Spain Market Overview

Food & Drinks Industry Day
Converting Opportunities to Business
Spanish Market Overview
Thursday 27th November 2008
Presentation Outline
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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 8th 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)
Small
supermarkets,
28%
Convenience,
13.4%
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
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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
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32% of the total amount spent on food is allocated to eating
out.
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Health concerns turn the spotlight on the fast food sector & the
demand for healthier alternatives
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A traditionally fragmented sector, the Spanish foodservice
market is showing signs of consolidation
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Spanish restaurant chains are beginning to internationalise
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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
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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
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Rank
1
Company
McDonald’s España
Sales
EUR m
659
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
No. of
Establishments
373
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 – 2nd 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
Source: Hostelmarket 2008
Rank Company
No. of
Hotels
1
Sol Melía, S.A.
162
2
Riusa II, S.A.
(Riu hotels)
48
3
NH Hoteles,
S.A.
121
4
Barcelo
Gestion
Hotelera, S.L.
48
5
Grupo H10
Hotel
36
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