International Supermarket News

In the ratings for the major markets of Central and Eastern Europe (CEE), Bulgaria remained second-last, out of the 15 countries in the survey. The rapidly deteriorating economic outlook is the key factor responsible for Bulgaria’s low ranking, even though other markets have

suffered a fall in their scores, due to the tightening of consumer spending levels. Investment in Bulgaria will continue to be at a disadvantage by modest and falling population numbers, low food and drinks prices, as well as by currency depreciation expected over the medium term. The all the above factors, as well as the structural decline of the country’s population, will keep

Bulgaria among the bottom half of the table in the coming months. Even though we forecast 8.35% growth in it's food and drink expenditure through to 2014, as measured in local currency. However, in US dollars, the 2009-2014 growth will actually be in the negative territory (falling by 13.1%), as the local currency depreciates. Having decreased in value by 0.14% year-on-year as measured in local currency, food consumption was estimated to be worth BGN6.86bn (US$4.98bn) in 2009.

While overall food consumption values will clearly suffer, the challenging economic situation is providing considerable expansion opportunities for discount operators. In fact, in early 2010 German discount retailer Lidl, though currently not present in the country, was linked with the purchase of the Plus retail chain, owned by a compatriot mass grocery retail (MGR) operator Tengelmann. Lidl is part of larger Germany-based Schwarz group, owner of Kaufland which already has a presence in Bulgaria through the nascent hypermarket format.

Similarly, capitalising on the rising demand for discounted products, another German MGR player, Rewe, recently launched it's first Penny Markt discount store in Bulgaria.Total investment into the country over the 2010-2014 period is reported to be as much as EUR250mn, with Rewe planning to open between 20 and 30 Bulgaria stores in the course of 2010 and targeting the total of 100 Penny stores in the longer term.

In regards to key food and drink industry news, the local unit of the US food conglomerate, Kraft Foods Bulgaria was recently reported to be intent on establishing itself as the company's Balkan region manufacturing hub. Previously, in 2009 Kraft poured BGN40mn (EUR20mn) into increasing chocolate production capacity at it's Bulgarian unit in what was its largest investment into the South East Europe region. Although most of the firm's capital expenditure will continue to be devoted to the chocolate segment, Kraft also has plans to firm up coffee production in 2010, capitalising on the strength of it's Jacobs brand.