Prymat spices are present in virtually every Polish home, which motivates us constantly to monitor and respond to the consumer needs. Therefore, 2019 was another year of intense marketing and sales actions as well as further portfolio development of the Prymat company. Our major activities included a broad-based brand-support campaign under the slogan “Prymat… and you want more”. It included advertising spots and sponsorship billboards on television, outdoor and radio advertising, as well as press advertisement in both consumer and industry media. Additionally, the action was implemented through digital marketing activities, during events and in outlets through appropriate POSs or sales actions. Moreover, 2019 was a year of further development and optimization of our offer. New products have appeared to complement our portfolio and to respond to the current culinary trends. The interest in homogenous spices is still noteworthy, which is why we have expanded our offer with such products as: Ramsons, Himalayan salt in a grinder, XXL grained black pepper. We are also developing the so-called sweet shelf by introducing the Prymat Coffee and Dessert Spice in a sachet and in a glass container with a dispenser. On the other hand, introduction of the Prymat Hummus Spice and Garam Masala Spice is our answer to the consumers’ interest in cuisines of the world. In parallel to the retail offer, we are developing operations in the area of catering through constant expansion of the portfolio, as well as of products for B2B, so as to remain the most desired business partner on both the Polish and the European market.
Polish Vodka Association
2019 was a year when the Polish people decidedly reached for high-end alcohol. According to data from the Nielsen report, consumers spent 6.1% more in liquor stores until the end of September than in the previous year, but this was not because they purchased more alcohol. We were buying more expensive spirits from the premium shelf. These data confirm a trend that has already been observed for some time. We are increasingly consuming vodka, gin, rum and whisky of top quality and high reputation. This trend pleases us very much, since Polish Vodka – a protected geographical indication – is, by definition, a high-quality product with a rich tradition of many centuries. Vodkas with the Polska Wódka/Polish Vodka marking on the label have to meet very stringent requirements concerning the quality and origin of the raw material: rye, wheat, barley, oats, triticale or potatoes, which has to be grown in our country, and the entire production process of Polish Vodka must take place in Poland as well. In the previous year, flavoured variants of whisky, gin or vodka also enjoyed much popularity among consumers. In the case of vodka, what we could usually find on shelves were products with an alcohol content below 37.5%, commonly known as flavoured vodkas but not actually constituting vodka in the light of the binding regulations. For the spirit industry, 2019 was also a year of preparation for the announced 3% increase of excise tax for all alcohol and its unexpected increase to 10%. Introduction of the excise tax at such a rate will surely bring problems in the operation of the industry, including its export capabilities, and cause consolidation of the grey market.
Head of Polish market
One of the most important trends on the Polish market, affecting the food industry in recent years, is the health-promoting trend. Consumers look for “clean-label” goods as well as lactose-free products and those suitable for vegetarians. Our Dziugas brand meets all of these requirements. This is why it increasingly finds its way to the basket of a consumer counting on quality and unique taste. To meet the needs of our consumers, we introduced new products under the Dziugas brand in 2019 – an exclusive line of Dziugas cheeses ripening for 60, 100, and 120 months, available at connoisseur shops, as well as Dziugas 150 g slices. Currently, Dziugas brand cheese is available on the Polish market in seven different ripening periods. We have also marketed products of such brands as PikNik, Magija, or Dobilas. Over the previous year, our products received new distinctions and awards, which strongly impacts the building of our brand’s strong image on the Polish market. In 2020, we wish to develop categories in which we have already been present, in order to become their leader. However, one of the most important challenges our company faces is the opening of the first “Dziugas House” in Poland, a house dedicated to the Dziugas cheese, but I still cannot reveal all the details.
The year of 2019 was a very intense and fruitful period for the Wawel brand. We have been active in many segments, we have carried out many campaigns and interesting projects, and our portfolio has been expanded to include many new products, such as the Królewskie Mleczko Waniliowe, delicate and fluffy marshmallows with a natural and distinct taste of vanilla. Each marshmallow has an original circular shape, covered with unique Wawel chocolate and marked with the letter “W” representing its top quality. This year, we have also received many important awards. In the “Golden Cash Receipt 2019” contest, as many as five of our products have been appreciated. We won the Golden Cash Receipt in the category of modern sales forms for the Wolność Wyboru (Freedom of Choice) concept, while Mieszanka Krakowska 280 g candy mix won in the category of packaged chocolate products. We have also received 3 distinctions: the jury appreciated the Czekolada Gorzka 70% Cocoa dark chocolate in the category of chocolate bars, Kasztanki 430 g in the category of pralines and chocolate boxes, and Żelki Jak SMOK Owocowe 100 g jellies in the category of impulse products. The food market trends in 2019 were still largely affected by the growth of consumer awareness. Increasingly more consumers searched the shelves for products with a good and short ingredient list. We strive to constantly respond to such needs by offering top-quality products, only with Good Ingredients – with no colourings, artificial aromas, E476 emulsifier. This year, as a part of the next stage of our pioneering “Good Ingredients” programme – pursuant to which we are constantly continuing the process of the improvement of products – we have obtained certification for a raw material crucial for production. We have received a UTZ certificate for the line of Premium Chocolates, guaranteeing that the cocoa used for their production comes from sustainable crops and the acquisition of the raw material has no adverse impact on the natural environment.
In 2019, we also focused on strong communication of the unique Freedom of Choice sales modules we support under the largest advertising campaign in the history of the Wawel brand. We are the leader in sales of bulk products, so in order to combine this advantage with building a module distribution, we have also concluded an international contract for sales of such products at the Cinema City chain of cinemas. Confectionery available in the “Freedom of Choice” display units adapted to the needs of cinema bars are already present at all Cinema City venues in Poland. Since September 2019, the products have been also available for purchase at cinemas in Slovakia, the Czech Republic, Bulgaria, Romania and Hungary.The year of 2019 also means new cities on the map of Poland to have been visited by our innovative Wawel Truck, a mobile confectionery zone full of interactive applications inviting people to the world of the brand and presenting its strategy. Since the onset of the project, the truck has already visited almost 50 localities, directly reaching approx. 40,000 participants, and brand events have attracted almost a million people.
PR & Marketing Services Manager
Since the very beginning, our objective has been to consistently build a stable, growing business that would operate and develop in accordance with expectations of all persons interested, including, above all, consumers and customers, owners and employees. And we have reached that objective. The brands offered by Hochland Polska are the best-known brands of the cheese market in Poland. Brand recognizability and awareness stands at the level of 83% for the Hochland brand, and 77% for Almette (Brand audit 2018, GFK Polonia). Consumers declare they associate the Hochland brand with the slogan “To jest pyszne!” [This is delicious!], with expertise in the cheese category, high quality and diversity of tastes. Consumers also associate Hochland with its products – processed cheese or sliced yellow cheese; probably, when saying “cheese”, they think “Hochland”! In the case of Almette cheese, on the other hand, consumers point out that the product is light, fluffy, delicious, delicate, natural, with a package unique on the market, which makes it efficiently stand out on the shelf. Consumers know they will never be disappointed when they reach for Hochland products. This is the number one brand in terms of the sales value, with a share of more than 10% on the cheese market in general. Our shares in the processed cheese segment exceed 50%, Almette – 66%, the share of Valbon blue cheese – 5%, and of Hochland hard cheese – 2.3% of the market (in terms of value, source: Nielsen). We are the leader in the cottage cheese category with our bestselling Almette brand. Hochland also comes first in the processed cheese category. We record an increase both in our market shares and the growth dynamics of the entire category. Our company enjoys the trust and respect of consumers, it provides an attractive offer to its customers and generates revenues on an economically difficult market, enabling investments necessary for a leader. We have a very efficient portfolio and we work on it, constantly searching for a response to the changing preferences of the Polish people. We know we will face profound and incredibly quick changes – we are getting ready and we look forward to the future. We wish to consolidate our position of a market leader who creates trends and constantly surprises the consumer with new products.
Polish Chamber of Commerce
A new parliamentary term lies ahead, so many new ideas to improve the economy will surely emerge. We hope they will be introduced deliberately and slowly, so that entrepreneurs can have enough time to comply with the regulations. Sudden changes are unfavourable to the development of business, this hinders planning of investments. In the case of Sunday trade restrictions, the situation is dynamic, since the ban has still not come into effect in its entirety. Full assessment will only be possible in late 2020. Currently, the data reaching the PCC show the following picture: shops with an area up to approx. 100 square metres, which can operate on Sundays under exemptions, do well despite the restrictions. Larger shops (usually above 100 square metres), which must stay closed on Sundays, achieve worse results than before the introduction of the restriction. On 1 November 2019, regulations establishing the electronic registry of theft perpetrators came into force. The Polish Chamber of Commerce has strived for this for many years – since as early as 2013. We hope this will become an effective tool to combat thieves who habitually steal goods with a value at which theft is not classified as a felony but as a misdemeanour. Unfortunately, the main problem is the threshold amount up to which theft remains just a misdemeanour. Such thresholds virtually mean the establishment of the profession of a thief. This is particularly onerous to small stores which cannot afford to hire professional security or install surveillance. August 2019 saw the passing of the parliamentary act on the prevention of food waste. Shops above 250 square metres are obliged to conclude an agreement with a community organization concerning free transfer of food which might otherwise be wasted. Problems are caused by the definition of stores included in the act, assuming it should apply to stores with an area exceeding 250 square metres. The Polish Chamber of Commerce called for increasing this threshold to 500 square metres, so that no additional burdens would be generated for small and medium enterprises. The parliament partially acceded to this motion, introducing a transitional period of 2 years during which stores up to 400 square metres would be exempt from this act.
Polish Organization of Commerce and Distribution
For the trade sector, the last year was dominated by the issue of the trade tax, the discussion on the Sunday trading ban, waste management, the food waste act and a wide range of other environment-related parliamentary acts. In May, the Court of Justice of the EU acceded to the Polish government’s position concerning the introduction of the trade tax, yet in late July, the European Commission lodged an appeal against the first-instance judgment of the CJEU. On 26 November, the Council of Ministers adopted a new draft amendment of the act on the tax on retail sales, assuming suspension of tax collection until 1 July of the present year. 2019 was the year of the Sunday trading ban debate in which the POCD is actively involved. In accordance with the current legal status, a total ban on Sunday trading is to come into effect from the next year – excluding 7 Sundays. The POCD has repeatedly raised the issue of amending the act which fails to fulfill its overarching purpose of employee protection and only intensifies competition – due to 32 exemptions from the act and unequal treatment. The package of ecology-related acts, imposing a range of new obligations on the industry, includes the Single Use Plastic Directive intended to limit the amount of plastic waste – through prohibition of marketing of certain products made of plastic materials, appropriate marking as well as achieving high recycling levels. The new waste management assumptions will be implemented in accordance with the definition of extended producer responsibility. EPR specifies the minimum level of financing of waste management by the implementing entities. The act on food waste prevention, having come into force on 18 September 2019, entails burdening food sellers with an obligation to conclude a contract with a non-governmental organization concerning free provision of food for social purposes. The act entails fines for traders and administrative burden, even though the trade sector only accounts for 5% of all wasted food and the largest trade chains have been cooperating with Food Banks and Caritas Poland on an everyday basis for many years.
For the ice cream industry and the entire FMCG sector, 2019 was a surprising and demanding year. Each year, weather is crucial to ice cream manufacturers, and it was very erratic in the season. However, it turned out that Polish people do not only eat ice cream during hot weather and records were broken, as every year. In June, manufacturers would experience record-breaking sales results – PPL Koral sold almost 12.5 million litres of ice cream, which is the best result in 40 years of the company’s history. To ‚weather’ this situation and to maintain high level of sales, as well as the enthusiastic attitudes of sellers, we introduced additional non-standard special actions and promotions which largely compensated for the weather fluctuations. In total, the Polish people ate 114,564,631 liters of ice cream and although this was above 5.5 million litres less than the year before, the record of sales value was broken – more than PLN 1.6 billion (PLN 1,667,729,180). Why was it possible to break another record in sales by selling less litres of ice cream? This results from the growing popularity of the premium-segment ice cream which is slightly more expensive than the traditionally chosen products of the so-called mainstream segment. Significant growth in purchases in the premium segment has been observed for several years; currently, this kind of ice cream is characterized by relatively high trade dynamics. The Poles are becoming increasingly conscious consumers, they are more and more eager to choose higher-quality, slightly more expensive products. One of the trends and an important factor in shopping decisions of the Polish people is attention to the composition of the product and the brand behind the given ice cream. Consumers are also increasingly likely to pay attention to the packaging – its aesthetic, quality and practical aspect alike. Another important fact is that the season for ice cream in Poland is slowly but steadily “flattening out”. The Poles declare they are eager to choose and eat ice cream in autumn and winter as well. This happens, among other things, due to the increasing availability of ice cream in stores – not only chain ones – throughout the year. This is why, despite the end of the summer season, the company conducted intense actions in the autumn and winter period, until the end of the year, through development of sales, particularly of family-type ice cream.
Aleksandra Kusz vel Sobczuk
Corporate Communication Manager
2019 was a difficult year for the sector and 2020 does not seem more promising. The increase in costs of business operations, comprised by such items as energy prices, labour costs or taxes, is perceptible. On the other hand, we expect a slowdown in the growth of consumption, as well as increased inflation, as heralded by the price increases already announced by other manufacturers. The growth of the chocolate category by 6.4% in terms of value in 2019 (the value of the category currently reaches almost PLN 7.4 billion*) compared with that in 2018 is an effect of higher product prices and the growing sales of brand and premium products. Apart from premiumization, another ongoing trend, not only in the chocolate category, is convenience – understood in the aspect of product formats, consumption and modes of shopping. The activities of industry representatives are also affected by higher awareness of buyers in the area of presence of specific ingredients and responsible production, as well as high expectations concerning the offer – the modern consumer is “adventurous” and looks for multisensory sensations in food. The health & wellness trend is not fading, even though, on the other hand, we can see development of so-called self-indulgence. Despite difficulties, thanks to good preparation of the entire organization, 2019 saw us rise up to the expected challenges and achieve major goals set by the owners. In the achievement of satisfactory results for the company, we are helped by such non-standard activities as presence in the ice cream category and intensification of presence on foreign markets. Aware of the obstacles, we calm down looking at an example from 2008, which has shown that consumption of confectionery has a favourable effect on mood improvement in bad periods. We also look at our operations from a broader perspective, which makes us feel partially responsible for global problems and challenges. We respond to them by developing our activities in the area of social responsibility and intensifying works on the CSR strategy.
*LOTTE Wedel citing Nielsen – Panel of retail trade, all Poland (as a sum of markets: hypermarkets, supermarkets excluding discount stores, discount stores, grocery stores (large, medium, small), wine and confectionery stores, fuel stations, kiosks); sales in terms of value between October 2018 and September 2019.
The market of soft drinks comprises a significant share in the entire shopping basket of the FMCG sector. It accounts for nearly 10% of the overall value of sales of fast-moving goods. The beverage sector is constantly developing, thanks to the current consumer trends and the generally positive economic situation. Moreover, considering the seasonal nature of beverages, favourable weather also has considerable influence. For Zbyszko Company, the year of 2019 was a very important period in which we carried out a highly ranged campaign for products of the Zbyszko 3 Owoce series, under the slogan “Let’s share our joy!” Following the keynote, we have increased the capacity of our beverages without changing the selling price – by adding 250 ml FREE. The campaign and the increased capacity were received very well by our hitherto and new consumers. Moreover, in the passing year, we worked intensely on the development of the Veroni Mineral brand, approaching the market with attractive sales-enhancement solutions. Currently, our offer of natural mineral waters in carbonated and non-carbonated variants includes the capacities of 1.5 l and 750 ml. The Veroni Mineral beverage group has increased its market availability and consumer recognition, resulting in a significant increase of its sales. Another important aspect for Zbyszko Company is the beginning of the construction of the third production plant in Piła. On a plot of land with an area of 3.6 ha, a production and storage hall will be built, along with office and social facilities, with a total area of 16,000 square metres. The factory will be equipped with three state-of-the-art technological lines. Ultimately, the plant will produce 100,000 1.5-litre bottles per hour and employ more than 100 people. The first production will start in April, with a capacity of 50,000 1.5-litre bottles per hour. In 2020, we will consistently pursue the adopted strategy of development of both the aforementioned brands and the entire Zbyszko Company.
Trade Marketing Manager of
Premium Brands, Stock Polska
The market of the alcohol sector is constantly changing – this is affected, above all, by higher awareness and openness of consumers who are constantly searching for new tastes and modes of consumption. The year 2019 on the market of spirits was unquestionably ruled by the trend of premiumization – consumers were increasingly eager to reach for spirits from a higher price segment. Of importance was not only the product quality itself but the package design. Examples include the Orkisz ultra-premium vodka from the Stock Polska portfolio, which, besides its unique production process, also stands out with an elegant bottle. In our offer, customers can also find the Stock Prestige premium vodka, now available in a limited designer edition inspired by motorsports. The search for new taste combinations is another trend highly affecting the consumers’ shopping decisions. This trend is addressed by a new product in the portfolio of Stock Polska: the Żołądkowa Kolonialna vodka in two flavours – with a Whiskey Note and with a Brandy Note – both variants enriched with an aroma of exotic spices. Furthermore, one should not forget about the growing category of brown spirits – this is connected with the aforementioned market premiumization. From this group of spirits in the offer of Stock Polska, one can mention Dubliner Irish Whiskey in two variants or the Scotch Auchentoshan, both of them enjoying much popularity. As a leading manufacturer, we follow the consumer needs and the changing market – we focus on new flavours, we develop our portfolio by including new proposals, and we introduce total revolutions to the market; this year, one of them was Lubelska Soda, a carbonated alcoholic beverage with a volume of 25%, available in two tastes – Lemon and Orange. We are constantly watching the dynamically changing market. One challenge the alcohol sector will have to face in 2020 is the announced increase of excise tax, which may translate into increased competition among alcohol producers.
President of the Management Board
We are helped by the trends of healthy nutrition and clean label, in which we actively participate through numerous educational campaigns. The products we have introduced, anticipating the needs of the market, are now dynamically gaining popularity. HELIO Natura dried fruit without preservatives are one of our hits; our offer also includes ECO products, and our masses are gluten-free, as emphasized by a certified mark, and do not contain palm oil commonly used by other producers. The absence of palm oil is also a distinguishing feature of our popcorn for microwave ovens. I would say our best new product of 2019 is the HELIO – Bakaliowe Kieszonkowe line, comprehensively responding to the consumer insight in the area of healthy snacks. Besides the product itself, providing a 100% answer to the essential need of a healthy snack – healthy, tasty, convenient and affordable – it also provides added value in the form of the well-known healthy brand of HELIO, an expert in dried fruit, as well as distinct and original packaging of stylish denim that gives a fashionable informality to the product. The passing year also meant significant investments in the production infrastructure. We see modern technology as well as the highest standards of quality and production safety as consistently built competitive advantages. It enables us to have one of the largest and most modern production plants in Europe today, thus making us a reliable manufacturer and a timely supplier. Unfortunately, apart from favourable consumption trends, we still have to take into account the key risks for the industry. In 2019, particular acute problems were the growing raw material prices, the difficult labour market, and the growing costs of transport and energy. Although the industry seems attractive and simple, I have seen many business disappointments through the years. Therefore, it is worth betting on proven partners with a transparent financial situation and stable ownership structure. Behind us is vast experience, know-how, production infrastructure, millions of zlotys’ worth of investments in the HELIO brand, and, since the onset of our operations – a stable Polish strategic owner and management board. These are the advantages we have worked out, putting ourselves in the role of a market leader and a reliable business partner.
Vice-President for Trade and Marketing
District Cooperative Dairy Plant in Łowic
2019 was a stable but difficult year for the dairy industry and it should be deemed worse than the preceding year of 2018. This has been affected by several factors. The main ones include constantly growing production costs and selling prices of fat products – butter and cream – being definitely lower than in 2018. This year’s drought was painful to the industry as well, having afflicted milk manufacturers. At many farms, it caused a slowdown in development or even a drop in milk production, as well as increased raw material production costs. Despite the unfavourable market trends, the District Cooperative Dairy Plant in Łowicz deems 2019 to be definitely a better year than 2018. This state of affairs should be credited with this year’s actions related to the assortment strategy and sales strategy. We have recorded a significant increase in the export sales of our products, resulting in the supply of our products to more than 50 countries worldwide. We are also steadily penetrating the markets on which we have managed to emerge. In 2019, exports comprised 27% of the cooperative’s entire sales revenue. This is a considerable increase in value of the export sales in relation to the previous year. The result is very good, especially that the value of exports in the dairy industry has slightly decreased in comparison with the analogous period of 2018. We have reduced the number of hitherto trade indexes and introduced market novelties fitting in with the current trends – Ser Księżak cheese in an envelope-type packaging, Jogurty z Mascarpone (mascarpone yoghurts) or Twarożek Domowy (Home Curd). In 2019, we also made a bold decision of launching a new brand “Bez Deka Mleka”, offering milk-free products to serve as a vegan alternative to traditional dairy. We have introduced 12 products under this brand; their quality and suitability for vegans are confirmed by the V-label certificate. Our boldness has been appreciated not only by thousands of consumers but by experts – we have received the Food Market Award 2019 in the Food Market Innovator category.
For the Tarczyński company, 2019 was a year of innovation and expansion of the offer in the sector of meat snacks. The company’s operations respond to the nutritional trends, changing behaviour, as well as growing requirements of conscious consumers. Another priority was consolidation of the position of key categories, which we have managed to attain. Throughout the last year, the sales of kabanos smoked sausages were maintained at a constant, double-digit level of growth, while the sales of wieners increased by several percentage points on the scale of the entire market in this category. The most important premiere of 2019 was the Naturalnie line, with products distinguished by a very short ingredients list and top-quality meat without preservatives. The line includes 100% ham wieners, ham and chicken kabanos sausages, as well as roasted ham without preservatives, which appeared on the market in October. Other new products include the Tarczyński Protein line featuring high-protein Beef Jerky and Strips, addressed to people leading an active lifestyle; these are the first functional products in the company’s offer – this sector is surely in for further development. The marketing of the new products was supported by non-standard promotional activities of the company, aimed at close relations with the customer and modern forms of product sampling. The Projekt Plaża (Beach Project) with a tour around seaside resorts and the Meatlovers Food Truck, serving hot dogs with Tarczyński Naturalnie 100% ham wieners, contributed to building a new customer experience quality. Not only could the attendees taste the new products under the brand but they could also spend their time actively and participate in different workshops as well as a relax zone. The strategy of Tarczyński S.A. for 2020 is based, among other things, on further expansion of new categories with new products and consolidation of the market position of key goods. Another important part of communication activities will be an active event presence, including the creation of own events and the adaptation thereof to individual product lines and their corresponding target groups. We can boldly say that the late-year slowdown is of no concern to us, since the first months of 2020 will bring new products and many non-standard actions.
President of the Management Board
The year of 2019 has been full of challenges for the meat sector. A major one was the lack of stability on the market of pork raw material and the dynamic increase in its prices. The unfavourable economic situation was also affected by the increase in production costs, connected with rising material prices as well as labour and energy costs. One should not forget the ASF virus still spreading in Poland, which significantly restricts the export of Polish pork. Despite numerous challenges, the Sokołów Group has achieved a very good result and improved its competitiveness, both on the Polish market and on foreign ones. Such good results were possible due to, above all, efficient management, hard work, knowledge and the involvement of our employees. Of much importance was also quick adaptation to the prevailing market conditions and utilization of our own production capacities. In 2019, we could observe dynamic changes in consumer trends. An increasingly larger share in sales is held by premium products with a so-called clean label. Following this trend, we have removed preservatives and additives from the Sokoliki children’s line of products. Another important new product this year is the Stówki wieners – made of 100% pork ham meat, without preservatives, phosphates or sodium glutamate. Active lifestyles and lack of time for everyday cooking, on the other hand, entail the development of convenience products enabling easy and quick preparation of a balanced meal, which is why we are constantly working on the expansion of our offer of ready dishes. For those searching for tasty and nutritious snacks, we have created innovative Salami Chips CHRUP’US – crispy air-dried salami slices, the first such product on the Polish market. In the year to come, I predict the unfavourable situation in the industry to be maintained. However, I believe in the potential of our employees and our stable position will allow us to rise to all challenges and to achieve satisfactory results. We will continue our intense work on introduction of innovative products compliant with the market trends and consumer expectations.
2019 was another good year for the category of cookies which has recorded a sales value increase at the level of +6% and already reached the value of PLN 2.4 billion (Nielsen, MAT September 2019). It was also a very good year for the Dr Gerard company, recording an increase of sales by above 24% in terms of value and still remains a key nationwide producer of cookies. Our flagship product, Pryncypałki, reached a record-breaking share in sales in terms of value in the category of chocolate-covered wafers, amounting to 30% in September 2019! Both the result of Pryncypałki and the consolidating position of other cult-status chocolate-covered products (such as Delicje or Jeżyki) bear witness to the premiumization of the cookie market. This year, our key new products include delicious nut-flavoured Pryncypałka in milk chocolate as well as Mafijne Brownie – double sandwich cookies with delicate chocolate cream. Premium products are also featured in our holiday offer; consumers may discover a winter variant of Pasja with a cherry-and-rum flavour, as well as classic cherry Pasja in a gift box. Like the entire industry, we are about to face challenges related to price increases of raw materials and packaging, as well as difficulties connected with workforce shortage. We constantly care for the quality of our products and their invariably delicious taste – so I have no doubts that the Poles will be even more eager to reach for Dr Gerard cookies in 2020.
The number of small-format stores up to 300 square metres is steadily dropping, yet this channel still remains a very important part of the Polish trade. Along with the diminishing number of stores, the structure of the small format is slightly changing – those falling out of the market are usually the smallest and weakest establishments which have often served as a place of purchase of alcohol, beverages and cigarettes; on the other hand, the position of large grocery stores (with an area between 101 and 300 square metres) is consolidating, as they perfectly fit in with the needs of the modern customer who values time and convenience. Due to this, although there are less and less small-format stores year-to-year, the total number of transactions is not dropping, and the sales value is growing by several percent each year. In 2019, the average basket value in small-format establishments was approx. 7% higher than the year before, which was mainly affected by the increase in food prices, observed for several weeks, and the customers’ growing inclination to reach for better-quality products and brands from higher price shelves. Among other things, premiumization can be seen in the category of beers (the importance of cheap lagers is on the wane), ice cream (the demand for more expensive brands is growing) and many others. As shown by the CMR data, neither the importance of individual product categories nor the purposes for which customers visit local establishments have significantly changed over the last 12 months. Small-format stores up to 300 square metres still remain largely a place of supplementary, impulse or emergency shopping, and the three categories of crucial importance for this format, i.e. alcohol, beverages and tobacco products, invariably account for approx. 50% of the trade. However, as shown by the CMR data, customers are increasingly inclined to search small-format stores for convenient and easy-to-use products, as well as healthy snacks (fruit mousse perfectly fits in with this trend) or lighter substitutes for traditional stimulants (non-alcoholic beers or alternative tobacco products are causing quite a stir). Each year, small-format stores experience increasing availability – and, consequently, sales – of products suitable for vegetarians, such as vegetable sandwich spreads, soy pates, hummus, tofu or plant-based milk substitutes. There is also a dynamic increase in availability, and thus in sales, of products with the BIO certificate or of lactose-free ones. The share of these categories in the total turnover of stores is negligible, yet one can expect the interest in them to steadily rise in the years to come.
Over the first ten months of 2019, the beer market shrank by 0.3% in terms of volume and grew by 3.7% in terms of value. This is a result of the interesting offer and fine weather. The increase in value indicates the premiumization of the market but also reflects the increase in costs, e.g. of raw materials, incurred by beer manufacturers. Significant interest has been maintained in the segment of non-alcoholic beers, which has recorded a large increase in volume by 58% between January and October. This is a result of several factors: a rich offer, a responsible approach and the active lifestyle of consumers. Among many projects implemented at Carlsberg Polska in 2019, we devoted much attention to reinforcement of our offer of non-alcoholic beers – new variants and flavours of the Okocim brand and Okocim shandies as well as Somersby; we have also introduced our fridges to stores under the Refreshment Zone. We continued our support to premium beer brands, such as Grimbergen and Garage. A considerable venture was the refreshment of the Harnaś brand – the new packaging, the beer and a communication platform with a plot-based TV spot were positively received by consumers. In late 2019, the beer industry was greatly surprised by the government’s decision to increase the excise tax rate by 10% – instead of the previously-announced 3%. In 2020, our industry will have to face the effects of the excise tax increase, i.e. the response of the market and consumers. It may result in higher prices for consumers, a drop in sales, uncertain budget revenues, and become a factor blocking the development of the beer category and reducing the competitiveness of Polish beer. It is worth stressing that, apart from the higher excise tax, the brewing industry is simultaneously struggling against many other serious cost challenges – e.g. significantly higher costs of labour, raw materials, energy, etc. Another important topic in 2020 for many sectors, including the brewing industry, will be the work on implementing Extended Producer Responsibility. Beer is the only sector to utilize returnable bottles. The returnable bottle deposit system, created and fully financed by beer manufacturers, is efficient – we collect between 91% and 94% of packages back from the market. We hope the currently designed EPR model will take into account these solutions which exist and work well, and provide legislative support as well as incentives for use of returnable containers. Such solutions may prompt other industries and manufacturers to utilize reusable packages, also considering the anticipated increase of costs under the EPR system.
2019 was a successful year, both for the entire spirits sector and for our company. Year-on-year, the entire sales volume of vodka grew by slightly above 2%. This is a good result, considering that as late as several years ago, after the previous excise tax increase, the sector would record several-percent drops. We are glad that CEDC has achieved new successes on such a competitive market. We still remain an unquestionable leader on the vodka market. We also consolidate our position in the dynamically developing segments of wine, whisky and other imported spirits. Our major brands: Żubrówka and Soplica among vodkas or Carlo Rossi, Grant’s, Aperol and Jagermeister in the imported offer, have recorded record-breaking sales values. We are concerned and worried with the uncertain legislative and fiscal situation. In November 2019, our entire sector was taken by surprise by the government project to raise excise tax by 10%. For many months, the draft budget for 2020 assumed a 3% increase and that was the rate we have been anticipating as most probable. We are afraid this unexpected change and a considerably higher increase of the excise tax will bring more harm than good. The situation of retailers may deteriorate, especially in small-format trade in which sales of alcohol – both spirits and beer – comprise a large portion of the turnover. The probable drop on the alcohol market can make the manufacturers invest less in market development. Reduced sales also means restrictions in purchases of raw materials (spirit, cereals, fruit or sugar), which will directly affect farmers. The greatest risk is the rise of the grey market of alcohol, since it is hard to expect that manufacturers of illegal alcohol would miss such an opportunity. The health-promoting aspect of this increase, as referenced by the government, may prove counter-productive: the Polish people will still drink as much pure alcohol per capita as before the increase, yet the development of the grey market will result in significant deterioration of its quality.
Head of Reserve Poland
The liquor market in Poland is developing in the right direction. Consumers reach for high-end products and are increasingly eager to choose whisky, gin, rum and liqueurs. Such trends were highly favourable to DIAGEO’s portfolio in 2019. This is why we have decided to introduce a range of new products in Poland, both in the premium and deluxe segments. Simultaneously with global premieres, we have presented three stages of cooperation with the creators of the “Game of Thrones” TV show. Those included collector editions of Johnnie Walker Scotch whisky: “The White Walker”, followed by “A Song of Fire” and “A Song of Ice” Johnnie Walker, as well as the “Game of Thrones” Single Malts Scotch Whisky Collection series of eight bottles. Baileys liqueur in the “Strawberry & Cream” summer series and the “Gingerbread Spiced” Captain Morgan rum could boast limited editions as well. In the vodka category, the luxury CÎROC brand introduced special series: “Watermelon”, “White Grape”, and the effect of cooperation with designer Jeremy Scott – CÎROC “Moschino”. Along with the European premiere, Poland also saw the debut of the new Villa Ascenti gin. As Polish consumers are exploring the world of alcohol, DIAGEO portfolio brands have appeared at different events, from those dedicated to specific product categories to mass events. Johnnie Walker with the House of Walkers zone attended summer-holiday music festivals, such as Orange Warsaw Festival, Open’er Festival, or Cracow Live Festival. In Poland, we also implement our own initiatives, such as the domestic edition of World Class, the most prestigious bartender competition worldwide. In 2019, for the fifth time in history, we chose the best bartender to represent our country at the world finale in Glasgow. Maciej Mazur attained the highest position ever held by a Pole in this contest and found himself among the world’s top fifteen bartending talents. Under the auspices of World Class, we organized the World Class Cocktail Festival, a nationwide feast of the cocktail culture, for the second time. With 15,000 guests, our festival became one of the greatest such events worldwide. Predictions for the market of spirits in Poland assume double-digit dynamics, allowing us to look forward with optimism to the future development of our portfolio.