BMI's Executive Summary

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Bulgaria's food and drink industry continues to show major signs of development and improvement. In a key step for the country's dairy industry, in late September 2007 a virtual ban on Bulgarian dairy and meat products into the European Union (EU) was lifted following the approval of 15 Bulgarian companies for free trade with the union. The EU Standing Committee on the Food Chain and Animal Health made the decision to allow these companies free access to the EU market, bringing the total number of approved companies up to 71. However, this still leaves another 585 dairy and meat companies in a 'transition period' and still unable to meet EU standards. EU membership has been a challenge for the country's food and drink producers who have been struggling to meet the high level of industry standards, though the long-term benefit of these reforms will be a significantly stronger industry.

There have also been major investments into the Bulgarian drinks industry by international operators. In September 2007 US-based PepsiAmericas announced that it had formed a joint venture through its purchase of a stake in Agrima AD, the company that bottles, sells and distributes PepsiCo-branded products in Bulgaria. The company has said that Agrima will help it gain a foothold in the country's emerging beverage market. Although the terms of the transaction were not disclosed, PepsiAmericas said that it owns 20% of the joint venture, with plans to increase its stake to 100% by 2012. PepsiAmericas is the second-largest Pepsi bottler globally, with operations in the US, Central Europe and the Caribbean. With this deal Pepsi is making a clear commitment to the Bulgarian market, which is expected to have strong long-term potential.

This was followed by an announcement in October by Dutch brewer Heineken that it will increase its production capacity at its Zagorka brewery in Bulgaria as a part of its plans to increase local investments. Heineken has said that it will invest EUR15mn (US$21.2mn) between 2008 and 2009 with the funds used to increase production capacity, to construct a 2,100m2 warehouse and to increase its fermentation capacity. Other planned upgrades include expanding the plant's bottling capacity, adding new filter lines and reorganising glass bottling lines. Given this increased investment, Heineken clearly feels that the Bulgarian market is one worth investing in, and has no doubt been encouraged by the country's recent EU membership, which has given a major boost to both consumer confidence and the business environment. Finally, Austrian real estate company announced that it plans to invest around EUR300mn (US$428.6mn) in the Bulgarian soft drinks sector. Soravia already owns the Devin water bottling company, and is now looking for potential acquisition targets such as beverage, fruit juice and mineral water bottling companies in south-eastern Europe. What all of these investments indicate is the growing interest and confidence in the country's food and drink sector, with the drinks sector in particular illustrating strong growth potential.

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: