Poland: A market poised for growth

A population of nearly 40 million people means nearly 40 million potential seafood consumers. With this in mind, Polish processors are heralding a new era of growth in the eastern European country.

Increased disposable income, the rise of the middleclass and an economy in development -- after years of Communism up until 1989 -- seem like a great combination for seafood businesses to boost their stake in Poland.

And indeed consumption is rising: Last year, the country saw a growth of 65 percent to an average of 11.8 kilogram per capita consumption, Artur Kiner of the Polish Association of Fish Processors (PSPR) told IntraFishat the recent Polfish tradeshow in Gdansk.

How it will develop in the coming years "is hard tosay," but the potential for growth is there, especially for freshfish and value-added products (VAP)

Herring, pollock, salmon and cod are the most consumed species, and accounted for about 70 percent of the 452,000 metric tons of total imported fish and seafood in 2012, which was valued at €1.19 billion ($1.5 billion).

Tough times for processors

That said, Polish processors haven't had it easy, Kiner said. Processing companies traditionally focuson exports, especially since it joined the European Union (EU) in 2004.

In 2012, about 349,000 metric tons out of 370,000 metric tons produced at the country's 532 processingplants went back into exports.

With a total turnover of PLN 7 billion (€1.6 billion/$2.2 billion), it hold the ninth place among seafood-processing countries in the EU.

Higher raw material prices, an unfavorable currency, and sluggish consumer prices, however, led to a drop in profit of about 60 percent from PLN 256 million (€59.6 million/$78.9 million) in 2009 to PLN 105 million (€24.4 million/$32.4 million) in 2012, Kiner said.

Nevertheless, net income for the total fish processing industry saw a rise by 2.7 percent between lastyear and 2011.

Growth potential

However, talking to Polish and international processors, IntraFishheard thoroughly positive sentiments regarding the country's potential in seafood.

Herman Kroes, general manager at German company All-Fish, which showcased its products at the Polfish show, said the country is a "market with future."

"Demand is positive and especially fresh fish has recently seen a good turn-around at retailers," he told IntraFish. However, price -- and currency is playing into this-- is still very important, he said.

Polish family company SoNa, which processes about 100 metric tons of fish a week, is also seeing an increase in its sales.

"The Polish market is still very open to new seafood," Maria Pedola, purchase and sales director at SoNa, said. "Sales are increasing slowly, but steadily."

This is mirrored by Jacob Kicerman, member of the management board at tilapia producer Global Fish, who said people are getting "more and more aware of new protein sources." "Poland is quite a big market, and still underestimated," he said. "It is still developing."

Kicerman sees the biggest potential in fresh fish, he told IntraFish during a recent visit at the company's plant.

"Frozen fish is available and it will be always a great success; it has been for ages especially in Poland," he said. "But people are looking for something new."

Aggressive retail expansion

Global Fish is targeting both foodservice and retail but Kicerman sees the biggest potential in retail, driven by the aggressive expansion of discounters.

Biedronka, owned by Portuguese company Jeronimo Martins, is the biggest chain of no frills supermarkets in Poland, with currently more than 2,100 shops, and perhaps also the biggest driver of discount growth.

John-Paul McGinley, CEO at Morpol, told IntraFishduring a recent visit at the company's Utska plant, retail expansion will boost consumption -- and Poland is no exception.

"In Poland, you notice Biedronka all over," he said. "It is one of the fastest growing retailers, the market leader, and is planning to open one shop per day until the end of 2015.

"Effectively, that means it will go from 2,000 to 3,000 shops," he said. McGinley, however, warns that Poland -- just as other emerging markets -- is very price-sensitive. Emerging markets, he said, "develop fast when the prices are relatively low.

"What will happen when prices go up? Will the increase in price balance of the underlying demand pool,as a consequence of the new availability due to the supermarkets? Or will the availability overrun the price?" he asked. "That's a question I cannot answer."

And then there is salmon

The country has been a hot-spot for salmon processing for years -- with the three giant salmon smokersMorpol, Suempol and most recently also Limitotaking the top spots. Traditionally, also these companies have focused onexports but this is poised to change.

McGinley said Poland hasn't been a strategic marketfor Poland but "certainly we start to focus on it going forward."

"The Polish market is developing really fast. It's just amazing," he said, adding salmon consumption is increasing.

"If you go to the supermarkets then you'll see salmon everywhere. There are no good numbers yet, consumer numbers which are reliable, but any numbers that I have seen, or through conversations with our customers, it's clear that there is significant growth in domestic consumption," he told IntraFish.

As the country continues to develop and consumers continue to get wealthier, he said, "there's no reason why that shouldn't continue.

"Poland is a country of 40 million people," he said. "There's a huge base of consumers out there who like fish and who understand salmon. It's just clear that the developments in these countries will go forward."