Local producers send shock waves through Western meat market
Much hype throughout the European press has focused on soaring Polish exports in the food and drink sector, as giant retailers, such as Auchan, Metro and Tesco, report plans to significantly increase internal exports from Poland. Western European players are reacting by consolidating fast. They aim, say consultants, through economies of scale, to secure themselves against being ditched by hypermarkets for more price-competitive Central European neighbors. Consequently, further foreign investment on the Polish market is now unlikely to happen in the near future, say consultants, as foreign players are preoccupied with shoring up their home defenses.
Local analysts have reportedly recommended investors check out the two biggest locally listed meat processors, ZM Duda (a family firm) and Sokołów (controlled by Finish HK Ruokatalo) over all the other top twenty firms listed on the bourse, including giants such as PKN Orlen and TP SA. Indeed, share prices for fresh meat producer ZM Duda have already risen 90 percent this year. Meanwhile, in January, Wiktor Stanisławski, director of Sokol-ex, Sokolów's export arm, predicted a 30-40 percent rise in export sales this year, bringing the worth of exports to around zł.190.6 million (40 million). Animex, the local subsidiary of U.S. Smithfield Foods, meanwhile, has reportedly noted a 45 percent growth in export sales for Q1 2004, compared to last year.
Western European firms, meanwhile, are taking defensive action. Danish Crown is incorporating UK-based Flagship Foods into its own UK subsidiary, Tulip, to create one of the UK's largest meat groups.
"In an increasingly competitive marketplace it's crucial that we are in a position to produce quality products at the best price," says Graham Roach, chief executive of Flagship Foods, according to press reports.
According to Michiel Klompenhouver, consultant at Food and Drink consultancy Rabobank International, this is just one sign among many that larger 'old' EU companies are trying to lower their prices through local acquisitions and economies of scale to secure their favor with retailers against cheaper competition from the East.
"In a world where retailers are increasingly powerful, European players are concentrating on securing their sales markets, not production," says Klompenhouver.
This is a tribute to the future potential of those few local firms which, largely thanks to foreign investors, have managed to prepare themselves to benefit so spectacularly from EU markets. However, it could mean bad news for many other domestic producers that, like Beef-san or Agros-Koszalin, didn't make it in time, and have announced desires to find a foreign investor to help them get into shape.
But then, who knows? For two years ZM Duda's website has openly declared the company's eagerness to expand on the local market; by all appearances, the company now has - or will soon have - the necessary cash. So it could be that local companies that have, until recently, been looking abroad for a leg-up into EU sales may soon find it right under their noses.
Local analysts have reportedly recommended investors check out the two biggest locally listed meat processors, ZM Duda (a family firm) and Sokołów (controlled by Finish HK Ruokatalo) over all the other top twenty firms listed on the bourse, including giants such as PKN Orlen and TP SA. Indeed, share prices for fresh meat producer ZM Duda have already risen 90 percent this year. Meanwhile, in January, Wiktor Stanisławski, director of Sokol-ex, Sokolów's export arm, predicted a 30-40 percent rise in export sales this year, bringing the worth of exports to around zł.190.6 million (40 million). Animex, the local subsidiary of U.S. Smithfield Foods, meanwhile, has reportedly noted a 45 percent growth in export sales for Q1 2004, compared to last year.
Western European firms, meanwhile, are taking defensive action. Danish Crown is incorporating UK-based Flagship Foods into its own UK subsidiary, Tulip, to create one of the UK's largest meat groups.
"In an increasingly competitive marketplace it's crucial that we are in a position to produce quality products at the best price," says Graham Roach, chief executive of Flagship Foods, according to press reports.
According to Michiel Klompenhouver, consultant at Food and Drink consultancy Rabobank International, this is just one sign among many that larger 'old' EU companies are trying to lower their prices through local acquisitions and economies of scale to secure their favor with retailers against cheaper competition from the East.
"In a world where retailers are increasingly powerful, European players are concentrating on securing their sales markets, not production," says Klompenhouver.
This is a tribute to the future potential of those few local firms which, largely thanks to foreign investors, have managed to prepare themselves to benefit so spectacularly from EU markets. However, it could mean bad news for many other domestic producers that, like Beef-san or Agros-Koszalin, didn't make it in time, and have announced desires to find a foreign investor to help them get into shape.
But then, who knows? For two years ZM Duda's website has openly declared the company's eagerness to expand on the local market; by all appearances, the company now has - or will soon have - the necessary cash. So it could be that local companies that have, until recently, been looking abroad for a leg-up into EU sales may soon find it right under their noses.
