the past year. Since our last summary, the network has expanded by eight stores and now has over 150 outlets. Behind it comes Media Saturn Holding Polska, which manages two networks belonging to the Metro Group: Media Markt and Saturn. In total they now have 50 outlets on the Polish market. The first of these networks is developing at a faster rate and after the opening of five electromegamarkets in the last 12 months, it now has 38 outlets in 31 Polish towns. Still in this year�s third quarter, shops are to open in Przemy�l and Tarnów. The second network, Saturn, has opened two new branches since our last summing up and currently has 12 stores in 7 towns, and this year it plans to open new branches in Tychy (still in this quarter) and in Lubin. Electro World too, belonging to the British company DSG International, which over the last months opened two shops, intends to develop its chain further this year. At present it�s known that an outlet will be opening in Kraków.
For certain last year may be regarded as successful by the Mega Avans chain. After the confusion of previous years connected with financial problems and changes in investors, it seems that the chain belonging to Avans International will again try to fight for the market a bit. After the closure several years ago of its shop in Warsaw�s Blue City shopping centre which had been going since 2004, its only remaining outlet was the branch in Poznań�s Stary Browar centre that was opened in 2003. Now we can start talking about a network again � in the final months of last year the company opened three stores: one was opened in November in Konin, and in December one was opened in Legnica and another in the Oliwa shopping centre in Gdańsk. Over ten new branches have been forecast in the next two years, thus as long as the crisis does not waylay these plans, it may be said that the bad spell has passed.
However, considering the current economic slowdown, it is difficult to foresee how the situation will develop. In the pessimistic scenario one has to take into consideration the suspension or abandonment of further outlets being opened by operators. In the case of Electro World there are signals flying back like boomerangs that the chain might pull out of Poland or be taken over. Electro World representatives vigorously deny these rumours but the fact is that the chain is developing at a significantly slower rate than it had announced at the time of its market debut in 2005. And considering the extent of the crisis on its owner�s domestic market, nothing may be ruled out.
Canned beer gaining in popularity
Beer sales ended 2008 with an 8.3 percent growth rate in terms of sales measured in litres, and 13.9 percent growth in terms of sales values, as compared to the previous year (December 2007�November 2008 vs December 2006�November 2007). This meant that beer sales values in retail stores alone rose to over PLN 12 bn a year.
Polish beer preferences are moving from the bottled variety to that in cans. Insofar as even a year ago these two types of containers were separated by a 7 percentage point gap in terms of market share volumes, now it is over 11 percentage points which is clearly indicative of the increasing popularity of the canned variety of beer.
Whiter mouths
The mouth hygiene goods� market is developing very dynamically. Taking into account toothpastes and toothbrushes alone, its value was estimated to be over PLN 737 m in the period November 2007-October 2008).
Sales of toothpaste rose 5.6 percent as compared with the previous year in terms of volume, and by over 11.8 percent in sales values. In the period under analysis, Poles bought over 9.8 m litres of toothpaste which had a combined value of over PLN 566 m. In terms of unit volumes, the best-selling package sizes remain those of 101 to 125 ml, but it should be noted that consumers are opting for smaller sizes with increasing regularity. The share of the most popular format of toothpaste in the period under consideration came to nearly 55 percent in terms of share volume and over 47 percent in share value. However, in relation to the previous year, both its share volume and value, it fell by 5 and 3.5 percentage points respectively. The second most popular sizes of toothpaste come in the range of 76 to 100 ml (looking at the results in terms of sales volumes). Their share in this respect came to 22.3 percent and nearly 16 percent in terms of value. And it is precisely these formats that registered the highest growth rates in relation to the previous year � 6 and 3.6 percentage points respectively.
The share of the smallest unit sizes � up to 75 ml came to over 19 percent in terms of volume and over 35 percent in value, and remained relatively stable in relation to last year.
Due to the qualities that consumers seek in toothpastes, the toothpastes with whiteners are of primary importance. Their share in the period November 2007-October 2008 came to over 35 percent in terms of sales volume and value, and this segment was the only one to register such considerable growth in relation to the analogous period last year � that is, of 4.5 and 4.7 percentage points respectively.
The toothbrush market is developing even more dynamically than that of toothpastes. In the period November 2007-October 2008, Poles bought over 35,700 toothbrushes of a total value of over PLN 170 m. In relation to last year, this is growth of over 12 percent in terms of volume and over 17 percent in terms of sales values.
Polish consumers continue to use almost exclusively manual toothbrushes. Their share in the category�s sales is nearly 97 percent in volume and 87 percent in sales values.
Lion roars almost everywhere
The highest level of distribution in the current round of our ongoing survey was achieved by the Lion candy bar from Nestlé. Its rates of availability in both the modern and traditional channels were very similar - 91 and 88 percent respectively. Its best showing was in the hypermarkets and small shops (of under 40 m2 in size), where it was available in 94 percent of the monitored outlets. Its average price in hypermarkets was PLN 0.98, while in small shops it was PLN 1.10.
Lion�s current result is 4 percentage points up on the one registered last October (see �DD� 17/2008). We have already surveyed the distribution rates of two candy bars this year � Wawel�s X-plode candy bar (in �DD� 1/2009) which was available in 21 percent of the shops, while in �DD� 2-3/2009 it was Bounty from Mars that scored high, with a 78 percent rate of availability in the shops. It is worth stressing that the Lion bar was the only product in the current round of the survey that was available in over half the small shops.
Danone the leader, Ferrero the unquestionable victor
The Top 15 most screened commercials in the period 26.01.-8.02.2009.
First place in the latest ranking of the most watched television commercials went to Danone�s Actimel, but the true victor should be seen as Ferrero, given that every third commercial in this TOP 15 ranking was put out by this firm.
The leader in TNS OBOP�s ranking remains � as in the last round-up, Actimel from Danone, but the firm that marked its presence most forcefully in the current ranking was Ferrero which managed to bring five of its products into the reckoning. This at once makes it the absolute record-breaker � some firms have managed to get four of their products into the TOP 15 in the past, but so far no one could boast of grabbing one third of the cake. Four of Ferrero�s spots, dedicated to the Kinder brand, took the 9th, 10th, 14th and 15th places. Its best place, however, was won by the Tic-Tac commercial which came third. Tic-Tac and Actimel were separated on the podium by Agros Nova�s Fortuna commercial which, after a short break, made a comeback onto our television screens with a new campaign promoting its juices and again, immediately joined the front-runners.
FEBRUARY
Competition with... the banks!
Drugstore-cosetics chains are developing but, as with every form of activity, here too, their owners are encountering certain barriers which impede their plans. Among the most significant problems, they mention finding interesting locations at �decent prices�. The reason for irrational rents in so-called high street locations, among others, traders point at the aggressively expanding number of bank chain outlets.
An increasing number of outlets selling cosmetics under the names of various drugstore-cosmetics chains, points to the intensive development of this distribution channel and the needs of customers for specialist shops. Last year � in the opinion of representatives of drugstore-cosmetics specialists � belonged to the more successful ones since most of their adopted aims for 2008 were accomplished. Firms opened new outlets, expanded their assortment ranges, established cooperation with more manufacturers, trained their shop staffs, improved their logistical back-up...
The Polish market of cosmetics-drugstore networks is developing but, as in every activity, here too, the owners of networks are encountering certain barriers which impede their development. Among the most significant problems are those with finding interesting locations at �decent prices� or, in the case of franchise based networks, with overcoming the fears of shopkeepers in joining organisations. � The expansion of networks primarily are impeded by difficulties in finding suitable premises of the size that we seek and locations along major thoroughfares, and in town centres and shopping malls - says Roman Lewandowski, the press spokesman of Rossmann Polska. The impediments here are the forcefully upward driven commercial space prices. � As an FMCG branch, we work on fairly low margins and by the same token, given the high rents, some premises are beyond our reach - explains Krzysztof Thomas, the development director of the Drogeria A�propos chain. The cause of irrational rents for so-called high street premises are, it is said, among others, the aggressive development of outlets of bank chains.
An offer for the ambitious and reliable
We will be addressing our franchise offer to ambitious and reliable traders who have an awareness of the market and a need for consolidation � said Zbigniew Paczóski, the owner of the Topaz network which has its seat in Sokołów Podlaski.
- What are your plans for new branches in 2009?
- We want to maintain last year�s growth rate, that is at the level of 40 percent. We shall concentrate on outlets of over 1000 square metres in size and strengthen our position in the region.
- Could the current economic situation and consumer moods have an impact on your activities in 2009?
- We are trying to anticipate such a situation and ensure that the possible deterioration in consumer moods have small effect on our firm. The effects of the crisis will surely be felt, though in the food trade it will be less so than in many other branches. It�s undoubtedly a bad period for networks that are strictly delicatessens in character. For us it�s a challenge and a call for mobilising in work on our assortment ranges.
- Given the trend towards consolidation and the growing role of big trading organisations, is it possible at present to think of long term activity of a network which, with only 25 outlets is, by today�s standards, small?
- Counter to current opinion, consolidation on the retail market might not have a good effect on retail customers. Here I have in mind the lack of direct competition which, as we know, is not a good thing in every area. Given its autonomy and policy, the firm does not anticipate - in the immediate future ahead - consolidation with countrywide retail networks; we want to retain in our region for as long as possible a balance since it is a good solution both for manufacturers and retail customers. 25 Our shops on a countrywide scale, are not much. But on a regional scale I could argue with the notion that it�s a small network!
In 2009, we plan to expand our trading activity, which is currently based on our own trading outlets, by building up a franchise network characterised primarily by a high degree of integration with our standards and observance of our trading policy. We do not want to duplicate the mistakes that are visible on the market. That is why we shall be addressing our franchise offer to ambitious and reliable traders who are aware of the market and sense the need to consolidate via franchise, and also have the possibility of opening sales spaces of at least 100 square metres and are operating in localities of no less than 2000 inhabitants.
21-percent growth in chocolates with fillings
Candy bars, being one of the biggest segments of the whole confectionery market in terms of value (which ties in with the fact that they are frequently taken as a tasty snack by Polish consumers), according to data from MEMRB, in the period November 2007�October 2008, registered sales of 24.7 m kg, which translates into sales values of PLN 767 m.
This result, in comparison with a similar period a year earlier speaks of a 9 percent increase in sales volumes and 16 percent in sales values. Within the framework of the candy bar category, there are three distinguishable main product types: muesli bars, bars with fillings and standard ones, because their sales in the period under scrutiny represented a staggering 79 percent in terms of value and 81 percent in terms of sales volumes. This segment, comparing the current results with those of the previous year, increased by 17 and 8 percent respectively. The highest growth rate of all candy bar types was achieved by those with fillings, whose 15 percent share in sales volumes speaks of a 21 percent growth rate in real value as compared with the period November 2006-October 2007. In this same period, the sales values of this segment increased by 29 percent, giving it a 16 percent share in the whole category as such.
The candy bar market is principally one consisting of three players, because only three producers (Mars, Nestlé and Cadbury Wedel) managed, in the period November 2007�October 2008, to generate a double figure share in sales volumes and values in the category, thereby jointly achieving a market share of over 70 percent. The unquestioned leader in the category is Mars, which, with a share of 43 percent in sales values and 46 in volume, in terms of kilograms sold, considerably outdistances the remaining players. Like Mars, they registered sales growth in the period November 2007�October 2008. Both Nestlé and Cadbury Wedel achieved sales shares in the candy bar category of 14 percent in sales volumes and values.
Black teas� flagging popularity
In the course of the year commencing December 2007, and ending in November 2008, tea sales, both in tea bags and loose leaf, came to over PLN 1.2 bn, which signifies growth, as compared with the previous 12 month period, of 13.1 percent. Another type of tea, namely the instant variety is selling in Poland to a lesser extent than the tea bag and loose leaf varieties. The sales values of instant teas in this same period came to over PLN 670 m, which makes it approximately 5 percent of the sales values of tea bags and loose leaf teas. At the same time, the sales value growth rate of instant teas is over three times lower than that of ordinary teas and comes to a mere 4.1 percent in comparison with the previous one year period.
In terms of sales volumes of ordinary and instant teas, their year on year growth rates are similar. These growth rates are 4.1 and 4.5 percent respectively as compared to sales volumes in the previous year ended November 2007, and with this, sales volumes of instant teas, in terms of kilograms sold, constitute over 3 percent of the sales of ordinary teas. For those two types of teas this spelt 24 m kilograms of ordinary teas and over 8.7 m kilograms of instant teas. In the previous annual period, every other zloty was spent on black teas, while in the same period the share of black teas in terms of sales values throughout the tea category declined by 1.7 of a percentage point and now constitutes only 48.1 percent of sales of the whole category of teas.
Second, after black teas, in terms of sales values, are functional teas � which took a 16.8 percent share in the last one year period, but with this, the increase in functional teas in comparison with the previous year came to 0.4 of a percentage point. In third place, in terms of sales values, are fruit teas. The share in sales values of fruit teas came to 15.2 percent and this represented an increase of 0.8 of a percentage point as compared with the previous period. It should be noted that fruit teas are in second place in terms of sales volumes, while the price for these teas is relatively lower than that of functional teas. That is why, in terms of value, they are in third place. Apart from black, functional and fruit teas, there are also other types of tea, like Earl Grey, which achieved sales values last year of 6.6 percent; herb teas � their share in sales values is 9.8 percent of all tea varieties; finally, aromatic teas have a 3.3 percent share in the sales values of the tea category.
26 m litres down the plug-hole
The sales values of shower gels and bathing liquids both for adults and children came to nearly PLN 412 m on the Polish retail market in the period November 2007�October 2008, and their volume exceeded 26 m litres.
Distribution of Kinder Eggs without a surprise
Ferrero�s Kinder egg with a surprise is the second Distribution Leader this year. On the day of the survey it was available in three out of four of the monitored shops. The distribution level registered by Kinder�s eggs was one percentage point up on its result as registered by �DD� in December 2005, when it achieved the best result and became the Distribution Leader for the first time. The current level of distribution of Kinder�s egg did not surprise us.
Analysing the availability rate of the current victor in the various channels of distribution, it achieved its best results in the small grocery stores where it scored an 88 percent rate of availability. In the hypermarkets and supermarkets, Kinder Niespodzianka (Surprise) was available in 75 percent of such outlets. Its average price in all types of stores was PLN 2.48.
Carlsberg beer was available in 70 percent of the shops. Its highest rate of availability � 94 percent � was in hypermarkets, and its lowest - 38 percent � in small shops. Last year, we monitored two Carlsberg beers in our survey: in �DD� 9-10/2008, Okocim Mocne, which scored a 78 percent rate of availability, became the Distribution Leader, while in �DD� 18/2008, Karmi Classic was available in 50 percent of the shops.
Actimel advertised the most intensively
The Top 15 most screened commercials in the period 01.01-31.12 2008.
The FMCG sector spent PLN 4.4 bn on television commercials in 2008 � reports TNS OBOP. The FMCG sector is in first place on the list of categories which invest most in television commercials in Poland.
According to TNS OBOP, in 2008, the biggest spender on television advertising in Poland was Unilever � PLN 529 m (price list data without rebates). Second place was taken by Procter&Gamble which spent PLN 435 m. The next FMCG firm, in all categories, is L�Oreal, which spent over PLN 270 m. Expenditure on television commercials increased in Poland by 17.4 percent and came to PLN 11.2 bn. The most intensively advertised FMCG product last year was Actimel from Danone.
JANUARY
Record year
For the delicatessen segment, the past year was one of record growth as far as the number of outlets and the reach of networks are concerned. Without doubt, it was also the best year for delicatessens since the the development of this format of shop on the Polish market began.
The past year was very successful for delicatessen chains operating on the Polish market. Virtually all of them registered clear growth in their numbers of outlets, and more and more of them decided to plunge into regions in which they had never been before. The biggest growth was enjoyed by the Piotr i Paweł chain, which opened 11 new branches and in line with its assumptions, ended the year with the round figure of 50 by opening its Leszno branch on December 17, which is in fact its second branch in that town. Alma Market can also count 2008 as a successful year � at no earlier time did it open so many new outlets. It ended the year by opening its 22nd branch in the Manufaktura shopping centre in Łód�. The Bomi chain, which changed its management board in October, also did well, having increased its holding by several further outlets. More players have entered the map of delicatessen chains � Milea, managed by Detal Koncept, which belongs to the Emperia Group, which built up almost a 50-branch chain in the course of just over a year, and the Delicja chain, which belongs to the Polish Supermarkets� Group (Polska Grupa Supermarketów) which for the moment has two outlets.
Taking into account the new players on the market, we now have a growth rate of over 80 percent in the number of delicatessen shops in Poland. But even in summing up the results without the Milea and Delica networks, which were not in the rankings last year, we have growth of 30 percent, which is also indicative of the strength of development of this type of format over the past year.
An assortment that makes it more attractive
Today�s chemist shops in no way resemble their austere predecessors of old, which exclusively sold pills, creams, dressings and other items associated solely with health care and protection. Today�s consumer is more sensitive to the product assortment range on offer in all types of shopping outlets. Contemporary pharmacists, wishing to meet the challenge of the free market and customer expectations, are extending their product ranges to cosmetics, parapharmaceuticals, hygiene products etc.
- The baby foods� market in the chemist shop channel is chiefly concentrated on modified milk (on refundable prescriptions) � says Piotr Sucharski, chairman of the management board of Torfarm S.A., a pharmaceuticals� distributor and business partner of 4000 chemist shops in Poland. � Other products like meals in jars, are in practice unavailable in chemist shops. Pampers are a category that is in systematic decline in terms of availability in chemist shops. Nappies are bought in chemist shops only occasionally since typically they are bought in large format stores in the course of general shopping trips. Female hygiene products and cosmetics are among the most intensively developing categories in chemist shops (its forecast growth rate in 2009 is 15 percent) � in this category there are a highly visible growth rates and chemist shops see in this great profit opportunities while producers busy themselves devising sales offers specifically and exclusively targeted on this channel, which makes them very exclusive (given that chemist shops can give customers professional advice). There are �exclusively chemist shop� brands whose major selling point and brand-building strategy is based on sales in chemist shops which are treated as exceptional, indeed, the most trustworthy retail outlets. For these brands, sales in drugstores and supermarkets would have a depreciative effect. As Mr Sucharski adds, the biggest competition between chemist shops and supermarkets or other shops is precisely in the cosmetics segment. � Parapharmaceuticals, notably diet supplements, are another most significant category with big growth potential. These products are virtually predestined to be retailed by chemist shops which are their major, if not exclusive, distribution channel. Torfarm will soon be launching its own brand products of this type on the market � says Torafarm�s chairman.
- Chemist shops are a more important sales channel for milk category products � especially initiatory and specialist ones � says Agnieszka Karolak, the marketing manager at Nestlé Nutrition. � In the case of these first-mentioned ones � their importance in terms of share, to the whole segment is over 12 percent, for the milks� category however, the importance of this channel drops to just over 7 percent (according to ACNielsen data for the last six months, ON'08). Young parents very frequently go to chemist shops when making their choices of the first milk varieties for their children � where they expect professional specialist advice � in this instance, that of a pharmacist.
- Apart from medicines, diet supplements sell best in our chemist shop � says Marzena Podyma of Apteka Magiczna in Wrocław. � Nutrients, vitamins, weight-loss support products, green teas. Their sales bear comparison with those of prescription medicines. Advertising is of no small influence on these trends. All new products appearing on the market that are advertised sell markedly better. Patients even come to chemist shops with cuttings of adverts asking for given products.
Intimate female hygiene products and dressings, which were always available in these shops, also continue to sell very well. � In chemist shops, besides prescription preparations, non-prescription goods are also available (for example, Ranigast Pro x10t, Ibuprom), diet supplements (for example the vitamin product Vigor) � says Ewa Makowska, the sales director of Dolno�ląska Grupa Apteczna Sp. z o.o. � Diet supplements and certain OTC medicines are admitted to extra-pharmacist (OTC) trade. In our chemist shops we see growth trends in sales of these product ranges. Patients opt for purchases in chemist shops where they can obtain professional advice. The picture is different for the intimate hygiene product, mouth-wash and pampers and male contraceptives segments. Our chemist shops have highly restricted ranges in these categories of products, due to their broad choice and availability in the extra-pharmacy market. In the past year we observed increased interest in accessories for babies, for example, bottles and rattles. As Ewa Makowska adds, sales in the above-mentioned preparations have varying impact on chemist shop sales. The percentage share of prescription medicines, OTC ones and others in the overall turnover rates of chemist shops depend on their locations. � A chemist shop next to a clinic will generate even up to 80 percent of its sales via prescription medicines, the remaining 20 percent being non-prescription goods, in this products distributed on the extra-pharmacy, dermatological cosmetics� and other markets � says Ms. Makowska.
Sales increae by 73 m litres
Over the 12 months through November 2008, the juice, nectar and noncarbonated beverages market registered increased sales volumes � by 73.3 m litres � i.e. 6 percent growth in relation to the period December 2006-November 2007. Total salesin this domain settled at 1.3 bn litres. In terms of sales values, in the same period reached PLN 3.49 bn � which signified growth of 14.1 percent as compared to the analogous previous year period.
Nonetheless, in analysing the various segments of this market, we can observe variegated sales trends. Insofar as each of them registered growth in sales values, in terms of sales volumes only non-carbonated beverages increased in comparison with the previous year. The remaining two segments � juices and nectars � registered drops of 3 and 4 percent respectively in the same period. As a result, non-carbonated beverages were that type of product that increased its share in the whole juices, nectras and non-carbonated drinks market � with an increase in volume share of 4.2 percentage points in the period December 2007-November 2008 in comparison with the period December 2006-November 2007. This expansion came, to the gratest degree, at the expense of nectars � partly due to the change of formula of the currently available nectar products to ones that is closer to non-carbonated beverages with lower fruit juice content.
In the juices segment, despite a drop throughout the whole segment as such, orange-, tomato- and grapefruit-flavoured products enjoyed increased sales volumes. In the case of orange juice the increase was 6.7 percent, while tomato juice sales went up by 6.6 percent in comparison with the previous year. However, a higher rate of growth is observable in relation to grapefruit juice � of 24.7 percent. But the contraction of the whole juices� segment stemmed from the drop in sales of its second largest flavour � ie apple � by 15.9 percent, but of no less significance was also the declining sales volume of multi-vitamin juices and multi-fruit products: by 39.2 and 13,5 respectively.
The drop in necter sales did not affect all flavours. Indeed, in the period December 2007-November 2008, as compared with the period December 2006�November 2007, carrot-based products enjoyed an increase in sales volumes of 6.3 percent. Banana nectars also enjoyed dynamic growth, thereby enhancing their standing in the segment by 2 percentage points.
However, the growth rate for the entire category as such was determined, as in previous periods, by non-carbonated drinks. The whole segment increased its sales by 14.4 percent in terms of volume. Sales values on the other hand, increased PLN 310 m taking their total up to PLN 1.6 bn, which signified growth of 23.6 percent in the period December 2007�November 2008 as compared to the previous 12 month period. Among these beverages, orange-based products enjoyed considerable growth � of 35.4 percent, as a result of which this dlavour increased in importance and to the greatest degree contributed to the increase of the non-carbonated drinks� segment on the whole market. To a lesser degree, this growth was also driven by increased sales in multi-fruit drinks based on blackcurrant and apple flavours.
Fortuna�s first Distribution Leader crown
For the first time in the history of our ongoing Distribution Leader survey, the top spot was taken by an Agros Nova product. The highest distribution rate in the current round was scored by Fortuna�s orange juice that comes in one litre boxes. It was available in 63 percent of the shops that were monitored. This result comprised an 81 percent rate of availability in modern retail outlets and a 50 percent rate in traditional stores.
Fortuna�s orange juice has already been in our basket of monitored goods once before. In �DD� 5-6/2008, the juice was available in 51 percent of the shops. The current result thus 12 percentage points better. The average price of Fortuna�s juice hovered round the PLN 3.98 in the hypermarkets, PLN 4.45 in the supermarkets and PLN 4.85 in small shops.
The second most widely available product in the current round of our survey was the mini garlic cube from Knorr, which made its first appearance on the market in July 2005. Knorr�s mini cube was already included in our survey in �DD� 1/2007 when it was available in 56 percent of the shops, so its current result is very close. Its level of availability diminished in proportion to the size of the shop � from 81 percent in the hypermarkets and 63 percent in large stores, down to 31 percent in small shops.
Bakoma�s 7 Zbóż (7 grains) yoghurt and Mokate�s instant tea were one percentage point behind Knorr in their rates of availability. The Bakoma yoghurt, together with Floriol olive oil, had the highest rate of availability in the hypermarkets � 94 percent and 56 percent in the supermarkets which, together, gave it a 75 percent rate of availability in the modern retail channel. We monitored two other varieties of Bakoma yoghurt in our surveys in 2008: in �DD� 7 it was its natural flavoured yoghurt in a 150g tub, which scored a 49 percent rate of availability, and in �DD� 9-10 when Bakoma Premium (a 165 g tub full of strawberries), was available in 55 percent of the shops.
Unilever�s domination
The Top 15 most screened commercials in the period 1.12-31.12.2008.
In December, the most screened tv commercials related to soups, cake ingredients, juices, yoghurts, sweets, and, as is usual for the winter period, vitamins and pain-relieving tablets. In summing up December�s commercials, the top spot in the ranking was taken by Unilever, which also got two more of its products into the TOP 15.
Detal Dzisiaj/Detal Dzisiaj Network 2008
DECEMBER
Customers like it
Despite the rapid and dynamic growth in the number of shopping malls, open street markets (bazaars) are not in danger of collapse. Poles continue to gladly do their shopping at bazaars and though their number has dropped slightly, there has been sales� growth in certain product groups at bazaars. But to survive, bazaars will have to modernise themselves.
Bazaars continue to play an important role in trade, despite the dynamic development of modern trade. According to the report prepared by the firm Cushman & Wakefield, in the course of the next few years there will be about 100 new shopping malls in Poland with a combined area of 2.5 m m2. Since the early 1990s the combined volume of space at shopping centres in Europe has trebled. In the past two years nearly twice as much space was opened up than at the beginning of 2000. There is much development on the mature markets of Western Europe, however in the immediate future developer activities will concentrate on East Central European markets, the Polish one included. Will trade at bazaars thereby disappear, is their existence under threat? It seems not since Poles continue to buy willingly.
There is still room for bazaars on the retail scene. This segment is organising itself ever better as far the quality of the services it offers is concerned. Locations are changing as well � instead of lock-up stall (known as �jaws�), consumers do their shopping in roofed over open markets. Moreover, given sales points specialise in set categories. Mainly they are basic goods: bread, meat, fruit and vegetables. The consumer is ready to pay more for good quality fresh products at an accessible price and near one�s place of residence. At the end of 2007, local council offices throughout the country had 2283 registered permanent market places on their books. Analysing the situation of permanent market places one can see a small drop of 0.6 percent in their number as compared with the year before. The biggest drop� by four market places, was registered in Silesia. This had the effect of a reduction of permanent market space in this province by 1.1 percent and the number of permanent petty retailing outlets by 3.7 percent. In 2007, in the provinces of Mazowieckie, �ląskie and Wielkopolskie, there were 34.2 percent of all such markets in the country and this represented growth of 0.1 percentage point in relation to the previous year. At the same time, it may be noted that their share in the overall permanent market place figure was 37.3 percent which was 1.6 points lower than the year before. At the bazaars, trade was carried on by about 111 000 permanent petty retailing outlets of which 76 800 were open daily. The supplement to the permanent market network were the seasonal markets. In 2007 there were 6639 of them which means growth in relation to 2006 of 7 percent. The biggest growth in their numbers was registered in the provinces of Mazowieckie, �więtokrzyskie and Zachodniopomorskie. Annual revenues from market fees in relation to 2006 increased imperceptibly and amounted to PLN 263 m.
People have to eat
Companies listed on the Warsaw Stock Exchange published their results for the third quarter of 2008 in the second week of November. Of the FMCG sector firms, those that had published their results by 15 November included: Alma Market, Bomi, Emperia and Advanced Distribution Solutions and the Eurocash Group.
Upon publishing these third quarter results and those for the period January-September 2008, investors may have been disappointed at the sector�s performance. Alma Market managed to achieve PLN 209.7 m in sales revenues in the third quarter, but this only gave it PLN 5.5 m in net profits. Last year at this time it had returned PLN 162.9 m in sales revenues which gave it net profits of PLN 16.9 m. After three quarters, Alma Market has chalked up PLN 614.8 m in sales revenues and PLN 16.7 m in net profits. A year earlier it was correspondingly PLN 460.8 m and 22.6 m. In this way, Jerzy Mazgaj�s � Aklma Market�s chairman�s - forecasts of fairly weak results for Alma, came true. He explains this, among others, by the opening of five Alma Delikatesy stores in the third quarter. Thus, since the beginning of the year the chain has increased by seven branches. � The newly opened delicatessens are generating fixed costs associated with their start-up operations. The attainment of sales at a level which will yield profits enabling the sustaining of these costs comes after 9 to 12 months. If in a short space of time several new stores are opened, then they have a short-term downward effect on the profit levels of the whole company � explains Jerzy Mazgaj.
Krakowski Kredens, a subsidiary of Alma, is also investing in new outlets. Ten shops under this logo were opened in 2008. The company�s plans assume that in the last quarter at least one Alma Delikatesy and two Krakowski Kredens stores will be opened.
Emperia Holding did not evade a drop in profitability in relation to 2007 either. According to its latest report, in the third quarter, the company achieved over PLN 1.33 bn in sales revenues and PLN 5.5 m in net profits. In the analogous period in 2007, Emperia made PLN 1.2 bn in sales revenues and PLN 15.5 m in net profits. The first three quarters of 2008 brought Emperia PLN 3.96 bn in sales revenues and just over PLN 41 m in net profits. After the first three quarters of last year, the company had made PLN 3.39 bn in sales revenues but bagged nearly PLN 65 m in profit. This situation might be explained by reference to the six retail companies - Lewiatan: Dolny �ląsk, Zachód, Orbita, �ląsk, Wielkopolska, ZKiP Lewiatan �94 Holding and the distribution company MPT MAGO in Pila - that were added to Emperia�s portfolio. � The Emperia Trading Group invested nearly PLN 144 m in the distribution and retail segments over the first three quarters of 2008. Due to this we have acquired over 1000 shops belonging to the following chains: Lewiatan, Euro Sklep, Milea, Groszek, Stokrotka and Delima � enumerates Artur Kawa, the chairman of the management board of Emperia Holding.
Bomi Group sales revenues (the company Bomi, the Rabat Pomorze Group and the company Rast) after three quarters of 2008 came to PLN 520.6 m and net profit of PLN 9 m. Here the dominant share is that of Bomi whose sales revenues after three quarters of 2008 came to PLN 463.9 m (PLN 334.7 m last year). However net profit after three quarters of 2008 was negligibly higher � by 1.13 percent than the analogous period last year. This result is explained by representatives of the Bomi Group by embracing the post-merger results of Rast and Rabat Pomorze and investments. Bomi handed over for use three delicatessen shops and two Rast supermarkets. To the end of the year it is planning to open a further three delicatessens under the Bomi logo. � The results we have achieved are not sensational. We are working without interference and are implementing the adopted plans. The company�s situation is stable also because of diversification of activities into retail, wholesale and property lets � stresses Andrzej Wojciechowicz, the chairman of PPH Bomi.
After three quarters of 2008, Advanced Distribution Solutions achieved revenues of PLN 414 m and PLN 5 m in net profit. In the analogous period in 2007, the company showed losses of PLN 1 m. � The achievement of the forecast revenues in 2008 at a level of PLN 610 m seems not to be under threat � declared Marian Przepolski, still as the chairman of Advanced Distribution Solutions.
The Eurocash Group achieved revenues in the order of PLN 1.73 bn and net profit of PLN 18.9 m in the third quarter.
More for the better
The alcohol market in Poland was worth PLN 24 bn � in the period October 2007�September 2008. Wine is maintaining a stable share in the basket at the level of 6.2 percent in value. That means that increases in sales in the category are at the level approximating to the entire basket � 9.8 percent in volume and 14.5 percent in value respectively.
The alcohol basket is dominated by beer which accounts for 51.5 percent of sales values. In terms of volume the superiority of this alcohol is even greater � for every 100 litres of alcohol sold in Poland, 88 litres is beer. However, from one period to the next, the share of this beverage is shrinking. The chief beneficiary is vodka which accounts for 38.5 percent of alcohol sales values in Poland � a 1.4 percentage point increase in comparison with the period October 2006�September 2007. Other categories that are undergoing a phase of dynamic growth - whisky, ready-to-drink beverages and liquers - are also gaining shares.
77 m unit packs worth PLN 803 m
Sales of mass-produced deodorants in Poland in the period September 2007 to August 2008 were estimated by MEMRB International Poland to be over 77.1 m single items of the product valued at nearly PLN 803 m. Both the value of the market of these cosmetics and the quantity counted in unit packs increased in the period under consideration in relation to the analogous period a year earlier by 9 and 5 percent respectively.
The deodorants� segment for women constitutes the bigger part of this market, generating 58 percent of sales in the category and 60 percent in volume. The growth rate in women�s and men�s deodorants in terms of volume is similar and came to 5 percent, however, in value these segments differ � the women�s deodorants category is developing faster � at the rate of 11 percent than the men�s � with 7 percent growth.
If we compare the sales shares of ordinary deodorants and anti-perspirants, it turns out that the first of these categories which accounts for 54 percent in value and 52 percent in volume, still counts for more, and translated into unit packs in the period under survey 19 percent more were sold than in the analogous period the year before, while sales of ordinary deodorants fell by 5 percent.
The Apple-and-mint Leader from Tymbark
The last Distribution Leader this year is the apple-and-mint drink from Tymbark. Its availability on the day of the survey was 83 percent � in the modern channel 94 percent, and in this, 100 percent in the hypermarkets and 75 percent in traditional shops. That�s the second time a product from the firm Maspex has achieved the distinction of Distribution Leader this year � in �DD� 11-12/2008 it was its juice Kubu�, with an 81 percent rate of availability in the shops that was checked out.
The second most widely available product was the washing powder Vizir Color, 400 g � 58 percent rate of availability. It must be stressed that this result is the second best score for a chemical-cosmetic category product this year. The relatively lower rate of availability of these products is the lower importance attached to this category�s products by traditional shops. The best result was achieved by the dishwashing liquid Ludwik � 64 percent rate of availability (�DD� 2-3/2008), third was Domestos Pine Fresh, 750 ml � 54 percent in �DD� 17/2008.
Nestlé in the lead
The ranking of commercials at the turn of October/November decidedly belonged to Nestlé, which was the only one to get three of its spots into the picture. One of them was its Lion bar advert which made it into the top three, outpaced only by brands we know so well already: Actimel and Fortuna.
NOVEMBER
A good way to sit through the economic slowdaown
Franchising is becoming an increasingly popular form of economic activity. This can be seen not only by our expanding table, but also in its financial results. According to the estimates of the firm Profit System, the sales revenues actually achieved by franchise and agency networks reach PLN 72 bn which represents 7 percent of the Polish GDP.
The franchise market is constantly growing. For the first time, we are presenting a ranking of the TOP 50 FMCG franchise networks. Such networks are appearing in increasing numbers which is evidence of the growing popularity of this trading format in Poland. � When the hypermarkets put something of a brake on their development, considerable competition on the franchised convenience type grocery store market appeared. The number of delicatessens and ecological food shops is also rising. � says Arkadiusz Słodkowski, chairman of the consulting firm Profit System and member of the Polish Franchisers� Organisation management board.
This firm�s data confirms that franchisers operating in the food sector are successfully developing networks of shops in a variety of formats: from small ones, through medium ones, all the way up to hypermarket size formats. The slowdown in the spread of hypermarket networks was associated with the act blocking their development, and bore fruit � before the act was repealed by the Constitutional Tribunal � in that some of the operators, not being able to develop large format outlets, created the local store format. That�s what Carrefour did for example, developing its chain of Carrefour Express and the franchised Carrefour 5 minut.
Consolidations have also become a natural part of the Polish trading landscape, which have not circumvented the franchise sector. � Owners of single outlets are finding it increasingly difficult to stay competitive. Membership of a network with a well-known brand is the best solution to consolidate one�s position on the local market. Those coming together in this way acquire greater negotiating clout and economies of scale. On the other hand customers also gain � outlets joining a network are modernised, and greater care for the quality of goods and services makes itself apparent � stresses Andrzej Słodkowski.
Krzysztof Wo�niak, deputy chairman of the Euro Sklep management board also believes that franchising is a good business idea. Euro Sklep was among the most intensively developing networks in the past year. The dynamic growth in numbers of the shops stemmed, among others, from the takeovers of already integrated groups, but also from the array of services that the firm put on offer � The attractive offer for shops is the result of our longstanding experience and merger at the end of 2007 with the Emperia Group � explains Krzysztof Wo�niak. The openness of traders to change enabled us to implement newly-proposed methods, among others in organising the shops, merchandising or personnel management.
- Brand and common operating principles are the strength of the franchise system, which is contributing to the survival of the small and medium sized enterpises on the market. However, the guarantee of success, in truth, is really the awareness and enthusiasm of the individual franchisees � stresses Krzysztof Wo�niak. He also adds that the development of franchise networks is dependent on the attractiveness of the franchise on offer as supported by a strong market position and shop support system now not only through a logo or newsletter, but through innovative solutions and systems ensuring competitiveness on the market. � Its a different, new look on franchising that allows the assertion that this system is at the beginning of its journey despite the fact that franchising has been developing in Poland for years � believes the deputy chairman of Euro Sklep.
One route to development is so-called �soft franchise�, as applied by Euro Sklep, which does not mean that there is freedom of action in every aspect. � There are standards that are imposed, but equally there are areas where franchisees make their own choices. The degree to which they opt for our package deal depends on its attractiveness. If its advantageous, there is no need to impose it � an informed franchisee will not reject what�s good. In soft franchising the most important are partner relations � emphasises Krzysztof Wo�niak.
As Andrzej Słodkowski observes, franchising could be a good solution at a time of economic slowdown, since entrepreneurs operating under well known brand names can nestle under the protective umbrella of those brands while customers give up their shopping at and services of well-known brand names. � An important proviso here is that it is different if you have been operating as a franchisee for some years and hit a crisis period � its easier then to pull through without losses, and it�s something else to commence business on a franchise basis from nought in a crisis period � here getting sales up to the appropriate level faster, may present difficulties, as in every business � says the chairman of Profit System. But luckily, he adds, with economic growth of 2 to 3 percent, it is the medium and small trader and service providers will defend themselves best, and licences for such businesses predominate in franchises. In the course of the VI edition of �Salon Franchisingu� (a sort of franchisers� fair � ed.), which took place in October, despite the crisis already being at an advanced stage on the financial markets, the big interest of people in their own franchised business was already apparent. � Poles increasingly want to decide on their own money themselves, and their expanding knowledge about the economy is prompting them now to choose franchising which is safer � asserts Andrzej Słodkowski.
For the moment, the franchise market has not felt the economic slowdown. In the opinion of the chairman of Profit System, only the audited returns of the last quarter of 2008 could reveal some slowdown. � For the moment however, this has not been reflected in the number of fresh franchise offers on the market. We estimate that to the 440 operating in 2007, we will have added a further 100 in 2008. And that would be indicative of a 20 percent plus growth rate � he concludes.
Traditional exchanges are the biggest competitors
Traditional exchanges will be losing in importance as a result of increasing consumer awareness with regard the safe trading in food � says Stanisław Gierszewski, chairman of the Pomorskie Hurtowe Centrum Rolno-Spożywczego SA Rënk wholesaling centre.
- What are the firm�s operating principles?
- The Pomorskie Hurtowe Centrum Rolno-Spożywcze S.A. Rënk lets premises for wholesale trade in flowers, decorative and gardening articles, fruit and vegetables, foods produced at home and abroad. The company has three covered markets of 25 000 square metres in total, shelters, spaces, seasonal and occasional tents (for example �chrysanthemum days�), parking space and office accommodation. The firm has infrastructure which enables all entities wishing to trade in the above mentioned commodities to carry on their economic activities at its site. The firm puts at its tenants� disposal trading boxes of 17 to 47 square metres in area, with running water, electricity, telephone and electronically secured roller blinds. There are 85 boxes in the flower market hall, 112 boxes in the general food hall, and larger firms lease the premises in the third hall which they use as their logistic-warehouse centres. The boxes may be joined together at will, which is something most of the entities gladly do. The market halls are heated, they have their own mechanical ventilation and automatic air conditioning systems. Tenants also have cold stores at their disposal where they can keep their goods at set temperatures. The width of the passageways facilitates the safe flow of movement of trolleys to the transport stations. Ramps, technically called docks (i.e. loading bays), have been specially provided. The halls also contain catering outlets, lavatories, showers, and rest rooms (called �social premises�) for workers.
Seasonal and occasional spring and autumn bazaars are regularly held on site. Among the more important events that can be distinguished are: �Grajmy w zielone� (Lets play green), �Dni chryzantemy� (Chrysanthemum Days) or flower shows. �Let�s play green� has now become a spring time tradition at our market, which is a gardening exhibition-cum-bazaar. Its most recent edition was visited by over 20 000 people in just one weekend. �Chrysanthemum Days� are held annually before All Soul�s Day.
- What is the size of your site and how many operators do you cooperate with?
- The company operates on a site of over 30 hectares, of which 19 hectares have already been developed. We are currently implementing further development plans regarding the flower market due to which Poland�s biggest trading centre for that sector will arise. The area we own is sufficient to carry on the present activities, and the spare area gives us the opportunity to further develop the wholesale market in an untrammelled way. On average, the firm cooperates with over 200 tenants in the course of the year, who offer their assortments of goods in marked out open spaces and tents.
- What are your plans for the immediate future?
- On site, the development of an extension of the flower market is actually in progress. This will make it the biggest flower market hall in Poland which will also contain all the additional items and decorations that come with it. The next investments will come in cooperation with the tenants and will concern the fruit and vegetable sector. We are also planning, insofar as there will be any interest, to build a market hall for traders specialising in poultry, dairy produce and fish.
Growth in value and volume
Alcohol is one of the biggest FMCG categories in the world. In that respect, it�s no different in Poland � it dominates the biggest categories of FMCG comestibles in the rankings in terms of sales values and volumes. In the period October 2007�September 2008, 2.9 bn litres of alcohol was sold in our country, which was 7.9 percent more than in the analogous period a year earlier. This translated into sales values of PLN 24.2 bn, which was 15.7 percent more than the year before. The faster rate of growth in its sales value than in volume means that this category�s average prices have increased.
PLN 405 m on hairstyling
In recent years there has veen a visible increase in customer interest in hair styling and dyeing products. Sales values of hairstyling products in the period September 2007�August 2008 increased by 8.3 percent in comparison with the analogous period the year before, while hair dyeing products enjoyed a corresponding sales growth of 9.7 percent.
Rama Classic � the Leader from Unilever
The Distribution Leader in the current round of our on-going survey was the margarine Rama Classic from Unilever, which was available in 76 percent of the stores monitored on the day of the survey. Its result comprises a 91 percent rate of availability in the modern trade channel and a 66 percent rate in traditional shops. It is the second product from Unilever that took the Distribution Leader title this year, and in the yellow fats product category at that, in �DD� 5-6/2008, the best result among the basket of products surveyed then was scored by the margarine Kasia, which was available in 84 percent of the shops.
Second and third place was taken by the instant coffee Tchibo Family and Orbit White Fresh Mint chewing gum respectively � both products being available in 66 percent of the shops.
Yoghurt reigns supreme
The Top 15 most screened commercials in the period 13.10-26.10 2008.
We have a very �healthy� podium in the current ranking of the most watched television commercials � it dominated by yoghurts and the list of winners is closed by juices.
Zott�s Jogobella yoghurt commercial, which is a regular visitor in TNS OBOP�s Top 15 ranking, has been climbing upwards systematically for a long time. At the beginning of September it was propping up the top 10, in the second half of that month it leapfrogged to 2 place, then it disappeared from the ranking for a moment only to return in grand style. The second half of October indisputably belongs to this firm - Jogobella outclassed its rivals taking first place and, in addition, 9th place was taken by the firm�s youngest progeny � Zott Serdeuszko.
Danone�s Actimel commercial is also holding fast unchangingly, and considering its the season for colds, its no surprise that that this spot too consolidated its position moving up from third place, which it held a fortnight earlier to the runner-up spot in the current table. The list is closed by juices from Fortuna which smashed their way into the ranking several weeks ago.
Twixt independence and economy of scale
The conference of franchisees and trading partners of the Polish Trading Network eLDe took place at a very specific moment � the company Rabat Pomorze, which holds about 97 percent of the shares in LD Holding, set up a capital group with the companies Bomi and Rast. These operations are part of the logic of the concentration processes which are changing the complexion of Polish retail and its ever stronger bonds with the wholesale sector that are coming with that.
The group will most certainly become one of the leading entities on the Polish retail market, jostling for primacy with the consolidated holdings of Emperia and Eurocash which, to be sure, have better developed back-up in distribution. As opposed to the biggest competitors whose origins can be traced back to the wholesale sector, the new group is an entity that is being organised from the retail side of things.
The decision on further consolidation (from the merger of Rabat Pomorze and LD Holding barely a year has passed) was enforced by the dynamically changing situation on the Polish distribution market and the aim to acquire resources for the further development of the network. � We did not talk about it aloud, but in forming a capital group this year, we intended to enter the stock market, so as to acquire resources through Rabat Pomorze � confides Roman Jakubowski, the chairman of LD Holding�s supervisory board. � In the meantime, however, Eurocach �gobbled up� McLane and we had to move quickly. Resources for development were urgently needed. Hence the merger with Bomi. Apart from gaining money from this source, we are seeking a strategic financial investor for the immediate years ahead, especially with the development of franchising in mind. But primarily we finance investments out of eLDe�s current profits. Profits achieved throughout the group are 100 percent dedicated to investments. We do not anticipate the distribution of dividends in the course of the next few years since our strategy is development-orientated. However, we do not want to bring about a situation in which one of the Capital Group�s companies will be draining away the profits of another firm � that�s why for example all LD Holding profits remain in the company. Those are not only the franchise fees, but above all the fees from agreements with producers.
The right balance
The supreme guiding principle in organising a consolidated firm is to strike a balance between the synergy that obtains in effect of merging firms into one integrated body on the one hand, and the maintenance of the independence of the various member companies on the other. In the small and medium store sector, it is the flexibility and possibility to adapt to the specifics of the locality that is the source of success which surely puts a break on centralising urges.
An example of maintaining the independence of the various companies is the fact that centrally-based contracts with suppliers are signed separately by the eLDe, 34 and Bomi networks. The sales departments only exchange information amongst each other on the topic of cooperation prior to every meeting with a producer and distributor In this way the networks are trying to enhance their negotiating clout in a situation when � due to the will to remain independent � it is impossible to increase the purchasing strength and utilise the synergy effect by the easiest route, that is, by signing centrally-based contracts subsuming all the networks. Such an operating model shall be retained in the case of negotiations with producers of products bound for the shop shelves, while other contracts are negotiated at the Capital Group level, for example, settlement payments made by debit cards (which lowers commission charges).
An example of the utilisation of economy of scale factors is the signing of the contract for the delivery of CAS brand weighing scales to eLDe stores. It embraces all �hard� franchised shops, while in outlets operating on a �soft� franchise basis in which the owner decides on the fixtures and fittings, eLDe will be suggesting the use of CAS equipment as its standard. The most important factor speaking for such a choice will be its guaranteed servicing.
However, changes in the distribution sector are unavoidable. � We are looking for new distributors who could join the capital group � confides Robert Pa�dzior, the chairman of LD Holding�s management board. � The plans also assume building our own distribution centres. The distribution back-up will embrace all networks belonging to the capital group. The share of centrally stocked products is growing uninterruptedly � throughout the whole eLDe network; the average is over 60 percent, while a proportion of the franchisees purchase even 80 percent of their stock via this route. An important role in increasing this indicator is played by the system of incentives in the shape of commissions on the contracts concluded with the central suppliers. Each supplier has to have an agreement with eLDe (even a baker who supplies a dozen or so loaves of bread to one shop). The agreement ties in with charges, but these depend on the product supply volume. Robert Pa�dzior: - We do not intend to interfere excessively in those aspects which determine the strength of small shops � in the fresh foods sections, bread, fresh and cured meats. These product groups are our strong suits � precisely because of the different management methods we have the edge on the hypermarkets.
Growth of the big � problems of the small
The significant developments in the pharmaceuticals wholesale sector in recent months have consisted of: the consolidation processes in progress, the entry of PGF into foreign markets (UK, Lithuania) and the invitation to tender for Cefarm Białystok.
Poland is the fifth biggest pharmaceuticals� market in Europe. It has about 200 actively operating pharmaceutical wholesalers who vie with each other for the custom of over 13 000 chemist shops. Most of the wholesalers are of a local character, not infrequently supplying under twenty outlets. The biggest distributors are the Polish Pharmaceutical Group (PGF), Farmacol, Torfarm, ACP Pharma, Prosper, which together hold 75 percent of the market worth PLN 19.5 bn � the year-on-year rate of growth being 9.8 percent.
For over a decade the number of pharmaceutical wholesalers has been dropping systematically, and the pharmaceutical wholesale distribution market is increasingly consolidated. � The consolidation of the distribution of medicines in Poland, as throughout the world, is being driven by market mechanisms. Due to the low net profitability rates in the sector � from 1 to 2.5 percent � only through an increase in the scale of activities can the synergy effect be harnessed to good effect and thereby reduce costs � explains Michał John, the press spokesman for the Polish Pharmaceutical Group. A further stage in the consolidation of the market ended in 2007, following the selection of a strategic investor by the biggest pharmaceuticals wholesalers belonging to pharmacists of the Apofarm Group (inter alia, Optima Radix, Galenica Silfarm, Galenica Panax, Aptekarz). Most of these wholesalers joined up with Torfarm, while PGF was joined by the wholsaler Aptekarz, which supplies chemist shops in south-eastern Poland. � Currently, two more independent wholesalers set up by pharmacists are waiting for partners � Multi Pharme from Łomża and Legfarm from Legnica � says Stanisław Kasprzyk of IMS Poland. One of the most active participants in the consolidation process of recent times was Torfarm of Toruń, which took over the pharmaceutical wholesalers � Galenika-Silfarm and Optima Radix, as well as the wholesalers Panaceum, Intero and Prego, and recently secured the consent of the Office of Fair Trading and Consumer Protection (UOKiK) for a merger with Promedic. In the press statements of Kazimierz Herba, the chairman of the management board and main shareholder of Torfarm, summing up the hot period of takeovers, he spoke of achieving a stable position of leader with market shares of over 21 percent and the completion of the aim set by the firm in 2005, and by the same token, the completion of the first stage of building up the scale of operations. The merger of ACP Pharma and Orfe also occurred last year. Upon their fusion, the new firm has been operating under the name ACP Pharma. � The company is developing organically and is continuously on the look out for possibilities to build up its market position via acquisitions � says Tomasz Kozłowski, the sales director of ACP Pharma, in relation to the firm�s further plans. It is worth mentioning that it is one of the investors interested in acquiring Cefarm Białystok. Among the firms that have put in bids, and the State Treasury has opened the way to checking out Cefarm Białystok, are also PGF, Farmacol, Phoenix Pharma and Euro-Apteka. In the opinion of experts, the takeover of Cefarm is one of the last chances for wholesalers to considerably increase their market share. Cefarm Białystok is the biggest pharmaceuticals distributor in the north-eastern region of Poland. Apart from wholesale, it is also engaged in retail through a chain of 48 chemist shops of its own, which cover the provinces of Podlaskie and Warmińsko-Mazurskie. Cefarm Białystok�s revenues in 2007 stood at PLN 258.6 m which yielded PLN 5.7 m in net profit.
Tinned fish generate 85 percent of sales
The fish market, defined as the sum of the following categories: tinned fish, herring, fish salads, pre-packed standard weight frozen fish � was worth a total of PLN 62 m in the period August 2007�July 2008, which was 16 percent more than a year earlier.
From the point of view of sales values in the past year, the biggest product group was tinned fish, which accounted for 85 percent of sales on the market thus defined. The sales value growth rate in the period up to last year was 15 percent. In terms of volume, at 8 percent, this category is showing a somewhat slower rate of growth.
From the point of view of growth rates in the period under consideration as compared with that of the previous year, the product group with the highest indicator was that of fish salads, whose sales values increased by 32 percent. Here it should be stressed that fish salads are not the smallest group on this market in terms of sales values. They represent 5 percent of the fish market�s value and, as a result, are the third category in terms of sales values.
The second biggest category in terms of value is that of herring, sales of which are growing at the rate of 14 percent comparing the periods August 2007 - July 2008 and August 2006 - July 2007. As a result of a less dynamic growth rate than of the whole category of fish products, the share of processed herrings in consumer expenditure on fish products in the monitored channels decline to just over 7 percent.
The last category, in terms of shares in consumer expenditure, is frozen fish, which accounts for 3 percent of the overall turnover in fish products. This category too is showing growth trends in both sales volumes and values � 20.6 and 23.2 percent respectively.
A stable 2 bn litres
Over the period of a year, that is, in the period August 2007�July 2008, over 2 bn litres of mineral water were sold for over PLN 2.1 bn.
Retailed mineral waters as monitored by Nielsen is stable in terms of sales volumes expressed in litres � in the period August 2007� July 2008 in comparison with the previous analogous period. Undoubtedly this year�s cool summer had a lot to do with it. However, looking at the behaviour of the whole mineral water market in terms of value, there is a small growth of 6.6 percent in sales throughout the category in the period under consideration.
In this way, in the course of the past year, over 2 bn litres of mineral water were sold for a sum in excess of PLN 2.1 bn. The growth in sales values when sales volumes remained stable was partly influenced by price rises that were to be seen in many food categories, though those relating to mineral water were not as perceptible as in certain categories of confectionery or coffee.
Kropla Beskidu and Absolwent � the drink Leaders
Not for the first time, the best � and identical � results were achieved by two products in our survey � the mineral water Kropla Beskidu and Absolwent vodka, which were available in 75 percent of the shops monitored. Thus we have two Distribution Leaders. Both products belong to the drinks� category, but oh how very different in their effects.
Comestibles on top
The TOP 15 most watched television commercials in the period 29.09.�12.10.2008.
In the current ranking of the most watched television commercials the unquestioned winner is the drink Fortuna from Agros, followed by Danone and Ferrero. The last of these firms has three commercials that made it into the TOP 15, which was bettered only by Unilever, which has four commercials in this ranking.
OCTOBER
Chilly specialisation
Freshland � a treasury of frozen meals � is the watchword the Siebert family from Poznań has adopted for its new outlet which, instead of display shelving, is furnished with freezers. The shop�s concept, its logo and its decor is of the family�s own authorship. But the firm itself is headed by representatives of the family�s younger generation � Monika and Mateusz.
- Our daughter has lived in France for ten years and when visiting her we do our shopping in a local store specialising exclusively in frozen foods. It belongs to a big French network called Picard. We said to ourselves many times over that it would be great to have a similar shop in Poznań. We had a family get-together last Christmas and we decided to open such a shop ourselves � explains Paweł Siebert, father of the co-founders, recounting the history of its origins. The founder of Freshland considers that there is still room for specialist outlets on the Polish market which would offer deep-frozen foods and other shops specialising in specific product ranges.
Customer crossing the Freshland threshold, enter somewhat usual premises in that instead of shelving, they will see 21 freezers filled with domestic and foreign products. Among them are snacks � casseroles, hamburgers, tortilla, toast, bread, semi-products such as vegetables, fruit, mushrooms, seasonings, fish, and ready made vegetable dishes, meat-and-vegetable dishes, fish for frying or baking in the oven. Also, there is no shortage of cakes, desserts and ice creams. � There are about 900 deep-frozen products on the Polish market of which half is earmarked for catering purposes only. That is why we try to seek out the most interesting articles on the European market. We started with about 350 frozen food items, currently there are 430 in our product range. Already now, we have half as many products as in the supermarkets and all the while we are seeking more � according to Mateusz Siebert. They enhance the range of frozen foods by all sorts of additions, for example ice cream wafers, sauces for dishes and desserts, seasonings. Currently, Freshland supplies 17 contractors. � Suppliers are slowly beginning to treat us as partners. At the beginning we mostly had to pay cash on the nail for our goods, there were no rebates. At the moment we already have telling rebates and we feel like partners � is how Paweł Siebert describes cooperation with wholesalers.
The shop is in Polanka � one of Poznań�s newer housing estates. About 30 to 50 customers do their shopping here per day and their number is growing all the while. Frozen food may be bought from Monday to Friday, 11 am to 8 pm, and on Saturdays, 11 to 5. Freshland is the source of supply both for young people who lack the time or cooking skills, and for the older residents of the estate as well. But there are families that come over from the other end of town to replenish their stocks of frozen foods for the week. The shop�s sales space is about 70 m2. In the opinion of the owners, that is the optimal space for a frozen foods product range, and that is why similar shops to be opened in the future will be 80 to 100 m2 in size. � The first shop of the chain we are planning should be opening in spring, and we are assuming that if everything goes well, next year we will open at least two shops in Poznan. We also have questions to ask of potential franchisees who are acquainted with similar shops abroad and would be interested in taking out franchises. That will probably be the further direction of the chain�s development � says Paweł Siebert.
Too early for expansion
Despite the fact that in certain areas of specialisation shops are enjoying a renaissance, this does not extend to fishmongers. The relatively low rate of consumption of fish-based products and the big market share of modern channel stores in this segment, does not make life any easier for small fishmongers� outlets.
Small shopkeepers are agreed in stressing that the situation that has befallen their outlets is none too good, and that the trends are negative in comparison to previous years. � I have been in the fish trade for 15 years and think that from the moment of commencement of expansion of the hypermarkets, its been getting worse and worse � claims Andrzej Stępień, the owner of two fishmongers shops in the Kraków district of Nowa Huta. � In my opinion, large format stores sell fish below their cost price, thereby spoiling the market (I myself buy from the same suppliers and know the prices). From the moment that several hypermarkets appeared in the area, a price war erupted between them, leading to a drastic drop in prices.
Aleksandra Mazur, the owner of the fishmongers in ulica Królewska in Kraków, sees things much the same way, but her diagnosis is somewhat different: - It gets worse with each passing year, especially from April to October. In the holiday period, earnings do not cover the shop�s running costs. September too is not a good month for the fish trade � customers have little money after the holidays and the beginning of the school year. With the relatively high prices of fish in comparison with other food items, the state of the household budget in a given month is of considerable significance. It is precisely in the high prices of fish that they see the cause of declining sales rates. Time was when customers bought fish by the kilo, now its by the piece.
From the perspective of suppliers the picture is somewhat different. Teresa Klis of Contimax Trade, being the main representative of the Contimax brand in the Małopolskie province, sees positive trends: - Fish consumption is growing though to a small degree. It could be that the EU-sponsored campaign to eat more fish had some effect. People want to eat healthy food and pay increasing attention to these issues, and fish are associated with healthy eating. However there are serious deficiencies in customers� knowledge on this score, for example, sales of panga, which is variety bred on fish farms, may be tasty but has hardly any nutritious qualities.
Cured meat sales dipping
In the period May 2006-April 2007, cured meats enjoyed an increase of 16 percent in sales values in comparison with the analogous period a year earlier, while already in the period July 2007-June 2008, sales of cured meats in the hypermarkets had undergone dips, both in terms of value - by 1.4 percent and volume � by 5.1 percent, as compared to the year before.
Hypermarkets of over 2500 m2 in size are responsible for 13 percent of food sales, however, year on year we are witnessing a decline in the significance of this channel to sales of a stock basket of food � by -0.8 of a percentage point. Despite this decline the value of sales in all categories in this channel registered a 9 percent increase (the increase was slower than the average countrywide rate). For prepacked cured meats too, at regular and variable weights, this channel stopped being a synonym of dynamic growth. Last year, in the period May 2006�April 2007, cured meats registered 16 percent growth in sales values in comparison to the analogous period the year before, while already in the period July 2007-June 2008, cured meat sales rates in the hypermarkets fell both in terms of value and volume, by 1.4 and 5.1 percent respectively, as compared with the previous year.
Chicks take wing
The market of pre-packed poultry meat pates is growing both in terms of volume � by 3 percent, and in value � by 6.5 percent (in the period July 2007�June 2008 in comparison with the analogous period a year earlier).
In the period July 2007�June 2008, the size of this market was estimated to be no less than 19 m kg of chicken meat retailed at PLN 233 m gross. A very strong leader in this category is Profi, which in terms of value carved out for itself a market share of about 51 percent. The next leading producers are Drosed � with a 22 percent market share and Drop � holding a 9 percent share. We are also witnessing acquisitions of shares by the main producers.
Only PLN 43 a year on cakes and biscuits
Retail sales of sweet bakery products (cakes, biscuits and wafers) were worth PLN 1.6 bn in the period July 2007�June 2008, which means that the average Pole spends just under PLN 43 per year on cakes and biscuits. This total cash amount accounted for 89 400 tonnes of such products. Comparing these sales rates to the analogous period the year before, there has been an observable � 8.4 percent - increase in sales values, and a 7.5 percent increase in sales volumes.
In drawing up the division in the most important sub-categories � cakes and wafers � the share of the first of these is 56 percent in terms of value and 61 percent in kilograms, and it�s the sub-category of cakes that is characterised by a more dynamic growth rate - 10 percent in both value and volume, than the sub-category of wafers � 7 percent in value and 4 percent in volume.
More Red Bull in the shops
The energiser drink Red Bull has taken the title of Distribution Leader for the second time. The current result � a 71 percent rate of availability in the shops, is 7 percentage points better than the one which gave it the Distribution Leader title last year (�DD� 9/2007).
Red Bull did not achieve a 100 percent of availability in any of the distribution channels surveyed; it was most widely available in the hypermarkets � 88 percent and in medium sized shops � 75 percent. This year we have already surveyed the availability of three energiser beverages: Tiger was available in 63 percent of the shops (�DD� 16/2008), Burn in 46 percent (�DD� 4/2008), and Red Bull in 39 percent. (�DD� 9-10/2008).
Lay�s in the lead
The TOP 15 most watched television commercials in the period 15.09.�28.09.2008.
The last ranking of the TOP 15 television commercials confirmed the strong position of Lay�s crisps � a product that took second place in the previous round, ceding ground only to the ketchup from Pudliszki. Evidently, this time round, Red Bull�s producers intensified their efforts to ensure that their product sticks in the minds of shoppers.
For a month, Lay�s crisps have held fast on the TOP 15 most watched relevision commercials chart � its second place two weeks ago has changed to first in the current ranking. Second place was taken by Zott�s Jogobella yoghurt, which has been listed regularly in this ranking for quite some time, while third place went to a Nestlé product - Winiary Ziarenka Smaku. And that�s not the only Nestle product in the TNS OBOP ranking for the period 15-28 September � in 14th place was the firm�s Smaczna Zupa.
Organic development and rebranding
The supermarket market in Poland is subject to ceaseless and dynamic change. In recent years it is no longer a question of new operators entering the market but of the development of networks already here, and their takeovers of smaller operators, not to mention their new format shop ventures.
Looking at the situation from the perspective of the past years, the number of supermarkets from 2003 to date has more than doubled. In the last two years this was double figure percentage growth � comparing 2006 with 2007 there was a 12 percent increase in the number of outlets, while comparing 2007 with 2008 � the rate has been 15 percent. The mainspring of this increase in recent months was undoubtedly Carrefour which had acquired 183 Albert stores from Ahold Polska last year. This year, these Alberts were rebranded as Carrefour Espress stores. Also all the Champions belonging to Carrefour Polska are already operating under this logo and the rebranding of the Globi stores belonging to Carrefour is in progress.
Delicatessen chains are developing robustly as well. Alma has 23 outlets currently, and is already making its presence felt in nine provinces. In turn, the Bomi Group has latterly merged with Rast, a supermarket chain as a result of which Rast shops will be transformed into Bomis. Due to this consolidation, and in association with the merger with Rabat Pomorze � the Bomi Group has the chance to become the country�s leader in the delicatessen category and premium type supermarkets. There is already nearly 50 of them at present. Delikatesy Centrum have enjoyed dynamic development in recent times � their number has increased from 275 to 340 since last year, and the Polomarket network � here the number of outlets has increased from 215 to 250.
Part of the foreign operators, apart from the supermarkets, are also developing so-called compact hypermarkets, which are distinguishable from traditional hypermarkets by their smaller size � as a rule up to 3000 m2. That�s how it is for example with Tesco, hence its compact hypermarkets, of which there are currently 39, were subsumed in this summing up since their floor space (2000-3000 m2) is closer to the dimensions of a supermarket rather than a hypermarket.
Considering the strong development of supermaket class stores by Carrefour and Tesco, and also the dynamic changes among Polish operators � not excluding here the possibility of further takeovers by Bomi � there is little to suggest that the expansion of this format is about to come to a halt on the Polish market next year.
We have the advantage over hypermarkets
We have the advantage over hypermarkets because we are the country�s leading distributors with many Polish producers. We buy great quantities of materials and products from them and as a result have very good negotiated prices � says Marek Starosta, chairman of the firm Benmar from Białystok, which deals in the wholesale and retail of building materials and building chemicals.
- Several weeks ago, Benmar opened its second builders� merchants� store this year under its own brand name. Whence the idea for the firm, which so far was more geared up for wholesale, to set up its own chain of stores?
- Our firm has been going since 1990. At the beginning we were geared up for wholesaling paint, but in subsequent years we began to expand our assortment range and we were also developing our logistical base. At a certain point, three leading distribution channels became more distinguishable: the wholesale of a wider variety goods, export which was assuming ever greater importance in terms of sales, and, well that�s it, retail. In that time we observed how quickly the number of western builders� merchants� store chains were growing in Poland. To be sure, we did not experience this in Białystok, because we�ve had only one such store here for years, but we were aware that that will not be the end of it, that sooner or later new stores will come. We knew that every next one would be taking away our retailing customers which would restrict our sales opportunities with regard building materials and chemicals. And since for many years we had two stores of our own, small and specialist but already known on the market, we decided to develop this distribution channel. We decided on stores of 2000 square metres in size because that is the minimum space needed to compete with hypermarkets, of course with the optimal utilisation of this space. It turned out that in terms of product range, we cede nothing to the western hypermarkets. We also have the advantage over hypermarkets since for many Polish producers, we are the country�s leading distributors. We buy big amounts of materials and products from them, and due to that we can negotiate very good prices with them. Apart from that we belong to Centrum Handlowe (Trading Centre), which brings together over a dozen such stores from all over Poland � due to which we have access to many typical chain store suppliers. So it�s much easier for us to be competitive price-wise vis-à-vis western chains. Certainly, if we were not involved in wholesale it would be a lot harder. The developed logistical back-up also gives us an enormous advantage. We do not have to keep big volumes of stock in the stores, so we do not need vast storage space. In case of need, we have the capacity to organise two or three supply runs a day to our stores. We can also deliver to our clients any unit of goods irrespective of whether he wants to buy 100 kg, or 10 tonnes. It�s no problem for us.
- In deciding on investing in retailing did you not fear that competing with foreign chains might prove too difficult?
- When we were considering opening builders� merchants� stores offering a wide variety of goods, we heard the opinion many times over that it is better to specialise in something since western chains will dominate the market and only specialisation will facilitate survival on it. Meanwhile, we have examples from other parts of Poland that it doesn�t have to be like that. Already today we see that stores such as ours are friendlier to customers than the western ones. The salesman is closer to the customer, the goods are more clearly displayed, we are also a lot more flexible when it comes to conditions and the place of delivery. We can also get hold of many unusual goods, so as to give customers a comprehensive supply service. A hypermarket chain store is not in a position to diverge into seeking out and offering goods which it does not customarily have on offer.
- Today you are saying that you have scored a success. To what extent is that influenced by the fact that in Białystok you have little competition from western chains � all there is here is Leroy Merlin?
- We prepared ourselves for opening our two stores for a longer period of time. First we had 200 metre stores, then we extended them to 500 square metres and prepared ourselves for further extensions. Time was our ally, because we were aware that western chains were interested in Bialystok and sooner or later further DIY hypermarkets would arrive here. That�s why we wanted to open our stores ahead of the western chains, so as to allow people to get to know us, and show what we have to offer. Certainly it would be more difficult for us if some western chain store were to be opened in Białystok this year. But now we have time to convince customers that they will get a fine service from us and that he will be able to buy verything he needs here, and at a good price of course.
2399 m individual items for PLN 613 m
The feminine hygiene product market sold 2 399.1 m individual items, as opposed to packets, in the period July 2007�June 2008. The value of products sold came to over PLN 612.8m.
Over half the feminine hygiene products� market is the sanitary towel segment whose share volume in the period under analysis was 56 percent. Year on year, their sales values have increased by 1.2 percent, while volume-wise their share in this segment dropped by 0.8 percent which signals this product�s price rise. The second segment in terms of both volume and value was that of pantyliners � 19 and 37 percent respectively. The smallest product group is that of tampons with a 16 percent share in value and 8 percent in terms of items sold. Both the pantyliner and tampon segments are developing more dynamically than the whole category. In the 12 months to June this year, the biggest growth in sales values over the year was the pantyliner segment while from the point of view of the largest number of individual items sold the most dynamic expansion rate was enjoyed by the tampon segment.
Growth categories
In the period July 2007�June 2008, the yoghurt market registered sales volumes of 207.1 m litres worth PLN 1485.7 m, the kefir market � settled at the level of 39.6 m litres worth PLN 158.2 m, while the buttermilk market sales came to 47.6 m litres worth PLN 124.9 m.
The yoghurt market, understood to be yoghurts themselves and functional products, showed growth tendencies of 12 percent in terms of sales volumes and 17 percent in sales values, worth a total of PLN 214 m, in the period July 2007�June 2008 as compared with the analogous period a year earlier. In the same 2007/2008 period, the kefir market, compared to the analogous previous period, grew by 7 percent which produced a sum total of PLN 10.8 m in total. The buttermilk market increased 6 percent in value even though volume-wise it declined by 6 percent, which is indicative of an increase in average prices.
Lion � the Distribution Leader
The Distribution Leader in the current round of our on-going survey was the Lion chocolate candy bar from Nestlé. Its overall result of an 85 percent rate of availability in the shops comprised a 97 percent rate in the modern channel - 100 percent in hypermarkets and 94 percent in supermarkets. The current result is 9 percentage points better than that scored in August 2007 when Lion also came top in our survey.
The runner-up in the ranking was the beer Dębowe Mocne from the Kompania Piwowarska portfolio. Dębowe proved to be fairly evenly distributed throughout all the channels looked at in the survey, with a 75 percent rate of availability in small shops, going up to 88 percent in the big ones.
For the second time this year we checked out Storck�s distribution rates. This time the it was their Nimm2 sweets. They had an 84 percent rate of availability in hypermarkets and supermarkets, while it was down to 56 percent in traditional shops. In May (�DD� 8/2008) Knoppers� wafer achieved a 61 percent rate of availability and took the Distribution Leader�s crown.
Hortex orange juice was available in 66 percent of the shops. The only product, apart from this round�s Leader, which registered a 100 percent rate of availability in one format of shop or other was Domestos from Unilever, which was available in all of the hypermarkets.
Warm soups for autumn chills
The TOP 15 most watched television commercials in the period 01.09.�14.09.2008.
It�s been a long time since there has been such great variety in the ranking of the most watched television commercials as was the case in the first half of September: there were 15 commercials and nearly the same number of categories represented by them. But it can be seen clearly that that summer is on the way out and autumn is approaching with ever quickening strides: beer and beverage advertisements have given way to �hot cup� (gorący kubek) type products in the TOP 15. But this time the race to the top was won by the ketchup from Pudliszki.
SEPTEMBER
The end of the war or only the first battle?
The Constitutional Tribunal�s ruling on the Large Format Stores Act (WOH) cut short the heated political, economic and legal debates surrounding the issue, and also arrested the European Commission�s complaints proceedings. On the other hand, �signals� are being picked up that it�s not the end of the struggle yet. In response to them (the diehards) I would say this: if it�s to be yet another idea for discriminatory divisions of the market participants into better and worse ones (even if it comes in an indirect guise), then the effect (and for my organisation and others it will be the first action) can only be one: a further defeat in court � be it domestic or European.
Let it be a reminder of a kind for populists who would seek to over-politicise the economy. For it is an obvious thing that while Poland remains in the EU, discriminatory ideas will not pass freely. Like the French who had already learnt painful lesson earlier, our Tribunal gave short shrift to those who would try their hand at populist style legislation here.
In my opinion, the lesson that is coming out loud and clear out of this whole kerfuffle surrounding the drafting and effect of the WOH Act, is that laws which would split economic entities by reference to some �better � worse� criteria, e.g. on the basis of shop size, turnover rates, staff numbers etc., always turn out to the detriment of the weaker market players. Hence it may be deduced that there is a certain mechanism manifesting itself by the fact that restrictions aimed at worsening operating conditions for e.g. larger stores lead to the stronger operators and investors either pulling out of the market or escaping into spheres untrammelled by restrictions, in this particular instance, that of smaller shops. The result? Very easy to foresee in both cases: in the first place (pulling out of the market), worsening the market�s parameters, intense competition of very many smaller firms and a �robber� concentrated bid for the assets of the weakest market participants in conditions of rising costs and prices (luckily, in Poland it is a theoretical possibility) or, in the second place, compensatory investments of the strongest market players in smaller formats of shops, as caused by that, the rapid �escape� of smaller entities into concentrations. Escapist reactions of smaller firms bestows privileges on those offering a kind of �protection through takeovers or franchising� of operators retailers operating in vertical systems based mainly on strong wholesale. This is actually happening in Poland in the wake of the WOH Act. Thus, it is better for both firms and consumers, and for the economy as such, when, on the principle of equality, all types of trade may function (and compete) regardless of where their capital originates from. Let local authorities decide what objects they wish to have in their localities. All are to have equal chances as investors, and let the powers that be decide who best will meet the expectations in relation to a given locality. Predetermined impediments conceived by legislation to some part of potential investors is a bad solution and at odds with the binding rules of a market economy and its regulations, respecting the principles of economic equality and freedom as well as local government sovereignty. The gradation of entities according to the size of a firm is thus a solution deprived of economic and legal sense, unless we are to give ourselves a return to �real socialism�.
Further market growth to come
The frozen fruit and vegetable market has been growing from one year to the next in Poland but its consumption rates are still far below the European average which suggests that this segment is in for further growth.
Currently, the estimated value of the frozen foods market is about PLN 390 m. the per capita rate of consumption of frozen fruit and vegetables in Poland are far below those in countries like Great Britain, Germany and France. This suggests that the potential of this market sector remains under-exploited, - What Poles buy most is single type and mixed vegetables � which out of the entire frozen fruit and vegetable market represent about 28 percent, followed by frozen soups and processed vegetables, and what they buy least of all is frozen fruit and ready-made dishes � says Agata Bonikowska, head of strategic marketing at Polski Ogród which, within the framework of the Hortex Group, is responsible for the entire frozen foods business side. � We expect further development of the market stimulated chiefly by increased consumption. The changing lifestyles of consumers , the lack of time together with an increased awareness of the need for healthy nutrition and inclusion of fruit and vegetables in menus is bringing increased interest in healthy food but which at the same time is tasty and does not require time-consuming preparation. That is why for some years now the modern segment of processed vegetables, that is primarily the �vegetables for the frying pan� line (Warzywa na patelnię) has been developing dynamically. This line of products may constitute an addition to the main dish or itself be a vegetable dish. In the future the market will surely be even more responsive to demand for new compositions in terms of taste, additions in the shape of vegetables so far unknown in Poland or so-called products with value added like for example sachets with herbs or seasonings added to the �vegetables for the frying pan� line.
Lean years a-coming?
The biggest dairy product manufacturers, in competing with each other for market shares, are taking over small firms, investing in new technologies, launching new products and modernising their packaging.
Last year, the dairy sector was characterised by very high prices of milk-based products, which stemmed from an imbalance in supply and demand. The source of this phenomenon was seen in several factors, among others in the growth of demand for dairy products in Asian countries, in the lack of emergency stock in warehouses, in the reduced rates of supply in dairy products in Australia due to drought, which is one of the main exporters on the world market. Among the reasons mentioned for the situation that had come to pass was also the imposition of export duties on dairy products in Argentina and the development of bio-fuels which caused a drop in the supply of fodder intended for dairy livestock, and with that a drop in milk production. All these events caused a shortage of basic dairy raw materials , and their prices began to rise dynamically. These changes obviously had an effect on the Polish market. In the opinion of milk processing firms, last year beat all records in terms of profits. Cooperatives were making money and so were farmers. In November however, the situation began to change. � When in QIV 2007 prices on the world markets and in Poland began to fall rapidly, many establishments had a delayed reaction to the changed trend and were left with excessive stocks and began to lose financial liquidity, as often happens, misfortunes come in pairs and besides falling prices on the world markets, the declining values of the euro and the dollar against the zloty additionally lowered the profitability in dairy produce exports � is how Tomasz Głasek the head of sales of OSM Piatnica describes the changes that came about at the end of the year. Today, manufacturers now speak of the market breaking down and the arrest of exports � until recently the chief source of profit for many firms.
And though the domestic market still remains, they stress that there are no great profits here since the consumption of dairy products remains small. The breakdown of the economic climate in 2008 had serious repercussions for many firms which were forced to keep paying high prices on milk purchases and at the same time sell finished products at lower prices than to date � frequently below cost price. In effect the financial situation of many businesses succumbed to drastic deterioration which made many of them stare the threat of bankruptcy in the face. In the opinion of Zbigniew Borawski, chairman of te Mlekpol cooperative, 2008 does not look as optimitic as the previous year and everything points to the fact that subsequent years are going to be similar. � This is occurring chiefly because the export of Polish dairy produce has become unprofitable due to the low dollar and euro exchange rates. Operating costs of enterprises have also risen considerably. The growing prices of energy and oil-based products have led to a considerable drop in the economic results of dairy sector enterprises � explains the chairman of the firm which is the leader in our ranking of the biggest milk processors.
Decline in sales and values
Sales in the washing chemicals category came to PLN 1.173 m (as paid for 161,000 tonnes) in the period July 2007�June 2008. This was one percent less in terms of value and 4 percent less in volume than the preceding analogous period.
The category under consideration comprises two segments: regular washing powders and specialist one (for children, delicate fabrics etc), of which the first segment dominates with an 86 percent share value and 89 percent share in volume, having lost almost one percent in relation to the specialist segment over the year.
The unquestioned leader of the category remains Procter&Gamble, which has 42 percent of the share value and 37 percent of the share volume of this market. Henkel is in second place � with 23 and 21 percent shares respectively, and third is Benckiser with 15 and 17 percent. The top spot among the brands is occupied by Vizir (Procter&Gamble) � 24 percent share in terms of zlotys and 20 percent in kilogrammes. Henkel�s Persil and again P&G�s Ariel are second and third in terms of value, but in terms of volume, P&G�s Bonux is second and Persil is third.
Washing powder sales are concentrated in the modern channel � 55 percent of the values in the analysed period. The biggest share in the whole market is held by the hypermarkets � 26 percent in value, 43 percent in volume. At the same time only the supermarkets increased their share in relation to the previous 12 month period while hypermarkets kept their share on an even keel.
Pudliszki concentrated in 80 percent of the shops
The Pudliszki tomato puree is the Distribution Leader in the round of our on-going survey. Its 80 percent rate of availability in the shops was comprised of an almost 100 percent rate of availability in the modern channel (100 percent in the hypermarkets and 94 percent in the supermarkets). That�s the second time this product has been Distribution Leader, the previous time being in July 2007 (�DD� 12) when it was available in 64 percent of the shops. The current result is thus 16 percentage points better.
Procter&Gamble in the lead
The TOP 15 most watched television commercials in the period 01.08.�31.08.2008.
In summing up the results of the August ranking of the most watched television commercials, the best was Procter&Gamble, which managed to get three of its products into the Top 15. The first two spots were taken by hair care products - Head&Shoulders shampoo and Pantene Pro-V products from its highlights, eye-shadow line. In relation to the July ranking, Head&Shoulders is a newcomer to the leading group, while Pantene Pro-V intensified its TV presence and moved up from 5th to 2nd place. Of the loosely associated body-care and hygiene products, in 9th place, were the toothpaste Blend-a-Med and Oral-B.
M1�s new image
The opening of the M1 shopping centre in Czelad�, after its extensive redevelopment, is the beginning of a process aimed at giving the image of M1 shopping centres a face-lift. The extension of M1 Czelad� took 12 months. Its main aim was to increase its commercial space which will enable it to make what it has to offer more modern and more attractive.
Balance of losses
Estimates of possible losses due to the Large Format Stores Act (WOH) should rather be replaced by a balance of lost opportunities. Delays in the development of networks due to the lack of supply of premises at modern shopping centres has caused the under-exploitation of the growing opportunities for the flooring materials� market whose growth rate is estimated to be over ten percent per year � says Jerzy Szkwarek, chairman of the management board of Sklepy Komfort S.A.
Integration from inside
Euro Sklep is undergoing transformations associated with its accession to Emperia Holding. Not everything is working perfectly yet, but the network�s organisers and its shopkeepers are united in optimism associated with expectations of positive change in the field of distribution. Maria Kręcina, chair of the Euro Sklep chain emphasises that the shops which have opted for taking 100 percent of their supplies via the central channel are pleased.
With the producer, retailer and consumer in the background
Five trends are emerging in outline which shall have impact in the immediate years ahead on what will be happening on the beverages� distribution market, and which will be giving definition to wholesalers� prospects.
Leaping at juices
The traditional market shall continue to generate large scale sales. We continue to have a huge number of outlets selling juices to look after in Poland, and that will not change in the immediate future. There are also numerous distribution channels in which we have a low rate of presence. Our products are sold not just in shops. Juices are consumed everywhere and on every occasion � says Dan Nistor, director-general of Coca-Cola HBC Polska.
A difficult market
The past year was hallmarked by price rises on the processed dairy product front, and the notable increase in raw material prices influenced the rise in finished product prices. In spite of that, the cheese market, for example, continues to grow. However, we are still far behind the Western European level of consumption (20 kg per capita per annum) � with Poles eating a little over half that amount. Poles have a cautious approach to things new and habitually go for tried and tested flavours, and if they seek additional ingredients, it�s usually herbs.
Over 70 percent of Felicity already let
Gray International, the developer and letting agent for the Felicity shopping-cum-leisure centre in Lublin, has informed that its cluster of tenants has been joined by, among others, H&M, Carry and New Yorker. The centre is already 70 percent leased. The surface area available for leasing, at 100,00m2, currently makes this shopping-cum-leisure centre the biggest in eastern Poland.
Polimeni investing in �wieć
Polimeni has acquired a 6.5 hectare plot in �wieć, where it intends to build a retail park. The plot where the park is to stand lies between ul. Wojska Polskiego and national route no.1. The firm wants to implement over a dozen such projects in Poland. Further locations are being sought for retail park developments.
Hot on the heels of the capital
Over the past months the number of shopping centres in Poland increased by about 20 percent. There is a chance that upon the repeal of the act blocking large format store developments, this growth rate is unlikely to abate in the coming years.
The presented map takes into account commercial buildings of a minimum of 10 000 m2 in size together with stores scheduled to be opened this year. As from 2006, when we last presented such a listing, their number has grown from about 180 to over 230. There was the risk that the Large Format Stores Act (WOH) of May 2007 would cause a considerable slowdown in shopping centre developments in Poland, however, in July, after the Constitutional Tribunal�s ruling on the Act�s unconstitutional nature, developers are planning new openings.
- This verdict brings to a close a long struggle aimed at showing that the Act is not only unconstitutional but also that it blocks Poland�s economic development regarding modern forms of distribution, such as shopping centres, as well as all forms of trade carried on in premises of over 400 square metres in size, including those at railway stations, airports, hotels etc. � observes Patrick Delcol, chairman of the Polish Shopping Centres� Council, with regard to the Constitutional Tribunal�s verdict.
In the development of shopping centres in 2007-2008 it can be seen that ever bigger opportunities are opening up before medium sized towns. The Warsaw market, which is already greatly saturated with that type of development, is still developing, but at a slower pace. The biggest rates of development were recorded in the provinces of Lower Silesia, Pomerania and Silesia where, in the period under consideration, several shopping malls apiece were opened. The south-eastern border provinces on the other hand, where there is little new investment, continue to make a poor showing. One city which consolidated its position is Lublin which acquired two shopping centres in 2007.
Double figure growth this year
We have noted strong consolidation tendencies on the wholesale market, and we want to play a significant part here too. However, simultaneously, we are concentrating on our main areas of business which are wholesale, logistics and services � says Dariusz Zdanowicz, chairman of Lekkerland Polska � which is the 7th biggest wholesaling firm in Poland.
� Retail sales remain at a high level, especially in chain stores, and economic climate indicators as estimated by the Central Statistical Office (GUS) are also promising. Is demand really growing, and is this growth due more to inflation and price rises or increased sales in segments other than food, like white goods, cars and building materials?
� Indeed, for several months a considerable growth in demand has been registered on the domestic retail market. There are many reasons for this, but one can be pointed to by way of example. In Eastern Europe we are presently witnessing big customer demand for convenience type products and material goods. Poland�s entry into the European Union greatly accelerated the development of this trend. However, its rate in the various categories of goods is varied. For example, the increase in the demand for alcohol has a two digit indicator while sales volumes in cigarettes, due to higher excise duties, is falling.
� What, given these circumstances, is the problem then for firms like Lekkerland Polska: growing competition? After taking over a majority shareholding in the firm Milo SA in 2006, are you planning further takeovers of wholesalers in Poland, or are you now rather looking at organic growth?
� There are thousands of active players on the wholesale market in Poland, of which some are important regional players, and only several are of countrywide importance. Since some time, we have been observing strong consolidation tendencies on this market, in which Lekkerland Polska also wants to play a significant role. However, at the same time, the firm is concentrating on its main areas of business which are: wholesale, logistics and services. We see our strong side as being the fact that we know how to satisfy the needs of our customers. So as to do that even better, we are planning to develop both the assortment of goods and the range of services we offer them. Lekkerland has always given its customers comprehensive solutions which supported their business development. The range of these solutions stretches from arrangements in the fresh-baked bread sphere to integrated trading concepts. Some of these concepts have been in operation for years. Due to such activities, Lekkerland is acquiring know-how which will be put to use with profitable effect for customers.
� Lekkerland Polska stands on several legs business-wise, and your offer does not concentrate on one group of goods. Is that a consciously pursued policy which is also proving itself in the Lekkerland Group structure in Europe, or are you looking for market niches for yourselves? You stand in denial of one of the trends in trade, that you should specialise?
� Lekkerland operates in very many segments and as a comprehensive supplier whose main areas of business are wholesale, logistics and services. It supplies its customers a full range of goods in food, tobacco and telephones. However, if we compare the assortment of goods offered by Lekkerland Polska with that which is offered by, for example, Lekkerland Germany, we see that there is much work to be done lying ahead of us. Our core business is impulse products which the consumer may buy and consume on the spot or when travelling. It is this category we want to develop in Poland, but we are also working on expanding the assortment by juices and drinks, which are a very rapidly growing FMCG category. Currently our offer is poor in these products and customers expect a full assortment from us. We also want to develop our offer of regional impulse products especially where local producers play an important role. In the telecommunications sector, we introduced the e-va brand which is common for the group, which covers about ten pre-paid products. In the 6000 terminals that Lekkerland possesses in Poland, customers may buy vouchers with PIN numbers, due to which they can recharge their mobile telephone accounts.
� What sort of rate of earnings does Lekkerland Polska expect this year, and what are the most important planned changes in cooperation with customers?
� This year we expect two-figure growth. As I mentioned earlier, we plan to develop our offer of products supplied to our present customer base and we want to be perceived by our customers as a partner and adviser, who increases their profits. The success of our customers is also our success.
Gents going for a close shave
Sales values of shaving accessories (electric razors, razor blades and disposable razors) came to PLN 410 m, which was the total paid for 210 m individual items, in the period July 2007�June 2008.
The category achieved growth of 11.2 percent in sales volumes and 16.3 percent growth in sales values in relation to the previous year. The higher rate of growth in terms of sales values as opposed to volumes suggests that prices are on the rise. And indeed in the case of this category, comparing the period May 2007�April 2008 with the analogous earlier period, the average price for a unit packet in Poland increased from PLN 1.86 to 1.95.
Within the shaving accessories� domain, two product segments may be distinguished: electric razors on the one hand, and razor blades and disposable razors on the other. What�s interesting is that the significance of machines is, in practical terms, negligible � only 0.9 percent of the sales volume and 10 percent of the sales value of the whole category. The remainder is accounted for by sales of razor blades and disposable razors.
Mounting joy
The certified children�s food market, which is composed of the following groups: milk and gruels, readymade dishes, fruit mousses, munchy cakes, juices and teas for children, is developing exceptionally dynamically.
Sales of certified foods for children increased by nearly 12 percent in terms of volume, and almost 20 percent in value in comparison with the previous year (taking the period June 2007�May 2007 as compared with the analogous period a year earlier). The children�s food product market weighed in at a total 51 m kg worth nearly PLN 870 m.
The biggest group of children�s products in terms of sales volumes is biscuits which in the period under consideration accounted for over 29 percent of overall sales. However, in terms of sales values, this product group�s share constituted barely 6 percent of the market. Together with juices for children � 19 percent in sales volumes and 11 percent in sales values � beverages account for almost half the market in terms of sales volumes, but only 17 percent of its sales values. A further group � milk for babies and gruels for infants have the biggest share � close to 59 percent � in sales values, and nearly 32 percent in sales volumes. The share of readymade dishes, desserts, fruit mousses and cakes for children are at comparable levels in terms of volume and value � 20 and 24 percent respectively.
20-percent increase in tablets and powders
Sales in the category of washing up liquids remain stable while together with the perceivable increase in popularity of dish washers come increased sales of automatic dishwashing agents. Poles spent nearly PLN 100 m on dishwasher tablets and powders in the period May 2007�April 2008, and PLN 337.7 m on washing-up liquids.
The category of dishwasher agents is growing more strongly � because they sold 20 percent more than in the analogous period the year before � than washing up liquids, without doubt the bigger category, whose sales � as mentioned � reached in the analogous period the value of PLN 337.7m and 78.2 m litres. Sales of liquids in this same period rose by 4 percent in value and 3 percent if we take the number of litres sold. In the category of dishwashing agents the biggest turnover is generated by those for dishwashers - 75 percent in value in the period May 2007-April 2008, of which the most important are tablets.
Nałęczowianka the Distribution Leader yet again
The Distribution Leader in this round of our on-going survey was Nałęczowianka, the non-carbonated mineral water. The 76 percent rate of availability in the shops that it achieved is nearly identical to the one which gave its carbonated variety the title of Distribution Leader last year (78 percent rate of availability, �DD� 3/2007). Nałęczowianka was available in 81 percent of the modern trade outlets and in 73 percent of the traditional shops.
Unilever and Procter&Gamble at level pegging
The TOP 15 most watched television commercials in the period 1.07.2008�31.07.2008.
The July listing of the TOP 15 most watched television commercials is decidedly dominated by two firms: Unilever and Procter&Gamble � each of which has three of its products among the top 15 spots, and in the case of Procter&Gamble � two are in the top ten.
Unilever managed to improve its position which was already high anyway, for its shampoo Clear Men, which was previously in sixth place while in the currrent ranking it moved up to third. Lipton and Knorr commercials were also avidly screened in this period. In turn, Procter&Gamble advertised two of its cosmetics brands � Pantene Pro-V and Olay cream, and Fairy washing-up liquid.
Two other firms each managed to get two of their brands into the ranking. The first of these is Colgate-Palmolive advertising its Lady Speed Stick deodorant and toothbrushes. The second � by tradition now � Danone, with its spots dedicated to Actimel and Activia.
The high-flying second place secured by Wrigley can only be cause for partial self-congratulation because last month it had taken the first two places.
AUGUST
Convenience and a step further
Filling station shops are not just a supplement to what the fuel suppliers traditionally offer. These shops have come a long way � the convenience store format is currently the preferred model, although certain chains are introducing further-going solutions.
The average size of an Orlen filling station shop is 51.3 m2. The number of goods available is anything up to 3800 though the range on offer is variegated and dependent on the station�s location and the particular trading outlet�s concept. � This selection guarantees a full response to the travelling customer�s needs � says Joanna Pietrak of the firm�s press office. � What the shops offer in the various categories is adapted to the outlet�s location. The assortment and its variety is also selected with the potential needs of a given station�s customers in mind. In shops located by major through routes the customer � the traveller � will buy beverages such as energisers, coffee, snacks, travel accessories. At stations in residential areas, it is beer, beverages, cigarettes and the press that are more in demand. Part of our stations� customers are people exclusively coming to do their non-fuel related shopping. They find the filling station a convenient place to do their shopping (because it�s accessible and safe). These people do not tank up with petrol and some come to the station on foot.
In general, the greatest popularity at Orlen stations is enjoyed by FMCGs like beverages, cigarettes and sweets. In turn, in the case of Lotos filling station shops the most popular categories include alcohol, cigarettes, beverages and other consumer goods (mainly sweets and savoury snacks) as well as pre-paid charge-ups. The average size of a Lotos station shop is 60-70 m2. The average number of items in the station�s assortment range is between 2500 and 4000 products, though of course the combined number of items available throughout the network as such is considerably greater. The �non-motoring articles� represent 60 to 70 percent of the sales structure. Also in the case of Lotos shops, location has direct bearing on the sales structure of a given station. � Typically residential area shops play the role of substitute grocery stores and off licences of the convenience type, and that is why the �non-motoring� categories of goods there have a greater share in the sales than anywhere else � says Krzysztof Kopeć of the Grupa Lotos S.A. press office. � In turn, stations located near major routes are characterised by a greater share of motoring-associated goods. Cigarettes enjoy a relatively comparable degree of demand with the exception of the stations near the German border � where the importance of cigarettes is even several times greater than the network�s average.
At BP stations (their average size being about 150-200 m2), out of approximately 2500 items on offer, 2000 will be of the �non-motoring� type. The shops at BP filling stations, operating under the name �5 minutes� have a thousand consumer goods more in their range. Beverages, beer, sweets, cigarettes and the press are the dominant articles there. An important element of the range on offer are seasonal goods, e.g. windscreen liquids. � Impulse shopping mechanisms prevail at filling station shops and it is from that angle that the range on offer is devised � says Magdalena Kandefer of the department of Communication & External Affairs BP Polska.
Additional services are also available at most filling stations. In the case of Lotos stations these mainly comprise car washes, cafes and hot-dog stands. Orlen customers on the other hand have �Moje Rachunki� (My Bills) services available. This service is already available at over 1000 stations of this concern throughout Poland. Customers can also avail themselves of trailer hire services, and hand or automatic car washes. Orlen is currently in the process of implementing its Stop Cafe catering project which comes in two formats � a coffee bar or bistro � depending on the station�s location and the volume of traffic. Currently, there are already Stop Cafe bars available to customers at 367 stations and Stop Cafe Bistros at 13 stations. At BP stations, Wild Bean Cafes have been in operation as from 2005. The fast-foods sections are also part of the assortment range at Statoil filling stations.
The convenience store formula is the most frequently used description for the evolving filling station shop concept. This direction in development is mentioned by Joanna Pietrak of Orlen: - In the past few years PKN Orlen filling stations have undergone far-reaching changes � from a small shop with basic car accessories, which was the basic CPN station standard, to an attractive convenience type store. It was not just the décor but also the product range on offer and the display method that was subjected to change. Currently, PKN Orlen shops offer assortments of products adapted to the needs and expectations of customers who are either in transit or who need to supplement their small domestic shopping.
The Lotos representative hit a similar note. � A filling station shop, due to the function it fulfils and its characterics, is a convenience store � says Krzysztof Kopeć. - The product offer in our shops is a combination of a standard range as supplemented by goods responding to local conditions; it depends on the type of shop (urban, transit) and its size. In the immediate future, it is planned to introduce greater standardisation in the network, to expand the catering services on offer and to introduce new additional services.
In the case of the BP network, the sales share of a shop taking the filling station�s total turnover into account is growing systematically. Magdalena Kandefer: - What�s important is that the number of customers visiting the station only because of the shop or food or car wash services is growing. The Wild Bean Cafe brand of cafes, which was given an excellent reception by BP custiomers in Poland is of particular significance. We anticipate that in the near future our product range will evolve towards expanding the convenience store concept.
BP has also been implementing a considerably further going project as from 2007. On the strength of an agreement with Carrefour Polska, the firms are striving to work out an optimal filling station shop model. The pilot project, whose effect was the �5 minutes� store concept, entails, as to date, three stations on the Warsaw market. The agreement does not however signify the takeover of BP shops by Carrefour � BP Polska continues to manage the shops at its stations. The �5 minutes� shop offer is broader by about 1000 items than the typical BP shop. � The range of fresh food products (the so-called dry ones) and a greater range of fresh bread (including that which is baked on premises) has increased in connection with the project. We tested various ways of shelf arrangement, we changed the positions of various categories and there is one conclusion: there is space at the stations for a good quality broad selection of fresh products which must come on a running basis, without breaks in their supply available to customers. The aspect of logistics in supply matters proved the most difficult in this project. The results are increasingly better but it still is not a sufficiently productive system to think about progressing beyond the test phase. But the results are sufficiently promising for us to extend the test period by a few more months � adds Magdalena Kandefer.
Also the shops at Statoil filling stations are moving beyond the traditional convenience store formula, and the product assortment is not being restricted to typical impulse buy products. Statoil station shops offer a broad range of products, playing the role of local shops. A filling station shop is becoming convenient � because being distinctive for its favourable location and amenable opening hours - it is a place for quickly supplementing products used in every household. Products like sugar, salt, bread, dairy products, cured meats, as well as a wide range of food products in tins and jars � dishes ready to eat cold or after reheating � are available in Statoil shops. The product range on offer also includes OTC medicines.
Extension of the assortment range - essential
It is anticipated that over the next few years dairy product wholesalers will continue to grow because, potentially, the purchasing power of their customers will be increasing continuously.
Like in many other branches, consolidation trends are increasingly visible in the whole of the dairy products� domain. And, as wholesalers are forecasting, this process is set to continue. Already last year the company Curyło�Asterix merged with Rabat Pomorze, while Mona acquired Kontra, thereby forming a new company named Mona-Kontra. 2007 was also a year of accelerated development for Bać-Pol�s Capital Group. As a result of negotiations and transactions, the group was joined by two firms: Sieć Handlowa Intern Kram Sp. z o.o. and Amax Sp. z o.o. Due to these developments, Bać-Pol acquired fresh experience in distribution and expanded its scope of activities through the amenable location of Amax (in Piotrków Trybunalski) to cater for the groups logistical needs. The company Arko, which had finalised its negotiations which had started in 2007, with the firm Batna from Elbląg � a wholesaler specialising in dairy products, with a turnover in the order of PLN 70 m - should also be mentioned. Arko signed a preliminary agreement with the general grocery chain Sedal from Wieluń with which it had joined forces in August-September, after securing the consent of UOKiK � the Office of Competition and Consumer Protection. But that�s not the end of Arko�s consolidation-orientated activities on the market. As announced by Arko�s chairman Jan Kotlarski: - We intend to consolidate further dairy wholesalers, and because we appreciate that distribution firms need regular customers, we are also negotiating with retail chains. Like the strong groups already set up on the market, we also intend to extend our offer by way of adding distributors of goods other than dairy produce to our group. Negotiations are very advanced with several firms from the dairy and other sectors. Of course, speaking of consolidation it is impossible to overlook Emperia Holding, which came out of the Eldorado � BOS merger. In 2007 alone, Emperii was joined by Społem Tychy, Centrum and Maro-Markety, Euro Sklep S.A., Sklepy Polka, Retail Services Poland, and also the distribution companies: Sydo and Alpaga Xema. 2008 heralds further acquisitions. In February the holding was joined by Lewiatan Dolny �ląsk and Lewiatan Zachód, and by Lewiatan Orbita in April. Emperia also signed a strategic cooperation agreement with Lewiatan Holding, on the strength of which, capital-wise, both companies want to bring about their full integration. Emperia is all the while holding talks with partners interested in joining the holding. In April, the integration process of select distribution companies into one economic entity under the name of Tradis was commenced.
Another trend, apart from consolidation, which is characteristic for dairy wholesalers, consisting of supplementing assortments of products with other categories of goods in order to meet the rising expectations of customers, should also be mentioned. Already now, the group of the biggest dairy wholesalers is represented not only by specialist firms, but also by big distribution firms for which dairy products are but a group in a wide product assortment range. Dairy wholesalers are noticing with increasing frequency that dairy products alone are insufficient in order to operate effectively on the market. � Based on our experience, to remain a competitive supplier, the assortment range must be expanded � says Urszula Cholewa, head of marketing at Serpol from Kraków. According to Bać-Pol�s business development director, the time of small specialist wholesalers is passing. - 2008 showed how drastic the decline in profitability in the sales of a dairy group can be. It is clearly visible that a firm based on specialist distribution can have difficulties in covering its operating costs. Dairy-products� logistics is expensive, and unit values of products are small. The support of a wide goods� offer, which is unattainable for small firms, and the appropriate know-how, to meet market demands, is needed � believes Paweł Witkiewicz. But not everyone is casting such bleak horoscopes for dairy wholesalers, and anticipate that it is actually specialisation in given assortments that could be a firm�s trump card. � Dairy wholesalers are very specific entities and they can always compete due to this with the big food wholesalers � believes Maciej Pankiewicz.
It is becoming increasingly common for wholesaling firms to go onto the stock market in order to acquire the resources for acquisitions and further expansion. This also concerns firms listed in the rankings of the biggest dairy wholesalers � besides Emperia Holding (the then Eldorado), which was the first to make a public offering in late November/early December 2001, and made its shares� debut in January 2002. Plans for making debuts on the Warsaw stock exchange are being harboured currently by other distributors as well: these include Arko, which intends to transform itself from a limited company (Sp. z o.o.) to a public limited company (S.A.) at the turn of the year, so as to enter the stock exchange in the quickest time possible and at the most advantageous period.
Ground coffee�s 72-percent share
The value of the coffee market in the period July 2007�June 2008 came to PLN 2.6 bn, which meant nearly 76 m kilograms sold, which in turn signalled a small drop � of one percent � in sales volumes in relation to the analogous period a year earlier. At the same time prices rose, causing a 7.5 percent increase in sales values.
As stems from MEMRB research, in the period under survey, barley coffee was least frequently selected by shoppers � giving it a 2 percent share in terms of sales value, and 5 percent in sales volume. Ground coffee and instant coffee on the other hand enjoyed a sustained degree of customer interest which found expression in the 49 percent shares in sales values achieved by each of these segments. Analysing the market in terms of the quantity of kilograms sold, the decidedly biggest market share was held by ground coffee � 72 percent, with instant coffee coming second with a 23 percent share. Such a great difference between volume shares while share values remained comparable, stemmed from the price differences between the two segments � instant coffee was characterised by a decidedly higher price per kilogram than ground coffee.
Own brands the strongest
The combined sales values of paper products, understood to be toilet paper, tissues, kitchen towels and napkins, came to PLN 861 m in the period May 2007�April 2008 thereby achieving a 9 percent increase in relation to the same preceding 12 month period, which gives us a sum total of PLN 69 m.
Taking into account the sales structure of paper goods, the modern market generated 59 percent of sales values of the whole category; in this, 35 percent of the sales are achieved via the hypermarkets.
Toilet paper has been, unchangingly for years, the dominant segment in the paper products� category, generating 63 percent of sales values in the period May 2007-April 2008. Toilet paper, in comparison with the analogous period a year earlier is growing in value by 11 percent, which gives a cash total of PLN 52 m.
Through tissues we understand disposable paper hankies in plastic packets and those in cardboard boxes. In the period May 2007-April 2008 their combined value was PLN 160 m and comparing that to the previous year, this market is proving to be stable. Tissues generate 19 percent of sales values of the whole category of paper products and are the second biggest segment.
In the period May 2007-April 2008, the paper kitchen towels� market registered sales worth PLN 133 m. Comparing that to the analogous period the year before, kitchen towels are a segment that is enjoying the biggest growth rates in both terms of value and volume � that is, 13 and 5 percent respectively.
Napkins are the smallest segment, whose sales values in the period May 2007-April 2008 came to PLN 23 m.
Strength and shine for PLN 918 m
The category of shampoos, in the period May 2007�April 2008, reached sales volumes of almost 98 m single items, which converts into PLN 709 m in sales values. The market of hair conditioners, as well as masks and serum type products etc, in the period May 2007-April 2008, reached sales volumes of 25 m single items worth over PLN 209 m.
The biggest part of the shampoo category consists of both universal shampoos, for all types of hair, and those for normal hair. The shampoo segment�s share out of the whole category as such in the period under analysis came to 36 percent in terms of the quantity of single items sold and 30 percent from the sales values viewpoint. A somewhat smaller segment is that of anti-dandruff shampoos whose market shares in the period under consideration were 20 and 27 percent respectively. Shampoos for dry hair and damaged hair also deserve attention. Sales of these types of shampoos are very dynamic. This segment, over the year, grew by 1.2 percent in volume and 1.6 percent in value, due to which it achieved a 14 percent market share in sales volumes and a 16 percent share in sales values.
The category of hair conditioners is developing more dynamically than that of shampoos. In relation to the previous year, sales volumes in this product group increased by 8.9 percent with a simultaneous increase in sales values of 10.6 percent. For several years now, traditional hair conditioners have unchangingly enjoyed the greatest popularity, whose share in sales volumes in the whole category came to 73 percent which translated into a 67 percent share in sales values. Research shows, however, that in the past year this segment lost imperceptibly in terms of importance which can be seen in the decline in both sales values and sales volumes by over 2 percentage points. In the last 12 months (through April this year) customers most frequently went for conditioners for dyed hair. The share of this type of product in the traditional conditioners� segment came to 31 percent in terms of volume and 30 percent in value. Conditioners for dry and damaged hair, whose shares came to 29 and 33 percent respectively, proved to be equally popular. This type of conditioner, as opposed to conditioners for dyed hair, registered sales growth of 9.2 and 10.8 percent respectively, in relation to the previous year.
Kamis, Luksusowa and Pall Mall Blue in the lead
In two rounds of our survey, three products achieved the highest distribution rates out of those in our survey baskets. These were: Pieprz (black pepper) from the firm Kamis-Przyprawy and Luksusowa vodka from V&S Luksusowa Zielona Góra. Both products were available in 70 percent of the monitored shops on the day of the survey. Pall Mall Blue cigarettes from the firm British American Tobacco did even better, scoring a 78 percent rate of availability in the shops on the day of the survey.
Summer flowing by with beer and juices in hand
The TOP 15 most watched television commercials in the period 1.06.2008�30.06.2008.
Television commercials best show that the summer season is in full swing � in the ranking of the TOP 15 most watched television commercials, the majority is made up of beers, juices and yoghurts. However the listing was dominated by commercials from Wrigley�s, which took the first two places.
JULY
They sold the most
The TOP 50 FMCG Producers generated sales revenues of PLN 82 bn last year. The leading positions are held by firms manufacturing tobacco products, alcohols, meat and dairy produce. They also have the biggest share in the sales of the TOP 50 FMCG Producers.
The editors of �Detal Dzisiaj�, as in previous years, thus for the fifth time, prepared a ranking of the biggest FMCG producers which is based on the sales revenues which the firms achieved in 2007. In respect of firms involved in selling and producing beer, alcohol and tobacco products, in our ranking, we presented their sales revenues together with excise duties, since such is the price shown on those products and it is at such prices that manufacturers and retailers must convince their customers to purchase those products. Our ranking also contains information on product groups and brands under which products are sold, and the names of the chairmen who, being in charge of the overall activities of their firms or capital groups, contribute to the successes or setbacks of their firms.
The Big Four
Consolidation processes have led to the arrival of several big domestic holdings which may be the harbingers of domestic dominance on the domestic retail market. The Polish holdings match the foreign network operators in terms of strength. Their turnover nearly equals that of the four biggest networks which are managed by international operators.
Port Łód� and what next?
Inter IKEA Centre Polska and IKEA Retail are planning to build seven to eight retail centres by 2015, in other words, to double the number of their shopping centres in Poland. However, if the Large Format Act continues to prevail, IKEA does not rule out that it will have to eschew further investments in shopping centres on the Polish market.
Hypermarket segment
We are still far from saturation point on the hypermarket market say Gelles Roudy, chairman of Carrefour Polska and Ryszard Tomaszewski, chairman of Tesco Polska. Both firms are planning further expansion in this format though the prevailing Large Format Stores Act continues to be a huge obstacle.
Processing industry in development mode
PKM intends to continue developing organically, basing its production and sales chiefly on Stół Polski brands. It is not excluding further acquisitions. One of the stages of activities in the direction of further development in this segment is the transaction concerning the meat plant PARUZEL, with which the meat plant Makton signed a sales agreement in the past few days � interview with Maciej Duda, chairman of PKM Duda
Eko-products in Makro and Real
The concern Metro Group, together with the Association of Ecological Food Producers and Processors EKOMAZOVIA is squaring up to implementing a joint project aimed at promoting ecological and regional products on the Polish market. The Real and Makro Cash & Carry networks are planning to expand their current offer in this field.
Meaty adventures
The prepacked cured meats market in the hypermarket channel was worth over PLN 321 m in the period II 2007�I 2008. The biggest segment is that of frankfurters, accounting for 21 percent of sales values and 25 percent in sales volumes. In the analysed period they registered growth of 2.9 and 3.4 percentage points respectively. Producers spent PLN 15.8 m on television commercials in the period II 2007�I 2008 (TNS OBOP).
22 mln m2 in two years
The investment boom in shopping centres throughout the whole of Europe will continue and it should be expected that in the current year and the next over 22 m2 of new shopping centre space will be handed over for use � says the latest �Raport on Shopping Centres in Europe� prepared by Cushman&Wakefield.
Polimeni in Pomorze
In the course of the next year or so Polimeni International will invite customers to two new shopping centres � Galeria Słupsk will be opening this autumn; it will have an area of 36 000 m2, with 60 brand name stores on three floors and a two-storey car park. The second centre � Galeria Rumia, will be opening in autumn 2009.
Integrated distribution channels
Polish consumers have become a lot more demanding, searching for better offers and intolerant of shortages. Customers expect an integrated approach in customer services from the shops. To meet these expectations requires of retailers the integration of the management of all sales channels, including the Internet, according to consultants from Deloitte.
JUNE
The semblance of growth
The number of hypermarkets in Poland has increased by 50, and it is not, in contrast to appearances, the effect of an equally considerable number of new outlets being opened.
The criteria as adopted for the past ten years in preparing the map of hypermarkets have proved of little significance for the biggest large format store operators in Poland. Both we and most research firms monitoring the market have come to recognise that the most important criterion of a hypermarket should be a minimum of 2500 m2. Meanwhile for the past year and a half Tesco is introducing the idea of a compact hypermarket, while Carrefour is introducing its mini-hypermarkets whose floor space is 2000 m2 and upwards, and at the same time in their listings they do not distinguish which of their mini or compact hypermarkets are smaller and which are bigger than 2500 m2. By the same token we were forced to recognise as hypermarkets all outlets of these networks that are over 2000, and not 2500 m2. And hence such a significant growth in the number of hypermarkets in Poland.
As a result of the consolidation processes on the Polish market, there are now only six big hypermarket networks, five of which � Real, Carrefour, Tesco, Auchan and Kaufland are firms with a centralised system of management, while one, E.Leclerc, has the character to some extent of a franchise. Kaufland on the other hand, which in terms of shop space is undoubtedly a hypermarket, as far as its product assortment and system of setting prices go, to a large extent, has the character of a discounter. Moreover there are shops which fulfil the criteria of a hypermarket, that is various operators run stores of over 2500 m2 but which they themselves prefer to call supermarkets. That�s how it is in the case of certain stores belonging to the Alma, Piotr i Paweł, Bomi or Rast chains.
Great competition, small margins
The Polish meat industry is very fragmented and though its representatives perceive the need for the market�s concentration, nonetheless, they do not anticipate a significant acceleration in the consolidation processes.
The meat market in Poland comprises some 3500 enterprises of varied scope and profiles. They are both small local enterprises and big companies belonging to domestic or foreign capital groups. In recent years part of these firms restructured themselves, investing in their modernisation and development. They became modern-operating entities fulfilling the very rigorous EU requirements. However the mighty fragmentation of market and the accompanying lack of specialisation is behind the lack of productivity of most plants. Enormous competition is accompanied by low margins in comparison with the whole food branch�s profitability.
54 m kg for over PLN 325 m zł
The ketchup market in Poland continues to develop apace. Sales in comparison to the previous year (comparing the period April 2007-March 2008 to the analogous period a year earlier) increased by over 10 percent in terms of value.
The annual size of the ketchups market expressed in weight is over 54 m kg, which was worth over PLN 325 m. Thus, in the period under consideration, the average Pole consumed over 1.4 kg of ketchup which represents one 118g bottle a month. That is a better result than that of the previous period in which the average annual consumption rate was 1.3 kg over the course of the year, or 107g per month.
Consumers go for spicy and mild ketchups in equal measure � 48.3 and 49.5 percent respectively in terms of value. It is worth noting that �other� ketchups, such as ones for barbeques or for pizzas, continue to be of small significance for the category. Their sales� share is 2.2 percent in terms of value and remains stable in relation to the analogous period a year earlier.
20-percent increase in value
Over the course of the year, in the period April 2007�March 2008, all sales of mayonnaise in Poland came to over 51 m litres, which translates into a cash value of PLN 475 m.
At the same time its a category whose sales are growing � in the period April 2007�March 2008 in comparison with the analogous period a year earlier this growth was 17.3 percent in terms of volume and somewhat more � over 20 percent � in value. Growth of the average market price of mayonnaise contributed to such a situation. The segment which registetred the fastest growth and contributed in the greatest degree to the growth of the whole category was that of the biggest packagings - over 400 g, which increasingly frequently are opted for by consumers. Their share increased by 2.8 percentage points in terms of volume in the analysed period at the expense of the smaller volume packagings. Due to its growth this segment also became the most important segment on the market in terms of sales volumes � in the period April 2007-March 2008 it accounted for over 45 percent of overall mayonnaise sales volumes in Poland.
The category is growing strongly
The beauty care cosmetics category which includes, besides body care products, face, hand and foot creams, achieved in the period May 2007�April 2008, according to MEMRB data, sales volumes of 165 m unit items, which sold for a total of PLN 1786 m.
This result can undoubtedly be regarded as very positive for all players on this market because it is indicative of growth trends for the whole product group in relation to the analogous period a year earlier � of 7.4 and 12 percent respectively.
The biggest part of the beauty care cosmetics category consists of the segment of facial care products. In the period under consideration, the share of these products stood at 59 percent in terms of sales value � PLN 1047 m, and 50 percent in sales volumes � 82.3 m unit packages. Such a result for the segment is greatly influenced by moisturising cosmetics, that is face and under-eye creams, whose share in terms of value in the beauty care cosmetics category as such came to 38 percent in this period, while its share in terms of volume was 26 percent. The second beauty care cosmetics segment in terms of value and volume is that of body care products (this segment�s shares in the category come to 36 and 39 percent respectively. Among the body care cosmetics the most popular are balsams and milks. The share of this sub-segment in the category of beauty care cosmetics comes to 19 percent in value and 15 percent in terms of unit package sales. It is also worth mentioning the group of special facial care products which includes masks, peelings, and all sorts of cosmetics for the neck and cleavage. In the period from May 2007 to April 2008 these products � apart from foot care products � developed the most dynamically from the point of view of sales volumes and in relation to the analogous period the year before they achieved increased sales rates of 26 and 16 percent.
Żywiec Zdrój in 91 percent of the shops!
The non-carbonated mineral water Żywiec Zdrój achieved a 91 percent rate of availability in the shops and thereby became the Distribution Leader in the current edition of our on-going survey. It should be emphasised that this is the highest rate of distribution out of all of this year�s rounds of our survey. This result comprised an 88 percent rate of availability via the modern channel and a 94 percent rate in traditional stores.
Second place was taken by Tatra Jasne Pełne beer from the Żywiec Group portfolio, being available in 89 percent of the shops visited on the day of the survey. An identical result was achieved by Tatra in April last year (�DD� 7/2007), but at the time it was the best and thus became Distribution Leader. Tatra, as opposed to Żywiec water, registered 100-percent rates of availability in the hypermarkets (Żywiec in the small shops).
The third most widely available product was Grze�ki chocolate wafers with an 85 percent rate of availability. The achieved result is 12 percentage points better to the one it scored in October 2007. This year we already ran the rule over the Knoppers wafers from Storck in �DD� 8/2008 which were available in 61 percent of the shops.
Moguls refreshing their images
The TOP 15 most watched television commercials in the period 12.05.2008�25.05 2008.
In the current TOP 15 ranking of the most watched television commercials first place almost traditionally belongs to Danone�s Actimel. Danone gives its products strong television advertising support, which finds reflection in the successive rankings. In the current one it is worth noting how strong was the support given by the Maspex Wadowice Group for its products.
In the current ranking, three places are taken up by the Maspex Wadowice Group. In third place is the Tymbark juice commercial, in ninth its Tymbark�s mineral waters, and in fourteenth it�s the Tymbark firm advert. This is now a further ranking where the strength of the televisual advertising support given by the Maspex Wadowice Group to its products is clearly in evidence.
In the current ranking there was no shortage of regular �visitors� in the first fifteen: in fourth place its the Zott Jogobella cokmmercial and in eleventh its the stock cubes Bulion Winiary. In sixth place its �Kociołek do syta Łowicz� (which was described in the TOP 15 most watched television commercials in Detal Dzisiaj�s edition no. 10). In the current ranking several positions are taken by products which rarely appear in the first fifteen squads in our rankings or are new products � viz. in fifth place there is the Veet depilatory cream , in eighth there is Big Milk from Algida and in thirteenth its Arla Kaergarden.
The biggest gain the most
Alcohol distributors are in high spirits at the development of the more expensive categories which gives hope of growth in sales of products yielding higher margins. The activities of the competition however are forcing distributors to defend their high positions by resorting to various strategies � from specialisation, through enhancement of their assortment ranges, consolidating good relations with customers, down to mergers with other entities.
2007 was a further year of consolidation on the wholesale market. The Central European Distribution Corporation (CEDC) group tightened its hold on the leadership. The Sobieski Group participated actively in the concentration, taking over six significant alcohol distributors which enabled it to become the second biggest power on the wholesale market. In December last year, Advanced Distribution Solutions completed its takeover of 9 companies on the basis of which an independent group of distributors in the beer, alcohol, mineral water and non-alcoholic beverages branch is forming up. The following make up the Grupa Kapitałowa ADS S.A.: Danpol Bis, Star Napoje Poznań, Nibres Lubomir Serbin, Inter Hurt, Max-Beer Strzelec, Mag-Mar, Empat, Bomark oraz RO & MA, due to which it achieved a high position on its debut in this year�s ranking of the biggest alcohol wholesalers.
In the milieu of the leading market distributors which we present in the listing there are also Alti Plus and firms carrying on wholesale activities through cash and carries � Eurocash and Makro � and distributors which have kept their market positions: Elmar, Diageo Polska, Ambra, Janus and Waspol. Its worth mentioning here why last year�s leader - the firm Żywiec Trade Holding � is not among the leaders. The reason is the Żywiec Group�s process of simplifying its sales-organisational structures with the liquidation of certain companies, as inaugurated last year. These activities will end in 2008 with the takeover of the Grupa Żywiec Trade Holding Sp. z o.o. company by Grupę Żywiec S.A.
The market of alcoholic beverages is developing very dynamically. According to recent data from Nielsen, it has grown by over 15 per percent. The decided leaders are beer and vodka, which have nearly 90 percent shares in the market. The third in the listing is wine with shares of about 6 percent. The dynamic growth of the alcohol market was significantly influenced by the very good economic climate and clear growth in consumer affluence. The economy is developing, thanks to which pay levels are rising which is fuelling growth in living standards, followed by growth in consumption. Entrepreneurs look on with optimism at the development of more expensive categories giving hope of rises in sales of products with higher mark-ups. The strongest development is enjoyed by premium and mainstream categories. Economy on the other hand is the slowest developing category. Also changing is the structure of alcohol consumption. Traditionally vodka is recording regular increments, however whisky and brandy are also strong players on the market. The wines market is also developing.
12 percent more sold
In the latter period, that is February 2007�January 2008, Poles spent a combined total of over PLN 2.6 bn on the category of carbonated beverages which was nearly 12 percent more than in the analogous period a year earlier.
From the point of view of sales volumes in the period February 2007�January 2008, the most important flavour in carbonated drinks on the market, which accounts for almost 43 percent of turnover, was cola. The sales values growth rate to the period of over a year ago was 19 percent. In terms of volume, products of this same taste also have a two-figure analogous growth in relation to litres sold � 19 percent. It was also the flavour whose sales developed most dynamically throughout the entire carbonated beverages market.
Over 28-percent growth
Over the past year, in the period April 2007�March 2008, consumers spent over PLN 193.5 m on crispbread which, in relation to the previous year, constitutes growth of 28.3 percent.
In terms of volume, expressed in single items, the market developed a fraction more slowly than in terms of values � in the period April 2007�March 2008 as compared to the year before, it increased by 26 percent. A higher rate of sales growth as opposed to volume growth really attaches to all segments. The only exception is crispbread, toast and ordinary bread.
Own brands in the lead
In terms of weight, the macaroni market in Poland in the period March 2007�February 2008 came to over 105 000 tonnes, which by the same token represented growth of almost 13 percent in comparison with the previous year�s figures. Even bigger growth, of 17.7 percent, was registered in terms of the market�s value, which finally settled at the PLN 594 m mark.
The leader of the discussed category has been Maspex for quite some time. Its share in the period under consideration was 27.1 percent, taking as the criterion sales in kilograms and 32.2 percent if we take its value. The rate of growth of Maspex sales in zlotys clearly exceeded the rate of growth of the whole macaroni market in the period March 2007-February 2008, coming to 35.2 percent in relation to the analogous period a year earlier. Its noteworthy that placing itself further down in the producers� rankings is Goliard (established in 1991) with shares of 7.8 percent in value and 5.7 percent in volume, and own brands, whose shares for more than a year have remained at a steady level, fluctuating round the 7 percent mark in value and 15 percent mark in terms of kilograms sold. Also WM Czaniec consistently increased its sales � growth of 29 percent in value and 24 percent in volume in comparison with the analogous period a year earlier, is placing itself in fourth position.
The biggest growth is in mixtures
Poles spent PLN 831.3 m on them in 2007, that is 10 percent more than the year before, while simultaneously growth in kilograms sold was 7 percent which took this up to 30 600 tonnes.
The category of seasonings is characterised by great variety, encompassing both seasonings in liquid and powdered form, and among which we can distinguish between the mono-ingredient seasonings and the mixtures, the dessicated vegetables, batters and universal seasonings. The biggest segment in terems of value is that of powdered seasonings, and among them the so-called mono-seasonings - 42 percent sales values in the last 12 months ended in February 2008. The biggest growth in sales values and volumes over the past 12 months has been enjoyed by mixtures of seasonings, while one of the segments recording decline is the small batters� segment.
Four leaders
In the current edition we present the results of two Distribution Leader surveys. This time, in the two surveys, four products gained the title of Distribution Leader. These are: Okocim Mocne beer, Kujawski cooking oil, Red&White Menthol cigarettes � available in 78 percent of the shops and the homogenised Danio Serek (cheese) available in 84 percent of the shops.
Beverages dominating prior to the heat-wave period
The TOP 15 most watched television commercials in the period 14.04.2008�27.04 2008.
The current ranking of the TOP 15 most watched commercials was dominated by assorted drinking products. There�s nothing to wonder at in this given that a warm spring is in full swing and summer is just round the corner.
In the current ranking, six relate to various beverages. The Maspex Wadowice Group has taken the first and third places with Tymbark Premium and Woda Mineralna Tymbark respectively. Pepsi cola is in 6th place and the juice Pysio is 8th. In 12th place is the Polo Cola commercial while last but one was the mineral water Żywiec Zdrój.
MAY
Economy of scale is what counts
Consolidation processes are changing the picture of Polish wholesale trade. Powerful distribution firms are arising while the number of small and medium sized wholesalers is shrinking.
Consolidation, consolidation and more consolidation, in every imaginable way: wholesale with wholesale, wholesale with retail, retail with retail. Such are the signposts marking out the future development path of the wholesale market. � Vertical and horizontal consolidation of the market. It�s a trend clearly in evidence for some time and I am convinced it will be the market�s determining factor in the future. Merging into strong groups is the future of this and many other branches. It facilitates both development and facing the challenges thrown down by the market, the competition, and the challenge of ambitious activities as such. It would be difficult by oneself - says Jarosław Wawerski, deputy chairman of the board and distribution director of Emperia Holding, all of whose distribution companies will be operating under the name Tradis by 1 July 2009. On the other hand Mateusz Wi�niewski, chairman of Kolporter Service, points to the remaining trends exerting an effect on wholesale. � The phenomenon of reducing distribution margins has intensified, with ever more firms having to make them contingent on the implementation of an expanding range of market activities. The expanding ranges of goods offered by distributors was also of significance. It should also be observed that the entry of wholesalers onto the stock exchange to acquire the resources for acquisitions and further development is becoming an increasingly common phenomenon. The group of companies operating in the FMCG wholesale sector includes Emperia Holding, Eurocash, Central European Distribution Corporation (CEDC), Sobieski Sp. z o.o. and Advanced Distribution Solutions. Other distributors, like Delko, Specjał, Interchem, are also talking about their Warsaw Stock Exchange debut plans.
Specialisation is often mentioned among the changes awaiting the Polish wholesale market. � Maybe like in Western Europe, several segments that are characteristic due to their trading formats, or the customer types they pander to, will emerge. The market could thus break up into wholesale suppliers as follows: cash&carries, food services, convenience stores, those at filling stations or kiosks, the service segment, integrated with their own retail channels, the specialist wholesale segment and groups supplying hypermarket chains. In each of the segments mentioned, besides specialist wholesalers, there can survive only several of the biggest players taking the perspective of 5 to 10 years from now. � is the long-term forecast for wholesale according to Andrzej Słodki, the Makro Cash and Carry Polska press spokesman.
Roland Pardey of Lekkerland draws attention to the fact that with time price will become a less important consideration for the Polish consumer. For convenience stores, which offer a broader range of services but at somewhat steeper prices, this will spell an increase in their market shares. For modern small retail shops the possibility of receiving comprehensive deliveries from barely a handful orf suppliers will become important. Retailers will no longer be interested in supplies from 30-35 suppliers, taking from each products at the lowest price. This situation will enforce organisational changes at wholesalers. � Polish wholesalers will have to work out a more effective chain of supply. An example might be served by the need to reduce the number of warehouses that will have to be closed down by domestic wholesalers in order to reduce fixed costs. The new procedures in storage and packaging of orders, as well as intelligent transport solutions will be important for all wholesalers irrespective of their size � predicts Roland Pardey. On the other hand, in Mateusz Wi�niewski�s opinion, the following events will influence changes in wholesale: - In the next few years the development of convenience-type networks undoubtedly awaits us and, like in other EU countries, the development of large format stores and their overspill into smaller trading formats, which has already begun.
Record investments
Record investments in the history of our investment market regarding franchisees and the beginning of the expansion of Polish systems abroad � that�s how the situation looks on the Polish franchise market according to the latest report from the firm Profit System.
The increase in investments observed in the whole economy made itself clearly felt in the franchise sector as well. In the course of the past year, franchisees invested over PLN 1.1 bn in their own firms on franchise licences. As from 2002, 2007 was among the most dynamic in terms of the number of new franchised and agency outlets coming on the scene. Over 6200 of them appeared in 2007. In retail�s food and industrial branches, the increase in the number of outlets is 4.3 percent.
Franchise and agency systems are businesses to suit every pocket. There are over 70 systems operating on the Polish market which have an initial investment fee that does not exceed PLN 50 000, in this, primarily, bank outlets, as well as small retail and service points. Half of the franchisees invested in their outlets up to PLN 110 000. The remainder made significantly greater investments and the average investment outlay figure rose by PLN 25 000 to PLN 335 000 over the course of the year. The most capital-intensive ventures are supermarkets and filling stations where the investment may exceed PLN 5 m. Already 40 Polish franchisers are successfully selling business licences outside of Poland, and a further 38 are planning foreign expansion in 2008. At the turn of 2007 and 2008 in Poland, 19 000 franchisees ran 22 700 shops and services outlets within the framework of 440 franchise networks. On the other hand, 14 000 agents ran 17 000 outlets belonging to one of 58 agency networks. The number of new franchise and agency systems (the condition � that it had sold at least one licence) rose in the course of the year by 21.5 percent and for sveral years has remaind at a high level characteristic for an economy in a phase of fast-rate of development. Firms choose to develop via franchises so as to rapidly build up their retail networks and achieve economies of scale. It allows for reducing effective operating costs of the network and expansion due to the firm�s specialisation. This year for the second time Profit System surveyed the income of franchisees and agents. The sales revenues of franchisees and agents in the period of the year under investigation came to over PLN 72 bn, which represents 44 percent growth in relation to 2006 and is the equivalent of nearly 7 percent of the GDP. With that, the average sales differed from branch to branch: it was least in financial outlets � ten to twenty thousand zlotys a month, and most at large format stores like Intermarché � the Musketeers Group (on average over a million zlotys) and the fuels sector � over PLN 700 000 per month. The scale of revenues is proportionate to the scale of the investment.
Flavoured beers on the rise
Comparing the last two years � the period February 2007�January 2008 vs February 2006-January 2007 � over 10 percent more beer was sold in terms of volume, which translated into 24 m hl in total.
This volume translated into annual turnover in the order of PLN 11 bn � which signals 13 percent growth thereby pushing beer to the top of the alcohol category in Poland. In any case, beer constitutes somewhat over 50 percent of the entire basket of retailed alcohols. Annual turnover of this basket is estimated to be PLN 22 bn. Producers seek various ways of reaching consumers. One of them is to offer an ever broader range of products. The segment that already has a well grounded position on the Polish market is flavoured beers. The sales of this product are growing imperceptibly faster than the whole market as such, and their current market share is 3 percent. The most popular flavoured beers are (alphabetically): Freeq, Gingers, Karmi and Redd�s.
The situation with regard the percentage alcohol contents in beers seems fairly stable. 2/3 of the market is accounted for by beers of 5 to 6.2 percent volume, and the next 22 percent belongs to strong beers, those of over 6.2 percent volume strength. We tend to buy relatively little low-alcohol beers; they account for less than 2 percent of the market.
PLN 303 m in jars
In the period February 2007-January 2008, consumers bought over 36 m kg of ready-made meat-and-vegetable dishes, spending nearly PLN 303 m on them in the process.
In comparison with the analogous period a year earlier that represents sales growth of 29.1 percent in terms of volume and 30.8 percent in value. On the food market there is a perceivable long-term growth trend in this category. As far as the sales structure goes in relation to packaging types, the situation remains fairly stable. All the while dishes in jars are the dominant variety responsible for 93.1 percent of sales volumes and in comparison with last year they registered a slight increase of 0.3 percentage point in market share. On the other hand in terms of value, the opposite trend may be observed with dishes in jars losing 0.3 percentage points in market share, thereby dropping down to 92.4 percent in the past year. The second most popular type of packaging is the can and the share of products packaged in this way in both aspects comes to 4 percent which represents a small drop on a year-on-year basis.
Knoppers the highest
The Distribution Leader in this round of our on-going survey was the Knoppers milk-nut wafer produced by Storck. It won this distinction because of the 61 percent rate of availability in the shops that it had achieved on the day of the survey.
This availability rate comprises the 56 percent rate of availability in the modern channel � 75 percent in hypermarkets � and 65 percent rate in traditional shops. The highest distribution level - 81 percent, was registered by medium sized shops. That�s the best result achieved by a product from Storck in the history of our on-going survey. In December last year, Toffifee was available in 58 percent of the shops (�DD� 21/2007), in July the chocolate box Merci Finest Selection registered a 53 percent rate of availability (�DD� 12/2007), and the weakest score was that of the Nimm2 stuffed chewy sweets, available in 16 percent of the monitored shops (�DD� 8/2007). The remaining products did not cross the 50 percent threshold of availability in the shops.
A treat for everyone
The TOP 15 most watched television commercials in the period 31.03.2008�13.04 2008.
The current ranking of the TOP 15 most watched television commercials there shows a fair differentiation of product groups. There are commercials for juices, shampoos, processed dairy products, an energiser drink, a deodorant and others. The next rankings promise to present new products, and that�s due to the firm Agros Nova, which is introducing new products onto the market: �Garden Ice Tea� in three flavours, and �Łowicz Kociołek do syta� in four flavours, which it plans to back up with a television advertising campaign.
Fewer firms, bigger sales
Consolidation processes in Polish trade have wrought huge changes in our retailers� charts, particularly in the FMCG retail sector. Not only have further firms disappeared from the lists, and chiefly foreign ones at that, but also the position of domestic retailers has clearly improved. Probably no one expected such an upward leap in FMCG sales as was had last year.
Convenience stores
Convenience stores which stay open 17 hours a day constitute a market at its initial stage of development. In the next few years, it will be subject to dynamic transformations. We believe that it has great prospects ahead and we intend to continue concentrating on consolidating our position as the country�s leader in this sector in the immediate future.
They made announcements, and�.?
The Large Format Stores Act in force for over half a year was to have been quickly revoked under the Civic Platform (PO) administration. But instead, the government is squaring up to issuing executive ordinances to this act, which would suggest that it does not intend to remove this piece of legislative nonsense that quickly.
Eko consolidating
Forming one�s own franchise system in conditions when there are a number of companies on the market which have already established fairly smooth running franchise network systems will be of small effect and it would be wise to take stock of the experiences of other firms. That is why we decided to establish cooperation with the company Rabat-Detal, which joined the structures of Eko Holding towards the end of last year through a shares� swap � interview with Krzysztof Gradecki, chairman of Eko Holding.
Cooperation � an opportunity for profit
Rising costs of employment are making constant work on improved productivity in distribution assume ever greater importance. We are investing more and more in machines, equipment and systems reducing the input of human labour which will be getting more expensive from one year to the next � said Jarosław Wawerski, the deputy chairman of the management board of Emperia Holding which holds fourth place in the ranking of the TOP wholesalers prepared for �Detal Dzisiaj�.
Poland in top markets
Poland is in Nestlé�s top three European markets in terms of growth rates, and moreover, after Russia, it is Nestlé�s second biggest eastern European market. Thus the significance of Poland for Nestlé is growing unabatedly - says Leszek Wencel, chairman of Nestlé Polska.
Children�s interest
The market of products aimed at the youngest citizens is looking forward to a period of prosperity, which is directly highlighted by the constantly rising number of toddlers in this edition of a baby boom, and the fact that women are ever more rapidly returning to work. Among the categories making up the children�s food market, its biggest value � of 40 percent � is held by milk for babies, followed by dishes and desserts for children - 23.5 percent and gruels � 18.4 percent.
Focus Park opens in Bydgoszcz
Parkridge Retail Poland opened its second Focus Park (leisure-cum-shopping complex) in Poland on 23 April. This new branch is in Bydgoszcz, in the historic buildings of the meat plant Byd-Meat. It has 93 000 m2 of space and is one of the biggest shopping centres in the region, and due to the beautiful architecture it has become an indisputable adornment of the city.
APRIL
A record year
Yet again, the editors of �Detal Dzisiaj Network� have prepared the annual ranking of the TOP 50 retailers in Poland. 2007 was a successful year for the whole economy, and particularly so for retail: it is estimated that retail sales grew at a much faster rate than the economy, which of course is the cause of satisfaction for retailers, but which also brought in train an increase in the rate of inflation. That does not alter the fact that in the past year was probably the best ever for retail trade in the history of the Polish free market economy.
With their own production back-up
Shops selling fresh and cured meats, as run by meat producers, assure their owners of rapid rates of settlement for goods sold, the possibility of selling products under their own brands and the achievement a high level of control over the quality of products, their display and staff skills.
We can distinguish two types of meat chain stores on the market � those belonging to the producers themselves and those that have no production back-up. Having your own production back-up facilitates the development of one�s own meat store network. � On the one hand we have products where we can vouch for their quality, our own tried and tested fleet of vehicles as appropriate to the transport and delivery methods of our goods, and on the other hand, there is our own chain of delicatessens - Delikatesy Mięsne - which are visually uniform, and sell high quality products. One�s own production back-up facilities enable the rapid relation to signals coming from the market � from one day to the next one can meet an individual order and also exceptionally quickly react with the delivery of the desired products on the market, change the packagig, producing new products, appropriate adjustment of price to market demand � says Marta Godzisz, PR Manager from the firm Gzella. � Of course it is possible to run a network of fresh and cured meat shops without one�s own production back-up and no doubt successfully to boot, but I presume that such a network may have a smaller degree of flexibility.
Processed meat producers are deciding on opening up their own chains because that enables them to sell their products under their own brands. The Makton chain of fresh and cured meats, which has a network of sponsored shops is currently contemplating setting up a network of franchised stores. In wholesalers� and self-service stores one frequently loses sight of the cured meat brands, especially those on display at the counter. The customer does not pay any attention to the producer and is only guided by appearance and price. One�s own network of meat shops facilitates the communication of information about one�s producer brands, the accentuation of their distinguishing features in terms of quality and taste, and also gives the chance to display sell and deliver the products in the most appropriate manner. � Thanks to one�s own network of shops we can educate the customer, inform him about the products, their purpose, how to prepare them in the best way, - it helps customers in making their choices, they can perfectly advise and tell clients about given products, and that really is valuable knowledge which customers very frequently expect � underlines Marta Godzisz. � Our firm, due to its own Delikatesy Mięsne network, regularly carries out cyclical consumer research into customer opinions, their preferences, habits and expectations. We also conduct research into brand awareness, we have carefully researched and specified our group of customers. Our own network of shops constitutes us an excellent source of information about the market. The firm is supplied with data which from one day to the next tells us about customer needs, expectations and preferences. That�s knowledge which cured meat producers who sell their products by proxy of shops that do not belong to them do not get overnight. It filters back to them with some months delay at times. � Setting up one�s own network of shops gives producers stability in their market shares. Producers have an influence on what is stocked in the shops. Having your own network, money for goods flows in basically the next day, while in the case of production plants or big international networks, settlement dates can be quite far off � notes Adam Wierzbowski, the chairman of the Makton network and the chairman of NetBrokers. Marta Godzisz emphasises that the Delikatesy Mięsne Gzella chain allowed the firm to impose a high level of control over product quality, its display, and staff skills � because staff should know what they are selling and conform to specified standards. � One�s own network enables excellent contact with shop staff, in sponsored shops this contact with staff is sometimes hampered, there is no opportunity to operate the motivating systems that prevail in our firm, since each sponsored shop has its owner who applies his own techniques and principles in remunerating and motivating its workers � says Marta Godzisz. � In sponsored shops the way of influencing sales techniques is made difficult � in our Delikatesy Mięsne we pay exceptional attention to customer services, advising customers and to the knowledge of staff members (regarding our products).
Customers doing their shopping in specialist fresh and cured meat shop networks primarily expect a broader choice of fresh products, that are tasty and of high quality. As well as a professional staff that is able to give sound advice. They are people who, for health reasons, select products for their quality and taste. � According to our forecasts, sales of fresh and cured meats � like bakery products � will be moving towards specialist shops , like the Delikatesy Mięsne Gzella stores � says Marta Godzisz. � Customers, particularly those of bigger towns, are turning away from buying fresh food in large format stores and returning to small shops, like meat shops, bakeries, confectioner�s, greengrocers, and even street markets are enjoying a revival in popularity.
70 percent increase in pretzels
In the period March 2007�February 2008 sales values in the savoury snacks category is estimated to have been PLN 1.42 bn and 70 500 tones in terms of weight. The market is showing a slight upward trend � in terms of value it increased by 4.5 percent, and very insignificantly in volume � by less than 1 percent.
It means a change in the declining tendency observed in earlier analogous annual periods. The biggest segment is unchangingly that of crisps. Poles most avidly buy this type of savoury snack. After a few weaker 12 month periods, when the significance of the segment in the category was smaller and there was a slight declining trend in evidence, in the last 12 month period ended February 2008 the segment somewhat increased its share in the category � by 1.5 percent, both in terms of volume and value, with a simultaneous sales growth in the segment of 5 percent and volume growth (in kg).
In the last 12 months, the popularity of two relatively smaller segments has increased among Polish consumers, namely that of pretzels, whose sales volume increased in relation to the analogous period a year earlier, by an impressive 70 percent, and hazel nuts � 6 percent increase. What�s worth underlining, apart from the three segments above, is that the remaning segments (crunchies, crackers, twiglets, nuts in shells, and popcorn) are registering declines in terms of sales volumes.
0.25 litre volume the most popular
In the period from January to December 2007, the value of the energiser drinks� market in Poland came to just under PLN 253 m, which was over 21 m litres in volume, while still in the September 2006-August 2007 period its value stood at just under PLN 218 m thus registering 4 m fewer drinks sold then than now.
The biggest is Red Bull which, like in previous months, boasts 46 percent sales in zlotys on the above mentioned market. Its sales volumes in the period under consideration came to over 5 m litres, constituting nearly 25 percent of the market. For several months the position of leader has continually been threatened by Gellwe�s (currently the company FoodCare) Tiger brand, which in the period under analysis fell just short of a 28 percent sales share in terms of litres � 18.3 percent in zlotys, in a word it shows growth tendencies in volume sales. Such popularity of the Tiger brand may be determined by its price, which in terms of price per litre is less than half that of Red Bull. I would dare presume that the plant that will be opened in the Special Economic Zone in Niepołomice near Kraków, will continue to consolidate Tiger sales. The third brand with regard to value proved to be Burn � 5 percent in terms of volume, 10 percent in value. Just six months ago this brand was registering an 8 percent (zloty)share of the market under consideration.
In analysing the data it can be asserted that among Poles who enjoy energisers, the preferred volume, whether in bottles or cans, is the 0.25 litre size. Just under 80 percent of sales values was made up of this sized package type. The place where Poles leave most of their zlotys for energiser drinks is filling stations (nearly a quarter of sales values in relation to all distribution channels).
Nescafé instant coffee the Leader
The highest level of availability in the seventh round of this year�s edition of our on-going survey was achieved by Nescafé Classic instant coffee. Its 80-percent rate of availability comprises an 88 percent rate of availability in hypermarkets and supermarkets, and a 75 percent rate in traditional shops � the highest being 81 percent in shops with sales space of 40-99 m2.
The achieved result is 14 percentage points higher than the one registered by this product in October last year. This year we monitored the availability of three ground coffees: in �DD� 2-3, it was Jacobs Krönung with an 83 percent rate of availability (Distribution Leader), in �DD� 4 it was Pedro�s � 40 percent rate of availability and in �DD� 5-6, Woseba Mocca Fix Gold scored a 33 percent rate of availability.
The second most widely available product in the current round was Coca-Cola Light in litre bottles. It had the best rate of availability in hypermarkets, and it failed to score in only one such outlet. What may be surprising is that the lowest availability rate registered by Coca Cola � 56 percent � was in supermarkets, as compared with the 75 percent registered in big and medium sized shops, and 81 percent in small shops.
Cheese offers in spring
The Top 15 most watched television commercials in the period 10.03.2008�23.03.2008.
In the current ranking of the TOP 15 most watched television commercials, for the first time this year, a cheese advert, in fact two cheese adverts, have made it into the top 15. In 5th place is the Turek cheese advert and in 11th is the processed Gouda advert from Hochland.
Is this the last successful year?
It�s probably the last year in which sales in the order of PLN 4 bn will help one scrape into the top ten of the TOP 50 retail trade ranking as compiled by �Detal Dzisiaj Network�. Consolidation processes are causing the likelihood that already this year sales of over PLN 4 bn could, apart from this year�s winners, also be enjoyed by Grupa Bomi, and possibly Eko Holding as well.
Labour market increasingly tough
Until recently it was thus: double figure unemployment, an excess of unskilled labour, no strikes or protests in retail chains, low pay in hypermarkets and supermarkets. The current situation is subject to a reversal process: retail chains have begun to experience staff shortages, pay rates are rising, non-Polish speaking workers are manning checkouts, and all of this is coming against a backdrop of strike action and protests.
Consolidation right here, and what next?
Right up to this day, the subject of our activities has been above all the franchisee. That facilitated a very intensive numerical increase in the number of shops belonging to Sieć 34. Due to that, Rabat Pomorze and Sieć 34 found themselves in a narrow group of the numerically biggest chains of this type in Poland and one of the biggest in terms of wholesale distributors� sales levels � says Marek Theus, chairman of the management board of Rabat Pomorze, the operator of Sieć 34.
PLN 37 m of investment
We earmarked over PLN 37 m for investments in the last two years. This year we intend to invest a further EUR 3.5 m in a production plant in Raciborz. Due to that, the factory will become the main manufacturer of chemical semi-products for Henkel plants in the CEE region � announces Janusz Gołębiowski, chairman of Henkel Polska.
Towards franchising
I consider franchise to be a good idea for business development. In our development strategy we are assuming the creation of a franchise network. We are at the stage of analysing this project - says Adam Wierzbowski, chairman of Makton and NetBrokers.
Not just the price
Representatives of the biggest firms in the paper business are emphasising that quality of the goods on offer is of increasing importance to customers which is confirmed by an 18.8 percent increase in the value of the hygienic products market which comprises disposable hankies, paper towels and toilet paper. This market is worth PLN 1.2 bn, and its biggest segment is that of toilet paper.
The capital city is still in the lead
Jones Lang LaSalle has presented the latest edition of its Warsaw Real Estate Market report. It would emerge from it that Warsaw�s commercial premises market remain the most highly developed in Poland. In terms of volume of space available for let, shopping centres � from the medium ones (20-40,000 m3) to the very big ones (over 80,000 m2) - hold the dominant position.
To overcome oneself
Extreme sports give the opportunity to have the adventure of one�s life, put oneself to the test, earn admiration or the opinion of being an eccentric. Fortunately not every sporting discipline threatens to attach such a label to its practitioners. Among the disciplines willingly pursued by Polish chairmen and managers are running, climbing, car racing, and water sports, even cave diving.
MARCH
Wholesalers� knowledge and ethics
A conscientious approach to customer services is the abiding rule in our network. The customer must feel good when visiting us, he must not have to wait to be served, he must be pampered � said Wojciech �liwa, chairman of Polska Sieć Handlowa Paleo.
- What are the origins of the Paleo network? How long has it been on the market?
- The network has been in existence since 2002, when we opened the first shop. Earlier I ran a shop as a partner in a company. I have been carrying on private economic activity since 1983 � first it was confectionary, then a bakery, then trading. The Paleo network is wholly a family business � the owners are myself, my wife and my daughter.
- How many shops does the chain have at present?
- Currently there are five shops, four of which are in Małopolska: two in Wieliczka, one in Nowe Brzesko and one in Proszowice. Our biggest one � about 500 m2 of sales space � is located in Kazimierza Wielka in �więtokrzyskie province.
- Do your development plans entail an increased number of outlets?
- We have no aspirations to be a big network, on the other hand we want the existing shops to develop. We also intend to open new outlets � we hope to open our next big store in 2008. The plans assume the opening of one new store a year. Our projects in this respect concerning this year and the next are already worked out in detail. We are moving towards relatively big outlets in small towns. We intend to concentrate on premises of up to 400 m2 in sales space (600-700 m2 with backroom and storage facilities), due to the additional requirements which the WOH Act (Large Format Stores Act) creates for the bigger shops.
- So the network is developing � does that mean that the situation of small Polish retail chains is good?
- It�s increasdingly difficult. In the small shops� segment competition has come from western retail chains. That is a relatively new phenomenon � the entry of the western big guns into places that don�t even have town charters. The expansion of western networks is most dynamic and here they are seeking fresh opportunities. To some extent it is because of the WOH Act which, in impeding the construction of big new shops, is channelling the big chains into smaller scale developments.
- How are the consolidation trends which are significantly changing the picture of Polish trade, perceived from the perspective of the Paleo network?
- It must be stressed that various solutions nestle under the concept of consolidation � retail chains are linking up, retailers are being taken over by big distribution firms or wholesalers are opening their own shops. This latter trend cannot be wholly called ethical � wholesalers acquire their knowledge of the market through their retail customers and exploit it, thereby setting themselves up in competition with them. They locate their shops where their customers achieved good results. If the tendency to combine the retail and wholesale sectors assumes such a guise, it could be dangerous for retail. On the other hand, we are looking at situations where strong retail networks are thinking of themselves and setting up warehouses. Having the guarantee of demand for large quantities of goods, they try to set up in their own storage and logistical bases, and thereby generate wholesale turnover for their own profit.
Reality precedes agreements
The signing of a cooperation agreement between Lewiatan and Emperia comes as no surprise to anybody since both firms have long been informing about the status of their negotiations regarding consolidation. The capital merger of these organisations was in fact commenced by Emperia through the acquisitions of shares in Lewiatan�s regional companies.
The management boards of Lewiatan Holding and Emperia Holding SA signed a cooperation agreement on 13 March 2008 in Włocławek. The main aim of Lewiatan Holding and Emperia Holding activities, as defined in the agreement, is the closest possible cooperation between Polska Sieć Handlowa Lewiatan and Emperia and to bring about the capital merger of these organisations. It is the intention of Lewiatan Holding and Emperia Holding to retain the autonomy and identity of Polska Sieć Handlowa Lewiatan, as of other retail networks currently operating within the framework of Organizacja Handlowa Emperia�s structures.
Both sides are declaring a striving towards stable cooperation based on market conditions, the implementation of uniform and modern IT solutions and a full exchange of operating and marketing experience aimed at reducing costs and enhancing operating effectiveness.
The trading network Polska Sieć Handlowa Lewiatan, which currently numbers 2081 retail outlets run on a franchise basis, is implementing its policy via the headquarters - - Związek Kupców i Producentów Lewiatan�94 Holding S.A. with its registered office in Włocławek and regional operator companies.
The signing of cooperation agreement comes as no surprise to anyone since both firms have been reporting on talks regarding consolidation for a long time. The capital merger of these organisations announced in the agreement was factually inaugurated by Emperia through acquiring the shares in Lewiatan�s regional companies. The last two such operations were carried out in February this year. On 28 February, Emperia acquired 100 percent of shares in the company Lewiatan Zachód Sp. z o.o. with its registered office in Szczecin. Emperia acquired from natural persons being shareholders in the company, 105 shares of a nominal value of PLN 600 each, constituting 100 percent of the equity giving 100 percent of the votes at general shareholders� meetings. The shares were acquired for the sum total of PLN 1 500 000. Lewiatan Zachód Sp. z o.o. is the organiser of an FMCG sector network of franchised shops which brings together 180 outlets located in the Zachodnio-Pomorskie province, which have premises totalling about 24 000 m2 in area. On the other hand, in 7 February 2008, Emperia Holding S.A. acquired 98.98 percent shares in Lewiatan Dolny �ląsk Sp. z o.o. with its registered office in Zgorzelec. Emperia acquired from natural persons being shareholders in the company, 194 shares of nominal value of PLN 500 each, entitling to 98.98 percent of votes at the general shareholders� meetings. The shares were acquired for a total of PLN 893 000. Lewiatan Dolny �ląsk Sp. z o.o. is the organiser of a franchise network of 100 FMCG sector retail shops located in the Lower Silesia province with a total sales space of about 11 000 m2. Emperia is also the owner of Lewiatan Podlasie (143 shops) and a minority shareholder in several of Lewiatan�s regional operator companies.
Emperia Holding thus carries on retail activities in a total of 1582 outlets currently, that is in 116 Stokrotkas (in this in the Berti, Jaskółka and Rexpol supermarkets incorporated into the network), three Stokrotka Premiums and 1463 franchised outlets (Groszek and the Milea, Eurosklep, Maro Markety, Centrum, Zatoka, Społem Tychy, Lewiatan Podlasie, Lewiatan Dolny �ląsk, Lewiatan Zachód outlets incorporated in the network). However it should be emphasised that 423 shops belonging to Lewiatan Podlasie, Lewiatan Dolny �ląsk, Lewiatan Zachód, takes into account in its calculations also (considering them as their own), the traders� and producers� union Związek Kupców i Producentów Lewiatan�94 Holding S.A., which means that the Polska Sieć Handlowa Lewiatan trading network currently brings together 2081 retail outlets.
Taking into account these reservations, Lewiatan and Emperia together form an impressive network of 3240 outlets comparable only to the Społem shop network which has about 5000 outlets operating under its logo.
On the other hand the number of 3123 franchised shops gives this group absolute primacy on the list of the biggest franchise networks and dethrones the ABC network which can boast of over 2600 outlets.
Caramels lead in the sweet stakes
The sweet market registered a 2 percent increase in volume and value in 2007, thereby achieving sales of 28 818 tonnes of sweets worth PLN 770.9m.
Among the segments of this big category we can mention caramels, dragees, jellies, as well as chewy sweets, sugar coated sweets and toffees. The biggest part of the market is made up of hard sweets (caramel) � their share in sales volumes in 2007 was 46 percent and hence together 13 270 tonnes of sold products. Caramels also maintain their position as leader in terms of value because it�s on them that consumers spent PLN 304.3 m in the course of the year, and by the same token generating sales at the level of 39.5 percent. Despite such good results it is precisely in the case of this segment that the biggest fall in relation to the previous year was registered in both sales volumes and values � of 6.8 and 6.9 percent respectively. Such big differences are at least partly compensated by jellies because it is they that in the period from January to December 2007 increased in terms of volume by 29 percent so as to finally boast of an 18 percent share of the whole category. dragees are of big significance in relations to shares in the whole sweets� category. This segment constitutes 33 percent of the market - PLN 255.9 m, while in terms of volume � 24 percent, that is 6828 tonnes, however, in comparison with 2006, it too fell in terms of volume by 3.9 percent.
Growing, but slowly
In the period February 2007�January 2008, 237 000 tonnes of cheese were sold at a value of PLN 3 bn, which is indicative of a low rate of growth.
Different than in the case of most such big categories, cheese sales are evincing a slow rate of growth. In the period February 2007� January 2008 sales of cheese in kilograms increased by 3 percent in relation to the analogous period a year earlier, while in terms of value it increased by 11 percent. This divergence in the volume and value rates of development is indicative of an increase in the average price per kilogram. These increases concern all market segments (white, yellow, processed and blue cheeses), which is confirmed by the ten best selling products from each segment � their prices in the period December 2007�January 2008 were between 8 and 40 percent higher than in the analogous period a year earlier.
Sales rates falling
Sales values of yellow fats which encompass butter, margarine and related blends/spreads, came to over PLN 2 bn in the period February 2007�January 2008, which represented over 280 000 tonnes in terms of weight.
That signifies a decline of 1.7 percent in sales of yellow fats in comparison with the analogous period the year before in terms of volume. The reduction in the size of the market was generated by both market segments. Margarines and blends/spreads constituting the �backbone� of the whole category in terms of sales volumes, holding a 70.9 percent share in volume, registered a drop of 1.4 percent in sales in comparison with the period February 2006 � January 2007. In turn, butter, which in terms of volume represents nearly one third of the whole category, achieved a sales level that was 2.3 lower than that of the analogous period the year before, which caused a small drop in its shares in this category.
Kasia margarine and Kinder Bueno the Leaders
In the current edition we present the results of two Distribution Leader surveys � Kasia margarine and the Kinder Bueno candy bar came top. This is the second time that Kasia margarine has achieved the best rate of availability in the shops in our survey and has again become the Distribution Leader. The result achieved this time � an 84 percent rate of availability albeit 5 percentage points weaker than the one registered precisely three years ago (�DD� 5/2005), is still very considerable.
The candy bar Kinder Bueno became the Distribution Leader for the first time, achieving an 86 percent rate of availability. Not for the first time, however, a Ferrero product has become Distribution Leader. In December 2005 (�DD� 21) the best was Kinder Niespodzianka � with a 76 percent rate of availability, while in 2007 (�DD� 17-18) Tic-Tac dragees � were available in 85 percent of the shops.
Yoghurts on our screens
The Top 15 most watched television commercials in the period 18.02.2007�2.03 2008.
Some of the biggest milk product producers, Danone, Zott and Bakoma, have made themselves at home in the current ranking of the TOP 15 most watched television commercials.
Zott�s continued policy of strong support for its products with television commercials has propelled its Jogobella advertisement into the No.1 spot, in fact just as it had done in the previous ranking. Another Zott product � Monte � is also in the Top 15. In line with tradition, a Danone commercial (25th in the �Detal Dzisiaj� TOP 50 FMCG Producers� ranking in 2006) � for Activia, was second. Bakoma, the third firm which spends most on television commercials, came in at no.8 in the current ranking (47th in the TOP 50 FMCG Producers in 2006).
They are not laying down their arms
Participants of the �Future of Polish Trade� conference organised by Polish traders, under the aegis of the Law and Justice (PiS) party, in the main hall of the Polish parliament on 19 February 2008, adopted a resolution by which they seek to defend the binding law on setting up and operating large format stores and shopping centres, and to support the proposed amendments to this act.
The act, which drew traders to the Main Hall nearly exactly two yars ago (on 28 February 2006) was passed on 11 May 2007, but to date � under the rule of the new administration as well � no accompanying executive ordinances or dispositions have been issued. Also, the Constitutional Tribunal has still not taken its position on the question of whether it is contrary to the Constitution, while the community centred round traders� organisations also maintains that it was not demonstrated that it was contrary to EU legislation. It also seemed that the conviction about the need to rescind it is not so warmly shared by the Civic Platform (PO) party�s coalition partner � the Peasant party (PSL), whose representative in government - Waldemar Pawlak, the deputy minister of the economy � despite announcements, did not show up at the meeting with the traders� in the Main Hall on 19 February 2008. Despite the reassurances of the biggest traders� organisations, not all traders speak of this act with the same degree of enthusiasm.
In the resolution signed on 19 February 2008 by the chair of the Polish Chamber of Commerce � Małgorzata Więch, the chair of the Board of the Congregation of Industry and Commerce (Kongregacja Przemysłowo-Handlowa) - Jan Rakowski, the chair of the board of the Supreme Council of Trade and Services Associations, - Roman Dera, the chair of the Kraków Congegation of Traders - Wiesław Jopek, Alfred Bujara of NSZZ Solidarno�ć Krajowy Sekretariat Banków, Handlu i Ubezpieczeń (Solidarity trade union � national secretariat of Banks, Trade and Insurance) and with Anna Czechoska � the chair of the All-Poland Trades Unions� Agreement , the Trade Division, we read: Polish Traders, a grouping representing the small and medium sized enterprise sector, gathered together at the conference entitled �The Future of Polish Trade�, confirm their unanimity and will to decidedly defend the act on building and operating large format shopping centres and at the same time support the proposed changes to the above mentioned act tabled by the Law and Justice (PiS) party.
Poland is one of the few countries in Europe in which large format shopping developments were not subject, until the entry of the act on building and operating such developments, to any restrictions either as to their size or their location, or their work-time/opening hours.
The Act of 11 May 2007 aims among others to rationalise the process of building large format shopping centres. It liberates the process of issuing building permits to hypermarkets of suspicions of corruption. It is a way of equalising the market opportunities of trading SMEs. It does not differentiate enterprises according to the criterion of the country of origin of the capital. (...)
Moving towards modern formats
Despite the traditional kiosks with a small roof for customers to shelter under continuing to represent the decided majority of this type of outlet, modern outlets which you can actually enter are increasing in number. They offer customers better shopping conditions and generate bigger sales rates in �top of the range� articles � specialist press and more expensive cosmetics, sweets or gifts.
Kiosks are not just a place where the press is sold. In the outlets belonging to the Eurokiosk network, the sale of non-press articles represents about 50 percent of the sales values of every retail outlet. Mariusz Młodzikowski, The deputy chairman of Eurokiosk�s management board says: - Half the sales of the non-press articles are generated by tobacco products, besides that, as a rule, its � charging up mobile phone cards, public transport tickets, and small food items. In the summer season the sales rates of beverages grow significantly among others because our kiosks and press salons are fitted out with refrigerators. Two types of retail outlets comprise the network � the traditional kiosks with a small shelters jutting out, which are located along the main communications routes, and the press salons usually located in the shopping malls and shopping centres. It turns out that the press salon format � somewhat contrary to its name � can have a positive effect on sales of non-press related goods. � In the Eurokiosk salons, thanks to the larger premises and easier access, souvenirs and toys play a bigger role in sales as compared to traditional kiosks. Frequently, better quality cosmetics and stationery are also on offer � says Mariusz Młodzikowski.
In the case of the biggest networks operating on the Polish market, one can observe in the latter period a clear tendency to create new formats of activity. The basic strategy of the Eurokiosk network is to develop the Euro-Salon Prasowy brand (all new initiatives involve small press salons) and the active development of sales outlets which bring customers inside. Mariusz Młodzikowski: - We are also developing the premium salon segment, which are frequently accompanied by a cafe operating under the Eurocafe brand name, increasingly forcefully.
Of course the market leaders � Ruch and Kolporter � are also involved in these trends. In February this year, Ruch opened its first more exclusive press salon � under the name of Update � in Gdynia, which allows for the better display of what�s on offer than in traditional newsagents� outlets. The Update salons will be competing with the In Medio and Relay outlets run by HDS, and the Euro-Salon Prasowy outlets. Ruch does not intend to abandon its traditional kiosks with a small shelter � the process of their modernisation and the optimisation of their locations is in progress, and its third brand is the network of �I coffee� (cafes) � with a strategy that assumes that they will be located next to the Update outlets.
The main rival, Kolporter, besides investments in the sector of Metas (small grocery stores), is putting its money on expanding its range of services at its outlets. In certain outlets there is a packet of financial services under the name �Szybki Kredyt� (Fast credit) on offer. There, customers can pay bills, obtain cash loans and Dominet Bank credit cards.
Every third packet contains jellies
The market of powdered desserts comprises custards, kisiels (a specifically Polish jelly-like dessert), jellies and ice creams. In 2007, it was worth over PLN 258 m which translated into the sale of 270 m packets. In relation to the analogous period the year before, this is a small increase � of 3.8 percent in sales values, and 1.6 percent in the number of packets sold.
In the same time frame the biggest dynamic in sales values was achieved by the segment of custards � an increase of 4.7 percent and jellies � which had growth of 4.5 percent. As in previous years, the powdered ice creams segment suffered a further year of decline in value � by 28 percent. Due to its sales values, the jellies segment is the biggest market for powdered products � in 2007 it was PLN 107.8 m, in other words 42 percent of the market. Due to the number of packets sold, jellies constitute nearly 32 percent of the market.
The second segment of powdered desserts in terms of size, that of custards, achieved a 31 percent share in value. This comprises instant-type products whose significance on the market diminished in comparison with 2006 by nearly 14 percent. Custards with sugar enjoyed growth of nearly 14 percent in consumer interest in comparison with the previous year, which gave them a 39 percent share of the segment, and custards without sugar, whose growth was low - 4 percent, but with its 48 percent share among custards, it still remains the biggest.
The segment of kisiels (a typically Polish variety of fruit-flavoured starch jelly) constitutes 27 percent of powdered dessert sales. In relation to last year, it evinced growth of 2.3 percent. As in the case of custards, three varieties of this product may be identified � instant type kisiels - 41 percent of the segment, kisiels without sugar - 37 percent and kisiels with sugar - 22 percent. In comparison with 2006, the biggest growth rate � 10 percent - in 2007 was had by instant kisiels, while a considerable drop � of 14 percent � was the part of kisiels with sugar.
The market of powdered ice creams diminished for the second year in a row � its sales volumes dropped by 25 percent in relation to the previous year. In 2007, this product accounted for less than 0.5 percent of sales on the powdered desserts market.
Higher priced segments growing
The tooth-cleaning market, underdstood to include both toothpastes and toothbrushes, is developing very dynamically both in terms of sales values and volumes. The growth in value of the whole market is being driven in the greatest degree by the toothpaste category which is responsible for almost 77 percent of the market�s value. The faster volume as opposed to value gowth of the whole tooth-cleaning products� market can also be seen when looking at the categories of toothbrushes and toothpastes separately. In the past year, the sales value of toothpastes rose by over 11 percent while its sales volume increased by only 4 percent. The rate of development of the toothbrush market is even greater � 16 percent in terms of value and 10 percent in volume. The difference in the rates of sales values and volumes points at the relative increase of the average market prices of toothpastes and toothbrushes. Such a situation stems from several factors. The main reasons are primarily the increase in significance of the top-priced products and the drop in significance of modern retail, visible both in relation to toothbrushes and toothpastes. Additionally, the fall in the share of big packages has a significant effect on the increase in the average price per litre of toothpaste.
Pawełek � the Leader from Cadbury
The Distribution Leader in the current round of our on-going survey is the candy bar Pawełek from the Cadbury Wedel portfolio. Its 76-percent rate of availability in the shops was 13 percentage points better than the rate it scored last November (�DD� 19). Pawełek was available in 84 percent of the modern retail outlets visited and in 67 percent of the traditional shops. Cadbury Wedel spent over PLN 9 m on Pawełek television commercials in 2007 (TNS OBOP).
The non-carbonayed orange flavoured beverage Costa was available in 55 percent of the monitored shops. It achieved a 94 and 69 percent rate of availability in the hypermarkets and supermarkets respectively, while in traditional retail outlets, its highest rate, 50 percent, was achieved in small shops. In the period December 2006-November 2007, Hortex spent nearly PLN 5.5 m on its Costa television commercial (TNS OBOP)
Nestlé-Unilever culinary skirmishing
The Top 15 most watched television commercials in the period 31.12.2007�13.01 2008.
The current ranking of the TOP 15 most watched television commercials is headed by Zott�s Jogobella yoghurt, while Danone�s Activia is in 3rd spot which, in principle, is a regular fixture in all our relevision commercials� rankings, and usually occupying the top positions. In the previous ranking, this firm was 2nd with Actimel, while in �Detal Dzisiaj� No.1, it also came 11th with Actimel. In the previous edition of �Detal Dzisiaj� we presented the annual summaries of the TOP 15 most watched television commercials in 2007, in which Actimel came first. That was not the only product from Danone which came in the Top 15 � second was Activia, and in 6th was Danonki. Jogobella was not absent in the annual summary � having come tenth.
The current ranking is interesting in that of the top 15, two rival firms � Unilever Polska (5th in �Detal Dzisiaj�s� ranking of the Top 50 FMCG Producers in 2006) and Nestlé Polska (6th in the TOP 50 FMCG Producers ranking in 2006) - gave their products strong support. Both firms have a wideranging assortment of products and in the current ranking they both supported similar groups of products with television commercials. Thus in 2nd place there is the Ziarenka Smaku (Grains of Taste) advert (from (Winiary, Nestlé Polska), in 6th its beefstock (from Knorr, Unilever Polska), in 8th Smaczna Zupa (Tasty Soup, from Winiary) and in 9th place it�s Fix from Knorr.
Aldi versus Biedronka
Aldi is only one of our numerous competitors whom we treat with respect but without fear � so Pedro Pereira da Silva, the director general of Biedronka summed up the opening of Poland�s first Aldi stores. More than two years after the registration of the company in Poland, the German discounter opened its first seven branches here.
Leaders � ever stronger
Despite the huge degree of market saturation with a myriad trading networks offering audio-visual equipment and white goods, several networks have been dominating the scene for a couple of years, and of these barely four are large format stores. More than three years ago the British Electro World chain entered the Polish market, and this market�s specialists predicted profound changes in the next few years as a result. Meanwhile, nothing of the sort happened while the position of the Media Markt and RTV Euro AGD networks seem not to be under threat.
Benign competitor?
There are currently nearely a hundred filling stations operating next to hypermarkets and supermarkets in Poland. The market share of filling stations belonging to retail chains is negligible though growing from year to year. The biggest operators have come to the view that such a station is, on the one hand, a supplement to the shop, and on the other, it may serve as a perfect �bait� drawing in the customers to their hypermarkets and supermarkets.
Ruch at a turning point
If no quick decision is taken the scenario both from the viewpoint of the company and the State Treasury could be very glum � say Adam Pawłowicz, the unexpectedly dismissed Ruch management board chairman, and Paweł Sobków, the management board member responsible for retail and network management, who is awaiting notice. Adam Pawłowicz adds that they had succeeded in implementing the programme to cure the firm and to put it on track as a normal-running market economy enterprise, as witness both its financial results and its successful debut on the stock exchange.
Spring cleaning
On average we use fewer detergents than in most other European Union countries. The prospects for the category of �World of Cleanliness� are thus rosy. We spent nearly PLN 1.3 bn on washing resources -powders, liquids etc. in 2007. Washing powders are decidedly the most popular, representing 87.8 percent in volume and 86.9 percent in sales values. The leaders in this category are Procter&Gamble, Henkel and Reckitt Benckiser.
Mutual benefits
Unilever Polska is a strong organisation whose brands have very good market positions � in the last few years Unilever Polska was always in Unilever�s top three European firms. Good cooperation between suppliers and shops is the key. I firmly believe that maintaining such cooperation with our customers is of mutual benefit - says Sanjay Dube, chairman of Unilever in Poland and | | | |
