major trends in the bulgarian fmcg...

& THEIR DRIVERS

ANGELOS GEORGIOU & NIELSEN BULGARIA TEAM

SANDANSKI, 28 MAY 2015

MAJOR TRENDS IN THE BULGARIAN FMCG MARKET

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

2

LIST OF CONTENTS

• Section 1: Macro environment & Consumer behaviour.

• Section 2: The Bulgarian FMCG market: Topline performance & Key category movements.

• Section 3: Looking Ahead: How to grow in a challenging market.

MACRO ENVIRONMENT & CONSUMER BEHAVIOUR

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

4

12,2 11,2 10,211,4

12,9 12,3 11,5 12,413,8 12,9 12,0 13,0 13,0

11,4 10,8 10,6

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Unemployment rate (%)

Source: National Statistical Institute

UNEMPLOYMENT AT ITS LOWEST LEVEL SINCE Q3, 2011.

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

5

CONSUMER PRICES AT 2011 LEVELS WHILE IN THE SAME PERIOD SALARIES HAVE INCREASED BY 14,5%.

103,43 109,72122,42

131,22 133,37 139,30 142,15 146,08 144,83 141,99

347 392480

590643

698755 786

846 865

01002003004005006007008009001 000

0

20

40

60

80

100

120

140

160

Dec

2005

Dec

2006

Dec

2007

Dec

2008

Dec

2009

Dec

2010

Dec

2011

Dec

2012

Dec

2013

Dec

2014

HICP % (2005=100) Average Gross Salaries

Source: National Statistical Institute

Inflation trends

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

6

92

8561

79

98

89

10394

55

80

87

63

57

72

45

56 49

54

52

53

52

77

75

CONSUMER CONFIDENCE INDEX: DIVIDED EUROPE (NORTH VS. SOUTH) BUT BULGARIA IMPROVES BY 13 P.P. IN ONLY ONE YEAR.

Source: Nielsen Consumer Confidence Index (Q4, 2014)

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

7

BULGARIAFast Moving Consumer Goods market dynamics

0,6%

1,2%1,1%

-0,6%

1,8% 1,9% 0,9% 0,2%

-0,2%

0,7% 1,0%

1,5%

1,7% 0,8% 0,6%

0,0%

-3,7%-2,8%

-3,9%-4,9%

-3,9%

-0,5%

1,7%

-0,3%

-1,6%

-5,5%

-6,2%

-4,0%

-4,0%

-0,8%0,6%

-2,5%

-1,8%

-4,5%

-3,1%

-2,0%

0,4%1,9% -0,5% -0,9%

-4,5%

-4,7%

-2,2%-3,2%

-0,1%

2012 2013 2014 Dec-Apr 11

Apr-Aug 11

Aug-Dec 11

Dec-Apr 12

Apr-Aug 12

Aug-Dec 12

Dec-Apr 13

Apr- Aug 13

Aug-Dec 13

Dec-Apr 14

Apr- Aug 14

Aug-Dec 14

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

Volume change Unit value change Nominal growth

Source: Nielsen Growth Reporter (Q4, 2014)

HOWEVER THIS OPTIMISM IS NOT REFLECTED INTO THE FMCG MARKET WHICH DECLINED FURTHER IN 2014!

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

8

THE RECESSIONARY MINDSET CONTINUES…


of Europeans have a pessimistic job outlook(“job prospects will be

bad or not so good over the next 12 months”)

67% of Europeans have a

pessimistic view on their personal finance status(“will be bad or not so

good”)

57% of Europeans believe it is a bad time to buy things you want/need(“bad or not so good”)

67%

73% in Bulgaria 56% in Bulgaria 74% in Bulgaria

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

9

MORE PEOPLE HAVE SPARE CASH IN COMPARISON TO 2013 AND THEY USE IT MAINLY FOR HOME IMPROVEMENTS AND PAYING OFF DEBTS.

34%

34%

29%

27%

26%

24%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Home improvements/decorating

Paying off debts/credit cards/loans

New Clothes

Holidays/Vacations

Out of home entertainment

Putting into Savings

SPENDING STRATEGIES

0%

5%

10%

15%

20%

25%

30%

35%

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

34% 33%

25%

31%29%

26%

19% 20%

NO SPARE CASH


THE BULGARIAN FMCG MARKET: TOPLINE PERFORMANCE & KEY CATEGORY

MOVEMENTS

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

11

FOOD AND BEVERAGES LEAD THE FMCG DECLINE.Drug & Alcohol increase Value due to price inflation while Tobacco is the only exception.

Source: Nielsen Retail Index (Total 2014 vs. 2013)

YoY performance (2014 vs. 2013)

-2,0%

0,9% 1,1%0,6%

-3,3%

-2,0%

3,7%

-1,0%

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

Food & N.A. Drink Drug Tobacco Alcohol

Value

Items

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

12

27,3%

17,0%

11,6%

9,1%

7,6%

6,2%

5,0%

4,5%

3,3%3,1%

5,4%

TOBACCO

ALCHOHOL

SOFT DRINKS & WATER

CONFECTIONARY

TOTAL DAIRY

CHILLED PRODUCTS

PERSONAL CARE

HOT BEVERAGES

HOUSEHOLD CATEGORIES

SALTY SNACKS

ALL OTHER

MEAT, BEVERAGES, DAIRY AND CONFECTIONARY HAVE ALL CONTRIBUTED TO THE WEAK PERFORMANCE OF FOOD & DRINKS.

Top 10 Super Groups in Value Share & movement vs. YA


Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

13

Best Performing Supergroups (Value change vs. YA)

CONSUMERS NOT WILLING TO SACRIFICE SPENDING FOR THEIR CHILDREN AND PETS. Chilled decline driven by a switch from meat to healthier lifestyle.


Worst Performing Supergroups (Value change vs. YA)

-6,4%

-4,3%

-2,9%

-1,8%

-7,0%

-6,0%

-5,0%

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

Chilled Shelf Stable Mobile Cards Dairy

11,0%

8,6%

4,1%

1,4%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

Pet Food Baby Categories Baby Food Personal Care

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

14

+16,2%

+14,4%

+9,4%

(*) Source: Nielsen Total Store Read (TSR) based on major cooperating Retailers providing weekly data

Category Value Change vs. 2013

FISH, FRUIT & VEGETABLES DISPLAY SIGNIFICANT GROWTH (*)

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

15

61% 59%56%

53% 52%49% 47% 46% 44% 42%

0%

10%

20%

30%

40%

50%

60%

70% Coffee

Detergents

Whisky

Tablets

Toilet Paper

Wafers

Biscuits

Toothbrushes

Baby Diapers

Deodorants

Most Heavily Promoted Categories (Volume % on Promotion)

Source: Nielsen Promo Pressure Database

WITH THE EXCEPTION OF TABLETS, ALL FOOD CATEGORIES IN THE TOP 10HAVE SEEN THEIR VALUE DECLINE DESPITE HEAVILY PROMOTING.

Val Ch.-1,1% -4,1% -3,1% +3,7% +1,8% -7,5% -6,6% +4,5% +8,5% -4,6%

LOOKING AHEAD: HOW TO GROW IN A CHALLENGING MARKET

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

17

THREE GROWING TRENDS IN THE BULGARIAN MARKET

HEALTHY & FRESH

Facial Tissues category has been experiencing softness which has been more significant in the past few years.

PRIVATE LABEL

DIGITALIZATION

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

18

HOW DO WE PLAN TO CHANGE PURCHASING OF SOME FOOD CATEGORIES IN THE NEXT 6 MONTHS?

In Europe, around 30% of the consumers plan to buy more fruits & vegetables; 20% more fish and seafood; 16% yoghurt and 15% more water in the next 6 months

A lot higher percentages for Bulgarians: 45% plan to buy fruit & vegetables; 34% fish and seafood; 30% yoghurt 27% nuts and seeds 25% water

312 285

2014 2013

BG: Share of monthly spend on fresh food

Base: All shoppers, 2013 (n=995), 2014 (n=996)Ref: Q9b Roughly how much is spent on Fresh Food –Meat, Fish, and Vegetables etc?

..and what shoppers say is that in 2014 their monthly spend on fresh food is going up..

HEALTHY & FRESH

Copy

right

©20

14 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

19

PRIVATE LABEL

Source: Nielsen Global study on Private Label 2014

Copy

right

©20

14 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

20

29

25

24

20

35

33

30

33

22

25

25

26

8

10

11

13

6

7

10

8

Store brands (private label) are a good alternative to name brands

Most store brand's (private label) quality is as good as name brands

Some store brand (private label) products are of higher quality than name brands

Store-brand (private-label) packaging looks as good or better as brand-name products

%

Strongly Agree Somewhat Agree Neither Agree nor Disagree Somewhat Disagree Strongly Disagree

Base : All Respondents n=501

WHAT IS YOUR PERCEPTION OF STORE-BRAND (PRIVATE LABEL) QUALITY?BG

Source: Nielsen Global study on Private Label 2014

PRIVATE LABEL

LIKE IN THE REST OF EUROPE, QUALITY PERCEPTION OF P.L. HAS CHANGED CONSIDERABLY OVER TIME.

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

21

DIGITALIZATIONONLINE FMCG SHOPPING IS GROWING DRAMATICALLY ACROSS EUROPE.

Source: Nielsen Global Online Study 2014

Copy

right

©20

14 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

22

12

8

7

7

6

5

27

23

53

41

46

40

28

30

26

29

29

30

33

38

14

23

20

24

Order online for delivery to home

Order online and pick up inside the store

Use self-service checkouts to reduce checkout time

Scan QR codes with my mobile phone to access more detailed product information while in-store

Use a hand-held store scanner to purchase products as you shop to avoid checkout lines

Download retailer app or loyalty program app to my mobile phone to receive information or offers while in-store

Already using Definitely willing Somewhat willing Not willing

WHAT IS YOUR LEVEL OF WILLINGNESS TO UTILIZE THE FOLLOWING DIGITAL OPTIONS FOR YOUR GROCERY SHOPPING IF THEY ARE AVAILABLE?BG

Base : All Respondents (n: 527)

DIGITALIZATION

Source: Nielsen Pan- European Study on Digital 2014

Copy

right

©20

13 T

he N

ielse

n Co

mpa

ny. C

onfid

entia

l and

pro

prie

tary

.

23

Despite some improvement in Macro economic indicators, Bulgarian consumers are still very cautious about their finances.

SUMMARY

The FMCG market in 2014 was in Value and Unit decline with Food leading the way. Tobacco the only group with positive Unit performance.

The trend for healthy nutrition and fresh products is already big but getting even bigger.

Improvement of quality image of P.L. likely to boost sales while there is already a large number of consumers willing to use digital options, once they become widely available in BG.

THANK YOU!

ANY QUESTIONS?

major trends in the bulgarian fmcg...

Documents