BMI's Executive Summary

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Croatia has emerged as a major focus of European Union (EU) enlargement planning in 2007, with the country potentially becoming a member of the bloc as early as 2009. The need to improve the country’s transparency and uniformity of its commercial legislation, among other requirements of EU membership, will continue to stimulate the development of the country’s mass grocery retail (MGR) sector. On the other hand, the level of competitiveness of the local food and drink manufacturing industry, already suffering due to high production costs, a lack of government subsidy and the increased competition from large foreign players, will need to be addressed if domestic firms are to survive independently in the coming years. Some of them have already increased their export activities, as well as foreign purchases in an attempt to prepare for the increased competitiveness of the local market.

In terms of market structure, a relatively difficult economic situation and a low level of private-sector share of GDP over the short term will continue to provide substantial opportunities for discount outlets, which will remain a threat to the position of supermarkets as key retail outlets in the country. In other sectors, a longer-term decline of agriculture as an industrial area is virtually inevitable, despite some financial assistance from development agencies, and despite announced attempts by local sugar refineries to join forces in order to combat EU-imposed production quotas.

In the latest BMI Business Environment Ranking, Croatia dropped from 11th to 12th place, behind Poland, and ahead of only Slovakia and the Ukraine. A modestly favourable economic outlook, depressed by high and unemployment and lower growth rates than its regional counterparts, remain the key factors for the country’s low ranking, in addition to the fact that the value of the tobacco market will continue to fall under attack from the government as much as the activities of the anti-smoking lobby. The situation will persist, despite the opportunities likely to be realised in the run-up to the EU membership.

The major event in the Croatian MGR sector in the last few months was the opening of the first Lidl stores in the country. The German discounter will aim to capitalise on the relatively modest purchasing power of the Croatian consumer, which has led to the development of price-conscious shopping habits, but also of a highly competitive and consolidating market as well as export-oriented strategies of leading local firms. In the food and drinks sector, Carlsberg secured rights to distribute the Budvar beer in Croatia and Finland, on behalf of Czech brewer Budejovicky Budvar, which will strengthen its premium beer portfolio in Croatia. The company has indicated its commitment to the regional market by the recent formation of a new unit responsible for its activities in Serbia, Croatia and Bulgaria. Consolidation is also evident in the drinks sector, with the recent purchase of Eurobev by Badel 1862.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Central And Eastern Europe Business Environment Rankings

SWOT Analysis

Croatia Food & Drink Industry SWOT

Croatia Political SWOT

Croatia Economic SWOT

Croatia Business Environment SWOT

Macroeconomic Outlook

Table: Croatia – Economic Activity

Chapter 2 – Retail

Plenty Of Potential For Private Labels In CEE

Does The UK Represent The Future Of Private Labels In CEE?

Small But Growing Market In CEE

Table: PL market share within overall food and drink retail sales, 2006, selected CEE countries

Industry Forecast Scenario

Table: Croatia MGR Value Sales by Format – Historical Data & Forecasts

Company Developments

Market Overview – Croatia

Table: Structure Of The MGR Sector By Number Of Outlets

Table: Structure Of The MGR Market By Value (US$mn)

Table: Estimated Value Of Sales Per Outlet 2005

Chapter 3 – Food & Drink

CEE Food Focus: Fittest 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

Food

Table: Croatia Food Consumption Indicators - Historical Data & Forecasts

Drinks

Table: Croatia Beverage Sectors Value/Volume Sales – Historical Data & Forecasts

Company Developments

Market Overview – Croatia

Table: Sectoral Trade Indicators: Export, Import And Balance Value – Historical Data And Forecasts

Chapter 4 – Tobacco

Industry Forecast Scenario

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players: Croatia’s MGR Sector (2005)

Table: Key Players – Croatia’s Food & Drink Sector (2005)

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

Table: Diageo: Distribution in the CEE

Groupe Danone – CEE Case Study

Groupe Danone – The Figures

Table: Key figures by Business Line

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

Metro – CEE Case Study

Table: Metro’s Presence in CEE

Table: Development of group sales and divisional sales as well as regional sales

Company Analysis

Adriatic Distillers

SPAR Austria

Podravka

Agrokor

Konzum

Mercator-H

Lura

Getro

Adris Group (TDR)

Schwarz Group – Lidl

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: