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Agence wallonne à l’Exportation et aux Investissements étrangers
Wallonia Export-Investment Agency
Julio Curie, 19, Bl. 1, fl. 12, apt.22/1113 Sofia/BULGARIA
Tél.: +359 2/97 97 435/436 ; +359 2/97 97 460/461
E-mail: [email protected]
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AWEX SOFIA – THE ORGANIC SECTOR IN BULGARIADecember 2016
1. General overview of Bulgaria
Bulgaria is a country located in South East Europe with a territory of 110.9 thousand km 2. It has 7.2 million inhabitants. According to IMF, the Bulgarian economy has been resilient to multiple shocks in recent years and macroeconomic developments have been encouraging. In 2015, GDP grew by 3.6 %. The economy is expected to grow 3.3 % this year and around 2.5 % in the medium term. Deflation has recently showed signs of gradual easing, supported by decelerating energy price declines and a pick-up in food prices. With slow convergence, the country’s per capita income (on a purchasing power parity basis) remains less than half of the EU average (about 5.787 € annual gross). One of five Bulgarians lives below the poverty line of 323 BGN (about 165 €) per month. The unemployment rate is around 9% (at its lowest level in seven years) and, according to the forecasts, there will be a decrease in the coming years (2016 – 8.2 % and 2017 – 7.1 %). The administration, transport, IT, & trade sector accounts for around two thirds of economic activity (63%), industry 30% and agriculture 7%. Life expectancy at birth was 74.9 yrs. (2013), among the lowest in the EU 28.
source:http://www.imf.org/en/News/Articles/2016/11/10/PR16498-Bulgaria-IMF-Executive-Board-Concludes-2016-Article-IV-Consultation-with-Bulgaria
2. Bio sector : current situation in Bulgaria
Certainly, the consumption of organic food in Bulgaria is still low. Its share is even less than 5% of the total food market. For comparison, in Germany this percentage is around 20-25%, while in countries such as Denmark and Sweden it reaches 50%. In these countries there are products that actually are not found unless organic, which is not the case in Bulgaria yet.
Even though there is no official data on the sector of organic retail trade in the country, it is clear that it is developing dynamically. Indeed, back in the years the market was dominated by importers and traders, but now the business is more and more oriented towards the local creation of products. Deliveries to Bulgaria are mainly originated from Germany (70%), Italy, Turkey, Greece, the Netherlands, India and South America.
Only 10% of all sales of organic products in the country are made through specialized shops. Judging on sales revenue in the segment, the largest organic shop today is either "Fantastico" or "Kaufland".
According to Albena Simeonova, President of Bulgarian Association of Bio Products, the organic products people are most interested in are fruits & vegetables, as well as baby food and honey.
3. Main players* :
Name Web Activity Comments
Bulgarian Association of Bio Products
http://bgbio.org/
Branch organization uniting manufacturers, processors and traders of organic raw materials and products in Bulgaria.
Organizes a common stand in several fairs, such as Biofach in Germany (https://www.biofach.de/) , Interfood & Drink in Bulgaria (http://food-exhibitions.bg/bg/interfood-and-drink) .
Bio Register
http://bioregister.mzh.government.bg/front/operators
Register of all manufacturers, processors and traders of agricultural products and food produced organically in Bulgaria
BALEV BIOhttp://www.balevbiomarket.com/?___store=en
3 specialized shops in Sofia, Varna and Plovdiv; importer, distributor of organic products & online sale
97-98% of organic products offered there is imported; portfolio counts about 4-5 thousand items; fruits and vegetables supplied mainly from the Netherlands; eggs, raw desserts and dried apples branded BALEV; Bulgarian dairy products, dairy products imported from Denmark, processed products (organic wheat, meat and flour) mainly imported from Germany, raw commodities (fruits and vegetables) imported from Italy, Spain and Greece, cosmetics and French bio wine from France.
BIO BULGARIA OOD
http://bio-bulgaria.com/
Producer, distributor, exporter & retailer of organic food; owner of the HARMONICA brand (bio yogurt, cheese and boza);
Deliver directly to more than 600 points of sale in major Bulgarian cities (all major supermarket chains, all organic stores, many independent shops, cafes, restaurants, hotels, catering companies, embassies, all Biomag stores) .
BIO MAG OOD http://biomag.bg/
online sale & 4 specialized neighborhood stores in Sofia - sister stores of BIO BULGARIA;
Offers a selection of organic products only - Bulgarian (but not many) and imported mainly from Greece, Austria and Germany; range of more than 2000 products now.
*contacts can be provided by Awex-Sofia ([email protected])
Agence wallonne à l’Exportation et aux Investissements étrangers
Wallonia Export-Investment Agency
Julio Curie, 19, Bl. 1, fl. 12, apt.22/1113 Sofia/BULGARIA
Tél.: +359 2/97 97 435/436 ; +359 2/97 97 460/461
E-mail: [email protected]
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GIMEL Organic Retail Stores – Healthy Zone
http://gimel.bg/en/home/
Bulgarian producer & trader of organic fruits & vegetables with 2 bio food shops in Sofia and in Varna
70 % come from its own manufacturing, offering also organic cosmetics, detergents and cleaning products; provide to all retailers; sell over 8000 tons of organic products annually; 80% (or about 5000 tons) of its annual production are for export to countries such as Germany, Czech Republic, England, Scandinavia, Romania. Among Bulgarian producers of organic production, the company has no competitor in volumes.
MY ORGANIC MARKET
http://www.bioslunceluna.com/shop/
one of the pioneers in the retailing of organic food, creator of raw energy bio desserts Roobar
Roobar is now being sold on 5 continents and in more than 40 countries; one of the fastest growing companies in this segment with annual sales growth of 200%, revenue of 3.5 mln BGN for 2014 and 1.2 million BGN profit. Most of the production is for export.
SUN MOON http://www.sunmoon.bg/
4 bakeries, 2 vegetarian restaurants, 1 store and online sale
a family project, part of the international movement of Slow Food, which supports solidarity, ethical and local production and distribution of raw materials and products.
ZELEN BIO / SMART ORGANIC (Smart Capital Ltd.)
http://zelen.bg/; http://smartorganic.eu/en/
the biggest organic food distribution & production company; owns two branded ZELEN BIO shops and has 4 franchise stores.
started by its own import from Germany, the company has now over 1000 items portfolio, distributed throughout 650 sales sites in BG.
ZELENA ZEMIA
http://zelenazemia.com/
importer & trader, including online sale
ZOYA Organic (INTERNET CAFE-BG LTD)
http://www.zoya.bg/en/
3 stores in Sofia; they also have production, distribution & online sale
space for cosmetics in their stores, provides to more than 200 organic stores, health stores and pharmacies throughout all big Bulgarian cities
BILLA www.billa.bg a retail chain with 108 stores in Bulgaria a corner with organic products in the stores
DMhttp://www.dm-drogeriemarkt.bg/bg_homepage/
Chain of drugstores in several Bulgarian cities
own baby food branded dmBio, healthy food branded Alnatura (tofu, rice, milk, etc.), food supplements, teas and others branded Das gesunde Plus
FANTASTIKO www.ff-bg.net a Bulgarian retail chain with stores in Sofia a corner with organic products in the stores
KAUFLAND www.kaufland.bga retail chain with over 55 hypermarkets in Bulgaria
own cereals, drinks and processed products branded K-bio
PICCADILLY www.piccadilly.bgBulgarian retail chain with 21 supermarkets throughout Bulgaria
big diversity of bio products of Bulgarian and international manufacturers
4. Opportunities:
There are products which cannot be found in Bulgaria for there is a lack of a provider worth trusting, for ex. These are organic meat, organic cheese, organic leguminous products, organic beers and organic fruits & vegetables.
*contacts can be provided by Awex-Sofia ([email protected])
Agence wallonne à l’Exportation et aux Investissements étrangers
Wallonia Export-Investment Agency
Julio Curie, 19, Bl. 1, fl. 12, apt.22/1113 Sofia/BULGARIA
Tél.: +359 2/97 97 435/436 ; +359 2/97 97 460/461
E-mail: [email protected]
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5. Annexes – press review :
04-10/11/2016, <<Business, clean food & meditation>>, Capital magazine, #44
Yani DRAGOB, owner & CEO of the biggest organic food distribution & production company SMART ORGANIC: “We started the business by opening a shop on Lavele Str. investing 30 000 BGN in 2009. Our home was mortgaged for guarantee and we just had a baby. Being a vegetarian and since there were not many specialized shops at that time, I saw a perspective in this. After the opening it turned out that either there were not many bio products in Bulgaria or they were sold at too high prices. So we started our own import from Germany. Thus we became distributors for other stores as well and the focus moved on to the distribution. Now, our own trade points make only 3 % of our profit.
In 2011 we added production and packaging of organic food to our activities, for our own brands and for other labels. Throughout the years we have reinvested everything so today our own capital amounts to 6 mln BGN.
The food business is very difficult and requires responsibility. In the bio sector, the responsibility is even bigger. We check and examine everything by ourselves.
The product, which we find hard to distribute, is the herbal jus. In Bulgaria, we are used to make more herbal teas and no one actually knows the fresh jus made of herbs. At the beginning it was considered as something off-beat and was hardly accepted but now people start to be interested in.”
Smart Organic has companies in Germany and in the USA. Comparing the administrative procedures abroad to the ones in BG, Mr Dragov says the environment in BG is ok. The company has over 1000 items portfolio, distributed throughout 650 sales sites in BG; owns two branded ZELEN BIO shops and has 4 franchise stores. Over 840 tons of organic food is sold in 2015 in BG and abroad. In 2015 their income was 16.7 mln BGN, grown 4 times compared to 2013 (4 mln BGN back then). The company expects a 50 % growth of income for 2016. The profit for 2015 was 2.6 mln BGN. Their warehouses are 3000 m 2. Smart Organic possesses 51 % of Roo Brands’ shares. Roobars are sold in 46 countries on 4 continents. The biggest part of the sales is made in Germany. Sales of Roobar amount to over 1 mln bars per month. The income of Roo Brands in 2015 was 6.1 mln BGN while its profit was 1.8 mln BGN. The personnel of the companies Mr Dragov manages accounts 160 people.
26/05/2016, <<Nature behind the counter>>, Capital online magazine, http://www.capital.bg/biznes/kompanii/2016/05/27/2767117_priroda_zad_shtanda/
Even though there is no official data on the sector of organic retail trade in Bulgaria, it is clear that it is developing dynamically. The number of organic operators (producers, processors and traders) in the country has increased 15 times in 10 years, and the growth in production in 2015 compared to a year earlier is over 50%. The demand, which is also growing, alas, is however not growing with a similar rate.
This leads to changes on the market. The first major difference is that organic and natural products leave specialized stores and expand their presence in conventional retail channels, including the largest FMCG chains. There, however, volumes and prices are what matters.
For the moment it does not seem to bother neither importers nor the larger Bulgarian producers because the eco boom has lead to consolidation of players, to creation of industrial-scale bio manufacturing in Europe,
and hence to a reduction of the cost of raw materials and finished products, which are usually about 30% more expensive than their conventional equivalents..
“Trust in manufacturer and brand is now more important than trust in bio certification. There are real quality and competition, and this is the boom in this segment. I think it will continue as there are whole production niches still unfilled", says Lubomir Nokov, owner of "Biomag" shops and director of "Bio Bulgaria” behind the products Harmonica. Indeed, back in the years the market was dominated by importers and traders, but now the business is more and more oriented towards the creation of products. If you ask me which the largest organic shop today is, judging on sales revenue in the segment, it will be either "Fantastico" or "Kaufland", explains the entrepreneur. According to some data he possesses, only 10% of all sales of organic products in the country is made through specialized shops.
Kalin Klassanov is among the pioneers in the retailing of organic food, it has been his main business for the past 10 years. Together with his wife Anita they used to own and operate two stores under the brand My Organic Market. But things changed dramatically and Kalin and Anita went out of the trade niche in order to indulge in production. Together with their partner Yani Dragov they are the creators of raw energy bio desserts Roobar, which quickly won a big share of the market and turned the company "Roo Brands" (created for this purpose) into one of the fastest growing in this segment with annual sales growth of 200%, revenue of 3.5 mln BGN for 2014 and 1.2 million BGN profit. Roobar is now being sold on 5 continents and in more than 40 countries. Most of the production is for export.
“Whether there are 10 or 15 shops for organic produce this is not a success. Success is when organic products really get into the mass feeding, which is much more difficult through niche organic shops than through traditional retailers", explains Klassanov. There is a positive tendency of closing shops in favor of opening manufacturing.
Rosen Gabrovski started his business in trade with organic products in 2008 as an importer. Initially sales were only online. Today, he and his partner Stella Petkova manage three own stores under the brand name "Zoya". What is interesting in their model is that they devote a considerable space to cosmetics in their stores. Like the other major traders, they also have production. In 2013 the company launches the brand of organic oils for skincare “Zoya goes pretty” that does good work up in some countries of Europe. "We have 40-50 own products. The export share is 50%", stated Gabrovski. Our own brand continues to evolve - new products emerging, ingredients to soften the oils are added and packaging being redesigned. We were contacted by “Fantastico" and now they offer around 30-40 of our products," explains Gabrovski. "But I can say that big retailers look for products from lower-priced segment and mainly organic food, although in our case the interest to cosmetics is great as well" says the owner of "Zoya BG".
05/09/2015, <<Natural growth>>, Capital online magazine, http://www.capital.bg/specialni_izdaniia/zemedelie/2015/09/05/2600812_estestven_rastej/?sp=0#storystart
This year (2015) "Gimel" celebrates its 20th anniversary and 12 years of receiving its first certificate as a manufacturer of biological products. An interesting fact is that the company exists and operates on EU markets before even Bulgaria joined the EU. Trade of organic vegetables has been entirely export oriented, but lately there are serious breakthrough on the Bulgarian market, though still 80% (or about 5000 tons) of annual production are for export to countries such as Germany, Czech Republic, England, Scandinavia, Romania. Among Bulgarian producers of organic production, the company has no competitor in volumes and in Europe Spanish, Italian and Dutch cooperatives can be considered as competitors. Its products are sold in Germany, Holland, Scandinavia and the Czech Republic. Powerful European companies like the German REWE group, owner of Billa and Penny retailers are among its customers. In Europe Gimel’s organic vegetables are sold branded as private labels. The trademark is used only for the Bulgarian market where distribution occurs mainly throughout the major retail chains.
*contacts can be provided by Awex-Sofia ([email protected])
Agence wallonne à l’Exportation et aux Investissements étrangers
Wallonia Export-Investment Agency
Julio Curie, 19, Bl. 1, fl. 12, apt.22/1113 Sofia/BULGARIA
Tél.: +359 2/97 97 435/436 ; +359 2/97 97 460/461
E-mail: [email protected]
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Indeed, the consumption of organic food in Bulgaria is still low. Its share is even less than 5% of the total food market. For comparison, in Germany this percentage is around 20-25%, while in countries such as Denmark and Sweden it reaches 50%. In these countries there are products that actually are not found unless organic. "Bulgaria used to be the largest producer of greenhouse tomatoes in Europe so has a long tradition and name in this business," says the Commercial Director of Gimel Elena Gerganova. The existing infrastructure around Zvanichevo village did was the biggest on the Balkan Peninsula.
21/11/2014, <<Nominations for Mr. & Mrs. Economics 2014 in Agriculture & Food Industry sector>>, Economic online magazine, http://www.economic.bg/bg/news/4/nominatsii-za-zemedelie-i-hranitelno-vkusova-promishlenost-v-mr-mrs-ikonomika-2014.html
Yani Dragov owns Smart Capital LTD. In 2008 he founded ZELEN BIO (Green Bio), which today is the largest distributor and major importer of organic foods in Bulgaria. Deliveries are mainly originated from Germany (70%), the Netherlands, India and South America. The company exports its products - packaged organic foods under the brand name Dragon Superfoods and under private labels throughout Europe. The average increase in sales of Zelen Bio for the last three years is 122%.
13/05/2011, <<Clean business>>, Capital online magazine, http://www.capital.bg/biznes/predpriemach/2011/05/13/1088915_chista_rabota/
BIOMAG on "Journalist" square in Sofia exists since April 2008. The idea was to show that there is a market for organic products in Bulgaria, according to the owner Lubomir Nokov. He is more known about his activities in the promotion of any green initiatives. Nokov is also chairman of the Association of organic traders. The store started with an assortment of 400 products. He has three stores by 2011. There is a new one each year by tradition. The range has more than 2000 product now and has grown five times for the few years since the chain exists.
"Biomag" is marketed as a specialized neighborhood store that offers a selection of organic products only - Bulgarian, but not many. The import comes mainly from Greece, Austria and Germany. "When we make a selection, we choose the brand. It is important if it is one that performs well and can be sold. If it is only bio, it is not enough," says Nokov.
"We have our own brand - "Harmonica" bio yogurt, cheese and boza. Sales have 37% annual growth, but we cannot say whether this is a market reaction or because we increase our store number" he says. The price of organic cheese is 8.33 BGN and yogurt is sold for 1.89 BGN.” Apart from these items, there are baby food and cereals, fruits and vegetables in the Biomag stores. The kilogram of organic potatoes costs 5.82 BGN. There is a risk of unsold quantities in organic food trade, but it can be minimized. "We have learned to work with small quantities, to order as much as it is expected to be demanded, explains Nokov. Eggs, cheese and milk are in top five of the selling products. "When we used to sell diapers, they were in the top 10, which is a bit curious," says Nokov. Cleaning and cosmetics products are new and there is an interest in them. Bulgarian products, however, are the most demanded.
"What I'm doing is more corporate business," says the owner of the chain "BALEV BIO Market" Dimitar Balev. The investment made in the three stores is about 1 million BGN and the largest item of this expenditure was the furniture. The concept from the beginning was a supermarket where you can find everything. "To me the shop in Sofia is small for my understanding of a shop, but it’s sufficient for the turnover we do. I'd double it or triple it in size, but it is a matter of consumption," he says.
The portfolio counts about 4-5 thousand items. The difficulties, however, come from the fact that many things are not available on the Bulgarian market and the import requires large volumes. The most difficult
products are fruits and vegetables. "The offer is small. We supply mainly from the Netherlands, paying high transport costs, consumption is low, which means big cost per unit and higher prices and unsold products," says Balev.
Sofia store is much more successful than those in the other cities, but it is still early to talk about financial results of the business as only first year of its creation has passed. "I am pleased, although we do not have a benefit this year," explains Balev.
Products in "Balev Bio Market" are exactly as the ones available in all grocery stores - cheese, milk, sugar. The demand of these very traditional commodities is highest, according to the owner.
"Yes, I can say that consumers are influenced by prices in their choice. For a very small circle of people "the more expensive - the better". But overall, we do not rely on them" he says. Organic products are between 2 and 4 times more expensive than conventional ones.
Meat is in the highest price range. In supermarkets Balev three types of meat can be bought, and yes, it really is. Pork, turkey and mince come from Germany; chicken - from Greece. The kilogram ranges from 30 BGN to 70 BGN. Clean chicken fillet is 70 BGN.
In the store there are several products branded BALEV. These are eggs, a kind of raw desserts and dried apples. In the beginning I thought it was better to have more my own branded products, but along the way I realized that it is better if manufacturers stand with their names ", he says.
I would not build a shop just for the store itself", he says. His personal forecast for the rise in total consumption of organic products is about 10%. His opinion is that the crisis has not affected the growth rates in demand for organic food, still without it, growth would be even greater.
Everything indicates that the market has room for development and growth of traders, but also for more new shops. "I think that the emergence of new stores will develop the sector, will increase the market and reduce prices," agrees chairman of the Association of organic traders Lubomir Nokov.
The Bulgarian market for organic products is estimated at 16 million BGN. Turnover of all the specialized organic shops in Bulgaria is slightly below 2.5 million BGN in 2010, according to the Association of organic traders. Since 2008, the market is growing by about 20% annually.
30/06/2010, <<On the bio market – what, where, how much?>>, Dnevnik online magazine, http://www.dnevnik.bg/zelen/2010/06/30/924911_na_biopazar_kakvo_kude_kolko/
The main philosophy of "Balev Bio" is diversity. Although the store owner Dimitar Balev is aware of the economic model of supply and demand, he relies more on his own judgment. According to him, the supply forms the demand rather than the opposite - the fact that an organic product is not available in our market is not a good reason it cannot be introduced, the entrepreneur notes. Therefore, in his stores and on his website you can find products, some of which sound quite exotic - bio gourmet pate from green pepper or olives, carinto (a Japanese dessert), Korean wakame (seaweed), bio Frankfurter, vegetarian bio salami, etc.
Although the first shop is open in 2010, the company already has a pretty strong lead in the niche being also a distributor of organic produce for about 8 years and an importer of organic products via his other company which supplies part of the traders. This partly explains why almost all production is imported. 97-98% of organic products offered there come from abroad. And the reason for this lack of offering of Bulgarian products is the lack of a wide range, merchants explain. For example Bulgarian dairy products are sold here but most dairy products are imported from Denmark, where the diversity of the cheese is much greater. The main import of processed products comes from countries that are strong in the food industry, such as Germany. We import organic wheat, meat and flour from there, Balev explains. Southern countries like Italy,
*contacts can be provided by Awex-Sofia ([email protected])
Agence wallonne à l’Exportation et aux Investissements étrangers
Wallonia Export-Investment Agency
Julio Curie, 19, Bl. 1, fl. 12, apt.22/1113 Sofia/BULGARIA
Tél.: +359 2/97 97 435/436 ; +359 2/97 97 460/461
E-mail: [email protected]
9
Spain and Greece provide raw commodities like fruits and vegetables. The shop is supplied with cosmetics and French bio wine from France.
So far, the prices of products in an organic shop are significantly higher than conventional products. This will change when Western companies increase the volume of their imports, Dimitar Balev predicts.