The Hungarian food economy after the EU accession Dr. György Raskó IAMA Forum& Symposium, Budapest, June 20 23, 2009.
The Hungarian food industry is the loser of the regime change and the EU accession Volumen index: % Name Period Production Inland realization Export Base year 1990 100,0 100,0 100,0 Periods of change Years of privatization 1991 1996 8,6 7,6 2,6 Years following the EU accession 2004 2008 16,9 24,3 4,8 Last year of periods 2008 76,1 69,6 109,4 Forrás: Zsuzsa Folláth, ÉFOSZ, 2009
External trade of processed food in million s 2003 Export Import Balance Food economy in total 2 855 1 494 1 360 Out of total: processed food 2 134 1 187 947 Percentage of food industry products in % 74,8 79,4 2008 Food economy in total 5 735 3 820 1 915 Out of total: processed food 3 264 2 990 274 Percentage of food industry products in % 57,0 78,2 Source: AKI, Budapest
The share of the Hungarian food economy from the Hungarian food market Source: ÉFOSZ, Budapest
Changes after the EU accession Sharp competitive market immediately, instead of the former, wellprotected inland market Overflow of food products that are cheaper than Hungarian ones but often of low quality Continuous reduction of production and loss of inland market share in almost all branches The import of processed food rose with a boom, while export grew only in modest amounts The import of agricultural raw materials tripled in five years (2003: 721mEURs, 2008: 2471mEURs) Loss of position with relation to raw material growers and retail trade (the double press)
Trade chains relations Retail chains in advantage (rapid decline of independent small shops, enter of the big discount chains (Lidl, Aldi) Net selling price below cost level Global purchasing (procurement companies) CBACOOP,Tesco,METSPA(turnover: 2.0 2.5 bneuro/year) Common action against them is punished with cartel charges by Office of Competition. Grey trade flourishes Sales of surplus supplies became permanent Private Labels underplay branded products Refunds (back bonuses) without service (30% and above, in spite of the code of good practice) Late payment and arbitrary reductions by the chains. Pressure for implicit deals (delisting threats) Creation, than refusal of the Food Code by the Office of Competition
The food industry and the current economic and financial crisis Demand for the processed branded products is decreasing The loan capacity of banks is minimal also in the case of good clients Meat, poultry, milk and canned food industry in the verge of bankruptcy Government initiatives (human resource retention, government guarantee for bank loans) are insufficient The main problem: Loans are irrationally expensive (15 18% interest / year), that a responsible food company will not accept if it has long term prospects Lack of capital and excessive indebtedness a straight way towards bankruptcy
Possible ways to restore competitiveness A significant reduction of taxes and other state charges is a prerequisite for staying alive (currently: over 50%) Capital investment and inside reorganization at the Hungarian food companies is inevitable The companies have to discover their efficiency reserves New management techniques have to be applied: Switch to a more market oriented production Professional marketing activity Cost efficient production Conscious brand name management Conscious PL strategy: the manufacturers have created their own highquality competitors under the egis of capacity efficiency. In the future they should distinguish the PL products and their branded products in product features as well.
The European retail structure In % of sales GB 13% 4% 11% 20% 22% 23% 25% 21% 23% 56% 53% F P 21% 19% 15% 43% 24% 24% 32% 27% 27% 24% 39% 33% 33% 11% 18% 20% 39% 32% 27% 22% 46% 43% 33% 33% 27% 26% 23% 21% 20% 18% 16% 14% 14% E SF D 13% I 30% Hipermarketek Kis Szupermarketek+Diszkontok 13% S CH 24% 15% 29% Dk Gr B 7% Ire 32% A 17% 24% 8% 59% 51% 46% 14% 20% 42% 7% 9% 5% 4% N NL 61% 15% 18% POL HUN 44% 35% 48% 20% 27% 18% 6% 5% 4% 31% 33% 30% CZ SK Nagy Szupermarketek+Diszkontok Hagyományos Kereskedelem+Vegyiáru üzletek *A teljes auditált eladási érték részesedés és üzlet-méret megoszlás alapján (dohányáru nélkül)
The Central European Retail Structure In% of sales 4% 5% 4% 5% 5% 5% 5% 4% 4% 4% 10% 11% 10% 9% 9% 9% 8% 7% 6% 5% 51% 51% 45% 41% 39% 66% 65% 64% 60% 57% 34% 32% 30% 29% 27% 59% 59% 54% 50% 45% 24% 26% 25% 27% 25% 22% 13% 15% 16% 19% 32% 31% 31% 31% 31% 19% 19% 17% 20% 26% 30% 31% 15% 16% 17% 17% 18% 24% 26% 28% 31% 33% 31% 33% 40% 26% 30% 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Hipermarketek (2500 m2 felett) Szupermarketek és diszkontok (400-2500 m2) Hagyományos kereskedelem (400 m2 alatt) Vegyiáru üzletek *A teljes auditált eladási érték részesedés és üzlet-méret megoszlás alapján (dohányáru nélkül) A hipermarketekre vonatkozó szlovák adatok 2001-2003-ig tartalmaznak minden 400 nm feletti üzletet.
Number of stores in Hungary Teljes boltszám 30 000 25 000 20 000 (28,069) (27,926) (27,389) (28,002) (27,022) (25,997) 35 45 56 64 673 671 910 713 708 903 860 855 77 879 6 282 6 276 6 533 6 888 6 936 92 753 851 6 914 814 15 000 10 000 17 736 17 572 16 900 16 276 15 310 14 415 5 000 0 2 435 2 448 2 448 3 211 3 067 2 911 2000 2001 2002 2003 2004 2005 Vegyiáru üzletek Kis élelmiszerüzletek (-50) Közepes élelmiszerüzletek (51-200) Nagy élelmiszerüzletek (201-400) Szupermarketek (401-2500) Hipermarketek (2501+) Forrás: ACNielsen Retail Audit
Number of stores in the Czech Republic Teljes boltszám 30 000 (23,891) (25,224) (23,935) (22,892) (21,923) (20,914) 25 000 20 000 15 000 68 3 045 5 254 900 110 2 753 5 420 953 133 2 589 5 339 993 151 2 511 4 843 1 013 164 2 571 4 577 962 195 1 125 2 537 4 450 10 000 10 662 12 319 11 310 11 015 10 423 9 774 5 000 0 3 962 3 669 3 571 3 359 3 226 2 833 2000 2001 2002 2003 2004 2005 Vegyiáru üzletek Kis élelmiszerüzletek (-50) Közepes élelmiszerüzletek (51-200) Nagy élelmiszerüzletek (201-400) Szupermarketek (401-2500) Hipermarketek (2501+) Forrás: ACNielsen Retail Audit
Number of stores in Slovakia Teljes boltszám (13,986) (15,531) (14,579) (14,034) (13,467) (13,088) 18 000 16 000 14 000 12 000 10 000 1 351 2 909 19 1 551 3 208 201 46 1 499 3 031 230 55 213 71 1 456 1 432 2 829 2 374 233 86 1 372 2 325 290 8 000 6 000 7 745 8 585 7 992 7 590 7 502 7 222 4 000 2 000 0 1 981 1 967 1 781 1 891 1 855 1 793 2000 2001 2002 2003 2004 2005 Vegyiáru üzletek Kis élelmiszerüzletek (-50) Közepes élelmiszerüzletek (51-200) Nagy élelmiszerüzletek (201-400) Szupermarketek (401-2500) Hipermarketek (2501+) Forrás: ACNielsen Retail Audit
Number of stores in Poland Teljes boltszám 140 000 120 000 100 000 (114,645) (117,791) (119,536) (123,244) (122,295) (122,828) 184 2 253 193 213 108 123 159 2 554 2 743 5 464 5 233 5 021 4 796 1 692 5 332 1 830 5 512 2 032 29 083 30 307 30 205 31 368 31 800 31 924 80 000 60 000 40 000 68 980 69 998 71 426 74 383 73 230 73 720 20 000 0 9 986 10 201 10 202 9 614 9 285 9 207 2000 2001 2002 2003 2004 2005 Vegyiáru üzletek Kis élelmiszerüzletek (-50) Közepes élelmiszerüzletek (51-200) Nagy élelmiszerüzletek (201-400) Szupermarketek (401-2500) Hipermarketek (2501+) Forrás: ACNielsen Retail Audit
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