BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Food & Drink Sector Of Bulgaria

Not surprisingly, dominating the headlines this quarter is Bulgaria’s accession to the EU, and the impact this has had on the country’s food and drink industry and retail sector. Following months of hesitation and delays, foreign discounters are moving ahead with their Bulgarian entry plans in full force. In January German discounter Tengelmann announced that it will open its Plus chain of stores in Bulgaria in the first quarter of 2008, although the location of the outlets and size of the investment remain unknown.

After announcing in mid-2006 that it was putting its expansion plans on ice, compatriot discounter Lidl is once again eyeing the Bulgarian discount market, and is currently hunting for real estate and staff for its local operations. These expansions should come as no surprise given that, according to BMI figures, the discount sector is forecast to experience the greatest growth of all mass grocery retail (MGR) formats, albeit from a low base, growing by a tremendous 215.4% between 2006 and 2011. Discount stores are the ideal format to penetrate the country’s poorer regional markets, which are currently out of reach of the major supermarket and hypermarket operators that have flourished in the major cities in recent years.

Meanwhile, the country’s food and drink producers have come under intense scrutiny in the run up to and following EU membership. The safety of the country’s meat and dairy products is of major concern. The EU narrowly managed to avoid a bloc-wide meat ban by Russia over concerns regarding the health and safety of Bulgaria’s meat exports. More bad news came in the form of a report on the country’s dairy industry that found that the vast majority of companies still fail to meet EU requirements, despite recent efforts to modernise the industry. Although there are more than 300 Bulgarian dairy producing companies, only 30 were granted access to the EU market. This also means that meat and dairy producers will not have immediate access to the wider EU market, as many had hoped. Despite the rush of EU funding that helped bring about major improvements in Bulgaria’s food and drink industry, these recent reports reveal that there still is a long way to go.

Such events will likely lead to a certain level of disappointment with EU membership, something which is almost inevitable. However, as the economy continues to growth and wealth trickles down to a broader base of the population, disappointment will likely be followed by the realisation that in the long run, the pros of EU membership greatly outweigh the cons. Membership has helped Bulgaria retain its seventh position in this quarter’s Business Environment Rankings, as the country’s long-term risk outlets has improved significantly with its EU accession.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Central and Eastern Europe Business Environment Rankings

Bulgaria Food & Drink Industry SWOT

Bulgaria Political SWOT

Bulgaria Economic SWOT

Bulgaria Business Environment SWOT

Macroeconomic Forecasts

Table: Bulgaria: Macroeconomic Data & Forecasts

Chapter 2 – Retail

Plenty of Potential for Private Labels in CEE

Table: PL Market Share Within Overall Food And Drink Retail Sales, 2006, Selected CEE Countries

Table: Leading CEE retailers by PL market share

Industry Forecast Scenario

Table: Retail indicators

Industry Developments

Company Developments

Market Overview

Table: Structure of the Mass Retail Grocery Market by Number of Outlets

Table: Structure of the mass retail grocery market by value (US$mn)

Table: Value Of Sales Per Outlet 2005

Chapter 3 – Food & Drink

CEE Food Focus: Fight for Future of CEE Dairy Market

Table: EU Allocation Of Milk Quotas To 2004 Accession Countries In The CEE (1,000 Tonnes)

Industry Forecast Scenario

Table: Food consumption indicators

Food

Table: Food Sub-sector Indicators

Drinks

Table: Drinks Indicators

Industry Developments

Company Developments

Market Overview – Bulgaria

Table: Bulgaria Volume (tonnes)

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Tobacco indicators

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table - Key Players: Bulgaria's Mass Grocery Retail Sector 2005

Table: Key Players – Bulgaria’s Food & Drink Sector

Regional Company Case Studies

Mercator – CEE Case Study

Financial Highlights

Table: Mercator’s Financial Highlights

The Only Way Is Up…

Current Position

Table: Mercator’s Market Share Growth To 2005

Covering All The Bases

The Importance Of Private Label

Future Position And Growth Strategies

Table: Projected Growth In Market Share, According To Company Strategy, 2005-2010

Group Diageo – CEE Case Study

Table: Brand Performance – Europe, Year Ending June 30 2006

Restructuring Europe

Table: Diageo: Distribution In The CEE

Russian Hopes, Russian Frustrations

Winning The Vodka War

Groupe Danone – CEE Case Study

Groupe Danone – The Figures

Key figures by Business Line

Key Figures Over 5 Years, Fresh Dairy Products (Euro millions)

Metro – CEE Case Study

Table: Metro’s Presence in CEE

Table: Development Of Group, Divisional And Regional Sales

Company Analysis

Metro Cash & Carry Bulgaria

Unilever Bulgaria

Billa Bulgaria

Kraft Bulgaria

Nestlé Sofia AD

Piccadilly

Bulgartabac Holding Group

CBA Kereskedelmi

BMI Forecast Modelling

How we generate our industry forecasts

Retail Industry

Sources

Competitive Landscape for Europe Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of European Food Sources

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BMI's European Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: