& THEIR DRIVERS
ANGELOS GEORGIOU & NIELSEN BULGARIA TEAM
SANDANSKI, 28 MAY 2015
MAJOR TRENDS IN THE BULGARIAN FMCG MARKET
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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
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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.
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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
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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)
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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!
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THE RECESSIONARY MINDSET CONTINUES…
Source: Nielsen Consumer Confidence Index (Q4, 2014)
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
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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
Source: Nielsen Consumer Confidence Index (Q4, 2014)
THE BULGARIAN FMCG MARKET: TOPLINE PERFORMANCE & KEY CATEGORY
MOVEMENTS
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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
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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
Source: Nielsen Retail Index (Total 2014 vs. 2013)
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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.
Source: Nielsen Retail Index (Total 2014 vs. 2013)
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
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+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 (*)
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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
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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
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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
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PRIVATE LABEL
Source: Nielsen Global study on Private Label 2014
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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.
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DIGITALIZATIONONLINE FMCG SHOPPING IS GROWING DRAMATICALLY ACROSS EUROPE.
Source: Nielsen Global Online Study 2014
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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
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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?