Poland Business Analysis

Part
01
of thirteen
Part
01

White Exchange Pallets

The White Exchange pallet industry in Poland is highly polarized with limited players in the market. Profit margin is also very low in the industry and industry players are complaining about very tight regulation standards. However, the market is expected to keep growing owing to increasing demand from China and an improving European economy.

Problems with White Exchange

  • One of the major problems with regard to White Exchange pallets in Poland is that the Polish pallet market has polarized in the last decade with a limited number of market players.
  • Less than half of the white wood pallets made in Poland reach the domestic market and most are exported to Europe.
  • The White Exchange pallets industry is a low margin industry but producers are able to compete because supply is low and customers prefer to buy from licensed producers regulated by the European Union EPAL that "conducts verification and certification of production and repairs together with Bureau Veritas.
  • Another problem is that individuals can trade pallets that come in possession or of pallets that are written off as sub-standard, leading to a loss of value of over PLN200 million. Industry players are pushing for tighter control and for a more responsible system that would prohibit the trade of pallets by unlicensed individuals.
  • A big problem regarding White Exchange pallets in Poland is the cost of doing business, especially the uncertainty and fear of losses associated with doing business in the industry. For instance, companies in the industry face uncertainty on if contractors will return their pallets in good condition or if the pallets will be too badly damaged that they may need to purchase a new set of pallets to meet demand and distribution. This issue can be quite devastating and can easily lead to job losses and even the collapse of some large companies.
  • There is also concern that current standards demanded and regulated by EPAL is too high as White Exchange "pallets, despite being a simple logistic carrier, is treated as a super specialized tool whose minor damage or simple repair in accordance with applicable standards may result in its elimination from the market."
  • Other challenges facing the pallet industry that has led to an increase in prices include less wood logging due to damp forests in Europe, fewer sawmills focusing on wood pallets, and increased Chinese demand. These factors are expected to contribute to an increased demand for pallet from Poland and Europe in general.

Cost of White Exchange Pallets

  • The cost of pallets increased by 13% in 2018. The cost of a pallet in Poland is from 14 PLN (about $3.67) for pallets with dimensions of 100x73x12cm.

Department in Charge of Pallet Budget

Part
02
of thirteen
Part
02

Purchasing - Beverage Industry

Information regarding the purchasing process and decision-making in the Polish beverage market is barely available; however, we have collected some helpful insights. Consumers from Poland prefer to purchase beverages such as wine from other countries, and rather purchase beverages in bulk packaging. A high percentage of polish prefer to purchase from specialized importers.

Helpful Insight Surrounding Purchasing Processes

  • The beverage market in Poland is growing greatly across the country.
  • Poland imports beverages largely from the Netherlands, Germany, Austria, Hungary, and Ukraine. Consumers from Poland prefer to purchase beverages such as wine in other countries and "desire more wines from regions outside Poland."
  • Polish consumers claim that they often purchase beverages in bulk packaging and companies have started making the packages to "reflect consumers' expectations and needs."
  • About 62% of Poland consumers purchase beer at the grocers, 34% in off-license stores, 20% in petrol stations and about 13% in highly specialized stores.
  • Across Poland, Coffee is among the most widely consumed beverage. More than 80% of individuals claim to drink it on a regular basis.

Helpful Insights Surrounding Purchasing Decisions

  • The primary factor influencing Polish beverage purchasing habits is the price, purchasers see products with the best value to price relations and seek bargains and promotions." Polish consumers indicate that price is still the primary purchasing factor for food and beverage products in at least 75% or more of their retail food purchases"
  • A high percentage of polish prefer to purchase from "specialized importers or wholesalers importing beverages. Specialized importers have appropriate knowledge of importing requirements, such as certificates, labeling, and packaging."
  • The health and sustainability trend is so obvious in the Beverage industry, specifically soft drinks. Living a healthy lifestyle and being active is one factor that contributes to the purchase of drinks in Poland. For instance, many people are participating in diverse sports and need some form of beverage to help them stay active.

Research Strategy

There was very little information specific to the beverage industry in Poland. We first scanned industry reports, including expert analysis and consultancy white papers. While we were able to glean several interesting insights about manufacturing in Poland, logistics and transport and the wider food and beverage industry, we were unable to ravel details regarding purchasing departments in the beverage industry.

The team then switched strategy and focused on major beverage producers in Poland like Kompania Piwowarska and SABMiller to see if they give any insights regarding the purchasing process. We looked at things like their CSR reports (to see if they give any details about the purchasing process) and press releases. However, this was not fruitful in gaining insight into the beverage purchasing process in Poland.

Finally, the team decided to check the Poland government official website, including the Poland.pl, the PolGov, and more for reports or data connected to the beverage industry. Unfortunately, no insights were found.

We also extended the research to include sources that are older than two years, due to the lack in availability of recent data. Through this approach, we have been able to provide limited but helpful insights regarding the beverage purchase process in Poland.
Part
03
of thirteen
Part
03

Supply Chain - Beverage Industry

Poland has built a good infrastructure and warehouse system to support investment and innovation from the beverage industry. Already home to many multinational companies investing modern production-line facilities, this sector in Poland is predicted to grow.

Innovations

  • One report found that Poland has great potential for cold chain logistics. The country already has 10.3 million square meters in chilled warehouse, is building 640,000m2 more and is investing around $2 billion per year.
  • The country using its central location to its advantage. Improved infrastructure has seen foreign investors competing for logistics assets in the country.
  • Some companies have invested in more modern production-line facilities. The demand dropped in 2016 when subsidy payments were blocked, which prevented smaller producers from investing. However, investment has picked up again.
  • According to McKinsey, Kompania Piwowarska and SABMiller, for example, have built state-of-the-art clean room technology in their processing plants. This sort of innovation is unique and not been done in Europe before.

Costs/Inefficiencies/Delays

  • A recent report called for Poland to innovate to keep up with other parts of Europe in low-cost manufacturing. It states the country needs a shift in strategy and higher R&D spending as the economy grows and cheap wages are no longer sustainable.
  • According to McKinsey, most Polish food and beverage manufacturers think too locally. They should focus better on building an international presence.
  • As previously mentioned, subsidy issues can cause supply chain problems. When raw product producers have financial problems, it can affect investment further up the production line.
  • Logistics and transport is a major factor in the beverage supply chain in Poland. Its biggest pressures at the moment are finding skilled workers and increasing wages.
  • Additionally, survey respondents rate Poland as less than favorable when it comes to bureaucracy and formalities. For example, obtaining a building permit.

Research Strategy

Overall, there was very little information specific to the beverage industry in Poland. We first browsed industry reports, including expert analysis and consultancy white papers. While we were able to glean several interesting insights about manufacturing in Poland, logistics and transport and the wider food and beverage industry, we were unable to detail how the supply works in the beverages industry in Poland. We then changed strategies and focused on major beverage producers in Poland like Kompania Piwowarska and SABMiller to see if they gave any insights on their supply chain. We looked at things like their CSR reports (to see if they gave any details about suppliers) and press releases. However, this was not fruitful in gaining insight on the beverage supply chain in Poland. Finally, we checked more official sources like the EU or the Agencja Rynku Rolnego (Agricultural Market Agency) for reports or data connected to the beverages industry supply chain.
Part
04
of thirteen
Part
04

Pain Points - Beverage Industry

Five pain points in the beverage industry include the impending exit of the United Kingdom (UK) from the European Union (EU), as the disruption could lead to a reduction in the beverage export market in Poland. Secondly, new legislation on waste is a pain point to beverage executives, who have to abide by the single use of plastic rule and find non plastic alternatives to bottle caps. A shortage of staff and poor weather conditions are other pain points for beverage company executives.

Expected Brexit Reduces Export Market

  • The UK’s anticipated exit from the EU, commonly known as Brexit, is a cause for concern for executives at beverage companies in Poland. This is because BrexitBrexit is likely to affect Polish beverage exports to the UK. Polish exports to the UK are likely to decrease as a result of the disruption caused by Brexit, which could lead to the imposition of customs duties and introduce certification on exports from Poland.
  • A hard Brexit is more likely to lead to "trade under the World Trade Organization rules." This will lead to the imposition of tariffs on trade that takes place between Poland and the UK.
  • Tariffs will affect the 1.4 Million in agricultural & processed food that the UK imports from different countries, including Poland. From January to August 2019, Poland exports to the UK totaled €9.5 Billion.

EU Waste Management Directive

  • In 2018, the EU introduced new legislation and regulations in the waste management and use of natural resources. Regulations on the circular economy and the single use of plastic products were implemented.
  • Beverage producers in the EU, including Poland, have a big challenge of ensuring that they "permanently fix the bottle caps" and look for alternatives to the plastic material. This is to enable executives at beverage companies to comply with the EU directive that is expected to come into effect from 2024.
  • Although final EU directives are not out, many executives at beverage companies have started to look for solutions to the bottle cap now, rather than wait for the deadline.

Shortage of Staff

  • The food industry in Poland, including the beverage industry, faces a shortage of workers. The labor shortage is blamed on the big emigration of Poles to other countries after Poland joined the EU. The labor shortage is also a result of the economic boom in the country that reduced unemployment levels.
  • Demand for workers in Poland is high and the country employs workers from other countries, such as India, China, Nepal, Turkey, Morocco, and Ukraine to help solve the issue. However, Poland is not the first choice for many foreign employees.
  • There is a high competition for employees and executives in beverage companies in Poland cannot afford to lose in the fight to acquire workers in the competitive labor market. Companies are forced to pay higher wages to attract workers and this reduces the margins made by companies. It also forces prices to go up to pay for the extra costs, and affects productivity when there are inadequate numbers of workers.
  • The problem of shortage of staff is growing and it is estimated that by 2025, there will be a shortage of 1.5 million employees in Poland.

Poor Weather Conditions Due To Climate Change

  • The beverage industry in Poland, like many other food industries, is faced with the problem of bad weather conditions such as drought that affected the country in 2018 and 2019. This has led to a shortage of ingredients used in the production of beverages, such as the barley crop used to make beer, and pushed production prices up.
  • When the supply of grain is low, animals are given first priority. This often decreases the amount of barley available for brewing beer and increases prices. Research has shown that the price of beer in Poland could rise five times as a result.
  • Climate change has been blamed for the bad weather as temperatures have risen, leading to extended dry periods. It is estimated that the problem of poor weather caused by climate change will continue to affect Poland to the year 2090.

Restrictive Government Regulation

  • The final pain point faced by the beverage industry is restriction by government policies. This is especially true for beer companies. The Polish government introduced new regulations in 2018 that gave powers to commune councils to decide “the maximum limit of licenses for sales of alcoholic beverages in the commune’s territory.”
  • The government also limited the times for alcohol to between 10.00 p.m. and 6.00 a.m. This impacted the volume.


Part
05
of thirteen
Part
05

Sector Overview - Beverage Industry

Kompania Piwowarska (SAB Miller), Grupa Żywiec (Heineken), and Carlsberg are the top three players in the beer industry. Coca Cola has the largest share in Poland's soft drinks market. The size of the beer market in Poland is 37 million HL.

General

  • Poland is the largest food & beverage market in Central and Eastern Europe. The spend on food & beverages in Europe is 16% of household consumption expenditure.
  • Poland represents 43% of Eastern Europe's beverage retail unit volume and 7.5% (9462.2 million liters/ 126807.2 million liters) of EU's non-alcoholic beverage sales.

Non-Alcoholic Beverage Sales Volume & Growth (2017)

Soft Drinks
Packaged Water
Dilutables
Juice & Nectars
Total

Beer Volume Market Size & Production

  • The size of Poland's beer market by volume is 37 million HL.
  • Poland produces 42,603,000 HL of beer, of which 3,758,000 HL is exported.
  • Poland's beer market grew by 3% in 2017; however, the alcohol-free beer market grew exponentially (75%).

Number of Breweries

  • There are 250 breweries in Poland.

Market Size by Value

Key Players

Beer Market Share

  • With 35% market share, Kompania Piwowarska (SAB Miller) is the top beer company in Poland.
  • Grupa Żywiec (Heineken) had a share of 30% of Poland's beer market in 2013. As of 2018, it brewed over 11 million HL of beer in Poland. This translated to roughly 30% (11 mHL/37mHL) by volume of Poland's beer market.
  • Carlsberg has an 18% share of Poland's beer market; it the third-most selling beer in the country.
  • Off-trade market share by category of beer in Poland (Nielsen 2018 data):
    • Super Premium: Kompania Piwowarska (16%), Grupa Żywiec (39%), Carlsberg (18%)
    • Premium: Kompania Piwowarska (39%), Grupa Żywiec (48%), Carlsberg (5%)
    • Mainstream: Kompania Piwowarska (51%), Grupa Żywiec (17%), Carlsberg (20%)
    • Economy: Kompania Piwowarska (3%), Grupa Żywiec (35%), Carlsberg (28%)
  • Browar Namysłów has a 2-3% volume market share of Poland's beer market. It was acquired by Grupa Żywiec in November 2018.
  • Alcohol-free brews have a 2.7% value share and 2.2% volume share of Poland's beer market.

Soft Drinks Market Share

  • Coca-Cola HBC Polska is the only company in Poland's soft drinks market to have a double digit off-trade market share in 2019.

Distribution Channels

  • According to Nielsen, the distribution of alcoholic beverages off-trade by value was as follows in 2017:
    • Hypermarkets: 7.2%
    • Supermarkets: 11.4%
    • Discounters: 20%
    • Petrol Stations: 9.9%
    • Groceries Medium: 22.6%
    • Groceries Small: 17.5%
    • Groceries Large: 8.5%
    • Sweet Alcohol: 2.9%
  • According to Euromonitor, the channel share of off-trade soft drinks sales volume in Poland was as follows in 2015:
    • Hypermarkets: 18%
    • Supermarkets: 19%
    • Discounters: 21%
    • Grocers (mainly); off-license, liquor and confectionery stores; petrol stations; and online stores: 42%
  • Ninety-two percent of bottled water sales came from off-trade and 8% from on-trade.
  • According to Euromonitor, the channel share of off-trade bottled water sales volume in Poland was as follows in 2015:
    • Hypermarkets: 23%
    • Supermarkets: 23%
    • Discounters: 21%
    • Grocers (mainly); off-license, liquor and confectionery stores; petrol stations; and online stores: 33%
  • Ninety-five percent of bottled water sales came from off-trade and 5% from on-trade.

Research Note

Owing to the unavailability of recent data, we have provided 2015 data for the soft drinks and bottled water distribution channel share. The latest Euromonitor data is behind a paywall.
Part
06
of thirteen
Part
06

Purchasing - Dairy Industry

Information on purchasing processes and decision-making in the Polish dairy market is not publicly available. However, meaningful information on the quality management of the milk coming from suppliers and the quality standards that the purchasing department enforces were found. In the first cooperative, the actual requirements were available for suppliers from the website. The second uses the FSSC 22000 Food Safety Management System, which checks for compliance once the product is delivered. In contrast, the other uses the HACCP systems that focus on prevention rather than relying mainly on end-product testing.

Overview

  • The Polish dairy industry is organized in cooperatives by geography. This structure appears to have evolved organically over the last century.
  • The majority of commercial dairy herds are in northeastern Poland in the Mazowieckie, Podlasie, and Warminsko-Mazurskie provinces. The dairy processing industry is also concentrated in this region.

Bieluch Dairy Cooperative in CHEŁM

  • This cooperative publishes the eligibility and process for becoming a supplier on its website. It states that milk production must take place in the Bug River region.
  • Producers must produce a certificate of compliance with veterinary requirements, as well as the results from microbiological tests of milk from the previous three months.
  • The producer should support the cooperative's direct collection of raw materials.
  • Potential suppliers are encouraged to contact the purchasing department of raw material for more detailed information on cooperation conditions, raw material quality, and pricing policy.

Mlekovita Dairy

  • Mlekovita works with 15,000 dairy farmers.
  • While it does not provide specific purchasing processes and policies, the website does state that the company has been following international systems for over 20 years.
  • All production processes — from the stage of obtaining raw materials through their processing to distribution and sale — take place according to the Integrated Management System, which includes the FSSC 22000 Food Safety Management System, ISO 9001 Quality Management System and ISO 14001 Environmental Management System.
  • Because the company has been certified as in compliance with the FSSC 22000 Food Safety Management System, they most likely use the following guidelines from FSSC in communicating with the milk suppliers.
  • The company provides the requirements regarding the purchasing information so that suppliers clearly understand what criteria they must have to be considered. They also list any specific approvals that might be needed to confirm that the supplied products and services meet their requirements and any monitoring or inspections that the supplier must provide on their premises.

District Dairy Cooperative in Radomsko

  • This cooperative uses the Hazard Analysis and Critical Control Point System (HACCP) system for making purchasing decisions.
  • The HACCP system, "which is science-based and systematic, identifies specific hazards and measures for their control to ensure the safety of food. HACCP is a tool to assess hazards and establish control systems that focus on prevention rather than relying mainly on end-product testing."
  • Acquiring raw materials for their products is carried out based on implemented preliminary programs and the HACCP system based on threat analysis for pre-production stages.
  • The cooperative has met both the legal requirements and the requirements of the implemented food safety management system. It has a certificate issued for the plant in Radomsko by the Polish certification body PNG Sp. z o.o.
  • The procedures of pre-programs and HACCP system functioning in their plants in Radomsko and Nowy Targ are subject to verification and continuous improvement to strive to achieve a high quality of products and guarantee their customer's health and safety.

Research Strategy

We began our search by looking for the dairy producers of milk and yogurt in Poland. Forum Mleczarskie is the most popular online source of information on dairy processing and trade in the country. The site is read by professionals throughout the value chain from production to retail sales. As the primary provider of business to business information in the Polish dairy industry, it attracts 16,000 users per month.

From this site, we retrieved the names and URLs for the ten Polish dairy product companies that sell milk. We checked each site for any information on purchasing processes and decision-making. While there was little information on purchasing, there was information on quality management and the standards used in the supply chain that affect the purchasing processes and decisions. We provided that information in the key findings.

We also reviewed numerous articles published in the last year concerning the Polish dairy industry. All the pieces discussed the economic aspect of the dairy industry and its international markets but provided no information on purchasing habits.

Part
07
of thirteen
Part
07

Supply Chain - Dairy Industry

There are about 165 dairy processing plants in Poland, many of which are small cooperatives and independent companies. Sixty percent of dairy production is handled by 10 large processors with the remainder of the market very fragmented. Additional details on the Polish dairy industry supply chain can be found below.

Innovations Taking Place in Poland's Dairy Supply Chain

  • Tetra Pak opened a new €25 million site in Poland at the tail-end of 2019. According to the company, the site was set up to "boost cheese production solutions and help its customers meet the growing consumer demand."
  • Furthermore, the company notes that the new site would allow it to meet and double the amount of cheese it can produce. The site will also allow for extensive equipment testing.
  • Tetra Pak is currently the only company offering an end-to-end integrated solution for cheese production in Poland and the new site will offer new expertise for companies in the cheese supply chain.
  • The Polish Federation of Cattle Breeders and Dairy Farmers (PFHBiPM) launched the genotyping laboratory in 2015 focused on female cows and in turn, supports the genetic improvement of 9 breeds in Poland.
  • PFHBiPM offers services such as "herdbook, milk recording, type evaluation, genotyping and advice" to over 20,000 farmers in Poland.

How The Supply Chain Works

  • In Poland, 70% of the milk produced is done by cooperatives, while private industries account for the remaining 30%. Milk processors in Poland purchase directly from farmers. Milk is collected from farms by diary trucks; this method currently accounts for "60–100 percent of dairy milk supplies," depending on the dairy processing company.
  • Contracts, which are necessary for private dairy companies' relationship with farmers in Poland follow the Common Market Organization format and must include "specify the price, quantity, quality, length, payment terms, force majeure, conditions for acceptance and delivery." The Agricultural Market Agency is the body tasked with verifying the deliverables of a contract was executed according to the terms and specified requirements by law, but only in the case of disputes.
  • The price of milk from cooperatives is determined at the beginning of each month by the Management Board of the cooperative and is dependent on factors such as the "quality of milk delivered and the financial capacity of the cooperative." Retailers in the supply chain have "higher negotiation power when negotiating with milk processors."
  • There were 132.5 thousand commercial dairy farms in Poland as of 2015 with regional distribution concentrated in Podlaskie (18.3%) and Wielkopolskie (12%) based on the number of dairy cows.
  • The dairy industry in Poland is mostly dependent on export, with 25% of all dairy products sold to other countries. Russia was a significant part of dairy export from Russia, especially for its cheeses. However, a dairy embargo by Russia means Polish dairy exports have been significantly affected.
  • There are about 165 dairy processing plants in Poland, many of which are small cooperatives and independent companies. Sixty percent of dairy production is handled by 10 large processors with the remainder of the market very fragmented.
  • A significant proportion of milk produced in Poland is sent to places like Germany for processing. Foreign companies operating in Poland process 25% of all milk produced in the country.
  • It is expected that the dairy industry will continue to see changes and restructure. In particular, it is expected that the number of suppliers operating in the dairy industry will decrease, while the average supply size per farm will increase leading to milk production rising from 14 to 14.3 billion liters in 2020.
  • Also, "the total number of dairy processing plants is decreasing at a slow rate, while the turnover has been increasing rapidly from 2016 to 2017, "indicating a gradual concentration of the dairy processing players.

Milk-Producing Farms and Feed Suppliers

  • Farmers at milk-producing farms rarely change their feed supplier; 45% have not changed their supplier in the last 10 years despite not having a written contract with these suppliers. The average number of changes of feed suppliers in the last ten years was 1.1.
  • Farmers at milk-producing farms buy their feeds via two main channels, "a direct purchase from a feed producing company (45%) and a purchase from an intermediary operating in the animal feed sector (49%)." An additional 4% get their feeds from through the dairy processing firms they sell milk to.

Main Causes of Cost, Inefficiency, and Delay

  • Due to strong competition among milk producers in Western Europe, a lot of milk producers in Poland are turning their milk herd into suckler herd. Because of this, beef meat production rose by 66% between 2004 and 2016.
  • Across Poland, there are regional differences in economic development, specifically technical infrastructure, and this can affect cost efficiency in various regions. As such, a level of expertise in critical areas such as genetic improvement and the use of technology vary from region to region. According to a report on the Polish dairy sector, "genetic improvements alone can be a source of substantial advantage for the competitiveness of dairying," in the Wielkopolskie voivodeship region.
  • The concentration of large processing sites can also impact cost efficiency; areas with few or no large processing sites, especially within a reasonable distance to the farms are prone to cost inefficiencies. The proximity allows for milk to be processed very close to the farms thus reducing shipping and transportation costs.
  • Food losses also occur in Polish dairies with a majority of this coming at the washing processing lines. In terms of stage, the least loss was encountered during processing and customizing, however, during packaging and storage, the loss could rise to as much as 11% for products like ripened cheeses.
  • The three major causes of food losses in the Polish dairy market include the inability to reprocess, inability to turn over for feed, and expensive disposal.



Part
08
of thirteen
Part
08

Pain Points - Dairy Industry

Some pain points affecting the dairy industry in Poland include severe climatic conditions, impending Brexit, fierce competition in the dairy market, poor butter prices, and changing dairy consumer behavior. A comprehensive review of each pain point is provided below.

Severe Climatic Conditions

Impending Brexit

Fierce Competition

Poor Butter Prices

Changing Consumer Behavior

Part
09
of thirteen
Part
09

Sector Overview - Dairy Industry

Poland is currently the sixth-largest dairy producer in the EU, producing about 13,768 million liters of raw milk in 2018. There are about 175 dairy processing companies in Poland and 30 dairy product producers. Below are the requested details regarding the Polish dairy industry.

Polish Dairy Industry General Overview

Companies operating in the Polish Dairy Industry

Dairy Industry Production Value and Key Players Market Shares

  • The dairy industry in Poland generated $4.36 billion ( €3.915 billion) in 2016, $4.432 billion in 2017, $4.533 billion in 2018, and $4.618 billion in 2019.
  • Since we only established the revenues of the key players for 2016, we can calculate their market shares as follows:
    • Mlekovita: €1 billion/ €3.915 billion x 100% = 25.54%
    • Mlekpol: €0.76 billion/ €3.915 billion x 100% = 19.41%
    • Polmlek: €211 million/ €3.915 billion x 100% = 5.39%

Production Volume

Level of Vertical Integration

Part
10
of thirteen
Part
10

Purchasing - Fruits and Vegetables

Insights surrounding the purchasing process and purchasing decisions in the fresh fruit and vegetables industry in Poland include direct purchasing from growers, choosing quality despite the higher price, using fresh produce for organic food products, considering the country of origin, and considering the healthy food choices of consumers.

Insight Surrounding Purchasing Processes

1. Direct Purchasing From Growers

Insights Surrounding Purchasing Decisions

2. Purchasers Prefer Quality Despite Higher Price

  • Despite its higher price, most Poles believe that their domestically-grown produce, like apples and strawberries, are tastier than the ones from other countries. They are more likely to purchase domestically produced fruit and vegetables, even if they are slightly more expensive.
  • According to the president of the National Union of Fruit and Vegetable Producer Groups, fruits and vegetables from Poland are safer to consume and tastier because they are produced in the environment that is not polluted. This also may contribute to Poles preferring to purchase domestically-grown produce.
  • Among European Union countries, Poland has the largest production share of berries and apples at 52% and 24% respectively.

3. Importance of Using Fresh Produce for Organic Food Producing Companies

  • These companies are being motivated by young Polish consumers, for whom the healthiness of food products is more important than the sensory quality attributes of the product. A study of young Poles found that this group prefers products with higher health and nutritional values over those that have a good taste.
  • Young Poles also prefer fresh produce over dried and processed produce because they are free of sweeteners, saccharose, and chemical pulverizing agents.

4. Country of Origin

  • 68% of purchasers believe the fruit and vegetables (including apples, strawberries, cucumbers, and tomatoes) produced in Poland are tastier and healthier than produce that comes from other countries.

5. Healthy, Sustainable Food Choices

  • In a survey conducted in the central region of Poland, 51% of consumers make decisions based on how sustainably the produce is grown, as well as its health content.
  • Poland's 2018 update to the country's food-based dietary guidelines, the "Pyramid of Healthy Eating and Physical Activity" suggests that, for a sustainable consumption, fresh fruits and vegetables should be consumed as often and as much as possible. Vegetables should be chosen most often.
  • Despite these recommendations, only 58% of the Polish population consumes fresh fruit daily and only 61% consumes fresh vegetables daily.
Part
11
of thirteen
Part
11

Supply Chain - Fruits and Vegetables

Insights surrounding the supply chain in the fruits and vegetable industry in Poland are delay in fruits production, decrease in harvest due to drought, the growing energy costs, the use of "purposeful packaging," and SmartTraxx Technology as a major tool for Polish fruit suppliers.

Delay in Fruits Production

  • Labor shortage causes some delays and difficulties in harvesting fruits in Poland.
  • The demand for fruits regularly lagged behind the supply, causing a drop in prices. The actual fruit yields from trees as well as bushes are probably even higher than recorded since, in some cases, it was decided not to harvest the fruits as the costs did not outweigh their sales price.
  • Polish summer fruits growers are concerned about how they are going to reap all their fruits before it is too late due to workers going to more profitable countries such as Germany and the Netherlands.
  • According to Andrzej Gajowniczek, chairman of the union of processors of fruits and vegetables, it is estimated that 30-40% of strawberries this season will end up rotting in the fields after lack of workers from the eastern borders.
  • The labor issue delayed the strawberry harvest, and growers need to pay the workers more money than usual, but there is inadequate labor.

Decrease in Harvest due to Drought

  • The vegetable market in Poland saw a decrease in harvests due to drought.
  • The 2018 vegetable harvest was 10% lower than in 2017, which was mainly be attributed to drought.
  • The vegetables mainly impacted by the drought were onions, 575,000 tonnes, 15% lower harvest than in 2017, and substantially lower than the average of 2014-2017 of 629,600 tonnes. Aside from the smaller harvest, the quality of the onions was also of lower quality.
  • In 2018, there was also a lower harvest for carrots (-12%), beets (-11%), and cabbages (-10%) as compared to 2017.
  • It is also estimated that this year's fruit harvest will be about 30% lower than in the previous year.
  • The Cherry harvest decreased the most, according to the Central Statistical Office, by 30%. At the same time, raspberry yields will be over 35% lower, and blackcurrant harvests are estimated to be 28% less than in 2018.

The Use of "Purposeful packaging."

  • The use of "purposeful packaging" that optimizes fruit & vegetable shelf-life with innovative technology was recently introduced in Poland.
  • Recently, "purposeful packaging" was conducted in Poland for its blueberry fruit. The country exports 25,000 tonnes of the berries each year, and those packed with the use of "purposeful packaging" technology stored over six weeks had reported 40% less waste than those without the packaging.

The Growing Energy Costs

SmartTraxx Technology

  • Locus Traxx Worldwide has appointed Genesis Fresh as its representative in Poland to distribute the innovative SmartTraxx™ GO product line, which provides information in real-time, regardless of how the goods are being transported.
  • According to Genesis, this will be available to Polish companies through a local distributor and will offer an innovative real-time solution never seen before in Poland.
  • The SmartTraxx technology will provide higher levels of supply chain visibility for Poland, especially that the country has a strong export trade, particularly with blueberries, apples, strawberries, raspberries, tomatoes, and peppers.
  • The innovative technology will give Polish suppliers a real competitive edge in the international market.

Part
12
of thirteen
Part
12

Pain Points - Fruits and Vegetables

According to local news and industry reports from Poland, the pain points/challenges/threats experienced by the fruits and vegetables industry include adverse weather conditions, employee deficit, rising production costs, Brexit, and rising foreign competition.

1. Adverse Weather Conditions

  • According to the BNP Paribas bank's agri-food sector analyst, Karolina Zaluska, extended droughts and spring frosts have diminished the yields of many plantations by a considerable margin. She also stated that fruit harvest in 2019 was expected to be around 30% lower than 2018.
  • In early 2019, the industry underwent unfavorable weather conditions, such as heavy rains as well as droughts. These events decimated several crops, leading to higher prices for some food items.
  • Fruit buds were not fully developed and losses were associated with spring frosts in the first half of 2019. The cold weather is also unfavorable for pollination.

2. Employee Deficit

  • The fruit and vegetable market in the country is also affected by staff shortages, particularly during the harvest of fruits and vegetables.
  • Poland is also not the priority nation for employment as neighboring regions, including Slovakia and the Czech Republic, present working conditions that are more favorable.
  • Poland is losing workers from Ukraine who were seeking long-time supplement vacancies within farming as they favor higher rates and lucrative occupations.

3. Rising Production Cost

4. Brexit

  • According to the Polish Federation of Food Producers' director general, Andrzej Gantner, the establishment of a hard Brexit could lead to more work for companies in terms of the requirement of customs clearances, certification, and customs duties.
  • Polish agri-food products exported to the United Kingdom reached EUR 2.7 billion in 2018 and with the UK withdrawing from the EU, trade will be troublesome, which may impact Poland's export market.
  • Agri-food product exports, such as fruits and vegetables, from Poland to the UK is anticipated to slow down and ultimately decrease, according to BNP Paribas Bank's director of bureau of agricultural and food sector analysis, Marta Skrzypczak.

5. Rising Foreign Competition

  • Several countries, including Turkey, China, Ukraine, Iran, and Serbia, actively compete with Poland regarding fruit production.
  • Compared to Poland, these nations also have lower production expenses, which impacts the price level presented to Polish suppliers.
  • This issue becomes a concern for fruit farmers in Poland as fruits from these nations compete in price as well as quality.
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Part
13

Sector Overview - Fruits and Vegetables

Total average volume for vegetables in Poland amounted to 4.307 million tonnes in 2018, while fruit production was estimated at around 4.59 million tonnes.

Number of Companies

  • In Poland, there were around 1,405,700 agricultural holdings in 2018, most of which are private farms numbering 1,401,800. Despite the 7% decline in the number of private farms since 2010, the overall volume of agricultural land owned by them rose by 2% over the same period.

Key Players

  • Bonduelle is one of the key players in the industry in Poland. Euromonitor also noted that private labels are the current market leaders as the Polish are known for being smart purchasers.

Production Volume

  • In 2018, the total average volume for vegetables in Poland amounted to 4.1 million tonnes, but it was about 10% lower compared to 2017's production figure of 4.58 million tonnes. Tomatoes and cucumbers were the leading vegetables produced in Poland in 2018 with a production volume of 671,000 tonnes and 311,000 tonnes respectively.
  • As for fruits, production in 2017 was considerably low, amounting to 2.7 million tonnes. The following year, production increased by 70% to reach 4.59 million tonnes.

Vertical Integration

  • Vertical integration in Poland's fruit sector is common as direct consumption of the fruit supply in the 2018/19 season was 26%, while processing of the fruit supply was 52% of the total produce. This process involves producing fruit preserves, drinking juices, Not From Concentrate (NFC) juices, and nectars.
  • The same is true in the vegetable sector as 46% of vegetable supply is processed despite 43% being directly consumed.

Distribution Channel

  • According to a market report from Euromonitor, discounters are the top distribution channel in Poland for fruits and vegetables. In Poland, they have exceptional quality for remarkably lower prices.
  • In Poland, discounters currently account for 30% of all organized retail groceries.

Additional Findings


Research Strategy:

Our research began by searching for market reports and statistics from sites such as Euromonitor, Market Watch, and Statista regarding the top players in the vegetable and fruit industry in Poland. Euromonitor mentioned Bonduelle as one of the key players, but we were unable to find five to ten additional players. Euromonitor also mentioned market shares, but the information was behind a paywall. Statista only addressed the retail sales of the fruit and vegetable industry in Poland, but it did not list the key players and their revenues.

Next, we searched for data on government sites such as Poland's Agencja Rynku Rolnego (Agricultural Market Agency) and the Export site, but there was no mention of the leading players. The latest document from Poland's Agricultural Market Agency was dated 2015, and though it included important statistics, the top companies were not included in the report.

Finally, we explored for data on the largest fruit and vegetable organizations and events in Poland, hoping to find insights regarding the key players. We searched through organizations such as Poland Fruits - Trade Cooperation Platform and TSW. We were able to see the partners and ads from companies in their reports, but they did not discuss the key players in terms of revenue or production values.
Sources
Sources

From Part 02
Quotes
  • "The beverage market in Poland The beverage market is significantly growing across Poland. The Polish market is both dominated by the main brands and widespread in various small industries at the same time, which is a remainder of its past"
  • " Poland imported beverages mainly from the Netherlands, Germany, Austria, Hungary, and Ukraine."
Quotes
  • " Polish consumers indicate that price is still the primary purchasing factor for food and beverage products in at least 75% or more of their retail food purchases"
  • "The majority of HRI operators prefer to buy from specialized importers or wholesalers importing food and beverages. Specialized importers have appropriate knowledge of importing requirements, such as certificates, labeling and packaging. "
Quotes
  • "Poles declare that increasingly often they purchase drinks in bulk packaging to have them at hand whenever necessary. 'following the buy Ahead trend, prodVcers have started gradually to adjust the packaging to reflect consumers expectations and needs."
  • "Regarding beverages, the main factor affecting Polish shopping habits is the price, one of the lowest in Europe. Consumers look for products with the best value to price relation and seek bargains and promotions, as they openly admit. However, this is just one soft drinks market trend. Other consumer and product trends include, among others, innovation, health, well-being, and localness. These are the trends that help to build a brand and launch new products."
Quotes
  • "HEALTH TREND IMPACTS THE TYPES OF SOFT DRINKS PURCHASED In 2019, the health trend was strongly evident in soft drinks. Leading a healthy lifestyle and being active, for example by taking part in different sports, is becoming increasingly popular. "
Quotes
  • " Beer consumers are highly attached to this channel: as many as 62% of them buy beer at the grocer’s and 34% buy it in off-licence stores. Beer is purchased less frequently at petrol stations (20%) or in highly specialised stores (13%). N"
Quotes
  • "They also had more global outlook as they were more likely to purchase wine in other countries and desired more wines from regions outside Poland."
Quotes
  • "Coffee is one of the most widely consumed beverages in Poland – over 80% of adult Poles claim to drink it regularly."
From Part 04
Quotes
  • "Polish-British trade is worth more than $20 billion a year. Poland’s agricultural sector might take a hit from disruption caused by Britain’s withdrawal."
Quotes
  • "... at least in the nearest-future post-Brexit scenario, trade under the World Trade Organization rules is most likely. This will result in the imposition of tariffs on trade between the UK and the EU members, including Poland. "
Quotes
  • " ... "Hard Brexit" was feared by the companies which in the case of food would mean the need for certification, the introduction of customs duties and customs clearance at the borders of Great Britain. "
Quotes
  • "Poland has taken in hundreds of thousands of Ukrainians since 2014 in what has been one of the biggest, and least noticed, European migrations in recent years."
Quotes
  • "Like for most countries, including Poland, climate change is a threat. Climate change will impact precipitation, temperatures and the amount of dry and wet periods in Poland."
Quotes
  • "Looking at the impact on price, the research found that Poland’s beer drinkers would be hardest hit in the worst-case scenario, with the cost rising almost fivefold. "
From Part 05
Quotes
  • "Two companies – Zywnosc Ekologiczna Bio Food and Symbio Polska – led organic beverages in Poland in 2018."
Quotes
  • "Multinational Coca-Cola HBC Polska continued to lead soft drinks in Poland in 2019, and maintained its value share. It was the only individual player to hold a double-digit off-trade value share in this year."
Quotes
  • "Poland is Central and Eastern Europe’s largest market for food and beverages. "
  • "Central Europe’s most populous country with domestic consumer market of nearly 40 million people. "
Quotes
  • "In 2018, Poland represented 43% of retail/off-trade unit volume"
  • "Brand share in the beer market is very fragmented in Eastern Europe. Name brands claim 81% of the market. Baltika (Carlsberg A/S) is the largest specified brand with 5.7% of total volume in 2018, and Carlsberg A/S has the largest market share by company."
Quotes
  • "The most important brand manufacturers in the Soft Drinks category are the Coca-Cola Corporation, PepsiCo, Suntory, Red Bull and Keurig Dr Pepper."
From Part 11
Quotes
  • "Recent blueberry trials were conducted in Poland, a country which exports 25,000 tons of the berry each year, according to It’s Fresh! Those packed with It’s Fresh! stored over a six-week period had a reported 40 percent less waste than those without."
Quotes
  • "The vegetable market saw a decrease in harvests due to drought, whereas the fruit sector was faced with large harvests (such as for apples and plums) with subsequent difficulties to match supply with demand resulting in low prices."
  • "Developments of the open field vegetable production differ from the production under cover. In the last 2016 census, there were 71,834 farms growing open field vegetables, and 8,122 farms growing vegetables under cover. The latter declined in number from 2005 to 2016 by 14,577 farms (64%), for all acreages. This heavy decline is attributed to growing energy costs and it being too expensive to modernize existing farms."
  • "The record production of fruits came at a price: often, due to labor shortages there were difficulties in harvesting the fruits, and the demand of fruits regularly lacked behind the supply, causing a drop in prices. "
Quotes
  • "New legislation, along with more and more Ukrainian seasonal workers going to more profitable countries such as Germany and the Netherlands, has some Polish summer fruit growers, strawberry growers in particular, concerned about how they are going to harvest all of their fruits before it is too late."
Quotes
  • "This year's weather conditions will have a significant impact on fruit harvests. Spring frosts and prolonged drought have significantly reduced yields on many plantations, says Karolina Załuska, agri-food sector analyst at the BNP Paribas bank."
From Part 12
Quotes
  • "This year's weather conditions will have a significant impact on fruit harvests. Spring frosts and prolonged drought have significantly reduced yields on many plantations, says Karolina Załuska, agri-food sector analyst at the BNP Paribas bank."
Quotes
  • "Moreover, this season there have been losses associated with spring frosts. At the same time, the coldness noted during the flowering period was unfavorable for pollination. In addition, there was insufficient rainfall. As a consequence, this year's fruit harvest will probably be clearly lower than last year - said Jakub Olipra, economist at Credit Agricole Bank Polska SA"
From Part 13
Quotes
  • "In 2018, there were 1,405,700 agricultural holdings in Poland, of which 1,401,800 are private farms. The amount of private farms declined since 2010 with 7%, however the total amount of agricultural land owned by private farms increased in the same time frame by 2%. With respect to regions, the largest average total vegetable harvest volumes in 2015-2017 were in the voivodeship Mazowieckie (14.4%), Kujawsko-pomorskie (13.4%) and Wielkopolskie (12.7%) of the total average volume of 4307.8 thousand tonnes. "
  • "In 2017, open field vegetable production managed to surpass the harvests of the previous two years, with a total harvest of 4,583.3 thousand tonnes. But in 2018 however, their harvest was 10% lower than in 2017. This can mainly be attributed to drought. The estimate for 2018 open field vegetable production is 4.1 million tonnes."
  • "On the contrary, the fruit harvest from trees was 70% more than the poor harvest from 2017, resulting from late spring frost. In 2017 the fruit harvest from trees was with 2.7 million tonnes extraordinarily low."
  • "In the years preceding 2017, harvests between 3.5 to 4.1 million tonnes were reached. The conditions preceding 2018’s harvest were very favorable for the fruit trees: there was a mild winter, no frosts in spring and the flowering was abundant."
Quotes
  • "Private label maintains its lead as Poles are smart shoppers Bonduelle maintains its position with product launches Discounters leads distribution thanks to lower prices and good quality"
Quotes
  • "TSW are the biggest Fruit and Vegetables Industry Fair in Poland. The spectacularity of Previous Edition was confirmed by high frequence - over 15 500 guests and the national character of event"
Quotes
  • "The total export value of fruit and vegetables and their preserves will increase from EUR 2.72 to 2.76 billion, and together with champignons and their preserves from EUR 3.17 to EUR 3.22 billion."
  • "The total import value of fruit, vegetables and their preserves will be reduced from EUR 3.25 to 3.11 billion, and the negative balance of foreign trade in these preserves will fall from EUR 529 to 358 million"
  • "In the 2018/19 season, the share of direct consumption in the distribution of fruit supply will be 26%, against 32% in the previous season, and in the vegetable supply it will remain at the level of 43%. "
  • "Processing will be 52% of fruit supply when compared to 48% in the 2017/18 season. With regard to vegetables, this rate will remain at the level of 46%."
Quotes
  • "Currently discounters make up almost 30% of organised grocery retail in Poland, with the channel taking the largest share of the market. With annual growth rates of almost 9%, the price oriented format has been distinctly outperforming the market by more than five percentage points over the last couple of years."