Country Profile

Poland Country Profile

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Poland Market Overview

Market Overview

Euromonitor reports that the Polish economy will continue to grow at a healthy pace in 2017. Growth will continue to exceed the European Union (EU) average. Real Gross Domestic Product (GDP) will see gains of 3% in 2017 – compared with 2.5% in 2016. With exporters struggling, domestic consumption provides most of the growth impetus. A rebound in investment and a gradual process of fiscal easing will also provide support. Unstable conditions in the Russian and Ukrainian markets are a drag on the economy. Britain’s exit from the EU or “Brexit” could also have negative spillover effects eventually. Growth of real GDP will fall over the next several years, dropping to about 2.7% in the medium term.

Real growth of private final consumption was 2.6% in 2016 while gains of 2.4% are expected in 2017. Private consumption benefits from rising employment and strong wage growth. Unemployment was 6.3% in 2016 and it will drop to 6.2% in 2017. Employment has been rising slowly but temporary employment – mainly in low-skilled jobs in services – is widespread. Private consumption should continue to be the major driver as employment and wages creep up. Rising disbursements of EU funds will also provide support.

Until recently, Poland has successfully followed the model of being a low-cost manufacturing center for Western Europe. This has proved a potent way of catching up with the west but as the economy grows and wages rise the strategy has become less sustainable. Ultimately, Warsaw must find new industries and products that will propel its economy once the advantage of cheap and skilled labor is eroded. The shift in strategy will require more spending on research and development (R&D) to improve Poland’s persistent lack of innovation.

Direct U.S. exports of agricultural products to Poland totaled US$187.9 million in 2016, a decrease 20%. Of that total amount, nearly 42% or US$79.6 million were of the consumer-oriented variety, which represented a decrease of 11% from 2015. Poland also imports U.S. processed food as well, totaling US$97.3 million in 2016, or nearly 52% of the agricultural total and a decrease of 8% from 2015. Top U.S. processed food exports in 2016 included beer and wine, distilled spirits, processed fruit, food preparations, dog and cat food, snack foods and fats and oils. It should be noted that a considerable part of U.S. food and agriculture products enters Polish market indirectly through other European points of entry.

USDA’s Office of Agricultural Affairs (OAA) hereinafter referred to as “Post” reports that primary challenges for U.S. suppliers include that U.S. products face high transportation costs as compared to many European competitors. There is also a complicated system of product registration in some cases delaying or even preventing products from entering the Polish market that are new to the EU. Poland’s EU Accession puts U.S. products at a competitive disadvantage versus EU-28 duty-free EU internally traded products. Despite rising incomes, 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. Foreign investment in the Polish food processing industry results in local production of many high-quality products that were previously imported. While the export of some U.S. goods has been encouraged by EU trade regulations, some goods, namely poultry and beef, are limited due to EU sanitary restrictions.

“All of Food Export’s programs were a tremendous help getting us export ready, understanding the challenges that come with international business, and learning how to navigate them.”

Katz Gluten Free

Food Export-Northeast Participant since 2018     

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Retail Sector

According to Euromonitor, retail sales in the packaged food market in Poland reached US$17.5 billion in 2016. That represents a growth rate of 6.4% or US$1 billion since 2012. It also makes Poland the 7th largest packaged food market in all of European Union (EU-28). By the year 2021, the retail sales in the packaged food market in Poland is expected to reach US$20.3 billion, a growth rate of 13.1% and US$2.3 billion. High growth products in the forecast include sweet biscuits snack bars and fruit snacks, dairy products, ice cream and frozen desserts, processed fruit and vegetables, sauces dressing’s condiments ready meals and breakfast cereals. 

Euromonitor reports that grocery retailers in Poland are highly saturated, with more than 135,000 outlets in operation in 2016. This constitutes about 3,500 grocery retailers per million residents. The number of grocery retailers is showing a declining tendency, as small, uncompetitive and unprofitable outlets are being closed. Disposable incomes and spending in the country are picking up, backed by rising employment, growing wages and a new social program, Family 500 Plus, which is aimed at families with children. A significant amount of the new benefit is being spent in grocery stores on food, drinks and other basic goods, driving the turnover of grocery retailers. As the most important retail channel, accounting for a 56% share of overall value sales in retailing, grocery retailers benefited from the positive consumer spending trend in Poland in 2016. 

Low price is becoming less important when choosing where to purchase. Consumers take into account the convenience of shopping (store location, suitable sales area, a wide offer, but without having to walk long distances while shopping), the availability of fresh food such as meat, fruit and vegetables, as well as attractive promotions. An increasingly wide assortment of fresh products, such as unprocessed meat, fruit and vegetables, is available in discounters, which influences the value of purchases in this channel. In turn, the number of food/drink/tobacco specialists is declining. An increasing number of butchers, greengrocers and fishmongers are being closed due to the decrease in the number of customers and lower turnover.

Hypermarkets posted a 1% increase in current value terms in 2016, up from a 1% decline in 2015. Nevertheless, hypermarkets remain a poorly performing modern grocery retail channel. The growing tendency to spend time at home and the development of various forms of entertainment mean that fewer people are inclined to spend time travelling to large outlets, usually located on the outskirts of cities. Polish consumers increasingly appreciate the convenience of shopping in mid-sized commercial establishments such as discounters, convenience stores and supermarkets. In line with this trend, the French operator Carrefour has been shifting away from large to smaller store formats. In 2015, 10 Carrefour hypermarkets were renovated and transformed into supermarkets to meet consumers’ changing lifestyles.

Smaller format stores performed well in 2016, particularly discounters, which saw the fastest growth, recording a current value increase of 9%. The strong growth of discounters was indicative of the change in strategy of these retailers, which become more focused on improving the quality of the product range and interior design. Such actions have weakened the typical image of discounters as a channel offering a narrow range of low-quality goods, and likened them to supermarkets. There are also growing sales of branded goods through discounters, including exclusive products such as top-shelf alcohol or seafood. Discounters also improved their image thanks to engaging in social activities, highlighting the local origin of the products or following popular cooking trends. In the minds of Polish consumers, discounters continue to be positioned as the cheapest sales channel.

Convenience stores saw the second best performance within grocery retailers in 2016, with 6% current value growth. The channel is subject to a consolidation trend, as small individual stores are joining large retail networks in order to survive in a competitive market. Furthermore, convenience stores are becoming increasingly popular amongst Polish consumers thanks to their long opening hours, convenient locations close to shoppers’ homes and relatively wide range of products in a fairly small sales area. Poles appreciate convenient solutions; hence the shift towards smaller stores, where shopping can be done comfortably and quickly.

Jeronimo Martins Polska remained the outstanding leader in grocery retailers in 2016, with a 20% share of retail value sales. For comparison, Lidl was second with a 7% share of sales. These leading operators dominate the discounters’ channel. Jeronimo Martins Polska runs Biedronka stores. The popularity of Biedronka can be attributed to the fact that in the minds of consumers it offers the lowest prices in the marketplace. The operator focuses on expanding its assortment of branded products and premium goods, ensuring that the chain is increasingly perceived as a supermarket rather than a discounter. A widespread chain of stores, convenient locations close to residential neighborhoods and a vast choice of both good-quality private label products and branded goods mean that Biedronka is the first choice store for many consumers when shopping for groceries.

Growth in the number of consumers who value convenience and choose to do their shopping in stores located near residential areas is developing. Since 2015, Shell, an operator of forecourt retailers, has been running a concept in the form of convenience stores, strongly displaying food products and limiting the range of fuel-oriented goods. The company wants to compete with convenience store chains, and hopes that thanks to the wide range of food products offered, it could attract more local residents. Shell, with this new concept, is expected to reach new consumers, who opt for the convenience of a quick shop near to their homes. The concept has the potential for growth in Poland; however, its development is likely to be hampered by the strong competition from convenience stores and other modern grocery retail channels.

Post adds that the majority of retail chains operating on the Polish market does not directly import and rely on local importers and wholesalers to obtain products. In this segment, the successful introduction of new products depends to large extent on local representatives, importers, and distributors.

Best Product Prospects

Post advises that consumer oriented products in the market with good growth potential include tree nuts, wine, alcoholic beverages, dried fruit, snack foods, cranberries and cranberry products. Products not present in significant quantities but which have good sales potential include high quality beef (hormone free), health food, organic food, seafood and seafood products, innovative sauces, condiments and confectionary products.

Food Service Sector

Euromonitor reports that in 2015, food service in Poland maintained its value growth, which was attributed to increasing consumer confidence, a rising inclination to dine out and the emergence of new concepts. A gradual shift from quantity to quality was visible, therefore the number of outlets declined slightly. A number of food service operators met changing customer expectations contributing to value growth.

The number of food service outlets continued to fall while consumer expenditure on eating out increased, reflecting the changes affecting the industry.Consumers do not want to eat in unattractive premises, but increasingly opt to enjoy meals in pleasant places, with knowledgeable staff. Retail locations gained more importance as they offer social and entertainment environment as well as clean conditions. Extensive development of street food was also observed as various events and outdoor food festivals attract consumers with a wide choice of dishes from around the world. Consumers increasingly choose food service offer which differs from homemade-style food; they therefore value the eating out experience.

Food service in Poland is dominated by small companies run by independent players, often family businesses. Such entities usually run one to three food service outlets. Food service chains have, therefore, a low share in terms of outlets numbers. However, more financial capital, longer experience and expertise gained from leading international companies enable chained players to strengthen their position in terms of value sales. Additionally, new international chains entered Poland or discovered its potential again after years of absence, which means that they perceive Poland as a prospective market. Large chains such as Dairy Quinn, Dunkin’ Donuts, Paul and Benihana became active in the country in 2015.

Polish consumers look for convenience and more simplicity in different areas of everyday life. The trend also extends to the dining experience. Online ordering and mobile payments for delivery orders have rapid growth in Poland. Takeaway and drive-through channels registered higher growth than eat-in in 2015 in value terms. Convenience stores fast food registered impressive 11% growth in current value in 2015, showing the dynamic development of premises operating in convenient locations and offering simple and quick snacks.

Some food service operators started to experiment with new technology, bringing new quality to the dining experience. For example, the operator of the leading McDonald’s brand chose Poland to test its Create Your Taste service, implementing it in three Warsaw outlets in 2015. The ability to make your own burger with the use of digital displays and pick from dozens of ingredients gave consumers a new dining experience. In 2015, Shell, another international player, experimented with touchscreens located by the pumps where consumers could order in-store food service items to pick up after fueling. The company tested it in a few stations in Poland.  

The interesting order solution was also implemented by The Alchemist Gastropub, an independent pub in Warsaw. The pub offers The Beer Wall which is a self-service wall with eight self-pour taps on it. The Beer Wall allows customers the ultimate self-serve beer experience as they decide how much beer they pour. Customers can use The Beer Wall with the use of a special pre-paid card which can be purchased in the pub and recharged. Although there are only a few examples of new technology applications in the process of ordering food on the premises, they show that Poland is a promising country for new solutions.

Post reports that the Polish market offers good opportunities for U.S. exporters of competitive products or ingredients with innovative characteristics.Purchasing by hotels, restaurants, and institutions (HRI) is fragmented and competitive. Companies usually do not import directly, except for items purchased in large quantities. 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.  Importers in most cases handle all shipping, customs clearance and warehousing procedures necessary to provide nationwide distribution.

Another important supplier for the HRI sector is Cash & Carry (C&C) wholesale operators. These are large stores carrying food and non-food products. They sell to smaller retailers, restaurants as well as other food service operators. C&C stores offer a variety of products at competitive prices. In order to conduct purchases at C&C stores business customers have to obtain a membership.

Food-Processing Sector

Post reports that Poland is the largest Agri-food industry producer in Central and Eastern Europe and 7th in the European Union. In 2014, over 2600 companies operated in this sector, producing goods valued at over US$64 billion. This sector is dominated by small and medium size enterprises. The most important enterprises in terms of value of sold production were meat, dairy, beverage, confectionary and baking industries as well as processed fruit and vegetables. Products from the U.S. that have good sales potential on the Polish market include: nuts, fish and seafood products, dry fruit, highly processed and functional ingredients.

Modern enterprises involved in processing of food products and the availability of domestic and imported raw material resulted in rapid development of this sector. Poland is seeing the continuously increasing consumption of processed food products and rising investments that strengthens the food processing business. The most important sectors of the food processing industry in Poland are meat, dairy, alcohol, followed by confectionery and food concentrates. Poland's EU accession in 2004 boosted exports from the food processing industry, especially within the meat and dairy sectors, mostly to the EU countries but also to new markets located in Asia. This trend is expected to continue in the coming years.

The food processing industry is developing rapidly and successfully and there is a high demand for high quality inputs. Poland’s 38 million consumers constitute the single largest market for food and beverages within the Central and Eastern Europe region. Annual disposable income in Poland continues to grow, yet constitutes just over 40% of that recorded in countries in the western part of the European Union.

During the last twenty years the Polish food industry has been restructured and privatized to a large extent. Large multinational corporations were active at the very beginning of the privatization process in Poland: Coca-Cola, Nestle, Heineken, PepsiCo, Mars, Unilever, and Danone. Over 70% of production of confectionery, over 50% of sugar, most beer manufacturing companies, meat processing plants, beverage bottling plants, fruit and vegetable processing plants are currently owned by foreign investors.

Post reports that the Polish market offers good opportunities for U.S. exporters of competitive products or food processing industry inputs with innovative characteristics. Except for large food processing companies (multinational operators), most of the food processing companies do not conduct direct imports, and so finding the appropriate trading partner (importer) is the key to successful entry into the Polish market. In depth knowledge of the market and personal contact are necessary in order to support new to market products. Appropriate marketing funds should be designated in order to promote new products. All promotional materials should be translated into the Polish language.

Poland is a part of the EU single market and customs union. International trade negotiations for all EU members are conducted by the European Commission (EC).

The structure and relative small size of the Polish food processing sector requires only a small number of traders, importers or agents for sourcing products. Only large processors will buy directly from foreign suppliers. Companies operating within the Polish food processing sector source their products through exporters located in country of product origin e.g. U.S. or through importers located in other EU Member States, mostly Germany and the Netherlands.

Large importers of food processing ingredients located in Germany, The Netherlands or the United Kingdom often work with Polish importers or wholesalers to distribute products imported by them to different food processing facilities in Poland. With large number of multinational firms operating on the Polish market a high share of production is exported to other EU countries (over 50% of Polish exports are designated for the German market). Hence U.S. food exporters have an excellent opportunity of penetrating other EU markets by attracting food processors in Poland. 

Best Product Prospects

Poland views the United States positively and U.S. products are considered to be of high quality. Product that has been imported into the EU can be transported to Poland without additional tariffs and without meeting additional regulatory requirements aside from required labeling in Polish language. Food processing and catering industries in Poland are increasingly interested in importing processed baking ingredients such as: nuts, fish and seafood products, dry fruit as well as flavors and aromas, sweeteners, food additives, food colors and enzymes.

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