Are you a grower, cooperative or trade company with export readiness wishing to expand sales to the CEE region? Are you thinking of entering Polish fruits and vegetables market? You would like to sign a contract with Polish retailers but you are not sure where to start? Here is a short guide that will equip you with basic information on how to deliver fruit and vegetables to Polish retailers.
Polish Market of fruits and vegetables- short summary
Poland is the largest country in Central and Eastern Europe and the 6th largest in Europe. Ever since 1989 and democratic changes, the Polish economy has been on rise, developing steadily despite external circumstances and crises. It is worth remembering though that the starting point was very low, so you need to keep in mind that Poland is still a little behind the wealthiest countries in the EU, with GDP per capita being around 79% of the EU average.
Self-sufficient market
When entering the Polish fruit and vegetables market, it is worth mentioning that Poland is a significant producer of fruits and vegetables in the European Union. Annual harvests of 9-10 million tons place our country in 3rd place in terms of fruit production volume and in 4th place in terms of vegetable production volume.
That means that on many products the Polish market is self-sufficient. For example, if you are an apple grower or exporter and you want to sign a contract with a Polish retailer, you may find it impossible due to no need for those products.
Seasonality
On the other hand, due to the climate, Polish production is seasonal and many products do not cover all year supplies. Also, not all products are produced in Poland and some categories depend solely on import. In order to give it some structure, we can divide fruits and vegetables assortment into 3 categories:
- all year Polish supply – if the product might be stored in cooling chambers or dry-storage chambers (like apples, carrots, cabbages) – the demand is fully covered with Polish production.
- partial Polish supply – many products are produced in high volumes but are available for a limited period of time (e.g. berries, pears, broccoli and cauliflower, salads). In that case, there is a space for imported products during off-season.
- no Polish supply – some products cannot be harvested in Poland (like citrus, tangerines, oranges) and those products are 100% iimported.
High potential
With high dynamic of economic growth (currently sixth largest economy in UE) , very low unemployment rate (around 5%) and over 37 million citizens, Poland may be an excellent choice for a new market for your company. If you want to know how to deliver fruit and vegetables to Polish retailers you should first be aware of how the Polish retail market is constructed.
Construction of Polish fruits and vegetables market
Around 70% of Polish FMCG retail market is covered by large-format stores: discounts, supermarkets and hyper-markets. If you want to sign a contract with a Polish retailer – discount markets should be your first place to go with market share over 40%. Biggest players in this segment are Biedronka, Lidl and Netto. On the other hand, hypermarket format (like Auchan, Carrefour or Tesco) has been struggling for the past couple of years, due to the changes of shopping patterns among Polish shoppers (people are buying less but more frequently and prefer stores that are close to them rather than big hypermarkets on the outskirts) and is actively seeking for new ways of boosting sales. Supermarket category seems to be growing steadily, with Kaufland, Dino, Stokrotka, Lewiatan and Delikatesy Centrum as main players.
Small-market format seems to be in retreat, as the number of individual stores has been decreasing for the past years due to the concentration of the market led mainly by discounters. That being said, there is a potential to discover here as well, since around 30% of wholesale trade (in other words trade between wholesaler and small individual stores) is covered by EuroCash – biggest wholesaler in Poland, which places it in top3 FMCG retail companies in terms of revenue.
Unclear divisions
However, when entering the Polish fruit and vegetables market you might sometimes be confused with attempts of segmentation of the market. Polish discounts are not typical low cost stores due to the trend of supermarketization that has been going for the past years. Therefore do not be surprised when you come across some premium brands and products when strolling along the alleys of Lidl or Biedronka.
Also, companies are moving freely between categories and store formats, bending back and forth to cater for Polish shopper needs. As mentioned before, discounters are opening big “hypermarket-like stores” but also they are entering small villages with “proximity supermarket” type. Hypermarkets are shifting towards supermarkets (like Carrefour Supermarkets), supermarkets are shifting towards small convenience stores (like Stokrotka Express) and convenience stores are trying to conquer the online world (Żabka Jush).
What does it mean for a supplier entering the Polish fruit and vegetables market?
Each offer needs to correspond to the needs of the retailers. If you want to sign a contract with a Polish retailer, you need to be aware what assortment you should offer, what volumes may be expected and what is the pricing policy. Talking to one retailer might mean discussing various store formats with different assortment and different prices. Some retailers may be interested in premium products, some need narrow offer because of limited space, some might take a lot of indexes but with small volume for each one. All this is important when calculating profitability of entering the Polish fruits and vegetables market.
Basic requirements you need to follow
Fortunately, despite the high complexity of the Polish retail market, the requirements you need to comply with are more or less the same for the majority of retailers. With each retailer you need to follow almost the same path. Firstly, you need to present a commercial offer and attract buyer’s attention. It is usually the hardest part that most supplies fail to go through. After that you need to schedule a quality audit, sign an agreement and then you have a green light to close first programme of deliveries.
Attracting buyer’s attention
In order to schedule a meeting with buyer and present him/her you offer, you should firstly thoroughly examine the need and problems of retail chains in Poland. Good offer may get you straight to the meeting with the buyer. If get a green light, you probably will need to go through quality audit.
Quality audit
Before you start working with a Polish retailer, you will need to get approval from the quality control department. The scale of the quality audit differs between retailers. Some of them are organizing full scale audits, even for suppliers from outside of Poland. Full scale audit may last 1-2 days and is performed by the retailer’s internal auditor regardless of the quality certificates you have . On the other side of the scale are retailers that will accept you as a supplier based only on quality certificates you have. One thing is certain – quality certificates are a must with Global Gap as a basic standard and IFS or BRC as a very common requirement.
Signing an agreement with Polish retailers
Agreements with Polish retailers are long, complicated and scary. And there isn’t much to add. All are theoretically negotiable. However, from my experience, most suppliers decide to sign a contract with a Polish retailer without negotiation.
First deliveries
There are multiple systems that retailers use to plan deliveries. The most common standard are weekly programmes closed by buyers every week. For certain seasons/products you may be able to close a full commercial programme for a couple of weeks/months with fixed price and/or volume. Many buyers also prepare some initial volume plans that they confirm with suppliers but it does not have a form of binding agreements. If you want to deliver ultra-fresh fruit and vegetables to Polish retailers you may also come across daily plans of deliveries which are sort of detailed confirmation of a weekly programme.
You will discuss commercial aspects with buyer (also called category manager). When working with bigger retailers you will also be contacted by the supply chain division with inquiries regarding more technical aspects of deliveries (e.g. changes of delivery hours). With small retailers this is also handled by the buyer.
For each delivery you usually need to prepare some delivery documents (CMR) and also put proper labels on the box according to the retailer’s standard. The quality of the product should be aligned with the quality spec that you should receive before the first delivery.
To sum up, you need to be prepared to be responsive all the time and keep an eye on orders and inquiries coming in your mailbox from buyers. For sure you should have a dedicated person responsible for entering the Polish fruits and vegetables market.
Summary
Entering the Polish fruits and vegetables market is not easy but may bring you excellent results. However, before you make some steps it is worth to prepare a good strategy. If you are interested in more detailed information about Polish fruit and vegetables retail market, feel free to contact me with your questions.