EMIS Insights - Poland Food Sector Report 2018_2022

POLAND
FOOD SECTOR
2018/2022
Including 5-Year Forecast
An EMIS Insights Industry Report
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ABBREVIATIONS
ANR Agricultural Property Agency

ARiMR Agency for Restructuring and Modernisation of Agriculture
ARR Agricultural Market Agency

FAPA Foundation of Assistance Programmes for Agriculture
IERiGZ Institute of Agricultural and Food Economics
KOWR National Centre for Agriculture Support
WSE Warsaw Stock Exchange

01 EXECUTIVE SUMMARY p.5
CONTENTS Sector in Numbers
Sector Overview
Sector Snapshot
Driving Forces
Restraining Forces
02 SECTOR FORECAST p.12

Macroeconomic Outlook
Economic Sentiment
Sector Outlook
03 SECTOR IN FOCUS p.20

Main Economic Indicators
Main Sector Indicators
Production
Sales
Food Consumption Patterns
Grocery Market
Financial Results
Global Positioning
Foreign Trade
Prices
Investments
Employment and Wages
04 COMPETITIVE LANDSCAPE p.35

Timeline Poland Food
Highlights
Market Shares
Top Companies
M&A Deals, 2017-Jun 2018
M&A Activity, 2016-Jun 2018
05 COMPANIES IN FOCUS p.46

Animex Foods
Mlekovita
Maspex Wadowice
CONTENTS Mlekpol
Sokolow
06 REGULATORY ENVIRONMENT p.57

Key Bodies
Government Policy
07 MEAT AND DAIRY PRODUCTS p.60

Highlights
Main Events
Meat Production
Meat and Dairy Consumption
Pigs and Pork
Cattle and Beef
Poultry
Poultry Foreign Trade
Fish
Meat and Fish Prices
Milk Output and Consumption
Dairy Products Output
Dairy Foreign Trade
08 PLANT-BASED PRODUCTS p.74

Highlights
Main Events
Production and Consumption
Flour and Bakery Products
Vegetables
Potatoes
Fruit
Fruit and Vegetable Prices
Sugar and Confectionery
09 RETAIL CHANNELS p.88

Main Grocery Shop Chains
Retail Facilities by Type
POLAND FOOD SECTOR 2018/2022
An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY
5
01 EXECUTIVE SUMMARY CONTENTS
Sector in Numbers
2.39% 13.4% 9.3%

Food Sector's Share Agri-Food Sector's Agri-Food Sector's
in Poland’s GVA Share in Poland‘s Share in Poland‘s
(2016) Total Exports Total Imports
6th 391,000 8th

Poland's Rank Poland's Rank
among EU Food Number of
Employed in among EU Food
Producers (Output Exporters
Value) Food Sector
No.1 No.2 No.1

EU Poultry EU Poultry EU Apples
Producer Exporter Producer
Note: Data for 2017.

Source: Statistics Office, Eurostat
POLAND FOOD SECTOR 2018/2022 6

Sector Overview
The importance of the food manufacturing industry has always been crucial for the Polish economy's
history and this has not changed nowadays: in 2016, the food sector's GVA was 2.7% of Poland’s total
GVA and 2.39% of the country’s GDP, similarly to 2015. Overall, food sector output accounted for 11.3%
of the country's GDP vs. 11% in 2016. Poland has traditionally been a farming country, but it has
recently started to shift its focus to healthier and more high-technology products. In 2011-2017, food
manufacturing accounted for a stable 6%-7% share of the overall employment in industry. Poland is
the EU’s 6th biggest food producer in terms of output value and the 8th biggest agri-food exporter. It
also has the fourth largest agricultural land area in the union. The country is also the top poultry
meat and apple producer in the EU.
Entry Modes
There are no major barriers or severe regulations in the food industry in Poland, except for sanitary-
related provisions. There are 1,250 mid-sized and large enterprises in the sector along with numerous
small family businesses. Furthermore, the government has included food manufacturing among the
priorities of its economic development strategy, which is expected to help modernise the sector.
Segment Opportunities
The sustained growth of the Polish economy together with the record good conditions on the labour
market and the generous social policies all contribute to Poles' rising affluence. At the same time,
Poles are becoming increasingly curious about new foods and this demand opens up new
opportunities in the sector. However, a significant part of consumers still prefer traditional foods, but
with a focus on healthy ingredients and artisanal recipes.
Government Policy
The food sector is not overly regulated, except for the food safety issues. Regulations in the industry
are generally in line with international standards. A recent example of new regulations is the 2018 law
on trade quality of agri-food products, which requires (in line with EU directives) taking out samples
to be inspected by the Agri-Food Products Trade Quality Inspectorate.
Source: Statistics Office, Agriculture Ministry, Finance Ministry, PMR, DM PKO BP

Sector Snapshot
Poland Food
Sector
OUTPUT* SOLD
PLN 206bn PRODUCTION
Poultry: 2.69mn t PLN 225bn
EXPORTS Cured Meat Products: 0.83mn t Firms: 9+ employees
Milk: 13.87mn t
PLN 114bn Apples: 2.5mn t PLN 178bn
Export Value Firms: 49+ employees
13.4%
Share of Total Export Meat and Fish Sales: PLN 69bn
Fruit and Vegetable Sales: PLN 37bn
Dairy Products Sales: PLN 30bn
IMPORTS
PLN 79bn MARKET VALUE
Import Value PLN 190mn
9.3%
Share of Total Import
KEY PLAYERS REVENUES

1. Animex Foods (PLN 5.7bn)
2. Mlekovita (PLN 4.4bn)
3. Maspex (PLN 4.4bn)
4. Mlekpol (PLN 4bn)
5. Sokolow (PLN 3.7bn)
*Data for 2016
Note: Data for 2017
Source: Statistics Office, Institute of Agricultural and Food Economics (IERiGZ)

Sector Snapshot
Poland Food Sector
The food manufacturing industry's importance for the entire Polish economy remains unchanged;
indeed, its share of the country's GDP even inched up to 11.3% in 2017 from 11% a year earlier; at the
same time, the sector’s share in GVA remained unchanged y/y at 2.7% in 2016, while the share in GDP
inched up to 2.39% in 2016 from 2.37% the year earlier. These figures concern only companies
employing nine or more persons, while food production is very common among smaller, micro
enterprises. The companies with nine or more employees had a combined payroll of 391,000 in 2017,
which is up by 5,000 in annual terms. This stands for around 4.2% of all employed in economic
entities employing more than nine persons.
After falling (in annual terms) in 2014, the total output of the food industry rose in subsequent years,
reaching PLN 206bn in 2016 (up by 6.5% y/y).
Poultry meat output rose by 3.3% y/y to 2.69mn tonnes in 2017, while that of cured meat products
inched up by 0.1% y/y to 0.83mn tonnes. Domestic milk production rose by 3.4% y/y to 13.87mn tonnes
in 2017. At the same time, apple output plummeted by 30.6% y/y to 2.5mn tonnes.
The sales value of food products of companies employing nine or more persons surged by 10.6% y/y to
PLN 203.2bn in 2017, after rising by 7.5% y/y a year earlier. In the group of mid-sized and large
companies employing 49 or more persons, sales trends remained similar - 11.2% y/y growth in 2017
that followed a growth of 7.5% y/y in 2016. The same pattern can be seen in the case of Poland's GDP:
it rose by 4.6% in 2017, accelerating from the 3% growth noted in 2016. Food sales' reaching double-
digit growths is clearly a consequence of Poland's strong private consumption, which was the main
driver of GDP growth, as well as of the booming export market.
In 2017, mid-sized and large enterprises’ meat and fish sales rose even faster by 12.9% y/y to PLN
68.8bn, while the sales of fruits and vegetables were up by 6.8% y/y to PLN 36.5bn, and the sales of
milk and dairy products surged by 20.3% y/y to PLN 30.3bn.
Mid-sized and large food producers decreased slightly in number in 2017 to 1,247 entities from 1,261 a
year earlier. The share of loss making companies inched up to 15.9% in 2017 from 15.4% in 2016.
Food exports reached a record-high value of EUR 27.3bn in 2017, rising by 12.3% y/y (though a less
dynamic growth is predicted in 2018) vs an increase of 1.8% y/y in 2016. Imports were EUR 18.9bn in
2017 and their growth accelerated to 7.6% y/y in 2017 from 6.2% in 2016.
The majority of the food industry’s subsectors are dominated by a handful of large players - Animex
and Sokolow are the leaders in meat processing, Mlekovita and Mlekpol are the major players in dairy
production, and Mondelez, Ferrero, Nestle and Wedel dominate confectionery manufacturing. The
situation is different in fruit and vegetable production and processing - these markets are highly
fragmented although processing companies are bigger and, hence, less numerous.
Source: Statistics Office, Agriculture Ministry, Finance Ministry, PMR, DM PKO BP, IERiGZ

Driving Forces
Statistical base effects, rising saturation and some doubts concerning export markets are the factors
that could trim further expansion of the Polish food sector, which is nonetheless posed to remain
strong given the solid economic fundamentals and the government strategy to support increased
consumption. The country will remain a leading EU food producer and has a chance to become a main
player in some new segments, such as organic food.
External
All domestic macroeconomic indicators speak volumes about the bright prospects for the food sector
as well as virtually all other mass consumption-oriented industries. GDP growth is expected at above
4.5% in 2018 and around the 4% mark in 2019-2020. Even though investments have begun to pick up,
private consumption clearly remains the main driver of economic growth and this bodes well for the
food industry. Unemployment has reached a record low and the government is generous in its social
policies. All these factors contribute to Poles' rising income - indeed, this is one of the explicitly-
declared goals of the current government.
The higher affluence of Poles and the possibility of cheap foreign travel mean that food consumption
patterns are changing. Poles are eager to eat higher quality, healthy food, which is at the same time
more expensive, and this is an opportunity for the sector. Also, Polish food producers are starting to
produce foods that have not been popular in Poland before such as mozzarella or feta cheese.
Internal
Sustained growth of sales and earnings in the food sector pave the way for investments that are more
and more oriented towards healthy or organic foodstuffs (with organic food sales expected to grow by
20% y/y until 2030) as well as at innovative production technologies. The sector companies are
focused on processed products such as confectionery, which have a higher added value.
Exports are bound to continue to thrive as Polish food producers have proven that they can easily
adapt to the requirements of new export markets and changing consumption patterns. Growth
dynamics may decelerate, but this will only push market players to seek new markets and expand
product ranges.
Another factor that will continue to strengthen food sales is the well-developed and organised retail
trade, from hyper- and super markets through very popular discount and convenience shops to
franchise networks of local vendors.
Source: Statistics Office, Agriculture Ministry, Finance Ministry, PMR, DM PKO BP, IERiGZ, BMI

Restraining Forces
Customers’ penchant for novelties that cannot be grown or manufactured locally as well as workforce
shortages are the main two factors that can weigh down on the food sector’s performance, slightly
worsening its generally positive outlook. Also, the ban on Sunday trade, which is to be fully
implemented by 2010, may harm food sales.
External
Rising wages hamstring the growth of food producers' earnings, but are insufficient to alleviate the
Polish economy's biggest problem at present, which is workforce shortages. After more than two
million Poles have left the country to work in other EU member states, the vacancies have often been
taken by Ukrainian immigrants. The immigrants are also eager consumers, but they, or possibly also
Belarussians who are expected to follow suit, are unlikely to fill the gap left by Polish émigré waves.
Also, potential restrictions concerning trade in agri-food products - implemented in Europe or globally
- could harm Polish exporters who may find it more difficult to find new markets for their products
due to increased competition.
Another factor hamstringing food sales is the ban on Sunday trade, which is planned to be fully
implemented in 2020.
Internal
The food industry's mild but always present hindrances are price fluctuations and the shifting
consumer habits of Poles. Polish consumers are increasingly opting for a healthier lifestyle and eating
habits that could potentially affect some segments of the industry such as pork production, unless
local producers adapt to the changing consumer behaviour.
After a law severely limiting GMO production in Poland took effect in the middle of 2018, this segment
will face growing difficulties, especially as Poles dislike GMO products and their unpopularity cannot
be offset with low prices.
Source: Statistics Office, Agriculture Ministry, Finance Ministry, PMR, DM PKO BP, IERiGZ

02
SECTOR
OUTLOOK
12
02 SECTOR OUTLOOK CONTENTS
Comments
In October 2017, IMF revised its forecasts for Poland’s economic growth in 2017 and 2018 to reach 3.8%
and 3.3%, respectively, from the April expectations of 3.4% and 3.2%. In the spring of 2018 the
expectation for the GDP growth that year was further revised upwards to 4.1%. In the short-term, IMF
expects the momentum to continue to be driven mainly by robust private consumption, aided by wage
growth, minimum wage hike and the 500+ child support programme. However, Poland’s growth in the
medium-term could be hampered by factors such as the country’s shrinking workforce, resulting from
emigration, ageing population as well as low labour force participation. Other factors likely to
negatively affect future growth pace are slowing down TFP (total factor productivity) growth, low level
of private investments and potential reduction of EU funds (essential for infrastructure projects so
far) after the current 2014-2020 programme.
Increase in labour force participation and other labour market policies are seen as essential to secure
Poland’s future high growth rate. Larger expenditure on R&D and infrastructure could also be helpful
by boosting productivity and private investment. The latter could also be boosted by reducing burdens
on start-ups and deregulating of professional services.
Real GDP Growth, y/y change, % Consumption and Investment,

y/y change, %
7
6 5.8 6.0
4.6
5 5.0
4.1 4 4.2 4.4 4.4 4.4
3.8 3.5
3 3.2 2.8
3.5 2.8 2.6 1.9
2 2.1 2.3 2.3
2.1
3.0 1 2.0 2.4
2.9 2.8 2.8 0
-1 2016 2017 2018f 2019f 2020f 2021f 2022f
-2
-3
-4
-5
-6
-7
-8 -7.9
2016 2017 2018f 2019f 2020f 2021f 2022f
Pr ivate Consumption Growth Public Consumption Growth
Investment
Source: IMF

(cont’d)
Unemployment Rate, % of labour force Consumer Price Index, y/y change, %
6.2 2.5 2.5 2.5 2.5 2.5
2.0
4.9
4.1 4.0 4.0
3.9 3.9
-0.6
2016 2017 2018f 2019f 2020f 2021f 2022f 2016 2017 2018f 2019f 2020f 2021f 2022f
Exports and Imports, y/y change, % Current Account Balance

2.0 50%
0.2
8.8 9.0 0.0

8.1 0.0 0%
7.9 -2.0
7.7 7.7
-0.3
-5.4
7.2 -4.0
6.7 6.6 -50%
-1.4
6.2 -6.0
-7.9
6.2 5.7
5.9
5.7 -8.0 -0.9
-9.8
-100%
-12.0
-10.0 -1.2
-13.6
-12.0 -1.4 -150%

-14.0 -1.7
-1.8
-16.0 -200%
2016 2017 2018f 2019f 2020f 2021f 2022f
2016 2017 2018f 2019f 2020f 2021f 2022f Cur rent Account Balance, USD bn
Export Imports Cur rent Account Balance, % of GDP
Source: IMF

Economic Sentiment
Comments Economic Sentiment Index*

The household consumption tendency indicator 115
has been steadily growing since the end of 2016.
In June 2018 the indicator value of 6.1 was 1.3 pts
110
higher y/y. The positive view was mainly driven by
the positive opinion of saving possibilities and
the overall view of the country’s economic stance 105
by the consumers. Likewise, the European
Commission’s Economic Sentiment Index for 100
Poland has significantly improved over the course
of 2017 increasing by 4.4 pts.
95
90
01/2016
03/2016
05/2016
07/2016
09/2016
11/2016
01/2017
03/2017
05/2017
07/2017
09/2017
11/2017
01/2018
03/2018
05/2018
07/2018
Business Tendency Indicators Consumer Tendency Indicator
20 10
8
15 6
4
2
10
0
-2
5
-4
-6
0 -8
-10
-5 -12
01/2016
03/2016
05/2016
07/2016
09/2016
11/2016
01/2017
03/2017
05/2017
07/2017
09/2017
11/2017
01/2018
03/2018
05/2018
07/2018
01/2016
03/2016
05/2016
07/2016
09/2016
11/2016
01/2017
03/2017
05/2017
07/2017
09/2017
11/2017
01/2018
03/2018
05/2018
07/2018
* Neutral point in the Economic Sentiment Index is 100

Source: EC, Statistics Office, CEIC Data

Sector Outlook
Comments
Poland's strong economic growth, underpinned by buoyant consumer spending on the back of the
growing incomes (stimulated by the government’s social programme and rising wages), bodes well for
the food industry in the years to come. The output is expected to see growth between 2016 and 2022
by a total of 25% reaching PLN 245.3bn.
The growing output value should result from increased production volumes of most food categories
as well as growing prices. Strong growth in Poland's food industry should provide attractive
opportunities for local and international companies to expand their production and meet increasing
consumer spending.
As far as foreign trade is concerned, both imports and exports of the beverages and tobacco products
category should grow in the period 2017-2022. The former are expected to increase by a combined
28.86%, while the latter by over 7%. The rapid growth of imports is a sign of Poles’ growing affluence
combined with high consumption levels. Nevertheless, Poland should remain a net exporter of food
products and the country’s exports will expand into new markets (primarily the Far East and the
Middle East) aside from further strengthening its position on the EU markets.
Food Production Value, PLN mn Foreign Trade of Food and Live Animals,
PLN mn
245,283
101,210
101,895
100,196
237,131
98,820
228,978
95,493
95,174
220,825
212,673
87,947
204,520
83,270
196,368
81,419
79,337
183,197
75,403
71,470
67,536
64,618
60,094
53,995
2015 2016 2017 2018f 2019f 2020f 2021f 2022f
2015 2016 2017 2018f 2019f 2020f 2021f 2022f Exports Imports
Source: EMIS Insights

Sector Outlook (cont’d)
Comments
Poland should see increased output volume in most of the main food categories. Being the largest
poultry meat producer in the EU and the 4th largest pork producer, Poland is expected to capitalise on
the popularity of these products and further increase its output (mainly thanks to export sales and, to
some extent, domestic consumption). Frozen foods are a category that should see increased demand
due to changing lifestyles. Frozen sea food products will capitalise on the expected increase in fish
consumption, as Poles are still lagging behind most EU states in that category. Confectionery
products are also expected to be on the rise in terms of production with chocolate production forecast
to increase by a total of 27% between 2016 and 2022, while the combined chocolate products and
chocolate category should increase by 21% in that period. Two products that are likely to see a
downward trend are groats and semolina from wheat and yoghurt, both continuing a trend visible
prior to 2017. The former should be a victim of a focus on groats perceived as healthier (such as
buckwheat, rye and barley), while the latter’s slump results from the freeing up of milk quotas in the
EU (leading to oversupply of milk and thus dairy products) and the problems with the post-Soviet
markets for Polish exporters due to the unstable situation in Ukraine and the Russian embargo.
Meat Production, thou tonnes Frozen Food Products, thou tonnes

806.1
3,681.1
775.5
3,408.3
747.1
715.5
695.5
3,160.5
671.8
646.7
2,913.8
2,681.0
2,683.5
567.4
2,500.0
2,133.0
431
419
416
409
407
395
392
342
1,467
1,432
1,396
1,355
1,321
1,272
1,212
1,175
74.7
71.7
68.8
66.5
66.1
63.7
63.6
60.2
31.4
32.4
27.4
25.9
25.6
24.7
23.8
23.1
225.1
229.9
218.9
214.5
203.4
200.4
197.2
182.9
2015 2016 2017 2018f 2019f 2020f 2021f 2022f

2015 2016 2017 2018f 2019f 2020f 2021f 2022f
Frozen Vegetables Frozen Fruits and Nuts
Poultry Meat Pig Meat Cattle and Calves Meat
Frozen Sea Fish Frozen Sea Fish Filets

2015 2016 2017 2018f 2019f 2020f 2021f 2022f
Food Products Output Value, PLN mn 183,197 196,368 204,520 212,673 220,825 228,978 237,131 245,283
Food and Live Animals Exports, PLN mn 81,419 87,947 95,174 95,493 98,820 100,196 101,210 101,895
Food and Live Animals Imports, PLN mn 53,995 60,094 64,618 67,536 71,470 75,403 79,337 83,270
Cattle and Calves Meat, thou tonnes 197.2 182.9 203.4 200.4 214.5 218.9 225.1 229.9
Pig Meat Production, thou tonnes 1,175.1 1,211.6 1,271.6 1,321.0 1,355.3 1,395.5 1,431.5 1,466.6
Poultry Meat Production, thou tonnes 2,133.0 2,500.0 2,681.0 2,683.5 2,913.8 3,160.5 3,408.3 3,681.1
Edible Animal Fats Production, thou

96.8 109.4 114.0 116.8 121.2 127.7 133.3 139.2
tonnes
Cured Meat Products Output, thou

741.3 826.4 827.7 808.6 827.2 841.3 852.9 864.6
tonnes
Canned and Preserved Ham Production,

101.8 100.0 90.8 88.6 92.0 94.9 97.3 99.8
thou tonnes
Canned Beef and Veal Production, thou

8.9 10.5 9.9 10.0 10.0 10.0 9.9 9.9
tonnes
Frozen Sea Fish Production, thou tonnes 60.2 63.7 63.6 66.5 66.1 68.8 71.7 74.7
Frozen Sea Fish Filets Production, thou

25.9 31.4 32.4 33.2 34.01 34.82 35.63 36.44
tonnes

2015 2016 2017 2018f 2019f 2020f 2021f 2022f
Frozen Vegetables Production, thou

567.4 646.7 695.5 671.8 715.5 747.1 775.5 806.1
tonnes
Frozen Fruits and Nuts Production, thou

tonnes 416.2 409.2 341.6 391.5 395.0 406.9 419.0 431.3
Yoghurt Production, thou hl 4,063.0 3,781.0 3,596.0 3,561.6 3,469.2 3,377.8 3,243.2 3,125.1
Wheat Flour Production, thou tonnes 1,558.0 1,611.0 1,768.0 1,860.0 2,051.9 2,312.0 2,634.3 3,057.8
Rye Flour Production, thou tonnes 144.4 150.0 162.7 175.6 180.8 186.7 191.8 197.0
Groats and Semolina from Wheat

Production, tonnes 13,289.0 12,635.0 10,709.0 10,708.8 10,708.7 10,708.5 10,708.4 10,708.2
Groats and Semolina from Barley

17,750.0 17,660.0 19,286.0 22,320.8 23,761.6 25,682.2 27,517.7 29,523.9
Production, tonnes
Groats and Semolina from Buckwheat

Production, tonnes 4,733.0 4,833.0 4,774.0 5,139.9 4,743.0 4,726.1 4,724.8 4,724.7
Chocolate and Chocolate Products

Output, tonnes 383,500.0 398,800.0 396,500.0 426,325.0 436,944.3 454,016.2 467,972.7 483,245.3
Chocolate Production, tonnes 231,600.0 246,100.0 247,400.0 270,341.5 279,138.3 291,688.8 301,608.3 312,548.3
Pasta Production, thou tonnes 154.6 152.8 155.3 158.3 162.3 167.0 170.8 174.9
White Sugar Production, thou tonnes 1,670.7 2,170.2 2,179.9 2,187.0 2,195.4 2,203.8 2,212.2 2,220.5

03
SECTOR
IN FOCUS
20
03 SECTOR IN FOCUS CONTENTS
Main Economic Indicators
2013 2014 2015 2016 2017
GDP, Real Value, PLN bn, current prices 1,656.9 1,719.8 1,799.4 1,858.5 1,982.1
GDP, % change y/y 1.4 3.3 3.8 3 4.6
Sold Production of Manufacture of Food Products, PLN bn, current prices* 191.9 187.8 189 203.2 224.7
Sold Production of Manufacture of Food Products, current prices, as % of GDP* 11.6 10.9 10.5 11 11.3
Sales Revenue in Manufacture of Food Products, PLN bn, current prices** 167 166.3 165.9 178.4 198.3
Sales Revenue in Manufacture of Food Products, PLN bn, current prices,** as % of GDP 10.1 9.7 9.2 9.6 10
Manufacture of Food Products: Output, PLN bn 192.8 191.4 193.5 206 n.a.
Gross Added Value in Entire Economy, PLN bn 1,470.9 1,524.9 1,596.3 1,637.5 1,743.3
Gross Added Value in Manufacture of Food Products, PLN bn 38.7 40.3 42.7 44.5 n.a.
Gross Added Value in Manufacture of Food Products, % of total GDP 2.33 2.34 2.37 2.39 n.a.
Grocery Market's Value (Sales), PLN bn 234 238 244.5 253.8 263.4
CPI Inflation: Average Annual, % 0.9 0 -0.9 -0.6 2
PPI Inflation: Average Annual, % -1.3 -1.5 -2.2 -0.1 2.9
Exchange Rate (mid-rate; end-year) EUR/PLN 4.1472 4.2623 4.2615 4.424 4.1709
Exchange Rate (mid-rate; end-year) USD/PLN 3.012 3.5072 3.9011 4.1793 3.4813
NBP Reference Rate (end-year), % per annum 2.5 2 1.5 1.5 1.5
Total Population, mn, end-year 38.50 38.48 38.44 38.43 38.43
Registered Unemploment Rate, end-year, % 165.3 143.2 418.2 8.2 6.6
FDI Inflow in Manufacture of Food Products; Beverages and Tobacco Products, EUR mn -957.0 -28.6 548.1 958.6 n.a.
FDI Inflow in Total, EUR mn 2,059 10,755 12,138 12,588 n.a.
* enterprises employing 9+ persons

** enterprises employing 49+ persons
Source: Statistics Office, Central Bank

Main Sector Indicators

Manufacture of Food Products: Key Sector Data
2013 2014 2015 2016 2017
Sold Production, PLN bn, current prices* 191.9 187.8 189 203.2 224.7
Sector Production as % of Total Industry* 16.7 16.1 15.8 16.4 16.7
Grocery Market's Value, PLN bn sales 234 238 244.5 253.8 263.4
Manufacture of Food Products: Output, PLN bn 192.8 191.4 193.5 206 n.a.
Preserved Meat and Meat Products, Value of Sold Production, PLN bn 49.5 51.7 53.9 57.8 63.6
Processed and Preserved Fruits and Vegetables, Value of Sold Production, PLN bn 12.2 12 12.5 13.8 14
Dairy Products, Value of Sold Production, PLN bn 26.1 26.3 24 24.8 29.7
Bakery and Farinaceous Products, Value of Sold Production, PLN bn 13.3 13.5 13.4 13.8 14.5
Number of Enterprises, average annual** 1,280 1,257 1,196 1,261 1,247
Share of Number of Enterprises with Net Profit, % of total** 85 85.4 86.3 84.7 84.1
Number of Employed, thou persons, end-period* 371 374 376 386 391
Sector Employment as % of Total Employment in Enterprise Sector* 6.5 6.5 6.4 6.4 6.2
Exports of Agri-Food Products, EUR bn 20.4 21.35 23.89 24.33 27.32
Imports of Agri-Food Products, EUR bn 14.3 14.79 16.07 17.29 18.93
PPI: Total Economy, % change y/y -1.3 -1.5 -2.2 -0.1 2.9
PPI: Manufacturing of Food Products, % change y/y 1 0.4 -1.2 -1.2 0.6
* enterprises employing 9+ persons

** enterprises employing 49+ persons
Source: Statistics Office, PMR

Production
Output Volumes, thou tonnes Output Value, PLN bn
2013 2014 2015 2016 2017
206.0
Animal Fats,
90 95.1 97.2 110 117
Rendered, Edible
Poultry Meat 2,042 2,199 2,159 2,601 2,687
Cured Meat Products 767 761 735 830 831
Wheat Flour 2,230 2,262 2,297 2,368 2,620
193.5
192.8
191.4
Pasta 176 168 182 177 180
Bakery Products 1,689 1,570 1,588 1,589 1,590
All Fruits 3,527 3,625 3,547 4,070 2,720
Apples 3,085 3,195 3,146 3,604 2,500
Sugar (in terms of

1,899 2,063 1,624 2,163 2,181
white sugar)
2013 2014 2015 2016
Comments
Output figures of the main product groups show where changes in consumption patterns and export
markets play the biggest role. Poultry meat output is on the rise due to both rising exports and Poles’
turning away from red meat.
The production of apples has been declining on a global scale, primarily due to weather conditions. It
is worthwhile to note, though, that all fruits as a category posted a more dramatic decline of output
than apples themselves (33.2% y/y vs. 30.6% y/y, respectively).
Significant growth has been observed in the case of wheat flour (up by 10.6% y/y in 2017), even though
Poles consume less and less bread – they simply switch to other products, perceived as healthier, such
as pasta (up by 1.7% y/y).
Source: Statistics Office, IERiGZ

Sales
Food Sales, firms employing 49+ persons, PLN bn
2012 2013 2014 2015 2016 2017
Food Products in Total 141 148.85 146.35 148.76 159.67 177.55
Processing and Preserving of Meat and

44.32 47.17 45.72 47.99 51.78 58.24
Production of Meat Products
Processing and Preserving of Fish,
5.91 6.96 7.5 7.9 9.16 10.58
Crustaceans and Mollusc
Processing and Preserving of Fruit and
12.19 12.67 12.3 13.1 15 15.83
Vegetables
Vegetable and Animal Oils and Fats 3.68 4.2 4.23 3.59 3.33 3.26
Dairy Products 23.56 26.24 26.93 24.4 25.21 30.33
Grain Mill Products, Starches 4.18 4.4 3.96 4.13 4.69 5.07
Bakery and Farinaceous Products 9.25 9.42 9.96 10.68 11.18 12.36
Other Food Products 26.21 25.69 23.27 24.23 26.04 27.4
Prepared Animal Feeds 11.69 12.1 12.47 12.74 13.3 14.47
Sold Production, PLN bn

224.7
203.2
191.9
189.0
187.8
2013 2014 2015 2016 2017
Source: Statistics Office

Food Consumption Patterns
Average Monthly Consumption per Selected Foodstuffs’ Share of Total Retail

Capita Spending, %
1.72
Sugar , Jams, Honey, Chocolate, 1.78 5.9
5.9
5.9
5.9
5.8
5.7
6
5.6
5.4
Confectionery, kg 1.83
1.76
3.7
3.7
3.6
3.6
3.6
3.5
3.5
8.24 3.4
3.4
3.4
3.4
3.3
3.3
3.3
3.2
3.2
2.9
2.9
8.59
Vegetables, kg
8.68
9.95
3.64
3.66
Fruits, kg
3.59
2000 2005 2010 2011 2012 2013 2014 2015 2016
3.43
Meat and Meat Products Milk, Eggs and Cheese
11.42
11.64 Br ead and Cer eal Products
Eggs, items
11.76
12.81
0.86 Selected Foodstuffs’ Consumption per

Cheese, Cottage Cheese, kg
0.85 Capita, kg
0.83
0.95
108
108
108
108
106
106
106
105
104
104
103
103
103
102
0.29
0.32
Fish and Seafood, kg
0.33
73.4
70.9
0.45
70.1
69.9
69.5
67.3
63.8
5.28
44.3
5.32
42.5
42.3
41.9
40.3
39.9
39.4
Meat, kg
5.27
5.57
5.67
5.88
Bakery and Cer eal Products, kg
6.06
7.01 2010 2011 2012 2013 2014 2015 2016
Cer eal Products Vegetables Meat Sugar

2017 2016 2015 2010

Grocery Market
Grocery Market Value, PLN bn
316.1
305
294.4
284.0
273.7
263.4
253.8
238.3 244.5
233.9
2013 2014 2015 2016 2017e 2018f 2019f 2020f 2021f 2022f
Comments
The grocery market's value rose by 3.8% y/y to PLN 263.4bn in 2017 and should expand by another 3.9%
y/y to PLN 273.7bn in 2018, according to estimates of researcher PMR. It notes that the market is
highly concentrated: the top 20 players account for 67.3% of the market, the top 10 retailers control
59.1%, and the top five players hold a whopping 46.5% of the market. However, PMR still sees some
scope for further consolidation in the supermarket and small-format shop segments. Specialised
grocery shops account for about 25% of the total shopping area in Poland, while shopping centres
take up another 50% of the total.
According to forecasts of the state Institute of Agricultural and Food Economics (IERiGZ), the growth
of Poles' spending on food and beverages will continue to decelerate to 1.3% y/y in 2018 from an
estimated 1.5% y/y in 2017 and 2% y/y in 2016. In 2016-2017, the growth was stimulated largely by
additional income from the child-support scheme Family 500+, but its effects are expected to level
out due to statistical effects.
Source: PMR, IERiGZ

Financial Results
Comments Financial Results,* PLN bn

Food sector companies' revenue grew by 11.1% y/y
in 2017, while net earnings inched down by 1.2% 2012 2013 2014 2015 2016 2017
y/y after growing in the previous two years.

Revenues have been on the rise thanks to rising
Net Sales Revenue 157.93 166.96 166.26 165.95 178.39 198.27
demand, both domestic and foreign, which
constituted 27% of revenue in H1 2017. Earnings,
though, are more vulnerable to changes of price Gross Financial Result 7.11 7.58 7.3 7.39 8.88 8.71
of both raw materials (e.g. in January-March 2018,
they grew by 0.6% y/y on the average) and of
Net Financial Result 5.95 6.62 6.33 6.24 7.5 7.41
end-products. However, the expected declines of
global supply of many agri-food products (e.g.
cereals, potatoes) could help raise the profits Incl. Exports Revenue n.a. n.a. 40.25 42.78 48.15 54.45
(though global meat supply is expected to rise in
2018).
Cost Level Indicator,* % Profitability Indicators,* %
95.7 95.7 95.7

95.6
4.9
95.5 4.5
4.4 4.3 4.3 4.3
4.1
3.9
3.7 3.7 3.6 3.7
95.1
Cost Level Indicator 2012 2013 2014 2015 2016 2017
Pr ofitability of Gr oss Turnover

2012 2013 2014 2015 2016 2017
Pr ofitability of Net Turnover
*firms employing 49+ persons


Global Positioning
Poland's Rankings among EU Member EU's Top Pig Meat Producers in 2017, mn
States in 2016/ 2017 tonnes
1st 2nd 3rd 4th 5th 5.46
4.25
Apples Cucumbers Cereals Butter Cattle Meat
Cherries Strawberries Eggs Onions Cheese

2.18
1.99
Poultry Potatoes Sugar Beets Wheat Milk 1.53 1.47
Carrots Pig Meat
mn tonnes
Germany Spain France POLAND Denmark Italy
EU's Top Poultry Producers in 2017, mn EU Countries with Biggest Milk Collection
tonnes in 2017, mn litres
31.97
2.34
24.65
1.83
1.65
1.53 1.54
15.19 14.3
1.33
11.65 10.65
mn litres
Germany (2016 data) France

mn tonnes UK Netherlands
POLAND UK France Germany Spain Italy POLAND Italy
Source: Eurostat

Foreign Trade
Comments Foreign Trade in Food Products, EUR bn

Within the European Union, Poland is the 6th
27.3
24.3
23.9
biggest agri-food products manufacturer and the
21.4
20.4
18.9
8th biggest exporter (according to 2016 data). In
17.9
17.3
16.1
15.2
14.8
2017, the sector's exports reached the highest-
14.3
13.6
13.5
12.6
11.7
11.5
10.9
10.3
ever value of EUR 27.31bn, rising by 12.3% y/y. At
10.1
9.3
8.5
8.1
7.1
the same time, import value rose by 9.5% y/y to 6.4

5.4
5.2
4.4
EUR 18.93bn, which resulted in a record high

surplus of EUR 8.38bn, up by EUR 1.34bn in annual
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
terms.
Exports continued to be hamstrung by Russia’s Exports Imports

ban on EU food imports and by the restrictions
introduced in connection with African swine fever
Top Export Products by Value, % of Total
cases. However, the impact of these factors has Food Exports, 2016
lessened as Polish farmers and food producers
are more and more successful in finding new Others 29.7
markets and in diversifying their offer. Meat & Meat Pr oducts 20.8
Tobacco and Cigarettes 10.4
In 2018, exports are expected to grow further, Grains and Grain Products 8.5
though the growth will likely be less dynamic. The Dairy Products 8.3
Institute of Agricultural and Food Economics Sugar & Confectionery 7.8
(IERiGZ) expects the sector's exports to rise by 5% Fish & Fish Products 7.5
Fruits & Fr uit Products
y/y to EUR 28.8bn, with imports expanding at a 7
lower rate of 2% y/y to EUR 19.2bn. Thus, the

surplus would increase to EUR 9.6bn. Top Import Products by Value, % of Total
Food Imports, 2016
In 2017, exports in the sector constituted 13.4% of
Poland's total exports value, while imports Others 39.9
represented 9.3% of the total. Fruits & Fr uit Products 11.6
Oil Plants & Pr oducts 11.5
Fish & Fish Products 7
Meat & Meat Pr oducts 9.4
Coffee, Tea, Cocoa 6.8
Sugar & Confectionery 5.5
Vegetables & Vegetable Products 4.5
Source: Statistics Office, IERiGZ’s Based on Data from Finance Ministry

Foreign Trade (cont’d)
Share of Food Exports by Value, %, 2017 Share of Food Imports by Value, %, 2017
EU28 81.5 EU28 70.2
Developing Countries 7.9 Developing Countries 17.1
CIS 7 EFTA 5.1
Other Developed Countries 3.8 CIS 4.2
EFTA 1 Other Developed Countries 3.1
Baltic Countr ies 0.8 Baltic Countr ies 0.3
Others 0.1 Others 0.1
Share of Main Food Export Markets by Share of Main Food Import Source
Value, 2017 Markets by Value, 2017
France 5% Baltic Countries 4%

Baltic Countries 2%
Italy 6% Others 54%
Others 41%
Netherlands France 3%
6%
Italy 4%
Czech Rep.
5% Netherlands
8%
Czech Rep.
UK 9% 3%
Germany Germany
UK 3% 22%
24%
Source: IERiGZ’s Based on Data from Finance Ministry

Prices
Food Prices Breakdown, % y/y change, average annual prices

2014 2015 2016 2017
Milk 5 -3.7 -3.8 2.9
Poultry -2.8 -4.1 -2.3 2.1
Eggs -6.3 -2 -2.2 12.9
Cheese, Cottage Cheese 3.5 -4.4 -1.8 5
Yoghurts, Cream, Drinks 3.4 -0.8 -1 5.9
Vegetable Fats -1.7 -3.4 -0.6 2.9
Wheat Powder -0.2 -2.1 -0.2 0
Cured Meat 0.3 -1.6 0.2 4.5
Noodles 0.8 -0.6 0.5 2
Beef -1.1 -1.1 0.5 2.9
Bakery -0.2 -0.2 0.6 2.7
Calf Meat 0.7 -1.1 1.3 1.9
Pork Meat -3 -6 1.5 8.6
Vegetables -3.6 -0.7 2.8 2.9
Fruits -2.8 -1.7 5.5 8
Sugar -28.8 -9 26.9 5.5
Price Indices of Consumer Goods and Services, % y/y change
2011 2012 2013 2014 2015 2016 2017
Total 4.3 3.7 0.9 0 -0.9 -0.6 2
Food, Non-Alcoholic and Alcoholic Beverages, Tobacco 5.1 4.3 2.3 0.1 -1.1 0.8 3.6
Food and Non-Alcoholic Beverages 5.4 4.3 2 -0.9 -1.7 0.8 4.2
Food 5.6 4.3 2.2 -0.9 -1.8 1 4.6
Alcoholic Beverages and Tobacco 3.7 4.1 3.5 3.7 1.2 0.7 1

Investments
Comments Investment Outlays, PLN bn, firms

employing 49+ persons
Investments in the food sector are of paramount
importance for keeping companies competitive.
This has so far been successful as the quality of
7.3
7.05
6.76
6.51
Polish food products is consistently perceived as
high both within the country and on the growing
5.06
4.98
4.83
4.69
number of foreign markets.
4.38
4.19
3.44
On the other hand, the sector witnesses intensive
3.01
3.2
2.89
2.54
2.42
investments via M&A - since the beginning of
1.75
1.71
2016, EMIS DealWatch has registered nearly 60

M&A transactions.
2012 2013 2014 2015 2016 2017
Total On Machiner y and Equipment Newly Started
FDI Inflow, EUR mn Direct Investment Income of Foreign

Investors in Food Sector, EUR mn, end-
year
14,832
12,588
12,138
2,068
10,755
1,134
1,062
4,716
1,031
1,001
988
2,059
958.6
505.5
418.2
197.3
165.3
143.2
2011 2012 2013 2014 2015 2016
FDI Inflow in Manufacture of Food Products; Beverages and Tobacco

2011 2012 2013 2014 2015 2016
Pr oducts
FDI Inflow in Total
Source: Statistics Office, Central Bank

Employment and Wages
Employment in Firms Employing 9+ Average Monthly Wage in Firms

Persons, thou persons Employing 9+ Persons, PLN
4,530
6,350
4,277
2017
4,121
391
3,980
3,837
3,751
3,728
3,496
6,065
3,324
2016
3,234
386
3,102
3,022
5,867
2015
376
5,774
2014
374
5,692
2013
371
5,651
2012
371
2012 2013 2014 2015 2016 2017
Total in Enterprise Sector Manufacture of Food Products Manufacture of Food Products Total in Enterprise Sector
Comments
A total of 9,400,100 persons were employed in economic entities employing more than nine persons
at the end of March 2018, up by 2.9% y/y. At that time 67.9% of all the employed were working in the
enterprise sector (vs. 67.1% a year earlier) and the remaining 32.1% - in the state budget sphere. At the
end of Q1 2018, the total number of persons working in Poland was 16,344,000.
In manufacturing industries, the average annual employment reached 2,649,900 persons in 2017 and
was the highest since 2013.
In Q1 2018, the average monthly gross wage in the national economy amounted to PLN 4,623, up by
6.2% y/y. In 2017, wages in the food manufacturing sector rose by 7.3% y/y, while in the entire
economy, they were up by 5.4% y/y.
Wage pressures and personnel shortages, especially given retailers' expansion plans, mean that
wages in the food sector are bound to rise.

Employment and Wages (cont’d)
Average Paid Employment in 2017, Average Monthly Gross Wages in 2017,

firms employing 49+ persons, thou firms employing 49+ persons, PLN
persons
Pr epared Animal Feeds 6,373

Food Products in Total 293.9
Pr ocessing and Pr eserving of Vegetable and Animal Oils and Fats 5,818
Meat and Production of Meat 94.8
Pr oducts
Bakery and Farinaceous Other Food Pr oducts 5,009

53.1
Pr oducts
Dairy Products 4,554

Other Food Pr oducts 45.2
Grain Mill Products, Starches 4,463

Dairy Products 36.2
Pr ocessing and Pr eserving of FOOD PRODUCTS IN TOTAL 3,958

28.1
Fruit and Vegetables
Pr ocessing and Pr eserving of Pr ocessing and Pr eserving of Fruit

16.2 3,924
Fish, Crustaceans and Mollusc and Vegetables
Pr ocessing and Pr eserving of Fish,

Pr epared Animal Feeds 10.3 3,649
Crustaceans and Mollusc
Pr ocessing and Pr eserving of Meat

Grain Mill Products, Starches 8.1 3,336
and Production of Meat Products
Vegetable and Animal Oils and

2 Bakery and Farinaceous Pr oducts 3,265
Fats

04
COMPETITIVE
LANDSCAPE
35
04 COMPETITIVE LANDSCAPE CONTENTS
Timeline Poland 16th-17th century

Large scale cereal exports from Poland (Polish
Food Sector Commonwealth)
Development Milestones
1802 Development Milestones
1851 Market Players First sugar-processing plant launched in

Lower Silesia (then part of Prussia).
The E. Wedel chocolate
producer is set up in Warsaw.
1928 Market Players
Butter and cheese plant in Wysokie

1958 Market Players Mazowieckie is established, the direct
predecessor of Mlekovita.
PHZ Hortex is established, the
predecessor of Hortex food group.
1991 Market Players
1992 Market Players PepsiCo takes over E. Wedel.
Danone starts production in Poland. E. Wedel debuts on the Warsaw Stock

Exchange (WSE).
1995 Market Players
Meat producer Animex enters the Warsaw Stock Exchange.
1999 Market Players
2000 Market Players

PepsiCo sells rights to the Wedel Brand
The merger of Sokolow and WSE-listed Farm Food – to Cadbury
creation of the largest Polish meat processing group. The acquisition of Animex by Smithfield
Foods.
2004 Development Milestones
The accession of Poland to the European

Union and the opening of EU markets to 2010 Market Players
Polish food products. Lotte Group buys Wedel for alleged PLN 1bn.
2015 Market Players Development Milestones
Maspex Wadowice acquires Agros The abolishment of the milk quotas in the
Nova assets. European Union.
Source: Company Data

Highlights
Overview
Poland is currently the EU’s 6th biggest food producer with the 4th biggest agricultural land area. The
country is also the 8th biggest food exporter in the organisation. Many industry segments, especially
confectionery, have become dominated by foreign-owned companies. Food manufacturing is loosely
regulated and entry barriers in the sector are low. There are 1,250 mid-sized and large enterprises in
the sector along with numerous small family businesses.
Market Structure
Market concentration in the food industry is very high. In the majority of market segments, large
players control 80%-90% of sales, according to estimates of Polish think-tank Republican Foundation.
Those main players are chiefly foreign-owned after wide-ranging privatisation processes were carried
out by subsequent governments from the 1990s until 2015. The level of domestic capital exceeds 50%
only in three product categories and is the highest in the dairy segment at 60%.
Market Players
Maspex is one of the few large players in the sector with Polish ownership. Through its Lubella
subsidiary it is the top player in the processed plant products, rice, pasta and noodles segment. Polish
OSM Piatnica and SM Mlekovita are key players in the dairy segment, even though the biggest two in
this segment are Hochland and Unilever. The meat segment is dominated by Sokolow, which is owned
by Danish Crown, and Animex, owned by WH Group Limited. Mondelez and Ferrero are the major
players in the chocolate and confectionery segment.
Market Entry
Entry to the food industry is easy, as the sector is not particularly capital intensive or overly
regulated. However, competition is fierce and the risk of bankruptcy is higher in the food retail
segment than in food production.
Source: Statistics Office, Euromonitor International, PKO BP, Republican Foundation

Market Shares:
Baby Food, Bread, Soups
Comments Baby Food Market Share by Sales, 2017

The baby food market inched up by 1.% y/y to PLN Nestle
Hipp Polska
Polska 32%
1.2bn in 2017, after stagnating in 2016. Sales were 11.4%
driven by demand for convenience and healthy
products. Nonetheless, Euromonitor upheld its Humana
forecast, under which it expects the segment to Polska 2%
Rossman
shrink at an average annual 1% in 2016-2021, to 0.4%
reach PLN 1.1bn at the end of this period.
Nutricia
Polska Others 5.1%
Bread consumption continues to decline in 49.2%
Poland – it was below 40 kg per capita in 2017
compared to 100 kg in 1981. This is due to Polish
Baked Goods Market Share by Sales, 2017
consumers' growing focus on healthy food and to
bread makers’ being slow in adapting to this
trend. In 2017, the entire baked good market
2
1.60
1.60
1.50
dropped by 1% y/y in volume terms to 2mn

1.30
1.10
0.90
tonnes, while it rose by 1% y/y in value terms to
PLN 12.5bn. Euromonitor International expects the
market to change little, both in volume and value
terms, in its forecasts for 2018-2022.
Jeronimo La Chipita Auchan Tesco Dr Oetker Rieber
Martins Lorr aine Poland Polska Polska Polska Foods
Poles' turning to healthier and/or homemade food Polska Polska Polska
and the gradual market saturation are the
reasons for the soup segment's remaining in the Soup Market Share by Sales, 2017
doldrums. Even though this market inched up by
Polski Ogrod Profi 5.4%
1% y/y to PLN 969mn in 2017, Euromonitor 7.0%
Unilever
International upholds its forecast of a decline by Polska
Agros Nova
2.7%
an average annual of 1% in until 2022, to the level 34.6% Jeronimo
Martins
of PLN 943mn at the end of this period. In volume Polska 2.2%
terms, the segment grew by 3% y/y to 44,000 Tesco Polska
tonnes in 2017. 2.1%
Nestle Others
Polska 10.9%
35.2%
Source: Euromonitor International

Market Shares:
Dairy Products
Comments Cheese Market Share by Sales, %, 2017

Customers’ drive for high quality products is
expected to help boost the cheese segment. In Others 38.8
2017, its sales grew by 6% y/y to PLN 5bn and by
Hochland Polska 16.5
5% y/y in volume terms to 201,000 tonnes.
Euromonitor International expects them to SM Mlekovita 11.9
expand at a CAGR of 4% in 2018-2022, to reach
PLN 6.1bn at the end of this period. SM Mlekpol 9.4
The sales of the other dairy products segment, Turek 8
which includes cream, fromage frais and quark Jeronimo Martins Polska 5.6
products, grew by 3% y/y to PLN 3.9bn 2017 and
are projected to expand at CAGR of 3% in 2018- OSM Lowicz 5.2
2022 to reach PLN 4.4bn at the end of this time
Tesco Polska 4.8
frame.
Other Dairy Market Share by Sales, %, Ice Cream and Frozen Desserts Market
Share by Sales, %, 2017
2017
Others 39.2 Unilever Polska 28.8
OSM Piatnica 16.7 Others 19.2
SM Mlekovita 16.7 PPL Koral 15.6
SM Mlekpol 11.4 Jeronimo Martins Polska 8.8
Danone 8.7 Zielona Budka 8.8
Jeronimo Martins Polska 6.6 Lodziar nie Firmowe 7.3
Zott Polska 5.9 Nestle Polska 6.7
OSM Lowicz 5.6 Tesco Polska 4.8

Market Shares:
Other Selected Segments
Comments Processed Meat and Seafood Market

Share by Sales, %, 2017
The Polish processed meat and seafood market
was worth PLN 8.3bn in 2017, up by 3% y/y.
According to Euromonitor International, it will Others 42.4
continue to expand, at a CAGR of 1% in 2018-2022.
Animex 13.6
Chocolate confectionery sales were PLN 7.8bn in Sokolow 13.6
2017, up by 1% y/y, but are projected to decline at
a CAGR of 1% in 2018-2022. Jeronimo Martins Polska 8.7
Lmeat Lukow 6.5

The sales of rice, pasta and noodles went up by
2% y/y to PLN 1.7bn in 2017. Euromonitor Tesco Polska 5.4
International expects a stagnation on this market
Car refour Polska 5.2
in 2018-2022.
Auchan Polska 4.7
Chocolate Confectionery Market Share Rice, Pasta and Noodles Market Share by
by Sales, %, 2017 Sales, %, 2017
Others 34 Others 50.7
Mondelez Polska 15.3 Lubella 14.1
Ferrero Polska 14.4 Unilever Polska 9.3
Lotte W edel 11.0 Jeronimo Martins Polska 6.5
Colian 7.4 Tan Viet International 5.7
Mars Polska 7.2 Healthy Food Production 4.8
Wawel 6 Tesco Polska 4.5
Jeronimo Martins Polska 4.7 Car refour Polska 4.4

Top Companies
Top 10 Sector Companies by 2017 Sales Revenue

PLN bn Segment
Animex Foods 5.7 Meat
Mlekovita 4.44 Dairy
Maspex 4.43 Pasta
Mlekpol 4.02 Dairy
Sokolow 3.67 Meat
Nestle 3.31 Confectionery
Morpol 3.1 Fish
Krajowa Spolka Cukrowa 2.89 Sugar
Cedrob (2016 data) 2.74 Meat
Kruszwica 2.55 Oil
Comments
Three out of the top ten food companies are owned by foreign owners - Animex Foods, owned by
Danish Crown; Sokolow, owned by WH Group Limited; and Nestle. Another two are milk cooperatives -
Mlekovita and Mlekpol - that are governed by a special law on cooperatives.
Poultry firm Cedrob increased its holding in Gobarto, a major meat-processing company, in 2016 and
increased it to around 83% in early 2017, but has not yet consolidated Gobarto's revenue in its books.
In 2017, Gobarto reported consolidated revenue of PLN 1.77bn. In September 2017, Cedrob took over
another segment player – ZM Silesia.
Source: Rzeczpospolita, Company Data

Top Listed Companies
Companies Listed on the WSE's Main Market
Jul 20 - Oct 19, % Jul 20 - Oct 19, %

Market Value, PLN mn Market Value, PLN mn
change change
Agroton -2.23 76 Makarony Polskie Suspended Trade 39
Astarta Holding -4.98 763 Milkiland -41.75 19
Atlanta Poland -14.63 21 ZPC Otmuchow -6.67 23
Colian Suspended Trade 787 Ovostar Union 12.5 648
Gobarto -7.96 238 Pamapol -8.55 37
Helio 5.66 56 Pepees -6.57 122
IMC 17.76 421 Seko -7 62
Indykpol -5.77 203 Tarczynski 4.9 170
ZM Henryk Kania 33.33 165 Wawel -4.83 1,240
Kernel Holding 1.4 4,150
Jul 20 - Oct 19, %

KSG Agro -16.95 15 Ytd, % change
change
ZT Kruszwica -31.78 1,010 WIG -0.1 -11.14
WIG-Spożywczy (Food
Krynica Vitamin 5.94 67 -0.91 -3.64
Index)
Source: Warsaw Stock Exchange (WSE)

M&A Deals 2017-Jun 2018

Deal Value Stake
Date Target Company Deal Type Buyer Country of Buyer
(EUR mn) (%)
17 Sep 2018 Agersol Sp z oo Acquisition Vaessen-Schoemaker BV Netherlands n.a. n.a.
14 Sep 2018 Konspol Group Acquisition Cargill Inc USA n.a. 100
3 Sep 2018 Ultrapharm Ltd Acquisition Finsbury Food Group Plc UK 18.97 100
Minority
3 Aug 2018 Golpasz SA Resource Partners Sp z oo Poland n.a. 18
Stake
27 July 2018 Rabat Detal Sp z oo Acquisition PPHU Specjal Poland n.a. n.a.
27 July 2018 Aligator Sp z oo Acquisition PPHU Specjal Poland n.a. 100
Minority Amerykanka Struktura Sp z oo sp k;

20 July 2018 Pamapol SA Poland 0.91 9.38
Stake Szataniak brothers
19 July 2018 Trec Nutrition Sp z oo Acquisition Aflofarm Farmacja Polska Sp z oo Poland 21.10 100
Frac Handel Sp z oo Auto - Market

5 July 2018 Acquisition E. Leclerc France n.a. n.a.
SKA; Frac Handel Sp z oo
26 June 2018 Partner Sp z oo Acquisition Eurocash SA Poland n.a. 100

Minority
15 June 2018 Colian Holding SA Consortium of investors N.a. 24.82 13.46
Stake
11 June 2018 Coffee Zone Sp z oo Acquisition Julius Meinl Industrieholding GmbH Austria n.a. n.a.
16 May 2018 Meat Production Plant in Slawa Acquisition ZPM Slawa Sp z oo Poland 6.59 100
SADAFCO, Kuwait Projects Company

25 April 2018 Mlekoma Sp z oo Acquisition Kuwait; Saudi Arabia 28.44 n.a.
Holding KSCP
3 April 2018 Gzella Meat Group Acquisition Sokolow SA; Danish Crown AS Poland; Denmark n.a. 100
Minority
6 March 2018 Tarczynski SA Jacek Tarczynski , Elzbieta Tarczynska Poland 5.05 13.31
Stake
20 Feb 2018 Tasomix Sp z oo Acquisition ForFarmers NV Netherlands 56.92 60
8 Jan 2018 Pepees SA Acquisition Skotniccy brothers Poland 10.98 33.05
20 Dec 2017 Pollena-Aroma Sp z oo Acquisition Frutarom Industries Ltd Israel 7.20 99.96
Lukpasz Sp z oo; Production Plant

20 Dec 2017 Acquisition Superdrob SA Poland 44.91 100
and Hatchery of Indykpol
17 Nov 2017 Bezgluten Sp z oo Acquisition Coast2Coast Investments (Pty) Ltd South Africa n.a. 100
13 Nov 2017 Unitop Group Acquisition Coast2Coast Investments (Pty) Ltd South Africa n.a. 100
10 Nov 2017 Staoil Sp z oo Acquisition Bioagra-Oil SA Poland n.a. 100
Source: EMIS DealWatch

M&A Deals (cont’d)

Deal Value Stake
Date Target Company Deal Type Buyer Country of Buyer
(EUR mn) (%)
2 Nov 2017 Hortex Holding SA Acquisition Mid Europa Partners LLP United Kingdom 200 100
26 Oct 2017 Profi Sp k Acquisition Coast2Coast Investments (Pty) Ltd South Africa n.a. 100
19 Oct 2017 Agram SA Acquisition Crop's Vegetables NV Belgium n.a. 100
13 Oct 2017 Part of Business of Nutrico Group Acquisition Puratos Group NV Belgium n.a. 100
25 Sep 2017 ZM Silesia SA Acquisition Cedrob SA Poland n.a. 100
1 Sep 2017 Rolpak Acquisition Levant Foods Sp z oo Poland n.a. 100
11 Aug 2017 Pini Group Minority Stake Smithfield Foods Inc; WH Group Ltd USA; Hong Kong n.a. 100
9 Aug 2017 Kulinaria SA Acquisition Prymat Group Poland n.a. 100
2 Aug 2017 Delicpol Sp z oo Acquisition Continental Bakeries BV Netherlands n.a. 100
24 July 2017 Milarex Sp z oo Acquisition Summa Equity AB Sweden n.a. 75
12 July 2017 Jednosc Sp zoo Acquisition Company manager(s) N.a. 2.31 100
10 July 2017 Melvit SA Minority Stake Polfood Group SA Poland n.a. n.a.
10 July 2017 Premium Rosa Sp z oo Acquisition Kofola CeskoSlovensko as Czech Republic n.a. 100
Processing Plant in Koszalin of

14 June 2017 Acquisition Espersen A/S Denmark n.a. 100
Royal Greenland
1 June 2017 Maga PPH Sp z oo Acquisition Salad Signature NV Belgium n.a. 100
Hamburger Pini Sp z oo; Pini Animex Foods; Smithfield Foods Inc; Poland; USA; Hong
1 June 2017 Acquisition n.a. 100
Polska Sp z oo WH Group Ltd Kong
27 April 2017 Jama Sp z oo Acquisition Gobarto SA Poland 2.67 100
Madej Wrobel Sp z oo; Gilem Sp z

3 March 2017 Acquisition Bruno Tassi Poland n.a. 100
oo
24 Feb 2017 Sequoia Sp z oo Acquisition Maspex SA Poland n.a. 66
31 Jan 2017 Nowel Sp z oo Minority Stake Credit Value Investments Sp z oo Poland 9.14 n.a.
20 Jan 2017 Gobarto SA Minority Stake Cedrob SA Poland 7.79 16.98
2 Jan 2017 Alpex Sp z oo Acquisition Dohler GmbH Germany n.a. 50

M&A Activity 2016-Jun 2018
Number and Value of Deals Deals by Deal Type, 2017-Oct 2018
9 9 9
6
5
Acquisition
4
82.2% Minority
252 3
Stake
Purchase
17.8%
0
73 60
17 3 2 41 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2017 2018
Value of Deals (EUR mn) Number of Deals
Deals by Region of Investor, 2017-Oct Deals by Deal Value in 2017-Oct 2018,

2018 EUR mn
Netherlands
USA 4.4% 6.7% Undisclosed;
South Africa 66%
6.7%
Poland
48.9% 50.1-100mn;
2.2%
Others
26.7%
100.1-
Belgium 0-50mn; 500mn; 2.2%
6.7% 31.1%

05
COMPANIES
IN FOCUS
46
05 COMPANIES IN FOCUS CONTENTS
Animex Foods
Highlights Income Statement, PLN mn

Animex Foods was established in February 1951,
as a state-owned enterprise, under the name of
Animex.
Animex was traded on the Warsaw Stock

Exchange between 1995 and 2002. In 1999,
5,695
4,813
American concern Smithfield Foods took over a
4,330
3,966
3,817
majority stake in the company. Thanks to the

acquisition of Morliny in 2004, it gained other
well-established Polish brands such as Morliny
n.a.
n.a.
n.a.
n.a.
72
6
and Morlinki, securing the company a leading

-2
-9
-17
-33
position in the production of branded meat
products in Poland. 2013 2014 2015 2016 2017
Net Revenue EBIT Net Pr ofit

Animex is currently directly owned by Smithfield
Polska, whose owner is WH Group Limited - a
Chinese company earlier named Shuanghui
International Holdings Limited, which in 2013 Balance Sheet, PLN bn
completed the takeover of Smithfield Foods. 1.87
Animex has 10 meat processing plants in the

country. It employs 8,600 persons, which makes it
1.32 1.32
the biggest employer in the food sector in Poland.
Animex exports 25%-30% of its annual production

0.78
to over 40 countries worldwide.
0.47 0.47
In May 2017, Smithfield Foods Inc. completed the
0.27
takeover of Pini Polska and Hamburger Pini, 0.18
0.1
specialising in preparing packaged meat for
supermarkets, and poultry producer Royal 2013 2014 2016
Chicken from Pini Polska - the third-biggest meat Total Assets Shareholders' Equity Net Debt
processing firm in Poland. The acquired
companies are managed by Animex Foods.

Animex Foods
Financial Ratios, %
9.31
5.91
3.86
-0.12
-0.97 -0.65
-0.19
-1.93 -1.11
-0.33
-2.58 -1.82
2012 2013 2014 2016
ROA ROE ROCE
Animex History
Year Development
1951 Animex Founded by the Polish Government.
1960 Animex Buys the KRAKUS Trademark.
1990 Animex Becomes a Private Company, Purchasing Several Meat and Poultry Plants, Agricultural Companies, and Feed Factories.
1994 Animex Debuts on the Warsaw Stock Exchange (WSE).
1999 Smithfield Foods Becomes Animex’s Majority Shareholder.
2000 Smithfield Foods Expands Animex’s Hog Production and Feed Factories in Poland to Create the Agri Plus Group of Companies.
2002 Smithfield Foods Increases Holding in Animex’s Capital to 99% and Delists the Company from the WSE.
2004 Animex Acquires Morliny S.A. (and Its Brands Morliny and Krakus).
2017 Smithfield Foods acquires Pini Group's packaged meats companies.

Mlekovita

Mlekovita originates from a cheese-and-butter
production plant set up in Wysokie Mazowieckie
(in the Podlasie region in north-eastern Poland) in
1928. It was rebranded as Mlekovita in 1992. The
group began its expansion in 1997, when the
Mlekovita unit in Morag was set up. The company
4,440
took over dairy cooperatives in Zakopane in 2003,
4,114
3,881
3,883
3,503
in Lubawa in 2007, and in Dzialdowo in 2007. In

2009 it launched a mozzarella production facility
in Kaliningrad, Russia. In 2012, it acquired
cooperatives in Biala Podlaska and in
95
70
68
53
52
Trzebownisk, and in 2014 - a cooperative in Sanok.
2013 2014 2015 2016 2017
In 2017 it completed its new powdered milk
Net Revenue Net Result
production facility in Wysokie Mazowieckie.
The company’s first UHT milk production line was

launched in 1995. Mlekovita has been producing Balance Sheet, PLN mn
sliced soft cheese since 2002.
It currently manufactures over 800 dairy products 1,361

and is the Polish market leader in five categories 1,155
1,102 1,092
- pasteurised milk, soft cheeses, hard ripened
cheeses, flavoured milk, butter and fats. It is the 792
sole manufacturer of clarified butter and Cheddar 669
724
582
cheese in Poland.
Mlekovita has set up its own retail and wholesale

distribution network and is Poland’s biggest dairy 6
product exporter. Since 2014, it operates its own
2013 2014 -9 2015-15 2016-27
research-and-development centre.
It is the largest milk-processing group in Central Total Assets Shareholders' Equity Net Debt
and Eastern Europe, operating 17 production lines

and selling products in 144 countries.

Mlekovita (cont’d)
Financial Ratios, %
10.2
9.06 9.14
8.42
7.89
7.14 7.16
6.25 6.6
4.79 4.9
4.48
2013 2014 2015 2016
ROA ROE ROCE
Investments, PLN mn Workforce, average annual 3,189

172
2,823
165
2,724
2,596
2,582
2,476
2,390
111
78
2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017

Maspex Wadowice
Highlights Group Sales Revenue, PLN bn

The Maspex Wadowice Group is one of the
4.42
biggest Polish-owned companies in the country. It
4.27
is the leading player in the juices, nectars and
3.73
3.64
fruit drinks markets of Poland, the Czech Republic
3.26
and Slovakia, and also one of the biggest players
3.09
2.91
in Hungary, Romania, Bulgaria and Lithuania. It is
also a leading producer of instant drinks in CEE.
The group is also a leading producer of pasta in

Poland and a major player in Romania (besides
being a leading player in the bottled water
market there).
Founded in 1990, Maspex has completed nearly 20

acquisitions, including ten abroad. It remains a 2011 2012 2013 2014 2015 2016 2017
privately-owned business. However, its CEO and

owner Krzysztof Pawinski told the ISBnews
agency in May 2018 that the company could be Number of Employees, average annual
floated on the Warsaw bourse, but not earlier
Persons
than in five years' time. Hence, the group is being
6,803
transformed into a holding structure. 6,420
Maspex's main brands include Tymbark, Kubus, 4,883 4,978 5,204

4,832
Lubella, Lowicz Kotlin, Krakus, Puchatek, Ekland,
DecoMorreno, Cremona, La Festa and Plusssz.
The firm’s exports account for around 40% of

total revenue and are directed to over 50
countries in the EU, North America, the Middle
East and Asia. 2011 2012 2013 2014 2015 2016
Source: Company Data, ISBnews

Maspex Wadowice
(cont’d)
Timeline of Acquisitions
Year Target's Name Country Segment (Brands) Comment
1995 Polska Zywnosc Poland Carrot Juices (Kubus)
1999 Anin Poland Cream for Coffee (Cremona)
Juices, Nectars, Fruit Drinks

1999 Tymbark Poland Entry into one of Maspex's landmark segments
(Tymbark)
2001 Multivita Poland Water (Multivita) Sold to Coca-Cola in 2003 to finance purchase of Lubella
Pasta, Grain Products (Lubella,

2003 Lubella Poland Entry into one of Maspex's landmark segments
Mlekolaki)
2003 Polski Lek Poland Diet Supplements
Walmark's Juice
2004 Czech Rep. Juices, Nectars, Fruit Drinks (Relax) Entry into Czech and Slovak markets
Business

2004 Olympos Hungary
(Olympos)

2005 Queen's Bulgaria
(Queen's)
2005 Plusssz Vitamin Hungary Sparkling Vitamin Drinks (Plusssz) Maspex's first major foreign brand to be introduced in Poland
2007 Arnos Romania Pasta (Arnos)
2008 Mark IV Russia Soft Drinks
2012 Salatini and Capollini Romania Snack Food (Salatini and Capollini)
2013 Malma Poland Pasta (Malma)
Juices, Nectars, Fruit Drinks, Jams

Agros Nova's Selected
2015 Poland (Lowicz, Krakus, Kotlin, Wloclawek,
Assets
Fruktus, Tarczyn, Dr Witt brands)
2016 Rio Bucovina Romania Water (Bucovina)

Mlekpol

Mlekpol was established as a dairy cooperative in
the early 1980s in Grajewo in north-eastern
Poland (the Podlasie region). Since then it
expanded by including 11 cooperatives: in Kolno,
Mragowo, Sejny, Zambrow, Augustow, Bydgoszcz,
Sokolka, Dabrowa Bialostocka, Radom Zwolen and
4,020
Gorzow Wielkopolski. The majority of them are 3,245
3,216
3,197
located in north-eastern Poland, but also in the
2,980
central and western part of the country.
Its dynamic growth started in the early 1990s,
n.a.
n.a.
39
33
31
26
14
16
when it launched its brands Laciate (the most 12

9
widely known milk brand in Poland), Milka and 2013 2014 2015 2016 2017
Mazurski Smak. Net Revenue EBIT Net Result
As of 2018, Mlekpol has a 40% share in the UHT

milk segment in Poland. More than 30% of its
products are earmarked for exports. Balance Sheet, PLN bn
In 2017, Mlekpol collected 1.77bn litres of milk and

plans to increase this volume in 2018.
1.57
1.35
1.34
1.34
In 2017, Mlekpol invested PLN 173mn and plans to

1.15
invest PLN 300mn in 2018. This includes PLN

1.06
0.92
120mn for one of the group's biggest

0.85
0.9
0.75
undertakings - the construction of a new

powdered milk facility in Mragowo. The planned
capacity of the plant is 3mn litres of milk and
whey per day.
2012 2013 2014 2015 2016

-0.16
-0.26
-0.26
-0.3
-0.31
Total Assets Shareholders' Equity Net Debt

Mlekpol (cont’d)
Financial Ratios, %
3.86
3.44
2.46 2.44
2 2.2
1.81
1.73 1.66 1.28 1.66
1.31 1.21 1.17
0.88
2012 2013 2014 2015 2016
ROA ROE ROCE
Investments, PLN mn Average Workforce, persons

2,328
2,323
175
107
2,214
2,212
2,187
71
64
63
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Sokolow

Sokolow was set up back in 1899, when the first
meat processing facility was set up in Rybakowo.
The company was traded on the Warsaw Stock
Exchange (WSE) between 1993 and 2006. Its
current owner is Danish Crown - the world's
largest pork exporter and Europe's largest pork
3,668
processor. Danish Crown is Europe's largest meat
3,356
3,330
3,204
3,150
processing company and a significant player in

the European beef market.
Sokolow currently has seven production plants.

125
126
n.a.
n.a.
n.a.
Three of them are engaged in pig slaughtering
and processing. The Kolo and Tarnow plants carry 2013 2014 2015 2016 2017
out cattle slaughtering, while those in Czyzew Net Revenues Net Result
and Debica are engaged exclusively in processing.
Over 90% of its raw materials come from Poland.

The firm purchases pork from around 2,000 Balance Sheet, PLN bn
providers and beef from around 2,500 providers.
1.65
Export sales account for around one-third of the 1.41
group's revenue. Its main market is the EU, which 1.24 1.28
takes up 86% of the total exports.
1.01
0.88
Sokolow is also building its own network of meat 0.75
0.82 0.8
delicatessen. It has already launched 48 shops
under the brand of Delikatesy Miesne Sokolow.
In March 2018, Sokolow received a permit from

n.a.
the Office of Competition and Consumer
Protection (UOKiK) to take over the Gzella group, 2011 2012 2013 2014 2017
which processes red meat and also runs a chain Total Assets Shareholders' Equity
of shops.

Sokolow (cont’d)
Investments, PLN mn
118
115
113
82
n.a.
2013 2014 2015 2016 2017
Average Workforce, persons

6,876
6,762
6,643
6,431
n.a.
2013 2014 2015 2016 2017

06
REGULATORY
ENVIRONMENT
57
06 REGULATORY ENVIRONMENT CONTENTS
Key Bodies
Agriculture Ministry
This is the government body that is most strictly related to the food industry, though more to
agricultural products than processed food products, which underlines the fact that the sector is not
overly regulated or scrutinised. The ministry’s duties related to food production include phytosanitary
certification, monitoring of plant protection and fertilising solutions, as well as GMOs and organic
products. It also supervises agri-food markets and gathers statistical data on them. Another key task
is the promotion of Polish food abroad as well as the promotion of regional food produce on domestic
markets. The ministry operates through, among others, the Foundation of Assistance Programmes for
Agriculture (FAPA), whose mission is to support actions aiming at the development of rural areas,
agriculture, agricultural markets and sectors of agricultural economy. Issues concerning food safety
are governed by the State Sanitary Inspection.
KOWR
The National Centre for Agriculture Support (KOWR) was established in September 2017. It replaced
the Agricultural Property Agency (ANR) and the Agricultural Market Agency (ARR) and took on their
respective responsibilities. ANR was a trust organisation authorised by the state treasury to perform
ownership rights in state agriculture with the obligation of taking over the property of liquidated
state-owned farms, and other agricultural real estate belonging to the state treasury. The ARR was in
charge of distributing funds to the beneficiaries under selected Common Agricultural Policy and
national schemes, promoting agri-food products in the EU and third countries and collecting,
analysing, processing and publishing information on the agri-food markets in Poland and abroad as
well as preparing forecasts for these.
Source: Agriculture Ministry, National Centre for Agriculture Support (KOWR)

06 REGULATORY ENVIRONMENT CONTENTS
Government Policy
Farmers' Trade Law

As of the beginning of 2017, Polish farmers are allowed to sell their produce free of VAT within an
annual limit of PLN 20,000. The goal is to promote local production and facilitate consumer access to
farm produce. Under this law, such trade has to be carried out without any intermediaries. After the
sales limit is exceeded, a 2% flat-rate tax is applied to these sales.
Trade Quality Law

In March 2018, a new law on trade quality of agri-food products took effect. Under the new
regulations, the Agri-Food Products Trade Quality Inspectorate (a body set up in 2003) will now have
to carry out tests of samples of agri-food products earmarked for retail trade. The new requirement is
a transposition of respective EU regulations.
Contractual Advantage Law

After the Contractual Advantage Law entered force in July 2017, the Office of Competition and
Consumer Protection (UOKiK) started to implement new regulations by investigating the relationships
between milk processing entities and their suppliers. It said that it had the most reservations on the
exclusivity clause as in some cases it requires suppliers to release all the milk they produce to a
specific dairy. According to the UOKiK, no supplier should be forced to deliver its products to one milk
processing facility only, especially if a contractual penalty is envisaged.
GMO Production Law

In July 2018, a law on production of Genetically Modified Organisms (GMO) took effect, as required by
the 2014 ruling of the Court of Justice of the European Union. Under the new regulations, a registry of
GMO cultivations will be created. Every cultivation may be included in the registry, provided that its
owner receives permits from owners of all plots within a radius of 30 km.
Source: Agriculture Ministry, Office of Competition and Consumer Protection (UOKiK), Presidential Chancellery

07
MEAT & DAIRY
PRODUCTS
60
07 MEAT & DAIRY PRODUCTS CONTENTS
Highlights
Overview
Poland has been the biggest poultry and poultry meat producer in the EU since it joined the union in
2014. It is also the second-biggest poultry exporter in the EU, the fourth-biggest producer of pork and
a very strong player on the dairy market - it has the third largest cattle stock in the EU, is the fifth-
largest cheese producer and the fourth-largest butter manufacturer. Exports, which take up around
40% of meat output, help to balance the changing food preference patterns in Poland such as the
shift from pork to poultry.
Challenges
Since 2014, Poland has been trying to cope with the African swine fever (ASF), which has a very
negative effect on pork trade. A number of non-EU partners, including Russia, have banned pork
imports from Poland.
Another challenge is consumers' shift to healthier food, which mostly translates into preferring
poultry rather than pork, but also entails preferences for higher quality dairy products, which often
means imported products. Also, Poles are cutting down on their beef consumption, mostly due to the
higher prices of beef.
Outlook
With their increasing affluence, Poles are keen on higher-quality food, which bodes well especially for
the poultry and dairy markets, but could also imply a return to beef products. Demand is strong and
rising on Poland's main export markets and, more importantly, Polish producers have adapted to
problems with exports to Russia and, to some extent, Ukraine, which means they should be more
resilient to future shocks. Thanks to sound exports, even the less popular segments such as beef are
posed for good times: in 2017, beef exports rose by over 20% y/y, with 86% of its volume sent to other
EU countries.
Source: Agriculture Ministry, IERiGZ, PKO BP

Main Events
Major Developments in 2017-2018

§ In March 2018, Indykpol announced its new strategy, under which the company will focus on its
core business of turkey meat production, but only in selected product groups. It therefore decided
to close down its subsidiary Eldrob's production plant in Swiebodzin due to its low capacity
utilisation (sticking to its main facility in Olsztyn).
§ In February 2018 the shareholders of Tarczynski, a premium red meat company, failed to pass a
resolution on withdrawing the company from the Warsaw Stock Exchange (WSE), the firm
announced in a statement. The firm's managers and founders, Elzbieta and Jacek Tarczynscy,
wanted to make the company private again, but other shareholders deemed the price they had
offered to be unsatisfactory. Thus, Tarczynski, which debuted on the WSE in 2013, remained listed
on the bourse.
§ In December 2017, red meat firm ZM Henryk Kania took over its peer Staropolskie Specjaly in
exchange for the write-off of the debt the acquired firm owned to ZM Henryk Kania, the buyer
announced. The value of the acquired company was estimated at PLN 293mn.
§ In October 2017, UK-registered FMCG company Bounty Brands Holdings Limited announced the
take-over of Profi, Poland’s prominent producer of pates and ready-to-eat soups. In 2016, Profi
generated revenues of over PLN 115mn. Bounty Brands’ previous acquisitions in Poland included
Sonko, a rice and healthy snacks business, and Stella Pack, a major manufacturer and distributor of
recycled refuse bags and other non-chemical household products.

Meat Production
Livestock Output Value, PLN bn, current prices

2005 2010 2012 2013 2014 2015 2016
Total Agricultural Output 63.34 84.48 103.11 107.5 105.34 98.64 103.36
Animal Output 32.56 39.57 47.38 49.78 51.54 49.2 50.89
Cattle, excluding calves 2.35 3.41 4.58 4.43 4.84 5.54 5.81
Calves 0.5 0.48 0.42 0.33 0.29 0.13 0.06
Pigs 9.71 9.27 12 11.1 11.14 10.84 11.27
Poultry 4.66 6.89 9.57 10.11 10.96 11.24 11.95
Cows' Milk 10.82 13.2 15.21 17.05 17.32 14.65 14.28
Hen Eggs 2.64 4.15 4.93 4.99 5.11 5.18 5.39
Processed Meat Production, thou tonnes
2000 2005 2010 2011 2012 2013 2014 2015 2016 2017
Animals Fats, Rendered, Edible 44.5 63.5 89.5 103 92.4 90 95.1 97.2 110 117
Poultry Meat 619 1,237 1,586 1,706 1,931 2,042 2,199 2,159 2,601 2,687
Cured Meat Products 857 756 729 780 764 767 761 735 830 831
Canned Beef and Veal Meat 28.5 20.3 54.1 59.3 65.4 66.8 64.4 65.9 69.7 63.5

Meat and Dairy Consumption
Meat Consumption per Capita, kg
77.6 78.5 79
73.4 73.6 75
71
67.5
42.5 41.4 40.8 40.5 40.5

39.2 39.1
35.5
28.2 29.2 30 30.5
25 26.1 26.5 27.1
12.2 11.7 12.2 13.5 12.5 13.1 12.4 12.2

2.1 1.6 1.5 1.6 1.2 2.1 2.2 2.2
2011 2012 2013 2014 2015 2016 2017e 2018f
Pork Beef Poultry Fish and Fish Products Total, incl. Giblets
Dairy, Egg Consumption per Person Comments

The IERiGZ expects food consumption to continue
2012 2013 2014 2015 2016 2017e 2018 to grow in 2018 for the fourth year in a row, albeit
the growth dynamics will likely ease down. It
deems that higher poultry production will
Animal Edible
Fats, kg
6 5.1 5.5 5.8 6.1 5.9 5.9 translate into a rise of consumption of poultry
meat and processed products, while the
consumption of pork and beef should stabilise.
Butter, kg 4.1 4.1 4.2 4.5 4.7 4.6 4.5 The rise of milk production yields and of dairy
cattle headcount, noted in 2017, suggests room for
higher production and consumption of dairy
Cow's Milk, litres 193 206 205 213 222 221 223 products in 2018. The Institute expects butter
consumption to decline, while egg consumption is
seen remaining more or less stable.
Hens' Eggs, items 140 148 155 144 145 142 142

Pigs and Pork
Comments Headcount & Slaughter,* mn heads

At the end of March 2018, there were 11.99mn
pigs in Poland, up by 0.73mn or 6.5% y/y and up
by 0.08mn or 0.7% compared to the end of 2017. 19.0 19.7 19.7
The growth was accompanied by falling prices as 17.2
15.6 16.4 15.8 15.9 15.7
14.9
in Q1 2018, pork procurement prices were around 14.3
13.5
11.6 11.7 11.6
PLN 4.44 per kg, down by 9.6% in annual terms. 11.1 10.9 11.4
For 2018, the IERiGZ expects a 1% y/y decline of

the pig headcount. This will be accompanied by
further increases of pig and pork imports.
2009 2010 2011 2012 2013 2014 2015 2016 2017e
Headcount Slaughter
* headcount in June, annual slaughter
Foreign Trade in Pigs & Pork, thou tonnes
2012 2013 2014 2015 2016 2017e
Exports in Total 578.4 706.2 623.2 649.4 697.9 722
Livestock 12.1 10.3 7.4 4.4 7 4
Meat 358.4 455.4 369.5 391.4 433.6 456
Processed Products 136.4 162.1 173.1 182.9 196.2 210
Imports in Total 738.7 819.5 822.6 840.5 863.9 855
Livestock 133.8 182.3 182.5 159.7 167.4 168
Meat 587.8 622.0 616.5 661.0 677.3 668
Processed Products 11.6 11.9 13.6 13.4 12.9 12

Cattle and Beef
Comments Cattle Headcount,* mn heads

Milk cows accounted for 38.8%, or 2.34mn out of
Headcount, mn heads
the 6.04mn heads of cattle at the end of 2017. 6.20
6.14
Their share remained stable compared to 39% a
year earlier. However, the IERiGZ expects the 5.96 5.94
5.92
number of milk cows to slightly rise to 2.38mn in 5.86
2018. 5.76 5.78
5.70 5.72
In January-November 2017, cattle imports fell by

7.6% y/y, while exports plummeted by 30.3% y/y.
The average procurement price of beef for the 11 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f
months of 2017 amounted to PLN 6.3 per kg and
was up by 6.5% y/y. * headcount in June of each year
Procurement Prices, PLN/kg, end-year* Beef Production, mn tonnes
Beef production, mn tonnes

10.8 1.05 1.07
9.69 9.52 9.84 9.6 0.97
0.92
8.81
0.81
0.74 0.74 0.75 0.72 0.71
6.58 6.31
6.1 6.16 6.22
5.75
2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f
Beef Livestock Calves
* 2017: end of September
Source: Statistics Office, IERiGZ, KOWR

Poultry
Poultry Meat, mn tonnes
2013 2014 2015 2016 2017e H1 2017 H1 2018f
Production 2 2.19 2.33 2.63 2.83 1.39 1.50
Imports 0.04 0.04 0.04 0.05 0.05 0.03 0.03
Supply 2.04 2.23 2.37 2.67 2.88 1.42 1.53
Exports 0.59 0.71 0.85 1.03 1.11 0.53 0.56
Domestic Consumption 1.45 1.51 1.52 1.65 1.77 0.88 0.97
Poultry Livestock, mn tonnes Comments

Poland has been the biggest poultry and poultry
3.45
3.69 meat producer in the EU since it joined the union
3.24 3.13 in 2014. It is also the second-biggest poultry
2.92
2.67
2.84
2.68 exporter in the EU. Around 40% of Polish poultry
2.26 2.37 2.28 is exported.
2.13
1.74
1.86 In 2017, Poland's poultry output rose by 7.5% y/y
to 2.69mn tonnes, while poultry prices were up
by 2.1% y/y (after falling by 2.3% y/y in 2016). The
0.45 0.46 0.47 0.47 IERiGZ expects higher poultry production to
0.36 0.35 0.38
translate into a rise of consumption of poultry
2012 2013 2014 2015 2016 2017e 2018f meat and processed products in 2018. It
forecasts production's growth by 5% y/y to
Livestock Production Br oiler Chicken Turkey 2.95mn tonnes.

Poultry Foreign Trade
Export Value, EUR bn Import Value, EUR bn
3 3 0 0.27 0
0.26 0.26
2.5 0.24
3 3 0 0.23 0.03 0
2.26 0.03 0.03
0.28 0.03
1.95 2.1 0.27 0.19
2 0.24 2 0 0.03 0.08 0
1.62 0.22 0.06 0.09 0.09
0.04 0.05
2 1.34 0.18 2 0 0
0.15 0.04
1.95 2.17
1 1.78 1 0 0
1.66
1.37 0.15 0.16
1.12 0.14 0.14 0.14
1 1 0 0.11 0
0 0.07 0.07 0.08 0.08 0.05 0.02 0 0 0

2013 2014 2015 2016 2017e 2018f 2013 2014 2015 2016 2017 2018f
Livestock Poultry Poultry Meat & Giblets

Livestock Poultry Poultry Meat & Giblets
Pr ocessed Poultry Total Pr ocessed Poultry Total
Export Volume, thou tonnes Import Volume, thou tonnes
1,415 178
2018f 125 2018f 8
1,260 60
30 110
1,262.9 175.7
2017 116.8 2017 7.8
1,121.6 56.6
24.5 111.3
1,148.5 168.8
2016 88.6 2016 8.2
1,025.1 47.3
34.8 113.3
957.3 148
2015 81.5 2015 7.6
849.6 36.3
26.2 104.1
804.1 135.7
2014 65.3 2014 8
714.3 37.5
24.5 90.2
668.6 121.1
2013 58.5 2013 10
587.4 39.9
22.7 71.2
Total Pr ocessed Poultry Total Pr ocessed Poultry

Poultry Meat & Giblets Livestock Poultry Poultry Meat & Giblets Livestock Poultry
Source: IERiGZ, Finance Ministry

Fish
Comments Fish Foreign Trade, EUR bn

The total supply of fish, fish products and
seafood is expected to ease down by slightly less
2.04
2.04
1.98
than 1% y/y to 475,200 tonnes in 2018 after it
2
1.81
dropped by 4.7% y/y to 479,800 tonnes in 2017,
1.66
1.61
1.54
1.6
1.49
1.44
according to the IERiGZ. The 2017 drop was
impacted by significant, double-digit growth of
exports, with stable imports. Fish supply rose by
3.5% y/y to 495,300 tonnes in 2016, chiefly due to
the increased local catch but also due to higher
imports. Fishing in the Baltic Sea rose by 3.1% y/y
to 138,900 tonnes in 2016. At the same time,
consumption of fish and seafood in Poland rose
2013 2014 2015 2016 2017 2018f
by 3.4% y/y to 12.9 kg per capita. The production
of frozen sea fish surged by 46.8% y/y to 63,400 Exports Imports
tonnes in 2016.
Fish and Seafood, thou tonnes
2013 2014 2015 2016 2017e
Sea Catch 195.4 171.4 186.3 197.2 195
Baltic Catch 134 118.5 134.7 138.9 130
Deep Sea Catch 61.4 52.9 51.6 58.3 65
Freshwater Catch, Fish Breeding 49.8 54.8 49.4 52.3 52.4
Imports 836.7 870.9 876.1 921.4 919
Exports 613.5 579.6 633.2 667.7 690
Domestic Supply 468.4 518.5 478.6 503.2 476.4
Canned Fish, Domestic Production 51.5 51.1 57 62.5 n.a.

Meat and Fish Prices
Average Annual Prices, % y/y change
2012 2013 2014 2015 2016 2017
Meat (average) 8.4 1.8 -1.1 -3 0 4.8
Poultry Meat 6 0 -2.8 -4.1 -2.3 2.1
Beef 14.3 2.3 -1.1 -1.1 0.5 2.9
Pork 10.3 0.8 -3 -6 1.5 8.6
Cured Meat Products 8.1 2.8 0.3 -1.6 0.2 4.5
Fish 8.5 1.1 0 -0.3 3.6 3.4
Eggs 31.9 -6.7 6.3 -2 -2.2 12.9
Procurement Prices, PLN per 1 kg Direct Farmers’ Sales Prices, PLN/kg
6.86 6.93 6.89 7.32 7.22

6.70 6.86
6.42 6.37 6.08 6.19 6.47 6.9
6.28 6.09 6.42 6.57 6.41 6.59 6.46 6.08 6.19 6.97
6.1 6.18
5.85 5.94 5.89 5.94 6.27 5.89 5.94
5.19 5.32
4.95 5.01 4.92 4.94 4.93 5.01 5.01
4.7 4.35 4.59
4.32 4.48 4.32
4.03 4.12 4.23
3.89 3.68 3.68 3.81
3.4 3.57
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
Cattle, excluding Calves Calves Pigs Poultry Cattle, excluding Calves Calves Pigs

Milk Output and Consumption
Comments Number of Dairy Cows, mn

Milk supplies to processing facilities rose by 3%
y/y to 3.8bn litres in January-April 2018. The 23.52
2016 2.13
IERiGZ and KOWR expect the whole-year milk 5.14
18.38
production to rise by around 4% y/y to 11.8bn
litres. The average procurement price for the four 23.59
2.13
months of 2018 increased by 3.2% y/y and 2015
5.22
amounted to PLN 135.91 per 1 hl. 18.38
23.56
In the entire EU, the biggest growth of milk 2014
2.25
5.38
supplies in Q1 2018 were noted in Germany, 18.18
France, Italy and Poland.
EU28 Poland EU 13* EU15
Milk Balance, mn tonnes
2013 2014 2015 2016 2017e 2018f
Production 12.74 13 13.26 13.27 13.72 13.87
Imports 1.42 1.74 1.63 1.83 1.9 2
Total at Disposal 14.15 14.74 14.89 15.1 15.62 15.87
Exports 3.5 4.03 4.04 3.88 4.2 4.4
Total for Consumption 10.11 10.11 10.29 10.7 10.85 10.96
* countries which joined EU in 2004 and 2007

Source: Statistics Office, IERiGZ, DM PKO BP

Dairy Products Output

Output of Selected Dairy Products, thou tonnes
2013 2014 2015 2016 2017e
Liquid Milk in Total 3,094.9 2,956.5 3,198.3 3345.1 3550
Fermented Milk Drinks 731.6 713.6 717.3 702.4 685
incl. Yoghurts 452.4 437.2 428.6 396.9 380
Powdered Milk and Cream 153.8 236.1 207.7 206.6 200
Cottage Cheese 405.2 406.0 429.9 449.3 475
Ripening Cheese 312.9 301.3 309.5 329.1 355
Other Cheese 17.2 10.2 16.3 12.7 15
Melted Cheese 87.9 82.0 77.7 80.3 80
Butter and Milk Fats 172.5 179.6 191.4 204.1 210
Iceceam (mn litres) 211.2 200.5 264.8 289.0 295
Whey 1,440.7 1,376.8 1,500.8 1,300.6 1,800
In January-April 2018, butter production rose by 13.5% y/y to 78,000 tonnes, while cream output was
up by 9% y/y to 131,000 tonnes. Powdered milk production increased in this period by 8% y/y to 56,000
tonnes.
In the first four months of 2018, the output of fresh cheese was up by 2% y/y to 156,000 tonnes and
that of hard and ripening cheese was up by 7% y/y to 113,000 tonnes. Yoghurt production eased down
by 0.5% y/y to 125,000 tonnes.
As for the fresh cheese segment, Poland was the EU's fourth-biggest producer with a share of 13% in
the union's market in 2017. Around 20% of this production is exported.

Dairy Foreign Trade
Export Volume, thou tonnes Export Value, EUR mn

50 105
Ice Cr eam 55.4 2018f Ice Cr eam 111.7
49.8 98.1
47.3 87.3
2017
265 805
Cheese, Cottage Cheese 243.4 2016 Cheese, Cottage Cheese 739.5
234.8 625.2
223.2 597.6
2015
55 230
Butter 56.9 Butter 265.3
45.2 131.1
41.3 120.9
245 245
Whey 214.9 Whey 213.9
222.3 150.1
238.5 171.6
105 125
Yoghurts and Drinks 96.8 Yoghurts and Drinks 117.6
92.6 102.7
101.5 111.5 2018f
120 240
Powdered Milk 120.6 Powdered Milk 244.8 2017
107.9 189.2
142.4 280.7 2016
630 370
Liquid Milk and Cr eam 598.2 Liquid Milk and Cr eam 385.2 2015
607.1 280
525.8 266.1
Import Volume, thou tonnes Import Value, EUR mn

20 45
Ice Cr eam 21.1 2018f 47.4
19.5 Ice Cr eam 40.2
17.4 31.4
2017
100 360
Cheese, Cottage Cheese 92.7 2016 324.7
88.4 Cheese, Cottage Cheese 287.5
76.2 262.4
2015
20 90
Butter 19.5 104.3
16.7 Butter 61.8
13.7 48.2
105 50
Whey 91.6 48.9
61.1 Whey 30
72.6 31.4
80 100
Yoghurts and Drinks 72.1 Yoghurts and Drinks 82.5
63.3 72.7
38.7 51.5
2018f
100 170
Powdered Milk 96.4 Powdered Milk 160.8 2017
116.6 232.2
106.4 243.5
2016
220 120
Liquid Milk and Cr eam 202.3 Liquid Milk and Cr eam 156.1 2015
254 128
212.4 86.8

08
PLANT-BASED
PRODUCTS
74
08 PLANT-BASED PRODUCTS CONTENTS
Highlights
Overview
Poland has the fourth-largest agricultural land area in the EU and is consequently the leading
producer of many agri-foods. The country is the top producer of apples, black currant, champignons,
triticale, white cabbage, raspberries and carrots. It is the second-biggest grower of rye, oats, potatoes,
cucumbers and strawberries as well as the third-largest producer of sugar beets, wheat, rapeseed,
cauliflower, and onions. Overall, Poland is the third largest cereal producer in the EU, only behind
Germany and France.
Challenges
Poles' inclination towards a healthier diet remains the main challenge for the subsector. Demand for
high quality foods is on the rise and although these come mostly from imports, domestic producers
could also take advantage of this trend.
Competition for both export markets as well as market shares on the domestic market is also a
potential challenge. However, Polish food producers have significantly improved the quality of their
products over the last two decades and proved they are flexible enough to find new export markets.
Outlook
Polish food producers are expected to continue to expand their export markets. Domestically,
improving economic conditions and the government's social spending translate into rising
consumption, which bodes well both for the output and the quality of food products. With the rising
affluence of Poles, and the rising popularity of meat-free diets, food producers may carve out
interesting market niches.
Source: Agriculture Ministry, IERiGZ, PKO BP

Main Events
Major Developments in 2017-2018

§ In June 2018, shareholders subscribed to sell 25.96mn shares of Colian Holding, one of the biggest
confectionery producers, in the tender for shares announced by AllumaInvest, Ziolopex, Barbara
Kolanska, Jan Kolanski, Colian Holding and Ipopema 21 FIZAN, Colian announced. Thus, this group
of shareholders now holds 91.75% of the firm's capital. In March, they announced the tender with a
view to increase their combined holding in the company to 100% from 66%.
§ In May 2018, Lubella, a subsidiary of the biggest locally-owned food producer Maspex, launched a
new production-and-warehouse complex in Lublin, built at the cost of PLN 130mn, Maspex
announced. Since acquiring Lubella in 2003, Maspex invested over PLN 400mn in the subsidiary.
§ In April 2018, Scandinavia-based bakery producer Lantmannen Unibake, owner of the Schulstad
brand, launched in Nowa Sol its biggest bakery in Poland and the second-biggest in Europe,
grocery industry site portalspozywczy.pl reported. So far, it invested EUR 37mn in the project, while
total outlays are planned to reach EUR 75mn by the end of 2019.
§ In February 2018, Mondelez International RD&Q signed a PLN 12.35mn contract with Mostostal
Warszawa on the expansion of Mondelez's R&D centre in Bielany Wroclawskie. The centre was
launched in June 2017 as one of the group's three such units in Europe.
§ In January 2018, Turkey-based snacks producer ETi entered the Polish market with a wide range of
products, announcing plans to invest a few million euros in the country. Since deciding upon
foreign expansion in 2015, ETi has already launched a production plant and a hub for CEE in
Romania.
§ In October 2017, Continental Bakeries reached an agreement about the acquisition of Delicpol, a
cake and biscuit producer with an annual turnover of EUR 58mn and around 950 employees,
Continental Bakeries announced. The major products are jaffa cakes, sponge cakes, ginger bread
and biscuits.
Source: Company Data, portalspozywczy.pl

Production and Consumption
Agricultural Output Value, PLN bn, current prices

2005 2010 2012 2013 2014 2015 2016
Total Agricultural Output 63.34 84.48 103.11 107.5 105.34 98.64 103.36
Plant Output 30.78 44.92 55.74 57.72 53.81 49.44 52.47
Cereals 9.87 15.07 22.93 20.58 19.65 16.32 16.74
Potatoes 3.17 4.09 4.07 4.2 4.06 3.17 4.53
Sugar Beets, Industrial Crops 2.09 1.65 2.23 2.98 2.34 1.73 2.67
Other Industrial Crops 1.78 3.84 4.28 4.52 4.88 4.5 4.24
Vegetables 3.78 6.28 7.13 8.84 8.97 9.4 8.46
Fruits 3.16 3.99 5.37 6.35 4.93 6.42 6.49
Others 5.42 7.62 7.72 8.36 7.18 6.45 7.52
Consumption per Capita, kg
2010 2011 2012 2013 2014 2015 2016 2017e 2018f
Grains, 4 Basic Types 108 108 108 108 106 103 103 102 101
Potatoes 110 111 111 102 101 100 97 96 95
Vegetables 106 104 103 102 104 105 106 105 106
Fruits 44 42 46 46 47 53 54 53 54
Plant Edible Fat 21.5 21.9 22.2 22.6 23 23.4 23.7 24.1 24.5
Sugar 39.9 39.4 42.5 41.9 44.3 40.5 42.3 42.8 43.5

Flour and Bakery Products
Comments Monthly Bakery Products & Flour

Consumption per Capita, kg
Bread consumption in Poland has been on a
downward trend for many years - it declined to
4.13
3.94
3.74
below 40 kg per capita in 2017 compared to 100
3.52
3.32
kg in 1981. This has been mainly caused by the
Polish consumers' growing focus on healthy food
and to bread makers’ being slow in adapting to
this trend.
In 2017, the entire baked good market dropped by

0.76
0.76
0.72
1% y/y in volume terms to 2mn tonnes, while it
0.68
0.6
0.38
0.38
0.37
0.37
0.37
rose by 1% y/y in value terms to PLN 12.5bn.
Euromonitor International expects the market to 2013 2014 2015 2016 H1 2017
change little in volume and value terms in its
Bakery Goods Pasta Flour
forecasts for 2018-2022.
Wheat Flour* Foreign Trade, thou tonnes Bakery Products and Flour Output, mn
tonnes
131.44
2.62
2.3 2.37
91.74
2.23 2.2 2.21 2.23 2.26

84.75
76.69
71.56
1.67 1.62 1.69

1.6 1.57 1.59 1.59 1.59
56.41
52.50
52.21
54.2
42.98
0.18 0.18 0.18 0.18 0.17 0.18 0.18 0.18
2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 2017
Exports Imports Wheat Flour Pasta Bakery Products
* wheat or meslin flour

Source: Statistics Office, IERiGZ, Euromonitor International

Vegetables
Vegetable Production, mn tonnes
2000 2005 2010 2011 2012 2013 2014 2015 2016
Cabbages 1.9 1.32 0.99 1.23 1.14 0.98 1.16 0.88 1.02
Onions 0.72 0.71 0.58 0.68 0.64 0.55 0.65 0.55 0.65
Carrots 0.95 0.93 0.77 0.89 0.84 0.74 0.82 0.68 0.82
Beetroot 0.5 0.36 0.29 0.37 0.35 0.3 0.36 0.3 0.34
Cucumbers 0.36 0.26 0.25 0.3 0.28 0.25 0.27 0.22 0.26
Tomatoes 0.31 0.23 0.23 0.27 0.26 0.27 0.27 0.24 0.26

Vegetables (cont’d)
Vegetable Exports, EUR mn Vegetable Imports, EUR mn
2014 2015 2016 2017 2018f 2014 2015 2016 2017 2018f
Onions 47 45.9 50.3 44 45 Onions 20.9 15.5 16.4 11.7 12
White Cabbage 13.9 14.3 10.7 12.2 12.5 White Cabbage 4.8 5.8 6.8 6.2 6.5
Cucumbers 7.8 7.1 11.5 12.6 13 Cucumbers 36 40.3 47.4 59.3 52
Carrots 9.8 10.4 7.1 8.3 8.5 Carrots 6.5 14.2 14.8 10.6 10.5
Tomatoes 75.3 77.4 70.7 64.2 68 Tomatoes 157.3 161.5 162.1 192.3 173
Fresh Vegetables in
258.3 253 268.2 249.3 255 Fresh Vegetables in Total 442.6 484.8 514.6 586.4 550
Total
Frozen Vegetables 213.2 236.5 234.9 233.6 235 Frozen Vegetables 34.7 34.8 40.6 37.2 35
Pickles 5.5 6.7 6.2 7 7 Pickles 16.1 18.6 17.9 20.5 20.5
Canned Vegetables 59 55.1 51.5 57.4 60 Canned Vegetables 55.4 61.6 61.2 58.3 56.5
Processed Vegetables in
Processed Vegetables 452 492.5 494.6 508.3 515 226.6 261.1 271.8 260.5 250
Total
The export value of fresh and processed vegetables eased down by 0.7% y/y to EUR 757.6mn in 2017,
while import value rose by 8% y/y to EUR 846.9mn, which resulted in a EUR 89.3mn negative trade
balance, up from EUR 23.6mn in 2016. The IERiGZ attributes the increase in foreign trade deficit
primarily to higher imports of most types of fresh vegetables.
The largest share of exports belonged to tomatoes, but their exports fell by 14% y/y in volume terms
to 84,000 tonnes in 2017 and by 9% y/y in value terms to EUR 64.2mn. Furthermore, Poland is a net
importer of tomatoes.

Potatoes
Comments Potato Prices, PLN/100 kg

Potato production in Poland has been growing in
recent years, which translates into lower prices
104.45
than in Western Europe. 95.98
87.59 89.52
85.33
The IERiGZ estimates that in the 2017/2018 77.50
season, a slight increase in the export of 68.11
63.49 63.15
potatoes should be seen. On the other hand,
50.48
exports of unprocessed potatoes and potato
starch will probably be stable in annual terms. 29.99
35.36
31.53 29.55
Imports of potatoes for direct consumption and
of seed potatoes will also be largely unchanged
y/y.
H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017
Potato starch output was 195,000 tonnes in 2016
vs. 138,000 tonnes in 2015 and 76,900 tonnes in Pr ocurement Prices
2010. Pr ices Received by Farmers on Mar ketplaces
Balance of Potatoes, mn tonnes
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18f
Domestic Crops 8.45 9.36 9.04 7.29 7.69 6.31 8.87 9.84
Imports 0.26 0.14 0.09 0.21 0.13 0.15 0.1 0.1
On-Farm Use 4.16 4.7 4.1 2.78 2.99 1.99 3.76 4.41
Market Sales 3.84 3.96 4.22 3.94 4.11 4.11 4.43 4.44

Potatoes (cont’d)

570.5 420.3
542.4 407.8
436.7 322.6
374.4 274
344 251.9
41 35.9 45
16.5 26.5 8 7.9
7.4 3.1 5.7
2014 2015 2016 2017 2018f 2014 2015 2016 2017 2018f
Potatoes Potato Products Potatoes Potato Products
Import Volume, thou tonnes Import Value, EUR mn
311.2 306.4
583.9 585
550.5 562.5 277 282.8
529.1 259.7
205.2
146.5 151.3
117 110 46.5 46.5
31 35.5 28.4
2014 2015 2016 2017 2018f 2014 2015 2016 2017 2018f
Potatoes Potato Products Potatoes Potato Products

Fruit
Tree Fruit Production, thou tonnes Berry Fruit Production, thou tonnes
2013 2014 2015 2016 2017e
204.9
202.5
198.5
194.5
192.6
197
177
166.1
Total 3,526.6 3,625 3,547.1 4,070.2 2720
162.6
154.2
150.2
129.1
127.1
125.9
130
121
Apples 3,085 3,195.3 3,145.8 3,604.2 2500
100
78.3
Pears 75.7 73.7 65.8 81.5 60
16.3
Plums 102.4 106.1 90.8 109.5 60

12.4
12.5
10.8
15
10
Sour Cherries 188.2 176.5 174.1 194.8 70 2012 2013 2014 2015 2016 2017
Strawberries Raspberries Cur rants Gooseberries
Comments
Poland is the EU's biggest producer of apples, black currant, and raspberries as well as the second-
biggest grower of strawberries. However, apples are by far the most important product in this group.
There are two types of apple growers in Poland. The first group are gardens with total area of around
50,000 hectares or 27% of the total area of apple production with 2,000-4,000 trees per hectare. The
average garden size is 15-20 hectares. This segment's annual output is around 2mn-2.5mn apples, of
which 1.5mn-1.9mn are quality apples. There are around 3,000 producers in this segment, which boasts
high profitability.
The second group covers around 100,000 hectares or 54% of total area of apple production. The
annual crop of these farms is around 1.5mn-2mn apples, all of which are used for processing - unlike
those from the first group, which are earmarked directly for retail sales. Furthermore, procurement
prices in this segment are often lower than production costs, according to the IERiGZ, apple
production is merely additional for the 30,000 farms in the second segment.

Fruit (cont’d)
Fresh Fruit Import Value, EUR mn Fresh Fruit Export Value, EUR mn
590
135
2018f 28
2015 2016 2017 2018 16
300
602.2
134.3
2017 17.2
11.4
336.8
Bananas 246.1 252.8 282.3 290 592.3
120
2016 32.4
16.4
316.8
567.4
104.3
Citrus Fruits 345.5 377.8 382.1 380 2015 39.3
17.5
299.5
612.8
116
2014 26.2
19.4
351.6
Grapes 138.9 132.6 159.3 160
Fresh Fruits in Total Re- Exports of Tropical Fruits

Raspberries Strawberries
Peaches & Apples
79.8 83.8 101.7 100
Nectarines
Processed Fruit Product Export Value, EUR

mn
1,235.6
1,218.5
1,133.4
1,175
1,090.9
Kiwi 29.2 31.2 34.4 38.5
Watermelons 35.6 39.1 46.2 45

550.1
502.6
492.3
483.4
455.7
451.9
475
413.7
468
430
215.9
201.1
176.4
165.9
220
Apples 16.6 9.1 12.5 15
2014 2015 2016 2017 2018f

Fruit Juices
Total 1,217.3 1,282.5 1,492.4 1,500 Frozen Products
Jams and Other Highly-Processed Products
Pr ocessed Fruit Products in Total

Fruit and Vegetable Prices
Average Retail Prices of Selected Fruit, PLN/kg
Apples Pears Plums Cherries Strawberries Raspberries Grapes Bananas Oranges Lemons Tangerines
2014 2.6 5.38 5.13 16.57 8.62 15.5 10.55 4.99 4.92 7.63 6.4
2015 2.74 5.45 4.58 18.88 9.47 17.82 10.91 4.91 5.05 7.31 6.58
2016 2.57 5.25 4.38 13.16 11.48 25.29 11.25 5.03 5.31 9.7 6.71
2017 3.08 6.07 7.04 17.7 13.11 30.26 11.94 4.81 5.8 7.68 7.21
Average Annual Retail Prices, % y/y Average Retail Prices of Selected

change Vegetables, PLN/kg
10.7 Field Cucumbers 4.94
4.08
8 6.86
Tomatoes
6.04
5.5
Pepper 10.21
10.31
2.8 2.9
1.8 2.2 1.7 6.49
Leek 5.73
Celer iac 4.25

4.93
-0.7
Beetroot 1.87
-2.8 1.91
-3.6
Car rot 1.9
2.2
-6.4
2012 2013 2014 2015 2016 2017 Green Cabbage 1.53
1.77
2017
Vegetables Fruits Onions 2.02
2.29 2016

Balance of Sugar, thou tonnes

2013/14 2014/15 2015/16 2016/17 2017/18f
Domestic Production 1,761 2,033 1,744 2,049 2,100
Imports 220 200 122 200 180
Domestic Consumption 1,650 1,700 1,705 1,700 1,730
Exports 470 550 435 550 550
Output of Selected Confectionery Products, thou tonnes

2012 2013 2014 2015 2016e
Marmalade, Jams 124.7 117.2 119.2 124.1 128
Chocolate 207.9 214.4 220.4 225.1 238
Chocolate Goods 166.1 207 214.5 232.1 236
Candies 62.7 67.5 82.4 68 72
Other Confectionery Goods 146 162.8 175.8 167.4 172
Comments
Sugar beets area in 2018 amounts to around 235,000 hectares, which is a rise of 5,000 hectares y/y,
according to the IERiGZ's estimates. This, the Institute projects, should translate into output of around
15.3mn tonnes of beets, allowing to manufacture around 2.3mn tonnes of sugar. At the same time,
domestic consumption is forecast at 1.72mn tonnes, hence the need for large-scale exports.
At the same time, chocolate consumption in Poland is on the rise - it amounted to around 6.3 kg per
capita in 2016, which is nearly 30% more than in 2011, according to estimates of Bank BGZ BNP
Paribas.
Poland was the EU's fifth-biggest exporter of chocolate in 2017, with 115,300 tonnes of exports.
However, imports were still higher in 2017, at 128,100 tonnes.
Source: Statistics Office, IERiGZ, Bank BGZ BNP Paribas


(cont’d)
1,392.5
1,428.6
1,357.7
709.7
1,380
700
464.8
432.0
321.6
310.6
311.4
304.4
320
315
250.5
206.3
363.1
327.8
323.2
390
313.1
307.1
290.8
269.9
320
300
109.9
186.9
186.9
120
115
114
226
99.3
108
83.5
76
37.2
33.3
34.1
14.8
15.5
30.2
25.6
11.2
38
32
15
2015 2016 2017 2018f 2015 2016 2017 2018f
Sugar Barrel Syrup Sugar Barrel Syrup

Confectionery without Cocoa Confectionery with Cocoa Confectionery without Cocoa Confectionery with Cocoa
Fine Bakery Products Honey Fine Bakery Products Honey
Import Volume, thou tonnes Import Value, EUR mn 700

246.4
678
618.1
602.7
180.8
185
167.3
160
137.7
118.5
130
190.0
186.4
168.2
166.2
62.2
56.9
53.7
65
100.3
38.3
113
50
97.8
36.4
105
47
33.6
83.6
78.8
27.6
26.4
24.4
22.6
54.6
46.1
30
44.1
25
65
21
52
50
2.9
2.6
2.9
2015 2016 2017 2018f 2015 2016 2017 2018f
Sugar Barrel Syrup Sugar Barrel Syrup

Confectionery without Cocoa Confectionery with Cocoa Confectionery without Cocoa Confectionery with Cocoa
Fine Bakery Products Honey Fine Bakery Products Honey

09
RETAIL
CHANNELS
88
09 RETAIL CHANNELS CONTENTS
Main Grocery Shop Chains
Comments Top Grocery Brands by Number of Shops,

% of total, 2016
The grocery market's value rose by 3.8% y/y to
263.4bn in 2017 and should expand by another Biedronka 42.7
3.9% y/y to PLN 273.7bn in 2018, according to
Lidl 13.83
estimates of the researcher PMR. It notes that
abc 11.95
the market is highly concentrated: the top 20
players account for 67.3% of the market, the top Tesco 10.83
10 retailers represent 59.1%, with the top 5 Auchan 10.19

players accounting for a whopping 46.5% of the Kaufland 10.11
market. However, it still sees some scope for Lewiatan 9.89
further consolidation in supermarkets and
Car refour 9.7
small-format shops segments.
Nasz Sklep 5.56
Grocery-related specialised shops constitute Zabka 4.81
around one-fourth of total shopping area in
Intermarche 4.51
Poland, while shopping centres take up another
Delikatesy Centrum 4.39
50% of the total.
Dino 3.37
Netto 3.09
E.Leclerc 2.71
Retail Groups: Share in Market Sales in Retail Groups: Share in Shop Numbers in
2016, % of total 2016, % of total
GK Specjal 3.8% Zabka Polska 2.5%
Schwarz Group Others 61.9%
Carrefour 1%
Others
3.8%
43.4%
Auchan
Group 4.2% Carrefour 1%
Tesco 4.3% Metro Group

2.9%
Schwarz Jeronimo
Group 9.4% Martins 3.3%
Jeronimo Zabka Polska
Eurocash GK Specjal Eurocash
Martins 5.4%
11.8% 16.8% 6.7% 17.8%
Source: PMR

09 RETAIL CHANNELS CONTENTS
Retail Facilities by Type
Shops by Type of Goods, at year-end, thou Comments

The number of shops in Poland amounted to
slightly over 367,000 at the end of 2016 and was
4.4
higher by 1.7% in annual terms. Total retail area
Alcohol 4.9 rose at that time by 2.5% y/y to around 37.09mn
4.3 sq m. The highest growth of space was noted in
the case of shops with area of 400-999 sq m (up
by 3% y/y), small shops of up to 99 sq m (up by
8.6
Bakery, 2.8%) and in shops with area of 100-399 sq m (up
8.9
Pastry by 2.7% y/y).
8.1
Around 31% of shops in Poland dealt with sales of
various foods and beverages in 2016. The second
1.1
biggest segment were clothing and footwear
Fish 1.2 shops, with a share of 12% of the total number of
1 points of sale.
The recent trend of discount chains eating up

10.7 market shares of small-format shops was
Meat 11.4 continued in 2016-2017. In 2017, the small-format
10.7 shops' (i.e. up to 300 sq m) share of retail space
was 42.9% vs. 51% in 2008. while in the same
period, the share of discount shops increased to
5.1
31.7% from 12%. The total area of hypermarkets
Fruits and
Vegetables
5.9 was 10.5% of the total in 2017, while that of
5 supermarkets came to 14.9%.
80.9
Groceries 82.9
83.7
2016 2015 2014
Source: PMR

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An EMIS Insights Industry Report

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02 SECTOR FORECAST p.12

03 SECTOR IN FOCUS p.20

04 COMPETITIVE LANDSCAPE p.35

05 COMPANIES IN FOCUS p.46

06 REGULATORY ENVIRONMENT p.57

07 MEAT AND DAIRY PRODUCTS p.60

08 PLANT-BASED PRODUCTS p.74

09 RETAIL CHANNELS p.88

2.39% 13.4% 9.3%

6th 391,000 8th

No.1 No.2 No.1

Note: Data for 2017.

POLAND FOOD SECTOR 2018/2022 6

Source: Statistics Office, Agriculture Ministry, Finance Ministry, PMR, DM PKO BP

POLAND FOOD SECTOR 2018/2022 7

KEY PLAYERS REVENUES

POLAND FOOD SECTOR 2018/2022 8

POLAND FOOD SECTOR 2018/2022 9

POLAND FOOD SECTOR 2018/2022 10

POLAND FOOD SECTOR 2018/2022 11

Real GDP Growth, y/y change, % Consumption and Investment,

POLAND FOOD SECTOR 2018/2022 13

Unemployment Rate, % of labour force Consumer Price Index, y/y change, %

6.2 2.5 2.5 2.5 2.5 2.5

Exports and Imports, y/y change, % Current Account Balance

8.8 9.0 0.0

-12.0 -1.4 -150%

POLAND FOOD SECTOR 2018/2022 14

Comments Economic Sentiment Index*

* Neutral point in the Economic Sentiment Index is 100

POLAND FOOD SECTOR 2018/2022 15

2015 2016 2017 2018f 2019f 2020f 2021f 2022f

Source: EMIS Insights

POLAND FOOD SECTOR 2018/2022 16

Sector Outlook (cont’d)

Meat Production, thou tonnes Frozen Food Products, thou tonnes

2015 2016 2017 2018f 2019f 2020f 2021f 2022f

Source: EMIS Insights

POLAND FOOD SECTOR 2018/2022 17

Sector Outlook (cont’d)

2015 2016 2017 2018f 2019f 2020f 2021f 2022f

Edible Animal Fats Production, thou

Cured Meat Products Output, thou

Canned and Preserved Ham Production,

Canned Beef and Veal Production, thou

Frozen Sea Fish Filets Production, thou

Source: EMIS Insights

POLAND FOOD SECTOR 2018/2022 18

Sector Outlook (cont’d)

2015 2016 2017 2018f 2019f 2020f 2021f 2022f

Frozen Vegetables Production, thou

Frozen Fruits and Nuts Production, thou

Groats and Semolina from Wheat

Groats and Semolina from Barley

Groats and Semolina from Buckwheat