Food & Drinks Industry Day Converting Opportunities to Business Spanish Market Overview Thursday 27th November 2008
Presentation Outline Spain in Figures Irish Export Performance Retail Market Overview Foodservice Market Overview Tourism Statistics Why target the market, hurdles to overcome The Winning Formula Bord Bia Spain Services
Spain In Figures Population: 45.59 M (including 5.2 M non-nationals) Area: 505,811 km2 17 Autonomous Communities Source: MAPA 2008
Spain in Figures Concentration of population: Andalucía Catalonia Madrid Valencia
Population & Age Structure 20.8 million homes in 2007 (+22.4% from 2000) An average of 2.71 people per home Age profile of population: 14.3% < 15 years 64.3% between 15 and 60 years 21.4% over 60 years Source: MAPA 2008
Spanish Economy Spain is the 8 th largest economy in the world Spanish economy worth 1,050 billion in 2007 GDP per capita: 18,629 GDP growth: 3.8% 2007 and 0.9% 2008 estimate Inflation rate: 4.2% Unemployment rate: 11.33% @ Sept 08 (seasonally adjusted) VAT Rates: Food 7%, Alcoholic Beverages 16%, Services 16%.Official Recession imminent Source: MAPA 2008
Irish Food Export Performance Ireland Spain Exports of 297 million in 2007 Source: CSO 2008
Irish Food Export Performance 2006 2007 Live Animals 25,805,162 25,544,827 Meat 82,059,947 81,245,631 Dairy Products 12,107,704 26,074,725 Fish 60,934,252 63,801,100 Drinks 55,822,962 54,867,071 Coffee, Tea 1,091,949 908,645 Cereals, Flours 377,920 301,355 Veg, Fruits 1,688,928 3,019,327 Sugars, Honey 2,165,367 1,090,405 Misc Products 42,207,240 39,439,715 Feeding stuffs animals 4,005,148 1,038,361 Total 288,266,579 297,331,162 Source: CSO 2008
Spanish Retail Market Overview
Grocery Retail Market Grocery retail market worth 78.1 billion (2007) (0.71% decrease from 2006) Convenience, 13.4% Small supermarkets, 28% Discount, 12.4% Hypermarkets, 15.2% Large supermarkets, 31% Source: Alimarket 2008
5 Top Retailers Grupo Carrefour, 17.2 Mercadona, 19.5 Grupo Eroski, 12.1 El Corte Ingles, 7.3 Other, 41.1 Auchan, 5.5 Source: Planet Retail 2008
Spain s largest retailer 2007 Net sales of 20.9bn Market share of 19.5% 1,137 outlets Private label sales contribute 35% of revenue Approx. 2,700 private label products More than 60% rule (when an own-brand product represents over 60% of sales within its category, the company removes other manufacturer s branded product listings) Source: Planet Retail 2008
Second Largest retailer in Spain in 2007 - Includes both Carrefour & Dia (discounter chain) Net sales of 18.4bn Market share of 17.2% 3,163 outlets in Spain -251 Carrefour hyper/supermarkets & 2,912 Dia Stores In Carrefour centres Private label sales contribute 30% of revenue 5 private label ranges (foods) & 3,200 private label products Source: Planet Retail 2008
Third retailer in Spain 2007 Net sales of 10 billion Market share of 9.4% Purchased Caprabo in 2007 1,738 outlets :1,246 Eroski chains & 492 Caprabo Private label sales contribute 30% of revenue 3 private label ranges: Eroski & Eroski Natur and Contigo ( With You launched in 2007) Source: Planet Retail 2008
318 outlets: Hipercor (36), Supercor (74), Opencor (159) & El Corte Ingles Supermercados (49) store formats Net sales of 7.8 billion Market share of 7.3% Private label sales contribute 16.5% of revenue 3 private label ranges with over 2,320 products. - First Price Range Aliada launched in Oct 08 Source: Planet Retail 2008
Part of the Auchan Group Net sales of 5.9 billion Market share of 5.5% 288 Outlets: 48 Alcampo chains & 123 Sabeco Supermarkets & 117 Aro Rojo Franchises Private label sales contribute 14% of revenue 2 private label ranges: 7,200 private label products Source: Planet Retail 2008
Retail: The Cost of doing business Margins: Vary from 20-50% depending on product & retailer New supplier needs to be 10-15% cheaper than current supplier Listing fees: Depend on margins, product & retailer. All expect a % of sales to be reinvested in promotional activities. Promotions: BOGOF or free gifts are common
Spanish Retail Characteristics Best method of supply: Through regional distributors Private label supply: May allocate space in central distribution platforms Quality standards: No specific standards for Spain
Key Consumer Trends In Retail Average spending per household: per year - 2,652 per month - 221 10% of homes buy groceries on the internet Private label accounts for 29.2% of grocery purchases Health is at the heart of grocery shopping Source: Alimarket 2008
Spanish Foodservice Market Overview
Foodservice Sector in Spain Foodservice sector valued at approx 28.8 billion in 2007 Over 300,000 foodservice establishments in Spain 3.4% 21.5% Restaurants Bars&Cafes Hotels 75.1% Source: FIAB 2008
Foodservice Key trends 32% of the total amount spent on food is allocated to eating out. Health concerns turn the spotlight on the fast food sector & the demand for healthier alternatives A traditionally fragmented sector, the Spanish foodservice market is showing signs of consolidation Spanish restaurant chains are beginning to internationalise Ethnic sector of the market growing by 20% year on year. Estimated to be worth 474 million by 2009 Source: Hostelmarket 2008
Foodservice: The Cost of doing business It depends! Traders take 5-10% Cash & Carries similar to multiple retail Wholesalers: Approx. 20% on fresh produce Approx. 30-25% on frozen food Operators make on average 6-10% net margin Source: Hostelmarket 2008
Top 6 Foodservice Companies Sales No. of Rank Company EUR m Establishments 1 McDonald s España 659 373 2 Telepizza 468 876 3 Heineken España S.A. (Div. Tematico) 425 535 4 Grupo VIPS 407 203 5 Areas 394 663 6 Grupo Zena 370 448 Four of the top 6 foodservice companies of 2006/07 were Spanish (Tele Pizza, Areas, Grupo Vips & Grupo Zena) Source: Hostelmarket 2008
Collective catering The Spanish collective catering market has not yet reached maturity. There are good perspectives for development and growth in this sector in Spain. Family-run companies are still notably involved in the Spanish catering sector. There are two groups which dominate collective catering on a European scale: Compass and Sodexho. Source: Planet Retail 2008
Transport Catering Collective catering sales of 2.34 billion in 2007 Consistent increase in sales in recent years due to high numbers of tourists. Increased demand for foodservice outlets on motorways and at railway stations. Áreas (subsidiary of Elior) is the main player in the sector. Autogrill is No. 2 in this sector Source: Planet Retail 2008
TOURISM STATISTICS
Spanish Tourist Market Spain 2 nd market in the world for number of tourists received 59.2 million international tourists visited Spain in 2007 (1.7% increase on 2006) 61% of this figure corresponds to UK, Irish, French & German tourists 1.63 million Irish tourists visited Spain in 2007 (a 8.4% increase on 2006) Source: CSO & FITUR
Hotel Sector Top 5 Hotel Chains The hotel industry is dominated by the tourist trade Main cuisines offered by hotels are: Mediterranean, Asian, South American, American and Spanish Rank Company 1 Sol Melía, S.A. 162 2 Riusa II, S.A. (Riu hotels) 3 NH Hoteles, S.A. 4 Barcelo Gestion Hotelera, S.L. 5 Grupo H10 Hotel No. of Hotels 48 121 48 36 Source: Hostelmarket 2008
Potential Hurdles In Spain for Irish Companies Fragmented & expensive logistics lack of centralised distribution Strong competition from other imported products Importance of the national food industry & preference for national products Pricing Irish products not always priced competitively for the market Products with short shelf-life can be problematic due to transport times Spain is unfamiliar with leading Irish brands Lack of resources to tackle new & unknown markets
Winning Formula Some tips for success in Spain: Always give prices including transport costs Suppliers may require a Spanish speaker to liaise with buyers Suppliers must be able to guarantee regular delivery Spanish buyers are very price focused - must emphasise product USPs
Bord Bia Office Services Business development programmes Market Familiarisation Visit and Marketplace Roadshow Customised individual client services including: Gap analysis PR In-store promotions Store audits Distributor searches Knowledge hub Media review and translation services
Bord Bia Activities in Spanish Market for 2009 Marketplace Roadshow Spain 2009 - Club de Gourmet Fair, Madrid - March 2009 MFV Alimentaria Lisbon, April 2009 Irish Embassy St. Patrick s Day Trade Reception Dairy Ingredients Directory Launch Trade Fair & Seminar Attendance Knowledge Hub