www.pwc.

pl

Food Sector in
Poland –
opportunities for
India
Info pack for Indian exporters
and investors

Report
commissioned
by Embassy
of India in Poland

Zdjecie do wymiany
przyprawy

PwC 2017
Poland is one of the largest economies in the
European Union

Poland is the largest Central European country; it is also eighth until 2021, the Polish economy will continue to develop at a
in the ranking of European Union economies. The Polish rate of more than 3% per annum, which means that the
Gross National Product is half a trillion US dollars. purchasing power of Poles will increase by an additional 20%
over the next five years.
The receptive internal market is made up of more than 38
million inhabitants, whose average income and purchasing Approximately 48% of Poland consists of farmland and over
power are growing dynamically all the time. The Polish 36% of this is arable land. This makes Poland one of the best
economy is developing at a rate faster than that of most locations for the food processing industry in Europe, in terms of
European countries and it was the sole EU economy to resist the natural environment, as best confirmed by the fast pace of
the recession during the global financial crisis. According to the growth of this industry in Poland in recent years.
forecasts of the International Monetary Fund,

GDP of Poland and EU, 2010=100%

120%
110%
100%
90%
80%
70%
60%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

European Union (28 countries) Poland

Source: Eurostat

$476 billion GDP 38 million inhabitants 312 thousand square

8th in the ranking of kilometers area
European Union economies

PwC 2017 2
 Poland is also an important
player in European food
production market
The food processing industry in Poland is developing dynamically. In the past ten
years, food production in Poland has increased by more than 40%, growing
in a stable manner throughout the period.
This shows that food production in Poland is growing faster than in other European
Union countries.
The drinks market is characterized by higher fluctuations: after a period of dynamic
growth in the years 2006-2009, since 2010 it has been developing at a rate similar
to other EU countries.
In 2015 food and drink production in Poland exceeded USD 50 billion, most of which
(over USD 14 billion) comprised meat and processed meat products. Milk drinks and
products are the next largest production items.

Production index for food 130%

industries in the European
Union in 2006-2015 120%

110%

100%

90%

80%

70%

60%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Manufacture of food products European Union (28 countries)

Manufacture of beverages European Union (28 countries)
Manufacture of food products Poland
Manufacture of beverages Poland

Source: Eurostat

Production of selected
groups of food industries Meat 14.3
in Poland, 2015 (US$billion) Beverages 7.9

Dairy products 6.4

Feeds & fodders 4.0

Bakery products 3.6

Vegetables and fruits 3.3

Seafood 2.3

Grain mill products 1.8

Animal or vegetable fats 1.1

Other food products 6.3

Source: Central Statistical Office of Poland

PwC 2017 3
 Despite its strong position in
food processing, Poland is also
a high-prospect market for
potential Indian exporters
The value of Polish foodstuffs imports amounts to approximately 13 billion US dollars,
of which approximately USD 1.6 billion comprises seafood, which has the largest
share in Polish food imports. The next largest groups of imported foodstuffs are meat
and fruit with a value of USD 1.5 billion. Poland also imports large amounts of: cocoa
products, processed fruit and vegetables, animal fats and cereal products.
Over the past few years, Poland’s imports of foodstuffs have been growing
dynamically. In the years 2005–2015 they increased by approx. 200 %. This means
that Poland is a high-prospect market for potential Indian exporters.

Food manufacturing Seafood 1.6

products imported by
Meat 1.5
Poland, 2015 (US$billion)
Fruits 1.5
Cocoa and cocoa preparations 1.1
Dairy products 0.9
Preparations of vegetables and fruits 0.8
Animal or vegetable fats 0.8
Preparations of cereals 0.7
Edible vegetables 0.7
Coffee, tea and spices 0.7
Live animals 0.6
Oil seeds and oleaginous fruits 0.5
Sugars and sugar confectionery 0.4
Cereals 0.3
Other 1.1
Source: International Trade Centre

Many products which have a large share in Polish food imports are at the same time
exported by India.
India’s key export products are cereals (mainly rice) which account for 24% of Indian
foodstuffs, amount to nearly USD 29 billion. Seafood and meat are the next largest
exported items and they are at the top of the list of products imported to Poland.
Therefore, in Poland there is a significant – and growing – demand for products which
can be delivered by Indian manufacturers.

Top 10 Indian exported

Cereals 6.8
food products in 2015
Seafood 4.6
(US$billion)
Meat 4.3
Coffee, tea and spices 2.9
Oil seeds and oleaginous fruits 1.7
Fruits 1.5
Sugars and sugar confectionery 1.4
Edible vegetables 1.2
Vegetable extracts 1.1
Animal or vegetable fats 0.9
Other food products 2.2
Source: International Trade Centre

PwC 2017 4
Despite its high potential, Poland remains far
down on the list of food importers from India

In 2015 India exported foodstuffs with a value of nearly USD 29 It ranks 45th among importers of all Indian goods and 60th
billion, of which only USD 56 million was exported to Poland. among importers of Indian food. On the other hand, for Poland,
This constitutes almost 11% of total Indian exports. The largest India ranks 21st in terms of total imports and 28th in terms of
customers for Indian food are the USA and Vietnam. Poland is imports of food industry products. However, economic
a country with potential which remains untapped by Indian food exchange between India and Poland is growing rapidly.
manufacturers.

Poland and top10 Indian export partners in food industry products, 2015 (US$million)

1. United States of America 3 395

2. Viet Nam 3 287
3. Saudi Arabia 1 818
4. United Arab Emirates 1 810
5. Iran, Islamic Republic of 1 030
6. Malaysia 983
7. United Kingdom 735
8. Japan 677
9. China 674
10. Bangladesh 610
…
60. Poland 56

Source: International Trade Centre

Top 10 food exporters to Poland, 2015

Norway, $0.75 billion

Denmark, $0.68 billion

Netherlands, $1.2 billion

Belgium, $0.55 billion

France, $0.37 billion

Spain, $0.8 billion

Germany, $2.8 billion

Italy, $0.56 billion

Czech Republic, $0.35 billion

China, $0.31 billion

PwC 2017 5
 Which Indian products can
currently be found on the tables
of Polish consumers?

Only 0.2% of foodstuffs exported by India is purchased by Poland.

Therefore, it is hard to consider Indian food exports to Poland as
significant. However, these products should be treated as goods
which are clearing the path for Indian food products to the tables of
Polish consumers.
Tea, coffee and spices have the largest share among the products
currently exported from India to Poland, with pepper being the most
important spice. Next come oilseed crops, seafood and cereals
(mainly rice), vegetables and respective preserves, and extracts.
All those products already rank high in Indian exports and have no
competition among Polish crops. The customers in Poland are both
direct retail traders and other industries.
This also means that the high demand of the Polish market may be
exploited, and that processing plants and enterprises confectioning
Indian foodstuffs can be established in Poland. Products from those
plants would then have an open path to other European Union
markets.

Top 10 Indian export food

products to Poland in 2015 Coffee, tea and spices 20.8
(US$million)
Oil seeds and oleaginous fruits 10.2

Seafood 7.5

Cereals 4.1

Edible vegetables 3.7

Vegetable extracts 3.1

Fruits 3.1

Preparations of vegetables and fruits 2.3

Live trees and other plants 1.3

Preparations of meat or fish 0.1

Source: International Trade Centre

PwC 2017 6
Consumer trends in Poland

MACROECONOMIC CHANGES
The food market has not noted any drops since 2008 and is growing at a steady pace of 4%–5% per
annum.
Past events, including the 2007–2009 crisis, have created a specific sort of “smart consumer” in
Poland. This consumer is more aware of the value of purchased products and carefully approaches
the relationship between price and quality of the offered product. However, at the same time, the
average consumer in Poland is less affluent than a Western European consumer and pays more
attention to the prices of purchased goods.
Interest in buying goods in discount chains and convenience stores in Poland is growing. The largest
discount chain in Poland is “Biedronka”, belonging to the Jeronimo Martins Group. Consumers also
readily purchase goods in malls.

CHANGES IN BUYING TRENDS

Poles are increasingly making purchases over the Internet. This
means that some products may be launched relatively quickly
without the need to search for local distributors.
Customers would like to experience “Shopping Safaris” – shopping
cannot simply consist of buying, it must be related to
entertainment, a sort of hunt for a good sale and a method of
relaxing and spending leisure time. Hence, the popularity of malls.
More and more consumers in Poland are buying products with
certificates of an “ecological footprint”, “fair trade”, “sustainable
development index”, any signs of ethics on the product labels –
they want their purchases to help other people.

CHANGES IN EATING HABITS

As vegetarian and vegan food is becoming more in vogue, interest in plant proteins is growing and
the consumption of groats and leguminous plants is increasing. All types of groats and pasta from
cereals other than wheat are strongly promoted both among people who do not eat meat and those
who believe in a healthy diet.
Consumers in Poland usually chose sweet-and-sour tastes; this trend relates both to sweets, and to
spices and even beer.
Another important trend in the consumption of drinks is seeking an alternative to sweet non-
alcoholic drinks. More and more sparkling drinks with lower carbohydrates content and heavier
flavours are appearing on the market.

PwC 2017 7
Competitive landscape of Polish
food industry – main facts

Meat processing is the largest segment of the

market which accounts for nearly one third of the
total turnover (28%). Beverages, mainly beer (6%)
and spirits (4.5%) are the second largest segment.
The dairy sector has a 13% share in the market.
In the latter, apart from factories belonging
to international producers, Polish regional dairy
cooperatives also hold a strong position.

In 2014, 14,500 firms in Poland dealt with the

production of food products. More than 700 of these
were entities with turnover of more than USD 10
million per annum. The market is highly
concentrated – 5% of the largest firms account for
80% of the sales of food products.

The Polish market is open to foreign enterprises.

Alongside Polish factories, the market hosts
branches of international groups cooperating with
local sub-suppliers. In 2013, the share of firms with
foreign capital in the market turnover exceeded 40%
– at that time it corresponded to nearly USD 25
billion.

PwC 2017 8
Competitive Landscape – main market players

The list of the largest firms comprises two firms from each In recent years we have observed a drop in revenues and
of the alcoholic beverages, meat processing and cereal a gradual and slow reduction in market concentration.
processing sectors. Apart from the Sokołów and Animex
meat processing factories, the largest players on the Polish
market belong to foreign entities.

Kompania Piwowarska Animex Foods

Profile: Beer manufacturing Profile: Meat processing
Revenue: $1.3 bln in 2015 Revenue: $1.3 bln in 2014
Net profit: $223 mln in 2015 Net loss: $-o.5 mln in 2014
EBITDA: $220 mln in 2015 EBITDA: not

Cargill Poland CEDC International

Profile: Production of feed and cereals trade Profile: Production of spirits
Revenue: $1.2 bln in 2015 Revenue: $1 bln in 2014
Net profit: $11 mln in 2015 Net loss: $-0.13 mln in 2014
EBITDA: $30 mln in 2015 EBITDA: $39 mln in 2014

Sokołów Glencore Polska

Profile: Meet processing Profile: Edible and industrial oils
Revenue: $1 mln in 2014 Revenue: $0.97 bln in 2014
Net profit: $40 bln in 2014 Net profit: $9 mln in 2014
EBITDA: non available EBITDA: non available

Revenues of largest competitors on Polish food manufacturing market

2,000

1,500
US$million

1,000

500

0
2011 2012 2013 2014 2015
Kompania Piwowarska Animex Foods Cargill Poland
Cedc International Sokolow Glencore Polska
Source: EMIS

PwC 2017 9
PESTEL analysis of Polish food market
Part 1 of 3

Political Issues Trend Impact Probability Indicator*

Membership in EU, OECD and WTO

 5 1 5

Election of a conservative government

for the 2015–2019 term of office  4 1 4

One governing political party (no coalition)

 5 1 5

Experts opinion Poland is related to three organizations, the membership of which imposes a
number of unified standards. At present, Poland is governed by a conservative
party which favours local business but supports large foreign investors who create
job positions.

Economic Issues Trend Impact Probability Indicator*

Continuing economic growth for the past 23
 

years (Poland avoided recession in the years 3 0.5 1.5

2007–2009)

Annual growth in the ranking of the level

3 0.6 1.8
of economic freedom

“Digital client” – a trend in growing online

4 0.8 3.2
shopping

The 8th economy in the EU in terms of the GDP

 5 1 5

Experts opinion Poland has been frequently described as the “golden child of political
transformation”. Since 1989, Poland has undergone an economic evolution, it is
the 8th economy in the EU, it did not record a recession during the recent crisis
and has been one of the leaders in digitization among consumers. Society
continues to become richer and is seeking new, foreign products which have not
been available so far.

* Indicator is the product of Probability and Impact factors.

PwC 2017 10
PESTEL analysis of Polish food market
Part 2 of 3

Social Issues Trend Impact Probability Indicator*

 
The changing culinary trends in cities – greater
2 0.6 1.2
internationalization

The growing interest of city dwellers in Indian

3 0.6 1.8
cuisine – restaurants, food trucks, night market, etc.

A population of 38.6 million citizens with 60%

1 0.2 0.2
urbanization
“Clever consumer” trend – of careful shopping and
the careful reading of labels – ingredients and 2 0.3 0.6
place of origin of products

Experts opinion Thanks to EU membership, the communities of the largest cities in Poland
continue to internationalize. They are looking for new trends by observing other
European cities. The current trend is for new ways of becoming acquainted with
the cuisines of faraway lands – food festivals, food trucks, markets bringing in
foods and beverages from a number of faraway countries. The communities of
smaller cities tend to choose traditional local flavours and traditional Polish cuisine.

Technological Issues Trend Impact Probability Indicator*

The majority of consumers have bank accounts

and payment cards  5 1 5


The volume of mobile shopping is going up 4 0.7 2.8

The higher number of payment terminals which

stand out compared with other EU countries  4 1 4


The foodstuffs sector requires increased

4 1 4
investments

There is a need for increased innovation and the

4 1 4
consolidation of production in the sector

Experts opinion Poland is one of the global leaders in adapting digital solutions, one of the first
countries where pay-pass transactions and payments using smartphones were
introduced. However, the technological solutions of the foodstuffs sector itself
require increased capital outlays and innovation. This involves a deterioration in
the relative competitive position of the sector but at the same time provides an
opportunity for investors who are ready to implement innovative solutions.

* Indicator is the product of Probability and Impact factors.

PwC 2017 11
PESTEL analysis of Polish food market
Part 3 of 3

Environmental Issues Trend Impact Probability Indicator*

Environmental requirements of the EU

 3 1 3


Increasing ecological effectiveness 2 0.8 1.6

Signed Kyoto Protocol

 3 1 3

Increasing afforestation of the country

 1 0.2 0.2

Small water resources (need to manage
4 1 4
the resources rationally)

Experts opinion As a result of signing the Kyoto Protocol and acceding to the EU, Poland is subject
to restrictive environmental objectives. Despite the good condition of the natural
environment and growing afforestation of the country (which translates into the
quality of the air), the country’s small water resources are a challenge.

Legal Issues Trend Impact Probability Indicator*

Imports of food, apart from rare GMO exceptions,


are not banned. Possible future restrictions 5 1 5

concerning cultivation of GMO varieties.

VAT and excise duty on imports of foodstuffs –

rates depend on changes in EU regulations.  4 0.7 2.8


Imports of foods having certificates acceptable in
the EU. Product quality is monitored by the Polish 4 1 4
administrative authorities.
 

Direct subsidies for entities conducting

4 1 4
agricultural activities in the territory of Poland.

Special economic zones for supporting innovative

agriculture and agricultural and foodstuffs 4 1 4
processing.

Experts opinion EU membership supports food production and commercial exchange in legal
terms. It also provides a guarantee of the law being unified with that of the
remaining Member States.

* Indicator is the product of Probability and Impact factors.

PwC 2017 12
PESTEL

The most important information about Poland - summary

The relatively stable political situation A country of innovations in payment

in the country, additionally supported transactions and readily adapting to new
by the joint EU policy. solutions, requiring technological support
for the foodstuffs sector.

Good economic situation of the High environmental standards combined

country and stable economic growth. with limited water resources.

The increasingly cosmopolitan society Supportive legal environment unified with

of Polish cities is looking for new the remaining EU Member States.
trends from faraway lands.

Experts opinion Poland is a country with a relatively stable political situation. This is mainly due to
its membership in the European Union – membership requires standards and
ensures proper regulation, as any failure to comply with the objectives set by the
European Commission (which hosts all the Member States) results in financial
penalties. Membership in the EU has changed social trends. People from large
cities are more likely to reach for products which had hitherto been unknown to
them and are also fascinated with Indian cuisine. A country of stable and
continuous economic growth which easily adapts technological innovations – has
been one of the leaders in adapting digital solutions. The technological enrichment
and modernization of the food production industry is a challenge. The quality of the
natural environment in Poland is certainly an advantage – but one should keep in
mind the limited water resources, which is particularly important in the industry.
The social openness of large cities in association with a supportive legal
environment places Poland in the position of a good investment location.

PwC 2017 13
Segments of food processing industry in Poland
with significant role of local producers and
technologies (1/3)
Production 2015
(US$billion)

Meat 14.3

Processed meat (excl. Poultry) 5.4

Processed poultry 3.9

POLISH PRODUCERS
Cedrob Indykpol ZM Henryk Kania WIPASZ
(giblets, poultry meat) (poultry meat) (pork, sausages) (fodder, beef cattle)

Production 2015
(US$billion)

Dairy products 6.4

Milk and cream 1.3

Cheese 2.3

Butter 0.6

Milk powder 0.5

Yoghurts 0.7

POLISH PRODUCERS
MLEKOVITA OSM Łowicz Polmlek
(milk products, cheeses) (milk products, cheeses, desserts) (milk products, cheeses, desserts)

SM MLEKPOL OSM Piątnica Bakoma

(milk products, cheeses) (milk products, cheeses) (milk products, cheeses, desserts)
Source: Eurostat, Central Statistical Office of Poland

PwC 2017 14
Segments of food processing industry in Poland
with significant role of local producers and
technologies (2/3)
Production 2015
(US$billion)

Beverages 7.9

Beer 3

Spirits 2.3

Non-alcohol beverages 2.25

POLISH PRODUCERS
ZP Glubczyce Sulimar Browar Jabłonowo
(beers) (beers, Energy drinks) (beers)
PWW Polmos Debowa Polska AKWAWIT
(vodkas) (wines, spirits) (vodkas)

Maspex FoodCare
(juices, preserves) (Energy drinks, beverages)

Production 2015
(US$billion)

Processed vegetables and fruits 3.3

Dried and frozen vegetables 0.5

Fruit and vegetables juices 0.8

Dried and frozen fruits 0.5

POLISH PRODUCERS
HORTEX Unifreeze IGLOTEX PAMAPOL
(frozen vegetables) (frozen vegetables) (frozen meals) (pickles, meals)

MAKOW Marwit Victoria Cymes

(fruits, vegetables, juices) (vegetables, juices) (syrups, juices)
Source: Eurostat, Central Statistical Office of Poland

PwC 2017 15
Segments of food processing industry in Poland
with significant role of local producers and
technologies (3/3)
Production 2015
(US$billion)

Miscellaneous

Chocolate 0.55

Sweets 1.1

Bakery products 3.6

POLISH PRODUCERS
Colian ZPC SKAWA Barbara Luijckx
(sweets, candies) (cookies, sweets) (peanut butter, sweets)

ZPC Baltyk PSS Jaskolka

(sweets, candies) (pastries, cakes)

Opportunities for India

(Prepared in consultation with Embassy of India in Poland)

1.Vegetables: According to the Central Institute of Post Harvest Engineering Technology, Punjab, every year,
around 18% of fruits or vegetables, valued at around US$6 billion are wasted in India due to insufficient food
storage and processing facilities. Given Polish competence in food storage/processing facilities, Indian
companies could benefit from technology transfer from Polish companies which are established in the food
processing Industry.

2.Fruit: Indian food processing companies could consider tie ups with Polish companies for technologies to
establish manufacturing units in lndia's Mega food parks, which could produce apple/citrus products such as
juice, jams, pies, etc. Polish apples will have a high market potential in India. Similarly, some exotic fruit could
be exported to Poland.

3.Dairy products: Poland is also one of the leading producers of dairy products in Europe and the local market
is dominated by companies catering mainly to local tastes and demands. Some of the specialized technologies
used in the Polish dairy Industry could be availed of by Indian companies through technology transfer
agreements. The increasingly discerning shopper in India is likely to appreciate the distinct taste of Polish dairy
products, mainly cheese, yogurt and butter.

4.Meat: Polish companies are among the European leaders in production of meat, and poultry in particular. The
share of Polish meat exporters trade within EU is close to 10%. Given lndia's strong meat and meat export
industry; and growing urban middle class, which is increasingly consuming poultry products, Indian companies
could explore joint ventures with Polish companies for establishing poultry products manufacturing plants in
lndia's Mega Food Parks.

Source: Eurostat, Central Statistical Office of Poland, EMIS

PwC 2017 16
5.Vodka/Alcoholic drinks: Poland is the European Union's largest and the world's fourth largest producer of
Vodka. However, beer is the major alcoholic drink produced locally. Earlier investments in Poland in the
Vodka/beer sector by multinational companies resulted in high know-how inflow from abroad and huge
investments in production and R&D facilities which are now considered to be one of the most advanced in
Europe. Given
the exotic varieties of Vodka produced in Poland (including 'Potato' vodka), Indian companies could consider
cooperation with Polish companies that could help produce local variants of Vodka in India, to tap into its huge
alcoholic drinks market.

6.Bio Products: Since Polish consumers are becoming increasingly conscious of environmentally friendly
agriculture methods and are tilting towards vegetarianism, export of 'bio', vegetarian products from India is
another area of opportunity for Indian exporters. Also ayurvedic and other natural food supplements could be
manufactured in Poland and exported to all of Europe.

7.Cooperation amongst States: Cooperation agreements between agriculturally rich and diverse regions of
both countries is resulting in increased interest in the potential of food processing opportunities being presented.
The State to State partnership between the Lublin region of Poland and lndia's 'green revolution' mascot, Punjab
presents opportunities for Indian companies for sharing of information, technologies and developments of mutual
interest with their Polish counterparts.

8.Exchange of delegations: During recent years, there has been a spurt in the exchange of business
delegations between both countries, the most recent being the high level government and business delegation
led by Poland to the Vibrant Gujarat Summit 2017 in India, where Poland was a partner country. The business
delegation included major food processing companies of Poland, such as Bakoma, which signed an agreement
with lndia's Amul. Indian companies could consider more active participation in such delegations and business
events, to explore opportunities for joint ventures with Polish companies.

9.Trade Fairs: Indian participation at top Food & Agriculture Trade Fairs in Poland, such as Polagara could be a
fertile avenue for Indian exporters and investors to meet and interact with Polish companies interested in Indian
products and investment.

10. Export Promotion Councils: Given that the Polish imports of food products is around US $ 13 billion and
Indian food exports to Poland presently stand at only about US $ 56 million, the various Indian Export Promotion
Councils such as Tea Board, Coffee Board, Spices Board, etc. could seek to raise lndia's share in this almost
untapped market, by engaging more actively with their counterparts in Poland.

PwC 2017 17
PwC 2017 18
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