balkans trends & outlook

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Balkans Trends & Balkans Trends & Outlook Outlook USDA Foreign Agriculture USDA Foreign Agriculture Service Service

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Balkans Trends & Outlook. USDA Foreign Agriculture Service. Trends. Big Buyers Big Producers Product Diversity Increasing Regionalizing Production / Supply Storage Warehousing Is Scarce Efficiency Dominates Marketing. Foreign Owned Rapidly Growing Market share = 33% - PowerPoint PPT Presentation

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Page 1: Balkans Trends & Outlook

Balkans Trends & OutlookBalkans Trends & Outlook

USDA Foreign Agriculture ServiceUSDA Foreign Agriculture Service

Page 2: Balkans Trends & Outlook

TrendsTrends

• Big Buyers

• Big Producers

• Product Diversity Increasing

• Regionalizing Production / Supply

• Storage Warehousing Is Scarce

• Efficiency Dominates Marketing

Page 3: Balkans Trends & Outlook

Hypermarkets/SupermarketsHypermarkets/Supermarkets

• Foreign Owned• Rapidly Growing

– Market share = 33%

• At the expense of …– Green Markets

• Regional Procurement

• Have fewer than 300 total suppliers

• Roughly 3 per category

• Operate with a Real Estate Management Perspective

The supply of Supermarkets is starting to overwhelm the market, and margins are falling. This may create a Producer opportunity as the Retailers seek to find non price ways to differentiate themselves.

Page 4: Balkans Trends & Outlook

Retail Market Structure, Romania, 2004-2006

0%5%

10%15%20%25%30%35%40%45%50%

2004

2005

2006

Page 5: Balkans Trends & Outlook

Retail market structure, Bucharest, 2004-2006

Hypermarkets take their share from small stores – growing at 7 to 10% annually.

Retail format* 2004 2005 2006**

Supermarkets 18% 20% 23%

Wholesalers/C&C 6% 4% 5% Hypermarkets 13% 23% 27%

Hard discounts 1% 2% 2%

Boutiques 29% 28% 24%

Kiosks 6% 3% 1%

Street vendors 9% 6% 7%

General stores 2% 1% 1% Other formats 16% 13% 10%

Source: GfK Romania;*FMCG monitored categories * * J anuary-J une 2006

Page 6: Balkans Trends & Outlook

Big Regional ProducersBig Regional Producers

• Can be Quite Large• Operating Old

Infrastructure• Typically Financed

with High Levels of Debt

• Lack “Marketing” Feel and Resource Commitment

• Market Information is Unequally Distributed in the Trade

• Logistics are Lacking or Redundant

• Trade Remains Locally Focused

Page 7: Balkans Trends & Outlook

Trade BalancesTrade Balances

• 25 of the top 42 imports are meat and meat by-products

• Meat and Meat Products Account for More than 38% of the Regional Trade Imports

• Exports are nominal sums of live animals and very little meat cuts

Page 8: Balkans Trends & Outlook

0203 Meat of swine, fresh, chilled or frozen 192,490 388,103.1

2402 Cigarettes, cigars and other 10,677 223,490.5

1701 Cane or beat sugar and chemically pure sucrose 540,402 139,690.5

0207 Poultry meat and offal 160,076 131,432.3

2106 Food preparations NESOI 38,467 111,479.4

0901 Coffee, whether or roasted or decaffeinated 43,242 86,688.7

2401 Raw tobacco 20,930 77,318.4

2309 Preparations used in animal feeding 122,060 72,267.0

0803 Bananas, fresh or dehydrated 143,207 65,858.8

0805 Citrus fruits, fresh or dehydrated 141,616 52,248.6

0303 Fish, frozen, excluding fish fillets and other fish meat of heading 0304 60,176 51,254.5

0202 Meat of bovine animals, frozen 24,191 48,548.8

1905 Bread, pastry, other bakers’ wares 18,464 44,287.9

2208 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% 5,824 43,705.5

1511 Palm oil, whether or not refined 45,144 29,661.0

0504 Guts, bladders and stomachs of animals 9,076 27,560.6

1206 Sunflowerseed, whether or not broken 53,036 27,254.7

1806 Chocolate and other 10,150 26,797.1

2005 Vegetables, processed or preserved, other than in vinegar, NESOI 29,623 25,864.6

2008 Fruits and other edible plant parts 20,856 25,467.9

0209 Pig fat and poultry fat, fresh, chilled, frozen, salted, in brine, dried or smoked 33,031.94 24,694.6

2304 Soybean meal 88,132.97 24,487.4

1001 Wheat and meslin 158,767.70 23,533.2

0206 Edible offal fresh, chilled, frozen 31,526.52 23,079.1

1006 Rice 79,729.10 22,352.9

Page 9: Balkans Trends & Outlook

Romanian Agricultural and Food Trade $ million, nominal prices

1998 2000 2001 2002 2003 2004 2005

Agri-food exports (FOB)

436 338 433 434 568 730 833

Agri-food imports (CIF)

1,012 932 1,206 1,174 1,738 2,042 2,513

Balance -577 -594 -773 -740 -1,170 -1,312 -1,680

Exports as a percentage of imports

43 36 36 37 33 28 33

Page 10: Balkans Trends & Outlook

Poultry Cost ParityPoultry Cost Parity

Romania Bulgaria Serbia Croatia Bosnia Macedonia Albania EU USA

Feed Cost Per Live Wt Kg. $ 0.1458 $ 0.1589 $ 0.1458 $ 0.1613 $ 0.1644 $ 0.1596 $ 0.1812 $ 0.1776 $ 0.1136

Feed Cost per Dress Wt Kg. $ 0.1823 $ 0.1986 $ 0.183 $ 0.2017 $ 0.2055 $ 0.1995 $ 0.2266 $ 0.2220 $ 0.1420

Regional Competive Spread 0.0% 8.9% 0.0% 10.6% 12.7% 9.5% 24.3% 21.8% -22.1%

Global Competitive Spread 28.4% 39.9% 28.4% 42.1% 44.8% 40.5% 59.6% 56.4% 0.0%

Feed as Percent Meat Valuel 37.9% 41.3% 37.9% 41.9% 42.7% 41.5% 47.1% 46.2% 29.5%

Romania, Serbia have a rough 10% cost advantage over Bulgaria, Croatia, and Macedonia; 13% over Bosnia and 22% over Albania and the EU. The “Region has Cost Advantage”

Page 11: Balkans Trends & Outlook

The Region Lacks Revenue ParityThe Region Lacks Revenue Parity

Premium cut values generate a greater live animal value in developed markets than in developing markets.

Page 12: Balkans Trends & Outlook

Trade Balance StrategyTrade Balance Strategy

• Developed markets produce FOR the premium cuts, and dump the balance where ever at whatever they can.

• The only way to stop that, is to Supply the developed markets. The Balkans Region MUST export premium cut values to Developed markets (EU / USA) to stop / reduce the trade deficit.

Page 13: Balkans Trends & Outlook

You Must Be …You Must Be …

Year Around – Year Around – Non Seasonal SuppliersNon Seasonal Suppliers

Buyer’s SayBuyer’s Say

Page 14: Balkans Trends & Outlook

Severe Seasonal Price VariationsSevere Seasonal Price Variations

Page 15: Balkans Trends & Outlook

Returns to StorageReturns to Storage

Volatile, but large, averaging 50 to 100%

Page 16: Balkans Trends & Outlook

Changing MarketChanging Market

• Market Changing to Hypermarkets

• Lacks Supply Chain Integration

• Lacks Regional Focus

• Needs Revenue Parity

• Needs “Storage Warehousing Solution”

• … will have collaborative opportunities as retailers face increased competition