. . . . . Market Research – Eastern Europe

Confectionery and milling in ...... Proexport – Colombia Equipo de Trabajo Dirección de Información Comercial Jorge Luis Gutiérrez – Director Fernando Piñeros – Subdirector Proyectos Especiales Bibiana Gutiérrez – Analista de Inteligencia de Mercados

[email protected] www.proexport.gov.co www.proexport.com.co

Calle 28 No. 13ª – 15, Piso 35 Tel: (571) 5600100 Fax: (571) 5600118 Bogotá, Colombia

GRUPO CONSULTOR EUNITE, Nederland

Todos los derechos reservados. Ni la totalidad ni parte de este documento puede reproducirse o transmitirse por ningún procedimiento electrónico o mecánico, incluyendo fotocopias, impresión o grabación.

Estimado Empresario:

La búsqueda de acuerdos comerciales que nos permitan como país ampliar los escenarios y mercados de exportación, nos reta como PROEXPORT a apoyar en forma directa a los empresarios en sus iniciativas exportadoras, ofreciendo servicios dentro de un modelo del gestión comercial y compartiendo un conocimiento más detallado sobre los mercados y sus oportunidades.

Para lograr lo anterior, PROEXPORT, con inversión de recursos propios y de cooperación técnica no-reembolsables del BID-FOMIN, emprendió una labor de recolección y análisis de información de primera mano en los principales mercados de interés a través de la contratación de consultorías internacionales especializadas en investigaciones de mercados. Los resultados de estos trabajos permitieron analizar y conocer la dinámica comercial de los sectores en los cuales existe un potencial para nuestras exportaciones, así como detallar aspectos de competitividad, información valiosa para la orientación de las iniciativas exportadoras de nuestros empresarios.

La información que contiene este estudio, sobre la dinámica del sector, la demanda y consumo, la situación competitiva de los productos, estructura y características de la comercialización y logística de acceso al mercado, es una contribución e invitación a profundizar y conocer aspectos que nos permitan avanzar en la realización de negocios en escenarios internacionales.

Cordialmente,

Luis Guillermo Plata P. Presidente PROEXPORT

Contents

1. Introduction ...... 7 1.1 Introduction...... 7 1.2 Methodology...... 7 2. General sector data...... 9 2.1 Current market developments within the specified sector ...... 9 2.2 Sector’s participation in GDP...... 9 2.3 Sector’s participation in employment...... 10 2.4 Developments in production ...... 11 2.5 Available data about the sub-sectors ...... 22 2.6 Recommendations...... 22 3. Market composition and characteristics...... 23 3.1 Market size ...... 23 3.2. Confectionery market segmentation...... 25 3.3. Analysis of the apparent consumption dynamics ...... 28 3.4. Governmental plans and programs ...... 28 3.5. Demand in the market ...... 29 4. Competition analysis ...... 33 4.1 Main trademarks available in the market...... 33 4.2 Features of the commercialized products...... 36 4.3 Marketing and advertising strategies...... 37 4.4 Participation in the market and segments that are served ...... 44 4.5 Quality of the product ...... 48 4.6 Expansion plans ...... 49 4.7 Pricing strategy...... 50 4.8 Segmentation of enterprises by sectors and its categorization ...... 51 4.9 Recommendations...... 57 5. Distribution channels...... 59 5.1 structure ...... 59 5.2 Confectionery products most frequently sold in groceries...... 65 5.3 Recommendations...... 67 6. Commercial Access Guide ...... 69 6.1 Preferential tariffs ...... 69 6.2 Tariffs imposed on major competitors ...... 70 6.3 Norms of origin ...... 72 6.4 Barriers...... 73 6.5 Licenses ...... 74 6.6 Quotas...... 74 6.7 Approvals & 6.8 Technical standards ...... 75 6.9 Packaging...... 80 6.10 Required documentation for import ...... 84 6.11 Import modalities or regimes involved in the process...... 92 6.12 Requirements for import of samples and accompanied luggage ...... 93 6.13 Website links to rules and regulations ...... 93 6.14 Flow chart of the process and related costs ...... 94 6.15 Recommendations...... 95

Proexport Colombia 5 Market Researches in Eastern Europe

7. Physical Access ...... 97 7.1 Available transportation infrastructure ...... 97 7.2 Identification of ports, airports, roads – border passes – railways, waterways...... 106 7.3 Description of status, operation, security, costs, distances, transportation arrangements and intercommunity customs...... 107 7.4 Identification of other handling and distribution infrastructure ...... 109 7.5 Identification of carriers that transport goods imported from Colombia ...... 111 7.6 International Freight or Transportation Costs ...... 112 7.7 Physical distribution services address book ...... 117 8. Recommendations to the exporter ...... 121 Annexes...... 123 Annex 1: Health inspection application form ...... 123 Annex 2: Certificate of origin form A...... 127 Annex 3: DV1 Form ...... 128 Annex 4: Single Administrative Document (SAD)...... 130

6 Proexport Colombia 1. Introduction

1.1 Introduction

This report aims at providing Colombian exporters with a comprehensive guide of the Polish confectionery market. The main goal of the report is to identify export opportunities for Colombian entrepreneurs in Poland. Civilization proximity, similar structures of democratic institutions, comparable level of reforms conveyed in the regions, close relations between EU and South America, cultural, tradition and religion similarity, should additionally encourage both sides to cooperate successfully. The report focuses on the analysis of the confectionery and milling sector, the various trademarks performing in the Polish market, competition description and profile of tendencies in the market.

1.2 Methodology

Information for the research was gathered by means of official information, such as the Ministry of Agriculture and Rural Development, Ministry of Finance, Ministry of Infrastructure, Central Statistical Office, Agricultural Market Agency, Foreign Trade Database, studies, publications, databases, branch magazines, internet sites of branch organizations, internet sites of companies present on the market and different field research.

The data presented here has attempted to create a very diverse picture of the Polish confectionery market. One must be aware that the confectionery sector is not one of the most important branches of Polish agriculture. Official sources such as the Central Statistical Office or Ministry of Finance provide limited and general information concerning this market.

More detailed information is presented by professional reports, like for example the analysis prepared by Boss Economic Information or Poradnik Handlowca (Trader Guide). However, this information is usually based on estimations and knowledge of professionals active in the certain market. Where possible, this report combines data from both nationwide institutions and professional organizations, sometimes showing the difference in figures given by these two sources.

The biggest effort was made to provide as much information as possible, however, some requested information was neither possible to gather or estimate.

The appropriate data is given in percentage, values in EURO or rating numbers. The current exchange rate for 8th of August 2005 was € 1 = 4 PLN. All the graphs

Proexport Colombia 7 Market Researches in Eastern Europe and tables presented are based on several, comparable sources and prepared for the purpose of this report. It is worth to state that certain data requested from particular companies, such as pricing strategies, companies’ development plans, are very hard to acquire, as entrepreneurs perceive it as merchant, official secret. All the latest available data, possible to access freely and not interfering Polish companies’ policies are however used and presented in this report.

8 Proexport Colombia 2. General sector data

2.1 Current market developments within the specified sector

According to the General Statistic Office (GUS), 19.516 entities operate in the sector of the manufacturing of food products and beverages. There are no specific data about companies that manufacture only confectionery and milling products

Table 2.1.1 Economic entities by ownership sectors, sections and divisions Total Public Private Manufacturing 206826 876 205950

Manufacturing of food 19516 87 19429 products and beverages Source: Central Statistical Office (GUS), 2003

The industry is strongly dominated by private capital. Many previously state- owned companies were taken over by private entrepreneurs.

According to BOSS1 there are about 900 entities in the Polish and industry sector. The majority are medium size companies with 10 to 50 employees or smaller ones that employ less than 10 employees. Although there are only about 120 companies, that employ more than 50 employees, these companies dominate the Polish market. According to the Association of Polish Producers of and Sugar Confectionery POLBISCO, that associates 30 leading companies from this branch, the companies stated above produce about 45% of the total production and employ 12.000 people, which amounts to one-third of all employees employed in this sector. According to estimations by BOSS in 2001, 70%, of the market is controlled by six big international companies. The 15 biggest producers controlled approximately 88-90% of the market.

2.2 Sector’s participation in total GDP

Data on Poland’s GDP are presented in Table 2.2.1. and Table 2.2.2.

Table 2.2.1 GDP in Poland 2002-2004 (current prices million EUR) GDP 2002 2003 2004 195278,1 203730,6 220914,5 Source: Central Statistical Office (GUS)

1 Boss Economic Information Proexport Colombia 9 Market Researches in Eastern Europe

Table 2.2.2 Dynamic of GDP growth in Poland 2002-2004 (annual average prices from previous year) GDP 2002 2003 2004 101,4 103,8 105,3 Source: Central Statistical Office (GUS)

The sector of chocolate and sugar confectionary as such is not detailed in national accounts. The only information on general participation in GDP of “manufacturing of food products and beverages” sector is given by the statistical office. The share of the “manufacturing of food products and beverages” sector in total GDP amounted to € 27773,95 mln in 2001 and € 25279,65 mln in 2002.

Table 2.2.3 Share of manufacturing of food product and beverages in manufacturing 1995 2000 2001 2002 1995 2002 In million EUR In percent Total 65334,325 129745,725 130700,325 130354,65 100% 100% Manufacturing 55325,925 112353,325 111118,825 109431,775 84,7 84

Manufacture 13786,75 25150,275 27773,95 25279,65 21,1 19,4 of food products and beverages

Source: Central Statistical Office (GUS)

2.3 Sector’s participation in employment

The sector of chocolate and sugar confectionery as such is not detailed in statistic data concerning employment in manufacturing elaborated by the Central Statistical Office (GUS). There is however general information available about the number of employees in the sector of food and beverage production, which also includes the sector of confectionery and milling. The changes of methods of production and privatisation of big state-owned companies in the ninieties have had a big impact on the decreasing number of employed persons in the sector of manufacturing of food production and beverages as a whole. The same development occurred in the sector of confectionery and milling. During the last few years the slightly decreasing trend in employment in this sector continued, this time mainly due to the modernisation of methods of production and reorganisation of management in the biggest companies operating in that sector.

General figures concerning employment in manufacturing sector in Poland are given in table 2.3.1.

10 Proexport Colombia Confectionery and milling in Poland

Table 2.3.1 Employed persons as of 31 December (in thous.) Specification 1995 2001 2002 2003 In thousands Manufacturing 3103,5 2732,9 2486,0 2872,1

Manufacturing of food 524,3 492,2 464,2 459,2 production and beverages Source: Central Statistical Office (GUS)

Table 2.3.2 presents the average gross wages in manufacturing.

Table 2.3.2 Average monthly gross wages and salaries in industries by sections and divisions Specification 1995 2001 2002 2003 in EUR Manufacturing 439,1075 466,6275 477,88 495,1825

Manufacturing of 401,1275 431,26 435,3325 449,26 food production and beverages

Source: Central Statistical Office (GUS)

2.4 Developments in production

The confectionery industry in Poland has been developing continuously since the early 1990s. The general growth characterising the confectionery industry is attributable to economic factors (although slowly the consumption of confectionery products is growing) and sociological phenomena (sweets are purchased even by the less affluent families, which can be seen as a way of compensating for their inability to buy expensive durable goods). The consumption of confectionery products is also undoubtedly stimulated by promotion campaigns organised by the largest suppliers of these articles, as evidenced by the fact that they ranked high among big spenders on advertising.

Proexport Colombia 11 Market Researches in Eastern Europe

Table 2.4.1 Industrial production in national economy 1995 2000 2001 2002 1995 2002 Specification In mln EUR In percent Manufacturing 55325,9 112353,4 111118,8 109431,7 100 100 Manufacture of 13786,7 25150,2 27773,9 25279,6 21,1 19,4 food products and beverages

Source: Central Statistical Office (GUS) The table 2.4.2 presents the production of pastry, cakes, biscuits, in period 1995-2002. The current data are not available yet.

Table 2.4.2 Production of pastry, cakes, biscuits, wafers Years 1995 1996 1997 1998 1999 2000 2001 2002 In thousand of 118 101 122 125 120 134 138,8 145 tons Source: Central Statistical Office (GUS)

The table 2.4.3 presents the value of sold production of pastry, cakes, biscuits, wafers, chocolate and sugar confectionery in period 2000-2002.

Table 2.4.3 Value of sold production of confectionery industry (in mln € ) Production 2000 2001 2002 Pastry, cakes, biscuits, wafers 99,3 139,8 108,0 Chocolate and data not sugar available confectionery 219,4 254,5 Total - 359,3 362,5 Source: Central Statistical Office (GUS)

2.5. Sales-, import- and export activities

In 1999, Polish exports of sugar confectionary not containing cocoa decreased due to the economic crisis in . As a consequence Polish producers lost contact with Russian wholesales and distributors. Even today export to Russia is still below the potential because this country is still perceived as a risky and a not transparent partner. Moreover, due to the introduction of customs duties on semi- finished products and ready-made goods by Russia in 2000, the Russian market became practically closed to producers operating in Poland and this country ceased to be the “launching pad” for the food manufacturing concerns in their expansion to the East.

12 Proexport Colombia Confectionery and milling in Poland

Although losing part of the Russian market, since 2000 the Polish export and positive trade balance of sugar confectionery (including white chocolate) not containing cocoa have been raising appropriately (from € 46966,25 thousands in 2000 to € 88302,25 thousands in 2003 and from € 4774,25 thousands to € 33479,5 thousands in 2003). In 2004 export raised by 17,1% compared to figures from 2003, whilst import decreased by 0,1%. It has been caused by raising the export to the European Union. Polish products are exported mainly to Germany, , Netherlands and . The imported products come from Germany, , Netherlands and Spain.

Table 2.5.1 Foreign trade of sugar confectionery (including white chocolate) not containing cocoa in period 1999-2003 in thous. EUR

Foreign trade of sugar confecionery (including white chocolate) not containing cocoa in period 1999-2003 in thous. EUR

90000 88302,25

80000

70000 64450,75 import export

60000 54822,75

48902,5 balance 46966,25 47303,75 50000 47703 42998,5 42192 40648,25 40000 33479,5

30000 value in thous. EUR thous. in value

20000 16747,75 8254,25

10000 4774,25 -4305,25 0

-10000 1999 2000 2001 2002 2003 years

Source: Central Statistical Office (GUS)

Export of chocolate and other food products containing cocoa has grown since the early nineties. The balance of foreign trade in this sector is positive. In 1998 Polish export totaled 102770,25 thousands EUR and in 2003 raised to 171484,5 thousands EUR. At the same time the Polish import raised from 42535 thousands to 77285,25 thousands EUR. Hence, Polish trade balance in this sector remains at the same level. The figures from 2004 show a faster growth of export for about 48,3 % compared to the same period in 2003. The import has increased 21,8%, compared to the same period in 2003 .

Proexport Colombia 13 Market Researches in Eastern Europe

Table 2.5.2 Foreign trade of chocolate and other food products containing cocoa in period 1999-2003 in thous. EUR

Foreign trade of chocolate and other food products containing cocoa in period 1999-2003 in thous. EUR

200000

180000 171484,5 159197,5 160000 156418,25 151485,25

140000

120000 102770,25 102633,25

100000 94206 89102,75 86524,5

80000 77285,25 import 72673 67315,5

60000 60235,25 export 48852

42535 balance values in thous. EUR thous. in values 40000

20000

0 1999 2000 2001 2002 2003

years

Source: Central Statistical Office (GUS)

Detailed data on the total Polish export and import during 2004 are presented in Table 2.5.3. and Table 2.5.4.

Table 2.5.3 Export in period January - December 2004 TOTAL IN THE EU Sugar confectionery (including white chocolate) not containing cocoa In tons 36838 22486 I-XII 2003=100 102,9 100,0 In thous. PLN 383571,2 243575,3 I-XII 2003=100 108,6 106,9 In thous. USD 103714 65806 I-XII 2003=100 114,6 112,6

14 Proexport Colombia Confectionery and milling in Poland

TOTAL IN THE EU In thous. EUR 83959 53251 I-XII 2003=100 104,7 102,8 Chocolate and other food preparations containing cocoa In tons 97395 71473 I-XII 2003=100 172,3 198,8 In thous. PLN 1084558,5 775054,4 I-XII 2003=100 158,1 181,7 In thous. USD 297427 211971 I-XII 2003=100 169,7 194,5 In thous. EUR 239593 170801 I-XII 2003=100 153,9 176,4 Bread, pastry, cakes, biscuits, wafers, etc In tons 124198 96723 I-XII 2003=100 146,3 152,2 In thous. PLN 1064438,5 823908,5 I-XII 2003=100 162,8 170,7 In thous. USD 289866 223524 I-XII 2003=100 173,0 180,7 In thous. EUR 234470 181020 I-XII 2003=100 158,0 165,2 Source: Central Statistical Office (GUS)

Table 2.5.4 Import in period January-December 2004 Total IN THE EU Sugar confectionery (including white chocolate) non containing cocoa In tons 21397 18514 I-XII 2003=100 98,7 95,2 In thous. PLN 220805,4 196110,8 I-XII 2003=100 100,7 102,2

Proexport Colombia 15 Market Researches in Eastern Europe

Total IN THE EU In thous. USD 59883 53081 I-XII 2003=100 106,6 108,0 In thous. EUR 48534 43042 I-XII 2003=100 97,3 98,6 Chocolate and other food preparations containing cocoa In tons 32066 30972 I-XII 2003=100 118,3 117,9 In thous. PLN 403683,3 389843,6 I-XII 2003=100 130,6 130,9 In thous. USD 111492 107673 I-XII 2003=100 141,0 141,3 In thous. EUR 89845 86760 I-XII 2003=100 128,2 128,5 Bread, pastry, cakes, biscuits, wafers, etc In tons 39292 34503 I-XII 2003=100 148,9 155,3 In thous. PLN 301470,4 260108,8 I-XII 2003=100 184,1 202,2 In thous. USD 82294 71000 I-XII 2003=100 195,9 215,3 In thous. EUR 66571 57492 I-XII 2003=100 179,3 196,9 Source: Central Statistical Office (GUS)

The tables 2.5.5 - 2.5.10 present main directions of Polish export and import of chocolate, sugar confectionery, cakes and wafers.

16 Proexport Colombia Confectionery and milling in Poland

Table 2.5.5 Exports of sugar confectionery (including white chocolate), in period January - December 2004 – major countries where Poland exports its sugar confectionery In thous. EUR In thous. USD Sugar confectionery 88302,1 90540 (including white chocolate) Germany 18302 18911 Czech Republic 7552 7756 Netherlands 7079 7264 Lithuania 6830 7017 Russian Federation 5445 5577 4655 4774 Canada 3452 3547 2898 2973 Italy 2564 2632 2504 2560 Saudi Arabia 2441 2496 USA 1802 1843 UK 1651 1689 France 1587 1629 Latvia 1543 1587 Denmark 1530 1568 Australia 1499 1537 Source: Central Statistical Office (GUS)

Table 2.5.6 Import of sugar confectionery (including white chocolate), in period January - December 2004 – major countries exporting to Poland In thous. EUR In thous. USD Sugar confectionery 54820 56165 (including white chocolate) Germany 16462 16804 Italy 65934 6411 Netherlands 5934 6089 Spain 5294 5404 Czech Republic 4120 4239 Belgium 2725 2806 USA 2416 2490 UK 1861 1902 Indonesia 1466 1506 Hungary 1409 1448 Ireland 1070 1102 Turkey 936 965 863 886

Proexport Colombia 17 Market Researches in Eastern Europe

In thous. EUR In thous. USD France 770 786 China 674 692 Switzerland 493 505 Austria 362 371 Source: Central Statistical Office (GUS)

Table 2.5.7 Exports of chocolate and other food preparations containing cocoa, in period January - December 2004 – major countries where Poland exports its chocolates and other food preparations containing cocoa

In thous. EUR In thous. USD Chocolates and other food preparations 171485 175292 containing cocoa Germany 27589 28146

Russian Federation 19910 20381

Czech Republic 16030 16361

Hungary 13986 14293

UK 11174 11426

USA 8995 9189

Lithuania 8559 8739

Ukraine 6928 7087

Sweden 6619 6754

Denmark 6427 6578

Netherlands 4642 4776

Croatia 3777 3884

Romania 3188 3252

Israel 2560 2623

Slovenia 2489 2548

18 Proexport Colombia Confectionery and milling in Poland

In thous. EUR In thous. USD

Canada 2227 2276

Serbia and Montenegro 2156 2201

Source: Central Statistical Office (GUS)

Table 2.5.8 Import of chocolate and other food preparations containing cocoa, in period January - December 2004 – major countries exporting to Poland In thous. EUR In thous. USD Chocolates and other 77278 79079 food preparations containing cocoa Germany 38419 39301 Slovakia 12183 12471 Netherlands 4091 4202 Hungary 3516 3596 Italy 3503 3581 Czech Republic 2860 2930 France 2447 2491 Switzerland 2140 2191 Denmark 1814 1859 Finland 1710 1746 Belgium 1378 1407 Austria 997 1026 UK 586 601 Turkey 520 533 Slovenia 352 363 Ireland 243 247 Sweden 213 219

Source: Central Statistical Office (GUS)

Proexport Colombia 19 Market Researches in Eastern Europe

Table 2.5.9 Export of bread, pastry, cakes, biscuits, wafers, in period January - December 2004 – major countries where Poland exports its bread, pastry, cakes, biscuit, wafers. In thous. EUR In thous. USD

Bread, pastry, cakes, 163431 167540 biscuits, wafers Germany 25685 26309

Hungary 25012 25602

Czech Republic 24074 24734

Lithuania 9035 9261

Slovakia 8817 9058

Romania 7259 7422

Russian Federation 6969 7149

USA 5761 5905

Slovenia 4507 4619

France 3179 3262

Netherlands 2917 2983

Denmark 2775 2847

UK 2663 2737

Latvia 2611 2680

Switzerland 2560 2624

Sweden 2386 2448

Saudi Arabia 2306 2362

Source: Central Statistical Office (GUS)

20 Proexport Colombia Confectionery and milling in Poland

Table 2.5.10 Import of bread, pastry, cakes, biscuits, wafers, in period January - December 2004 – major countries exporting to Poland In thous. EUR In thous. USD

Bread, pastry, cakes, 40939 42010 biscuits, wafers Germany 12144 12425

Bulgaria 7442 7675

Czech Republic 6528 6707

Netherlands 3008 3094

Italy 2972 3025

Hungary 2166 2230

UK 1538 1582

Denmark 878 902

Romania 853 875

Sweden 676 696

Austria 566 580

Belgium 435 444

France 433 442

Slovakia 360 369

Israel 206 211

Lithuania 165 169

Viet Nam 107 111

Source: Central Statistical Office (GUS)

For several years Germany has been the leader among the chocolate and sugar confectionery exporters and importers. The market of the Czech Republic and the Russian Federation is also vital for Polish manufacturers of chocolate and sugar confectionery.

Proexport Colombia 21 Market Researches in Eastern Europe

2.5 Available data about the sub-sectors

There are three distinctive segments in the confectionery market in Poland. These are: the premium segment, medium-priced segment and the low-priced segment.

The premium segment consists of the most expensive products, usually imported from Germany or Switzerland. There are also Polish producers who offer expensive products like Wedel and SolidarnoĞü. A well-established foreign trademark for example is Lindt. The box of pralines (approximately 200g) costs more than € 7,50, and chocolate table (100g) from € 1,25 to € 2,00.

The medium-priced segment is dominated by big international companies and domestic firms, which often emerged from former state-owned companies. The price for a box of pralines is about € 2,50-7,50 and for chocolate tablets € 0,50- 0,75.

The low-priced segment is represented by private labels of the biggest super- and hypermarkets. The chocolate tablets costs less than € 0,50 while a box of chocolates can cost up to € 2,50. For more detailed information concerning prices of different kinds of confectionery products, please see chapter 4.7.

2.6 Recommendations

This chapter provides the reader with the basic information on the chocolate and sugar confectionery sector in Poland. Since the beginning of the nineties the production (in the food industry) has been increasing and the employment is rather stable. Polish confectionery gains recognition on the European markets as being of high quality and good price. Prospects for the market’s development are good since the average Pole eats relatively small amounts of chocolate, candies and cookies as compared with the level of consumption in the European Union.

22 Proexport Colombia 3. Market composition and characteristics

3.1 Market size

The Polish confectionery market growth is detailed by the Central Statistic Office (GUS) only for the years 2001 and 2002, earlier data are not available. More specific information is available on the value of the the market of food product and beverages as a whole.

Table 3.1.1 presents the information about value of the confectionary market for the past two years. The data indicates that the production has been stable during that period. According to the Ministry of Agriculture and Rural Development during the last past years 2002-2004 the production of confectionery has been growing, but official data is not available for now.

Table 3.1.1 Value of sold production of confectionary industry in million EUR in period 2001-2002

Value of sold production of confectionery industry in EUR 1600 1400 1200 Pastry, cakes, 1000 biscuits, wafers 800 Chocolate and 600 sugar confectionery data not available 400 Total - 200 production in mln EUR mln in production 0 2000 2001 2002 years

Source: Central Statistic Office

Proexport Colombia 23 Market Researches in Eastern Europe

Table 3.1.2 below presents the value of manufacturing of food product and beverages in the whole manufacturing in the period 1995-2002 in million EUR. The presented data indicates that the production of food product raised significantly in period 1995-2000, since 2000 the production is stable and practically on the same level.

Table 3.1.2 Share of manufacturing of food product and beverages in manufacturing

Share of manufacturing of food product and beverages in manufacturing

140000 R 120000 100000 Total 80000

60000 Manufacturing 40000

20000 Manufcture of food production in mln EU 0 products and beverages 1995 2000 2001 2002 years

Source:Central Statistic Office

Table 3.1.3 presents the percentages of production of food products and beverages in manufacturing. According to the data, the percentages of production of food products and beverages in manufacturing slightly decreased from 84,7% to 84%.

24 Proexport Colombia Confectionery and milling in Poland

Table 3.1.3 Share of manufacturing of food product and beverages in manufacturing Share of manfacturing of food product and beverages in manufacturing

100,00% 84,70% 84,00% 80,00% Manufacturing 60,00% 40,00% 21,10% 19,40% 20,00% Manufcture of 0,00% food products and 1995 2002 beverages years

Source: Central Statistical Office

3.2. Confectionery market segmentation

Consumer basket of food products and beverages in 2003 had a value of € 10 486 852 500. The confectionery products share was 9,55%, so it was worth € 1 001 395 000. According to the ACNielsen2 research, the total volume of sales in the confectionery market, for the period August 2003 – July 2004, reached 96,7 thousand tones. Comparing to the same period one year ago, it has grown 10,2 thousand of tones, which amounts to almost 12%.

The different sorts of confectionery goods and their share in the whole segment of sweet products are listed in the table below.

2 ACNielsen – Market research, information and analysis agency Proexport Colombia 25 Market Researches in Eastern Europe

Table 3.2.1 Main segments in the Polish confectionery market CONFECTIONERY MARKET – MAIN SEGMENTS SALES VALUE VALUE in thousand SHARE (%) EUR Confectionery products 1 001 395 9,55 Sweet biscuits, cookies 296 152 30 and wafers Chocolate tablets 186 497 19 Candies and lollipops 163 902 16 Pralines 149 162 15 Bars 130 247 13 Pastilles 23 325 2 Chocolate spread 19 753 2 Halva 16 307 2 Filled croissants 11 963 1 Sesame 4 085 0 Source: ACNielsen, data for 2003

The value of the chocolate market was estimated at € 425 mln in 2003. The higher cost of sugar and better consumers moods caused higher spending. Chocolate bars and wafers were worth € 214 mln .

Chart 3.2.2 Kinds of chocolate products and their share in whole segment of chocolate confectionery

6.90% Dragees 8.50%

Chocolate wafers 15.70% 17.70% VIII 2003 - VII 2004 18.30% VIII 2002 - VII 2003 Pralines 19%

23.10% Chocolate bars 18.40%

36.10% Chocolate tables 36.50%

0% 5% 10% 15% 20% 25% 30% 35% 40% S Source: AC Nielsen, data for period August 2002 – July 2004

26 Proexport Colombia Confectionery and milling in Poland

According to the latest research by ACNielsen, Poles spend more and more on confectionery goods every year. The value of sales of chocolate goods will increase 10% every year (it does not include bulk products). This is mainly generated by chocolate bars and tablets. Chocolate tablets generate almost 40% of the turnover in the chocolate sector. They are very popular, due to their wide accessibility. Poles the most often choose plain or dessert chocolate boards(should this not say bars) of 100 g weight. Most popular among filled chocolates are the strawberry flavorred ones.

Segmentation of chocolates: x solid : milk, dessert, bitter x with nuts, delicacies, raisins x with filling: strawberry, blackcurrant, yoghurt, cherry, raspberry, kiwi, orange, pistachio, coconut, almond, toffee, coffee and .

Table 3.2.3 Kinds of candies and their share in whole segment of candies market CANDIES AND LOLLIPOPS – MARKET SHARES (%) Quantity Volume Value (packages) 2002 2003 2002 2003 2002 2003 Lollipops 8 8 11 11 32 32 Candies > 51g 62 63 41 41 24 24 Candies < 50g 30 29 48 48 44 44 Source: ACNielsen

Kinds of candies flavors: x fruit: lemon, orange, strawberry, blackberry, apple, cherry, grapefruit, lime x herbal, vitamin, healing x mint x toffee, coffee, chocolate x sour and fizzy x sugar free

Table 3.2.4 Kinds of candies and their sales value and volume

KINDS OF CANDIES AND THEIR SALES VALUE AND VOLUME SALES VALUE SALES VOLUME mln EUR /% mln kg/% All 173/100 27,9/100 Solid caramels 73/42 13,2/47 Sweet dragees 52/30 6,4/23

Proexport Colombia 27 Market Researches in Eastern Europe

KINDS OF CANDIES AND THEIR SALES VALUE AND VOLUME SALES VALUE SALES VOLUME mln EUR /% mln kg/% Filled candies 18/10 3,2/11 Jellies 12/7 2,2/8 Toffee, milk candies 9/5 1,7/6 Chewy candies 9/5 1,3/5 Source: MEMRB, data for period November 2003 – October 2004

In 2004, the sales of packed candies rose dynamically. Despite the increase in the sugar price, the sales went up and its value in the period December 2003 – November 2004 amounted to more than € 214 mln. Candies generate 25% of the total sales of sweets, which has grown 24% in 2004.

3.3. Analysis of the apparent consumption dynamics

Table 3.3.1 Polish apparent consumption in euros, 2003 Confectionery Milling Production 439.673.000 275.899.000 + Import 138.379.000 66.571.000 - Export 323.552.000 234.470.000 = Apparent Consumption 254.500.000 108.000.000 Source: Boss Rolnictwo

Poland is quite a large confectionery and milling producer and quite a substantial part of that production is therefore exported to third countries, mainly in the European Union. Part of the domestic consumption relies on the import of confectionery and milling products as well. This usually concerns either cheaper imports of confectionery from mainly Asia or very well known brands that are not being produced within Poland.

3.4. Governmental plans and programs

Poland, as a member of the European Union, has access to many community programs, which derive advantages for the Polish trade and production market. The best examples are the PHARE programs, realized mostly by the Polish Agency for Enterprise Development. Due to EU membership, in November 30th of 2004 the Polish government formed in a specific strategy for cooperation with non-European developing countries, for all sectors. However, there are no available documents or information about specific plans or programs for the confectionery and milling market.

28 Proexport Colombia Confectionery and milling in Poland

All the general projects are conveyed through the Ministry of Economy and Labour. Especially worth mentioning is the program of Economical Promotion of Poland, which is inclined to promote Polish expansion to foreign markets and at the same time create a bigger absorption of foreign investments, with emphasis on Direct Foreign Investment.

Also worth mentioning is the decision made on 1st of May 2004 by the Minister of Agriculture and Rural Development to embark on a new Program, Try Fine Food to replace the hitherto program Polish Fine Food. The main objective of the program is to inform consumers of high quality food products. The program is voluntary and open to each entrepreneur from the European Union. The logo is assigned only to those products which comply with the criteria established by the Scientific Council for Food Product Quality.

The Try Fine Food logo helps the consumer to choose the most suitable products. Simultaneously, the objective of the Community food policy is being pursued, i.e. expanding the range of diverse products of high quality on the Common Market. The logo’s aim is also to enhance consumer confidence in the food product through information on its quality. It is only food producers that have a right to submit applications for Try Fine Food logo and the application is free of charge.

The program covers the following groups of products: 1) meat and meat products 2) eggs and egg products 3) milk and milk products 4) fruit and vegetables (including potatoes), mushrooms and preparations thereof 5) cereals and preparations thereof, including bakery goods 6) fish, seafood and preparations thereof 7) non-alcoholic beverages 8) mineral waters 9) honey 10) sugar confectionary and cakes 11) herbs and spices 12) consumer and oils 13) mixed and highly processed products based on the above mentioned raw materials

The products that are awarded the Try Fine Food logo are inspected by the Scientific Committee for Food Product Quality through numerous independent control bodies. For detailed information, see website www.minrol.gov.pl .

3.5. Demand in the market

Income of the population determines the demand for food and are a derivative of the growth in GDP, which increased by 3,7% in 2003 compared to 2002. The

Proexport Colombia 29 Market Researches in Eastern Europe total food consumption rose by 2,5%, the average remuneration in the enterprise sector increased in real terms by 2% as well as the average old-age and disability pensions from the non-agricultural social insurance system – by 4,1%. The consumption of particular products fluctuated depending on their prices.

The most popular confectionery product is the chocolate tablet. 83% of Poles consumes it at least once a month. 40% of this group eats chocolate at least once a week. About 2/3 of questioned Poles buy cookies or cakes once a month or more frequently (61,8%) and 26,7 % buy them at least once a week.

Table 3.5.1 Consumption of confectionery products

PERCENTAGE OF CONSUMPTION OF THE FOLLOWING PRODUCTS Once a month At least once a week

Chocolate tablets 83,1 40,1 Packed biscuits 61,8 26,7 Chocolate bars 59,4 53,4 Chocolate wafers 58 47,3 50,4 Packed chocolate goods 5,8

Solid caramels 46,9 15 Pralines 34,9 13,9 Chocolate spread 26,7 35,6 24,6 Dragees and pastilles 20,8

Source: AC Nielsen, 2004

Research by SMG KRC3 has shown that approximately 63% of consumers between 20 - 40 years of age reach for a candy at least once a month. A research of retail panel by ACNielsen has shown that hard caramels make up about 40% of total sales of candies (the value of sales in this category is almost € 172,75 mln). Most consumers favor fruity flavor candy (51% of total sales).

The consumption of confectionery products in Poland reached a level of about 8,8 kg per capita, which means that it was 2,5 times lower than the average consumption in the EU countries (about 22 kg). However, thanks to its large population Poland is now one of Europe’s largest markets in terms of the overall value of sales of confectionery goods. The Polish market of confectionery goods is 5,5 times smaller than the German market and 3 times smaller than the French

3 Market and public opinion research institute 30 Proexport Colombia Confectionery and milling in Poland market, which is proportionally to the per capita incomes and expenditures in these countries.

3.6 Recommendations

It is very attractive for foreign enterprises to enter the Polish market. The food market in Poland is still in progress of forming its balance and stable condition. The coming years will be the best period to invest in Poland, because now, as a member of European Union, Poland is a reliable partner and a firmly developing country, which has already reached a sustainable level of welfare.

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4. Competition analysis

4.1 Main trademarks available in the market

The Polish confectionery market is highly congested. There are enormous numbers of trademarks being sold on the market. The competition is tight, hence the market is not an easy one. The most popular brands are active in the following segments: chocolate tables, bars, wafers, packed products and biscuits.

Despite the fact that Wedel, the best known Polish trademark, is now owned by , people are used to the brand and are very loyal. The favourite chocolate brands are presented in the table below.

Table 4.1.1 The most popular chocolate brands and their market share: MOST FREQUENTLY CHOSEN BRANDS AMONG PEOPLE CONSUMING CHOCOLATE CONSUMPTION (%) Wedel 39,2 Alpen Gold 25,5 21,1 Goplana 17,0 Wawel 6,2 Terravita 4,6 Fazer 1,7 1,7 Nestlé 1,3 Baron 1,2 Mieszko 0,9 Nussbeisser 0,8 - Nestlé 0,6 Cadbury 0,5 Lindt 0,5 Inda 0,5 Alpen Si 0,3 0,2 Other 1,4 Source: SMG/KRC, data TGI for period July 2003 - June 2004

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The sector of chocolate bars and wafers has reached its maturity. All the world best-known trademarks are present on the market and hence, the competition is strong. This sector is very dynamic with the 20% growth in 2004. As much as 60% of people interviewed by SMG/KRC declare consumption of chocolate bars. For the past few years brands that gained the biggest popularity haven’t changed their positions. Those are: Snickers, Mars (both produced by Masterfoods), (Nestle) and 3 Bit (Kraft Foods). Slightly less, but still impressing is 58% CONSUMING consumption of the chocolate wafers. They prefer GrzeĞki (Kaliszanka), Prince (Kraft Foods) and Princessa (Nestle).

Table 4.1.2 The most popular chocolate bars brands and their market share MOST FREQUENTLY CHOSEN BRANDS AMONG PEOPLE CONSUMING CHOCOLATE BARS CONSUMPTION (%) Snickers 28,2 Mars 15,3 Paweáek 14,1 Lion 12,7 3 Bit 11,6 Twix 8,7 Milky Way 6,3 Bounty 5 Bajeczny 4,7 Alibi 2,6 Source: SMG/KRC, TGI, 2004

Table 4.1.3 The most popular chocolate wafers brands and their market share

MOST FREQUENTLY CHOSEN BRANDS AMONG PEOPLE CONSUMING CHOCOLATE WAFERS CONSUMPTION (%) GrzeĞki 43,9 Prince Polo 28,1 Princessa 26,0 4,4 Kinder Bueno 3,8 WW 3,6 Teatralny 2,8 2,9 Source: SMG/KRC, TGI, 2004

34 Proexport Colombia Confectionery and milling in Poland

Polish consumers find chocolate packed products very tasty and they are used to the traditional Polish sweets. The most frequently chosen is Ptasie Mleczko, which is a mousse, appearing in vanilla, chocolate and caramel flavor, covered in chocolate. The candy assortment called Mieszanka Wedlowska, a Wedel specialty, is also very popular.

Table 4.1.4 The most popular chocolate packed brands and their market share MOST FREQUENTLY CHOSEN BRANDS AMONG PEOPLE CONSUMING CHOCOLATE PACKED PRODUCTS CONSUMPTION (%) Ptasie Mleczko - Wedel 20,9 Mieszanka Wedlowskie Igraszki - Wedel 11,5 Ptasie mleczko – Goplana 10,8 7,5 7,4 Michaáki – Wawel 6,4 Galaretka w czekoladzie – Jutrzenka 5,9 Michaáki z Hanki 5,7 Rafaello – Ferrero 5,4 Kinder niespodzianka – Ferrero 4,4 Ptasie mleczko – Otmuchów 4,3 Mieszanka Krakowska – Wawel 4,3 Traviata – Alpen Gold 4 Mieszanka Teatralna – Goplana 3,9 Source: SMG/KRC, TGI, 2004

The market is becoming attractive because consumers buy more of the most expensive and most processed cookies, which have also the fastest growing prices. The market is expanding dynamically. Delicje, jellies covered in chocolate, are the most frequently chosen biscuits. Crunchy cookies, Pieguski, with pieces of chocolate and delicacies and Jezyki, with caramel and chocolate, are the most popular brands among their kinds.

Table 4.1.5 The most popular packed biscuits brands and their market share MOST FREQUENTLY CHOSEN BRANDS AMONG PEOPLE CONSUMING PACKED BISCUITS (%) Delicje - Wedel 35,1 Pieguski - Wedel 13,9 Wafle Familijne – Jutrzenka 8,5 Jezyki – Jutrzenka 8

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MOST FREQUENTLY CHOSEN BRANDS AMONG PEOPLE CONSUMING PACKED BISCUITS (%) Pierniczki Alpejskie – Wedel 7,5 Petitki – LU 4,9 Pierniki ToruĔskie – Kopernik 4,9 Delicje Duo – Wedel 4,1 Pierniki w czekoladzie – Bahlsen 3,7 Kruche – Goplana 3,3 AHA- Sezamki 3,3 Kokosowe – Lajkonik 3,1 Source: SMG/KRC, TGI, 2004

The information about the most popular trademarks among candies are presented in chapter 5.2., with the most frequently sold products.

4.2 Features of the commercialized products

Packaging is a factor that helps when choosing a product. That is why producers pay attention to the design as possible. It appears in various colors, shapes, sizes and materials. The attention of the customers is lured by marketing tricks. Young people are very open to new products. Children can be easily attracted by colorful pictures. Colorhas a big influence on the purchase decisions. Red increases the interest and causes the need for impulse buying. Blue and green is fresh so is usually used for the mint sweets. Black, silver, golden and purple are colors that indicate luxury, so they are usually designed in elegant package, especially in case of the boxed chocolates or premium segment chocolate tables.

The packaging needs to fulfill certain requirements and must contain following information, given in the Polish language, while being distributed throughout Poland:

x name of the product (product named ‘chocolate’ must contain at least 45% of cocoa) x ingredients, in order of decreasing quantity x expiry date x name of the producer, country of the product origin, and (if relevant) name of the distributor, address and contact details, for the customer ability to gather more information or complain about the product x weight (without packaging) or number of pieces in the package x storing conditions x bar code

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x pictures on the packaging must be relevant to the product ingredients, for example if the filling has its taste thanks to strawberry synthetic, and not to natural aroma/flavor, there cannot be real strawberry fruit images on the packaging x as from November 2005 it must contain information about substances that may cause allergy x it is not necessary to list nutrition information, however it is recommended, for the increase of trust in the product

If the product packaging is smaller than 10 cm2 the following information need to be indicated: x name of the product x expiry date x netto weight (without packaging) or number of pieces in the package

More specific requirements regarding packaging are listed in Regulation of Ministry of Agriculture and Development of Rural Area on labeling of food products, dated on 16th of December. For more information concerning legal criteria for packaging, please see chapter 6.9. For examples of products and packaging, we refer to the annexes. For prices of products, we refer to paragraph 4.7.

4.3 Marketing and advertising strategies

Producers use different kinds of advertisement to draw attention to their products. The competition is severe, so expenditures on promotion and marketing are high. Brand imaging is increasingly important. Each producer is trying to create their own unique image. One differs from another with the target group. Producers work hard to maintain their position at any price and they keep introducing new products.

Interesting findings are presented by PENTOR4, which presents what ways of promotion are the most influential and best to inform customers about new products. Main advertising activities which have the biggest influence on the customers are presented in the chart below.

4 Opinion and Market Research Institute

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Chart 4.3.1 Most efficient types of advertising and promotion

3 Loyalty programs

5 Coupons in the magazines

7 Lotteries, competition 26 Recommendation by the salesperson 31

32 Product free sample

59 Presentation of the product in the POPs

77 Pricing promotion

TV, radio, press, billboards 0 102030405060708090

Source: Institute for Opinion and Market Research PENTOR-PoznaĔ, October 2004

The confectionery market requires high expenditures on advertising because Poles are disloyal consumers. Advertisements can the sales even 20-30%. Marketing expenditures reach more than 5% of sales value in case of large producers and 1-2% for small companies. As competition grows, spendings on marketing will continue to rise.

Table 4.3.2 TV advertising expenditures in the confectionery sector TOTAL TV ADVERTISING EXPENDITURES (EUR) All 111 035 262 Ferrero 25 416 049 Cadbury Wedel 19 457 841 Masterfoods Polska 10 137 967 Kraft Foods 10 011 753 Storck Polska 9 685 539 Danone 7 874 400 Nestle Polska 7 063 192 Wawel Kraków 3 789 079 Wrigley's 3 070 127 Perfetti Van Melle Polska 2 142 495 Jutrzenka Bydgoszcz 1 876 194 Leaf Poland 1 826 296 Kaliszanka 1 542 385

38 Proexport Colombia Confectionery and milling in Poland

TOTAL TV ADVERTISING EXPENDITURES (EUR) ZPC Mieszko 1 279 693 Chipita 1 078 556 SPPS SolidarnoĞü 948 709 Lindt and Sprungli 871 586 Haribo 722 741 Odra Brzeg 676 087 ZPC Lider Artur 658 946 Greenvita Ltd. 509 181 Krüger Polska 316 767 Other producers 79 677 Source: TNS OBOP (monitoring TV) for the period January 2004 – December 2004

Table 4.3.3 Advertising expenditures in the trade press in the confectionery sector TOTAL ADVERTISING EXPENDITURES IN THE TRADE PRESS (EUR) All 1 624 158 SolidarnoĞü 193 535 Wawel 158 670 Ferrero 155 509 Cadbury 143 949 Eurovita 143 149 Fazer 119 051 Haribo 109 176 Mieszko 92 589 Nestle 85 935 Kaliszanka 67 180 Odra 48 660 Jutrzenka 46 268 Lu Polska 44 056 Milano 33 898 Kruger 31 724 Other producers 146 807 Source: Monitoring Trade Press 2004

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The TV commercial expenditures in the segment of chocolate, which include: chocolate tablets, pralines, bars, wafers and chocolate spread, have increased in comparison with 2003 as € 7,25 mln more was spent. The main players in the market have increased their marketing budgets. This trend is followed by domestic manufacturers: Wawel, Kaliszanka and SolidarnoĞü.

Table 4.3.4 TV commercial expenditures in chocolate sector TV COMMERCIAL EXPENDITURES IN THE CHOCOLATE SECTOR (mln EUR) 2003 2004 66,3 74 Ferrero 14,1 18,25 Wedel/Cadbury Poland 17,2 18,07 Masterfoods Polska 5,48 9,13 Kraft Foods 9,29 7,83 Nestlé/Goplana 4,98 6,95 Storck Polska 3,57 3,1 Wawel Kraków 1,31 2,67 Stollwerck Polska 3,48 2,18 Kaliszanka Sp. z o.o. 0,69 1,55 SPPS SolidarnoĞü 0,09 0,95 Source: TNS OBOP monitoring TV

Table 4.3.5 TV advertising expenditures of candies TV ADVERTISING EXPENDITURES IN THE CANDIES SEGMENT AND THE ANNUAL GROWTH IN COMPARISON WITH 2003 (mln EUR / %) All 23,33 -30,1 Ferrero 6,38 -13,1 Storck 5,26 -15,0 Wrigley’s 3,07 -38,8 Perfetti Van Melle 2,14 -21,1 Cadbury Poland 1,4 -69,1 Wawel Kraków 1,12 -34,5 Masterfoods 1,01 +5,9 Leaf Poland 0,75 +100 ZPC Mieszko 0,74 -35,2 Source: TNS OBOP (monitoring TV) for the period January 2004 – December 2004

40 Proexport Colombia Confectionery and milling in Poland

According to Expert Monitor5 data, the highest expenditures in the chocolate sector are directed to chocolate bars and wafers. Four top advertisers are: Masterfoods, Ferrero, Nestle and Kraft Foods. Each of them spends more and more every year to maintain its position in the market. Every year the strategy is the same - to promote well-known brands. If producers promote a limited number of brands, there is usually one chosen, which is supported more than the others.

A good example of focus on solely the main brands is Kraft Foods. For 3Bit advertising in 2003 it spent € 2,75 mln and in 2004 it switched to invest more in Prince Polo. The expenditure on the mentioned brand has risen from € 1 mln to 3 mln.

The strategy of Masterfoods is to support three best-sellers equally: Snickers, Mars and Twix. Nestle invests in Princessa, Lion and Kit Kat. Ferrero’s product line Kinder expands and earns new consumers, not only children but also adults. The advertisement cost of this line reached as much as € 1,75 mln, which is twice as much as in 2003. Domestic producer Kaliszanka also strongly supports its GrzeĞki.

The marketing expenditures in total for the chocolate wafers and bars in 2004 are estimated to reach about € 31,95 mln. The highest campaign expenses were made by the following producers: Masterfoods – € 9,3 mln, Ferrero - € 7,925 mln, Nestle – € 7,2 mln and Kraft Foods – € 4,65 mln (according to Expert Monitor). Detailed data is only available for 2003, as presented below.

Table 4.3.6 TV advertising expenditures of chocolate bars and wafers TV ADVERTISING EXPENDITURES IN THE CHOCOLATE BARS AND WAFERS SEGMENT (mln EUR) Chocolate bars 18,07 Masterfoods 5,47 Ferrero 5,05 Kraft Foods 2,76 Nestle 2,25 Danone 1,97 Wawel 0,56 Chocolate wafers 4,58 Nestle 2,72 Kraft Foods 1,01 Kaliszanka 0,69 Source: TNS OBOP (monitoring TV) for the period January 2003 – December 2003

5 Media Tracking and Advertisement Monitoring Agency Proexport Colombia 41 Market Researches in Eastern Europe

GRP is the Gross Rating Point, the criterion for the pressure of publicity. It is identified with the sum of the number of times that 1% of the target group is being reached or contacts with the target groups are established.

GRP = Frequency x Reach = OTS x Coverage

Chart 4.3.7 The most effective advertising campaigns in the trade press - GRP Wawel 800 Solidarnosc Fazer 700 Eurovita Odra 600 Haribo Mieszko Cadbury Wedel 500 Nestle Ferrero 400 Kaliszanka Leaf 300 Jutrzenka IDC Polonia 200 Milano Kruger Lu Polska 100 Van Melle Masterfoods 0 Storck GRP OY Panda Bahlsen Source: SMG/KRC, RMT, 2004

OTS is Opportunity To See. This is the number of times the target audience is exposed to the advertisement and has an average contact with the advertisement.

OTS=GRP / Reach, Coverage

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Chart 4.3.8 The most effective advertising campaigns in the trade press – OTS 1+ Solidarnosc 80 Haribo Fazer 70 Mieszko Nestle Wawel 60 Eurovita Kaliszanka 50 Cadbury Wedel Odra 40 Lu Polska IDC Polonia Van Melle 30 Kruger Storck 20 Leaf Ferrero Masterfoods 10 Jutrzenka Milano 0 OY Panda Bahlsen OTS 1+

Source: SMG/KRC, RMT, 2004

The campaigns primary medium is television. Confectionery commercials are aired on TVP1, TVP2, TVN, Polsat, TVN7, TV4, MTV and TVP3, which are the most popular channels in Poland. The advertising clips made for the purposes of the campaigns, promote brands and focus on the most important aspects of sweet products. The knowledge of brand names increases with more commercials aired on TV.

The evaluation of the effectiveness of campaigns is prepared by market research institutes and thanks to that the market learns which campaigns are the most efficient. It is easy to notice that new products are very much advertised. Television is the main channel of informing about the unique news in the portfolio of the producer. With the frequent promotional campaigns current interest in the product is built. Additional advertising activities are sampling and price promotions in the market chains. Promotions for the shops are usually gifts, free products and samples.

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4.4 Participation in the market and segments that are served

The chocolate market was worth € 215,25 mln in the period July 2003 – June 2004. The following players were present in the market in the above indicated period.

Table 4.4.1 Chocolate producers and their market share

PRODUCERS OF CHOCOLATE AND THEIR MARKET SHARE (%)

SALES VALUE SALES VOLUME mln EUR /% mln Kg/% All 215,25 34 Wedel 28,5 28,5 Stollwerck 17,1 17,5 KJS 16,3 14,5 Goplana 8,0 8,6 Privete labels 3,3 6,9 Terravita 6,6 6,9 Ferrero 7,2 3,3 Wawel 3,0 3,3 Other producers 10,0 10,5 Source: MEMRB, data for period July 2003 – June 2004

The sector of pralines was worth € 148,12 mln. Wedel has the biggest market share, as presented in the table below.

Table 4.4.2 Pralines producers and their market share:

PRODUCERS OF PRALINES AND THEIR MARKET SHARE (%)

SALES VALUE SALES VOLUME mln EUR/% mln Kg/% All 148,12 16,6 Wedel/Cadburys 31,2 39,9 Storck 16,8 12,4 Ferrero 13,0 6,7 Solidarnosc 5,5 5,7 Goplana/Nestle 5,3 3,7 Wawel 4,2 4,7 KJS/Stollw/Olza 3,9 2,3

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PRODUCERS OF PRALINES AND THEIR MARKET SHARE (%)

SALES VALUE SALES VOLUME mln EUR/% mln Kg/% Jutrzenka 2,6 4,1 Mieszko 2,6 2,6 Mauxion 2,3 2,2 Vobro 2,0 1,7 Private Label 1,8 5,3 Other 8,8 8,7 Source: MEMRB, data for period November 2003 – October 2004 The market of chocolate bars and wafers was worth € 213,12 mln. The main players in the market are: Masterfoods, Goplana/Nestle and Kraft Foods. Theirs and other players market shares are presented in the table below.

Table 4.4.3 Chocolate bars and wafers producers and their market share PRODUCERS OF CHOCOLATE BARS AND WAFERS AND THEIR MARKET SHARE (%) SALES VALUE mln EUR/% All 213,12 Masterfoods 23,5 Goplana/Nestle 22,9 KJS/Stollwerck/Olza 17,7 Kaliszanka 10,3 Wedel/Cadburys 9,1 Ferrero 6,0 Wawel 4,1 Skawa 1,1 Jutrzenka 0,9 Mieszko 0,5 Other producers 3,8 Source: MEMRB, data for period November 2003 - October 2004

Candies market was worth € 174,5 mln. Main players in terms of volume sold were Goplana, Leaf, Van Melle and Storck. Their market shares are presented in the table below.

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Table 4.4.4 Candies producers and their market share

PRODUCERS OF PACKED CANDIES AND THEIR MARKET SHARE (%)

SALES SALES VALUE VOLUME mln EUR /% mln Kg/% All 174,5 27 818 Goplana 9,6 14,7 Leaf 7,9 12,2 Van Melle 18,5 11,5 Storck 12,9 10,9 Skawa 4,5 8,5 Mieszko Racibórz 3,5 4,8 Ferrero 10,1 3,7 Jutrzenka 2,6 3,5 Odra Brzeg 1,7 2,9 Other producers 4,2 27,1 Source: MEMRB, data for period January 2004 – December 2004

Hard candies are substantial part of the segment of all candies. They are very popular in Poland and there is number of producers present on the market. Their market shares are presented in the table below.

Table 4.4.5 Hard candies producers and their market share: PRODUCERS OF HARD CANDIES WITHOUT FILLING AND THEIR MARKET SHARE (%) SALES VALUE SALES VOLUME mln EUR /% mln Kg/% All 72,6 13,2 Goplana 16,5 24,6 Storck 16,2 12,1 Wedel/Leaf 13,4 20,1 Warner Lambert 12,2 4,8 Van Melle 11,1 7,5 Wrigley's 10,7 3,2

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PRODUCERS OF HARD CANDIES WITHOUT FILLING AND THEIR MARKET SHARE (%) SALES VALUE SALES VOLUME mln EUR /% mln Kg/% Odra Brzeg 3,6 5,6 Mayora 3,4 1,7 Mieszko Racibórz 2,6 4,1 Other producers 10,1 16,3 Source: MEMRB, data for period November 2003 - October 2004

Sweet dragees and pastilles are becoming more popular every day. The biggest market share in terms of value have two producers: Van Melle and Ferrero. But volume-wise, the Polish producer Skawa plays the key role in the market. The market shares are presented in the table below.

Table 4.4.6 Sweet dragees and pastilles producers and their market share: PRODUCERS OF SWEET DRAGEES AND PASTILLES AND THEIR MARKET SHARE (%) SALES VALUE SALES VOLUME mln EUR /% mln Kg/% All 51,9 6,4 Van Melle 40,9 28,7 Ferrero 32,8 15,7 Skawa 14,8 36,3 Master Foods 4,3 3,8 Jutrzenka 2,9 5,6 Other producers 4,3 9,9 Source: MEMRB, data for period November 2003 - October 2004

The market of cakes and cookies is worth € 377,5 mln. The main player in the market is LU Polska with more than one fourth of the market, in terms of value and also of volume. All of the players are presented in the table below.

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Table 4.4.7. Cakes and cookies producers and their market share:

PRODUCERS OF CAKES AND COOKIES AND THEIR MARKET SHARE (%)

SALES VALUE SALES VOLUME mln EUR/% mln Kg/% All 377,5 83,6 LU 27,2 26,0 Goplana/Nestle 9,2 6,3 Bahlsen/Lajkonik 8,9 10,3 Kaliszanka 8,0 6,5 Olza/KJS 7,8 5,5 Jutrzenka 7,3 8,3 Private Label 3,3 6,0 Wedel/Cadbury`s 2,7 2,0 Chipita 2,5 2,4 Skawa 2,2 2,8 Solidarnosc 1,8 1,9 Ferrero 1,8 1,0 Other producers 17,2 20,9 Source: MEMRB, data for period November 2003 - October 2004

4.5 Quality of the product

Quality of confectionery products is determined by ingredients, size, packaging, texture, flavor and color. These features are described below for chocolate products, cookies and candies.

The most popular among consumers are chocolates in tablets. The most popular are 100g, but they are also produced in following sizes: 70 g, 125 g, 180 g, 250 g, 300g. Chocolates are also sold as pralines, so called boxed chocolates. They occur in different sizes 100 – 500 g. The chocolate tablet is usually wrapped in tinfoil and then in paper. Box of chocolates are made of cardboard paper or metal tin. Packaging is usually in the shape of box, heart, candy or coffer and is colorful, which is to draw attention of potential customers. The name of the brand and logo are situated horizontally in most cases, so it is easier to display on the shelf. Boxes are designed to be stylish and elegant. There is usually a picture of pralines shapes, flowers, views, occasional pictures like First Holly Communion, Christmas, Easter or Valentines. Pralines in box are sold in the same kind or varieties. Available flavors of solid chocolates are: milk, bitter and dessert. Chocolate with delicacies: nuts, raisins and different types of filling: strawberry,

48 Proexport Colombia Confectionery and milling in Poland blackcurrant, yoghurt, cherry, raspberry, kiwi, orange, pistachio, coconut, almond, toffee, coffee, hazelnut and alcohol.

Chocolate wafers and bars are sold in sizes: 23 g – 60 g. Popular are XL weights, usually of 100 g (in case of bars) and 60 g (wafers) . On the other hand, sales of light, crunchy bars is rising dynamically, which is main trend in the market. Bars and wafers are impulse purchases and colors used for the packaging are to draw attention and cause hunger. The colors are very warm and instant: red, yellow, orange, brown. Beside chocolate (milk and white), the bar often contains , caramel, peanuts, different delicacies or biscuit.

Cookies occur in various shapes, sizes and flavors. There are several types of cookies on the market: biscuits, sponge cakes, crunchy cookies, cream-filled biscuits, gingerbread. The most popular in Poland are Delicje, jellies on the biscuit, covered with chocolate. They are sold in different sizes. Desired weight can be bought after asking the sales assistant in the shop.

Candies are sold as hard caramels, solid or with filling, sweet dragees, jellies, toffee, coffee and milk candies, chewies and lollipops. The most popular flavors are fruit: lemon, orange, strawberry, blackberry, apple, cherry, grapefruit, lime. More popular become herbal, vitamin, mint candies and sugarfree ones. Lately launched, sour and fizzy candies are perceived as very attractive by children. They are usually sold in bags 50 g, 100g, 125 g, 150 g and in the paper or folio wraping of 20 - 50g. It is also possible to buy them in the desired amount with help of sales assistant in the shop.

4.6 Expansion plans

Every year there is a set number of new products introduced to the market. The main trend on the Polish market is the launch of new products that are attractive to children. A healthy lifestyle is becoming more and more a way of life for the Poles. This generates the need for the fresh, herbal and sugarfree sweets.

Expansion plans of each company are confidential. However, the main trends in the market indicate the direction companies are going to follow. The market is congested so it is likely to happen that small local companies will merge and consolidate to gather a bigger market share. Jutrzenka has bought the Goplana plant and brand from Nestle, which is, after Wedel, the second best-known Polish trademark among confectionery products. The products of Goplana and Jutrzenka are complimentary, so the merged company will play an important role on the confectionery market in each segment. It has already benefited from the synergy effect.

The market of confectionery products is rising about 10% a year. It is going to grow continuosly, since Pole consumption of chocolate products and cookies is still much lower than that of the average EU citizen.

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4.7 Pricing strategy

For consumers, price seems to be the most decisive factor, while quality and brand are less often taken into account. The market is not a homogenous one and experts divide it into three segments: 1) luxury products, with high prices, from such companies as Dove and Lindt; 2) the crowded middle with, Milka, Terravita, Wedel’s Jedyna; and 3) the cheapest, products from several small regional Polish manufacturers and hypermarkets private labels. The price competition is very severe.

Table 4.7.1 Prices of confectionery products in hypermarkets PRICES OF CHOCOLATE PRODUCTS (EUR) IN DIVISION INTO PRICE SEGMENTS Product level High Middle Low Lindt, Wedel Chocolate slabs Milka, Alpen Gold Private label Maestria Price / 100g 1-1,5 0,5-0,75 0,25-0,5 Box of Lindt, Wedel Serce Wedel Pasjonata, Mieszko chocolates Merci Price / 200g 7,5-12,5 2,5-7,5 0,75-2,5 Nestle Quality Street Leaf HOPS, Goplana Candies Nimm2, Fruittella Brando Price / 150g 1-2,5 0,5-1 0,25-0,5 - Chupa Chups, Lollipops Private label Alpen Liebe Price / piece - 0,125-0,25 less than 0,125 Princessa, Prince Chocolate wafer Wawel Private label Polo Price / 100g 0,5-0,75 0,25-0,5 0,125-0,25 Loacker Buon Mieszko, Wawel, Wafers Giorno, Wedel Torcik Wedel, LU Jutrzenka Wedlowski Price / kg 7,5-12,5 3-7,5 2-3 Snickers, Alibi, Milky Way, Paweáek, Lion, Private label 3Bit Price / 100g 0,5-1 0,25-0,5 JeĪyki, Delicje Jutrzenka, Cookies Pieguski, Hit SolidarnoĞü Price / kg 5-7,5 3-5 1,5-3 Source: individual elaboration in the hypermarkets

50 Proexport Colombia Confectionery and milling in Poland

There is a huge increase in the number of hypermarkets private labels products. Although the main criterion of choosing sweets is still the price factor, people more often reach for the better quality products. The brands are very important, which is a matter of good marketing and information strategy. In this market children’s preferences are substantial. Very often they are the decision makers and hence have a big influence on the purchases.

4.8 Segmentation of enterprises by sectors and its categorization

Privatization of Polish companies and Greenfield investments have led to the domination of foreign manufacturers on the Polish market. The process started with the privatization of Wedel, Poland's largest confectionery factory. Later Nestle bought the second biggest plant, Goplana in PoznaĔ. In 1992 Mars Inc. spent € 100 million on constructing a factory. In 1994 Cadbury opened a factory near Wrocáaw and Stollwerck opened one near PoznaĔ. The State Treasury sold the Olza factory in Cieszyn to KJS (Kraft Foods) and GdaĔsk's Baátyk to Fazer.

Few Polish factories were able to withstand such competition. Those which survived hold strong positions on regional markets or manufacture niche products. The four most important of them are Jutrzenka, Mieszko and Wawel, all quoted on the Stock Exchange, and Greenvita.

Most important players in the chocolate confectionery market

Cadbury Wedel Sp. z o.o.

Location: Warsaw Beginning of activity: 1851 (Wedel), 1999 (Cadbury Wedel) Number of employees: 1250 Turnover: € 128 886 500 Website: www.cadburywedel.pl

When the Wedel chocolate factory was sold to Cadbury Schwepps in 1998, this caused a great sensation. Wedel is a symbol of delicious treats and nearly sacred national treasure. Poles have been consuming Wedel products since 1851.

Before World War II, Wedel had shops in London and Paris. Since 1991 the company was gradually bought out by PepsiCo. But PepsiCo decided to sell one factory to the Finnish company Leaf and then the chocolate factory to Britain’s Cadbury and the cookie factory to France’s Group Danone (that owns LU Polska). The company made the decision despite the fact that those plants were profitable. The production of sweets is not PepsiCo’s specialty and the company needed to focus on producing soft drinks and salty snacks in Poland. Proexport Colombia 51 Market Researches in Eastern Europe

Cadbury has not yet achieved success in Poland, despite an investment of € 40 million in its own chocolate factory. Poles don’t like the British chocolate as much as those from Wedel. As a result, in 1998 Cadbury owend less than 3% of the chocolate market, while Wedel had 24%. The takeover of the plant and to the use of Wedel’s name enabled Cadbury a great expansion.

Portfolio: all types and flavors of chocolate tablets; pralines: Pasjonaty Deserowe, Pasjonaty Mleczne, Serce, Chopin, Sáodkie Serduszka, Avanti, Maestria and Baryáki; bars and wafers: Rekord, Paweáek, Bajeczny, WW, Smyk and Pierrot; packed choolate products: Wedlowskie Ptasie Mleczko, TorcikWedlowski and Mieszanka Wedlowska.

Kraft Foods Polska S.A.

Location: Warsaw Beginning of activity: 2004 Number of employees: 700 Turnover: EUR 180 407 500

Kraft is part of the world leading producer of food products, Kraft Foods. In Poland it has been operating since 1992. It bought Olza in 1999 and Stollwerck in 2002. It owns the following brands: Milka, Prince Polo, 3Bit, Alpen Gold, Nussbeisser, Maxi, Mleczna Kraina and Bąbolada; pralines: Verdi and Traviata

Nestle Polska S.A.

Location: Warsaw Beginning of activity: 1993 Number of employees: 2000 Turnover: EUR 387 642 500 Website: www.nestle.pl

Nestle operates on the Polish market since 1993. It has taken over Goplana, after Wedel, the best known Polish brand. However, in 2004 it has decided to sell Goplana to Jutrzenka and focus on strategic brands, which are: , , Classic; bars and wafers: Princessa, Lion, Kit Kat, Nesquik, Cini-Minis and .

Masterfoods Polska Sp. z o.o.

Location: Sochaczew Beginning of activity: 1991 Number of employees: 1290 Turnover: EUR 278 447 500 Website: www.masterfoods.pl

52 Proexport Colombia Confectionery and milling in Poland

Masterfoods is less known on the chocolate market, but it is the unquestioned leader in the chocolate bar segment with its Snickers and Mars bars. It has built its own sweets and pet food factory 50 km from Warsaw. Its portfolio consists of: bars and wafers: Snickers, Mars, Milky Way, Twix, Bounty, Dove, No name; dragees: M&Ms, Skittles and Starburst; chocolate spreads: Snickers and Milky Way.

Fabryka Pieczywa Cukierniczego “Kaliszanka” Sp. z o.o.

Location: Kalisz Beginning of activity: 1892 Number of employees: 510 Turnover: EUR 34 129 000 Website: www.kaliszanka.com.pl

Kaliszanka owns the best known wafers brand in Poland: GrzeĞki and biscuits: BeBe, Petit Beure, MaĞlane

Zakáady Przemysáu Cukierniczego SKAWA S.A.

Location: Wadowice Beginning of activity: n.a. Number of employees: 1038 Turnover: EUR 26 500 Website: www.skawa.com.pl

It produces wafers: Elitesse and dragees: Korsarz.

Zakáady Przemysáu Cukierniczego Wawel S.A.

Location: Kraków Beginning of activity: 1926 Number of employees: 982 Turnover: EUR 35 644 250 Website: www.wawel.com.pl

It produces solid and filled chocolate tablets, light chocolates; pralines: Kasztanki, Malagi, Tiki Taki, Michaáki Zamkowe and Buáawka; chocolate bars: Danusia, Maciek.

PrzedsiĊborstwo Cukiernicze JUTRZENKA S.A.

Location: PoznaĔ Beginning of activity: 1922 Number of employees: n.a.

Proexport Colombia 53 Market Researches in Eastern Europe

Turnover: EUR 45 500 000 Website: www.jutrzenka.com.pl

Its target are consumers who have a lower dan average income. It recently bought Goplana from Nestle. Wafle Familijne is the best brand sold by Jutrzenka. It also offers chocolate wafers and bars: Alibi, Apetit, Amiko; cookies: Petit- Beurre, Elitki, Zwierzaczki, JeĪyki, Kokosowe; jellies: Gumolki, DĪo, Serduszka, MiĞki.

Zakáady Przemysáu Cukierniczego MIESZKO S.A.

Location: Racibórz Beginning of activity: 1993 Number of employees: 800 Turnover: n.a. Website: www.mieszko.pl

Main products are pralines: Klejnoty Premium, Klejnoty Classic, Espresso, Momento, Bellissima, Twój Sekret, La Stella; candies: Michaszki, Trufle; jellies: Duet, Solo, Rajska PlaĪa, Zozole, Yolobo, Vitto and wafers: Miáe Chwile.

TERRAVITA Sp. z o.o.

Location: PoznaĔ Beginning of activity: 1998 Number of employees: 300 Turnover: EUR 20 269 250 Website: www.terravita.pl

Terravita is 60% owned by Polish capital. It offers chocolate: Amaretto, Advocat, Kawowa, Serduszka, Andrzejki, Natchnienie; occasional chocolate figures for Christmas and Easter. It also produces sauces for ice cream in several flavors and chocolate spread.

Lindt & Sprungli Poland Sp. z o.o.

Location: Warszawa Beginning of activity: 1993 Number of employees: n.a. Turnover: n.a. Website: www.lindt.com

It offers chocolate products from the premium segment: Excellence, Gold, alcohol filled; pralines: Lindor, Swiss Tradition, Nouvelle Confiserie, Fioretto, Petis Desserts.

54 Proexport Colombia Confectionery and milling in Poland

Ferrero Polska Sp. z o.o.

Location: Warszawa Beginning of activity: 1992 Number of employees: 750 Turnover: € 42, 5 million Website: www.ferrero.com

It produces chocolate spread; bars and wafers: Kinder Niespodzianka, Kinder Bueno, Kinder Country, Kinder Pingui, Kinder Delice; pralines: Rocher, Mon Cheri, Rafaello and dragees: Tic-Tac.

Firma Cukiernicza SolidarnoĞü Sp. z o.o.

Location: Beginning of activity: 1952 Number of employees: n.a. Turnover: n.a. Website: www.solidarnosc.pl

It offers pralines: Záote, Golden Hazelnut, Golden Advocat, Almondo, Choco Choco, WiĞnie w likierze.

Most important players in the milling market

The baked goods market is also dominated by foreign companies, which either have taken over Polish plants (Bahlsen, Nestle, Kraft, United Biscuits) or have built their own factories (Danone). Of the main producers, only Jutrzenka, Wawel and Kaliszanka are owned by Polish capital.

LU Polska

Location: Warszawa Beginning of activity: 1999 Number of employees: n.a. Turnover: n.a. Website: www.lupolska.pl

It produces cakes: Delicje SzampaĔkie, Delicje Impresje, Pieguski, Petitki, Petitki DzieĔ Dobry, àakotki, Pierniczki Alpejskie, Pyszotki San, golden wafers Danone.

Thie Lorenz Bahlsen Snack-Wols Sp. z o.o.

Location: Warszawa Beginning of activity: 1980

Proexport Colombia 55 Market Researches in Eastern Europe

Number of employees: 100 Turnover: n.a. Website: www.lorenzsnack-world.pl

It is owner of Lajkonik, Bahlsen, Hit and Leibniz.

Most important players in the sugar confectionery market

Mieszko

The company has been described above.

It is one of the most important player in candies sector. It produces Fruits Frutis and famous Zozole.

Leaf Poland Sp. z o.o.

Location: Warszawa Beginning of activity: 1991 Number of employees: n.a. Turnover: EUR 17 109 750 Website: www.leaf.pl

It produces hard caramels and jellies HOPS!, Bomba, Mython pastilles, halva Królewska, sesame AHA!, Chupa Chups lollipops.

Perfetti van Melle Sp. z o.o.

Location: Tarczyn Beginning of activity: 1993 Number of employees: 430 Turnover: € 36 057 750 Website: www.perfetti.com

It offers Fruittella, Mentos, Alpen Liebe and Golia.

STORCK Sp. z o.o.

Location: Warszawa Beginning of activity: n.a. Number of employees: n.a. Turnover: n.a. Website: www.storck.pl It offers Werthers Original, Nimm2, Ice Fresh, , ; pralines: Merci and Toffifee; wafers: Knoppers.

56 Proexport Colombia Confectionery and milling in Poland

PrzedsiĊbiorstwo Wyrobów Cukierniczych ODRA S.A.

Location: Brzeg Beginning of activity: 1946 Number of employees: n.a. Turnover: n.a. Website: www.odra.com.pl

It offers hard caramels : Mini Owocowe, LeĞne, Landrynusy, Cytruski, Tropic; jelly in chocolate: Opolanki, candies: Michaáki Piastowskie and Trufle, pralines: Bon Voyage, Elegancja; Sesame Halva.

Cloetta Fazer Polska Sp. z o.o.

Location: GdaĔsk Beginning of activity: 1993 Number of employees: 450 Turnover: EUR 21 905 250 Website: www.fazer.com.pl

It offers candies: Dumle, Geischa, Liqueir Fills, Fazer Mint, Fantazja and Fazer chocolate tables.

4.9 Recommendations

The Polish market is very congested and full of players: domestic as well as international. All main world leading companies have an establishment and so are numerous Polish producers. Lack of space does not mean there is no chance to enter the market.

The product, however, needs to offer unique values, be interesting and be supported by suitable marketing strategy. Moreover, the market is being shaped by retailers, discount opportunities and a rapid turnover of goods. It is very difficult to fulfill expectations of such markets, but thanks to a good concept, imagination in advertisements and promotion, it may bring in large profits. The biggest chances to success have those companies which find their niche in the market and strengthen their image and products position.

Poles are very demanding nowadays. They have a great choice of good quality products and are not loyal customers. Poles still eat less than average EU citizen and hence, consumption of confectionery products is likely to increase. Average Pole eats 0,96 kg of chocolate annually, 2,16 kg of sugar confectionery and 6,36 cakes and baked products. That means there are huge possibilities for all the producers on the market. The success strategy is focusing on own position, widening the product range and increasing the market share. Due to increasing

Proexport Colombia 57 Market Researches in Eastern Europe competition on the market profits are not as high as they were a couple of years ago. However, in long term perspective, with the growing consumption and development of the market, profits could be very attractive.

58 Proexport Colombia 5. Distribution channels

Over the last decade the number of retail outlets in Poland has doubled, from around 230,000 to almost 450,000 shops. Poland has attracted the most foreign investors from Europe. Of the 20 largest retailers in Europe, 12 are already established in Poland and according to Colliers International6, over 120 new retailers will seek to enter the Polish market. The share of foreign retailers in the Polish market, according to GfK Polonia, Market Research Agency, soared from 0% as late as 1990 to 50% in 2002. Large-scale facilities (hypermarkets and ) still account for only 2% of the total number of general food retailing outlets, however according to figures released by AC Nielsen, there are only four hypermarkets per million inhabitants in Poland compared to 20 in Germany and 13 in the Czech Republic. Since the mid-1990s the expansion of large-scale retail facilities with foreign capital has been accompanied by a slight, though noticeable fall in the number of small shops with sales space of up to 50 m2, in particular specialist outlets. On the other hand, such small shops still constitute a very high proportion of all retail facilities (92,4%) and in this respect Poland is unique on a European scale.

5.1 Retail structure

The most popular ways to distribute confectionery products to final consumers are presented below. x Hypermarkets and superstores

Hypermarkets and superstores are a Western phenomena which has made a clear impact on the Polish retail scene since the collapse of Communism.Today these increasingly popular outlets count for over 15% of the national modern grocery distribution.

UK-based is now the leading player in the sector with its eponymous Tesco outlets, followed by French (Auchan), the German Metro Group (Real) and French players Casino (Géant) and (Carrefour). After a considerable gap, further players worth mentioning include Dutch Ahold, French Leclerc German retailer Schwarz Group. Together, all these players operated a total of over 170 hypermarkets and superstores at the end of 2003. Nonetheless, the country’s most densely populated regions are already facing hypermarket over saturation, so operators are now expected to target smaller cities of around 150,000 inhabitants. It is also worth noting that hypermarket growth rates have probably peaked now, as legal obstacles to opening outlets larger than 2 000 square meters are making their impact on the market.

6 Commercial Real Estate Consultants Proexport Colombia 59 Market Researches in Eastern Europe

x Supermarkets

Supermarkets are very important sales channels in Poland, although of less importance than hypermarkets. It is interesting to mention that supermarkets have increasingly come in the spotlight recently as tougher planning regulations have made it harder for retailers to open outlets larger than 2,000 square meters. It is also worth mentioning that many supermarkets continue to be operated by small local companies and co-operative groups and at least in the cities most of these stores look very clean and attractive.

As is the case with the hypermarkets, the sectors group of leading players is clearly dominated by foreign operators. Dutch grocer Ahold (with its Albert banner) is the clear leader, followed by the French ITM group (Intermarché), French Carrefour (Champion), the German Rewe (), local player (Polomarket), UK-based Tesco (Savia), Polish group Tarkon Gradi (Eko, Taf) and French Auchan (Elea). After a considerable gap, there is also a local player Eldorado (Stokrotka) and the Austrian Meinl (Julius Meinl) and French Leclerc (Leclerc) worth mentioning. Together, all these operators had a combined network of some 600 supermarkets at the end of 2003, although obviously there are many more supermarkets available for shoppers run by small local businesses and the co-operative societies. x Discount stores

The Polish discount market continues to be dominated by the formerly domestic chain, which was taken over in 1998 and subsequently expanded aggressively to more than 650 outlets by Portuguese retailer Jeronimo Martins. Next to Biedronka, important operations in the Polish discount market include German Tengelmann (Plus), French Casino (Leader Price), Danish Dansk Supermarked (Netto) and the German Schwarz Group (). These five companies operated a combined total of over 1,000 outlets at the end of 2003. x Convenience stores

Apart from the domestic operator of Poland’s largest petrol station network, PKN Orlen, further prominent representatives of the national forecourt store scene are BP (Aral Store, BP Connect, BP Express), Shell (Select), ConocoPhillips (Jiffy) and ExxonMobil (Esso Snach & Shop, Tigermarket), with the former two foreign networks being significantly larger than those of ConocoPhillips and ExxonMobil.

60 Proexport Colombia Confectionery and milling in Poland x Neighborhood stores, traditional outlets

Given the relatively low incomes in Poland, independent neighborhood stores continue to play a key role in the national food supply - especially in the small towns and poor rural areas, but to a certain degree also in the large cities, including the capital Warsaw, where they usually cater for people who pick up some ingredients for their lunch at the office or factory.

According to CAL, a strategic source of information for the FMCG sector, there were some 115 700 food shops trading in the country from less than 300 square meters in 2002. This corresponded to 98,1% of all food stores - virtually unchanged from the 98,4% two years earlier in 2000. However, the value of an average shopping basket in the small stores has decreased by an estimated 10- 15% over the last few years in favor of the increasingly popular hypermarkets.

In regard to the small-store sector, it is interesting to note that there are also huge numbers of kiosks, newsagents spread across the country, where people buy not only kiosk ranges such as newspapers and tobacco products but also confectionery. The leading player here is the state-owned Ruch chain which alone has over 13 000 20-square meters kiosks spread all over Poland. Even in the capital Warsaw it is difficult to walk a distance of 300 meters without encountering such an outlet. x Cash & carries

The national cash & carry sector is without the slightest doubt dominated by German grocery giant Metro Group, which is also the national market leader with a market share of around 10. The company is clearly benefiting from the large number of independent shops which are still around and will be around for some time to come. Another important customer group for Metro are restaurants and caterers.

Apart from Metro, German Rewes Selgros operation is also worth mentioning, as are the local C&C network of Eldorado and, last but not least, the stores which were formerly owned by Portuguese grocer Jeronimo Martins but were bought out by their local management in early 2003. x Delivered wholesale

Delivered wholesale continues to play a very important role in the Polish food sector. Especially the huge number of independent shops in the small towns and rural areas depend on such partners.

Shoppers not only spend the bulk of their household goods expenditure in modern trade, they are also spending significantly more in this trade in 2003 compared to 2002. The strengthening of a range of modern store formats modern trade has experienced a strong growth in store count of over 8% per annum in Proexport Colombia 61 Market Researches in Eastern Europe the past 2 years. Over the same time period, the number of traditional stores has declined by 7% per year.

The number of hypermarkets, supermarkets, convenience stores, and personal care stores has been gradually increasing over the past 3 years. In accordance with European rules governing the development of retail chains, the structure of the modern form of trade in Poland in the years ahead, should evolve in the same direction as in countries with a high level of development in retail trade (such as Belgium and France). This would signify a further intensification of trends towards the concentration and integration of retail enterprises as well as a rapid increase in the still underdeveloped areas of direct sales and Internet retailing.

Table 5.1.1 The most important hyper- and supermarkets in Poland

Shop Website Albert www.albert.pl Alma Market S.A. www.almasupermarket.pl Auchan Polska www.auchan.com Biedronka www.biedronka.pl Carrefour Polska www.carrefour.pl Eldorado S.A. www.eldorado.pl E. Leclerc www.leclerc.com.pl Geant www.geant.pl Hypernova www.hypernova.pl Intermarche www.intermarche.pl www.kaufland.pl Leader Price www.leaderprice.pl Lewiatan www.lewiatan.pl Makro Cash&Carry www.makro.pl Netto www.netto.pl Piotr i Paweá www.piotripawel.pl Real www.real.pl Selgros Cash&Carry www.selgros.com.pl Tesco Polska www.tesco.pl

Source: Individual research

62 Proexport Colombia Confectionery and milling in Poland

Table 5.1.2 Sales area and assortment of food products SALES AREA AND ASSORTMENT OF PRODUCTS

TYPE OF AREA ASSORTMENT LEVEL SHOP Hypermarket > 2 500m2 40 000 products (50% food, 50% non-food) 400 – Supermarket 10 000 (70% food, 30% non-food) 2 499m2 800-1 000 (mostly food articles, price levels lower by Discount store various 15-30% than the average market) Large grocery 101-399 m2 85% food products, 15% non-food products Medium grocery 41-100 m2 85% food products, 15% non-food products Small grocery < 40m2 85% food products, 15% non-food products Source: http://www.pmrpublications.com/index.php?pr_id=4

Big confectionery manufacturers sell mainly in supermarkets and hypermarkets, while smaller companies focus on traditional shops. Those provide them with higher profit margins. However, Poles’ purchasing habits are changing and they spend more time shopping in the big retailers. Every second confectionery product is now purchased in a hyper- or supermarket. This is mainly because of the growing number of the modern stores, but also due to the growing number of purchases.

Chart 5.1.3 Retail structure for confectionery products

Newsagents 1,1% Confectionery shops 2,5%

Small groceries 21,8%

Medium groceries 19,9%

Large groceries 11,1%

Supermarkets <2500m2 23,6%

Hypermarkets >2500m2 20%

Source: ACNielsen, data for period August 2003 – July 2004

Sales of chocolate products are expanding especially thanks to modern outlets. The significant growth of sales of 17% took place in the modern shops, while in the traditional shops the turnover has risen for about 5%. These shops are easy to access and offer competitive prices. Almost all of the shops sell chocolate Proexport Colombia 63 Market Researches in Eastern Europe tables. Even in the small size convenience stores, where there is lack of space for other goods, chocolate is usually sold.

Candies don’t follow the modern trend of focusing on hypermarkets. They are sold most often in traditional shops and small convenience stores. The most important channel for sales are the shops smaller than 40m2, which sell about 55% of all candies. Less important is the sales in the modern stores with 30%. However, the sales in modern stores have grown by 24% in the year 2004.

In the small and medium sized shops there is a wide range of products that are most popular. Small shops are very important for the wholesalers and producers. Customers trust the brands sold in those shops, while in the big retailers, unique and high-demanding customers are best served. Small shops are usually serviced with producers own sales strengths. Well displayed products and good advertisement strategy are main factors for those products to be fast rotating.

Candies often are impulse purchases, so they are usually located in the very near distance of the checkout. Sweets are very often purchased while going to work or school. Hence it is important that they are well displayed, eye-catching and easy to reach. Close to the checkout there is only place for the most popular and well-known brands. Sweets for children are usually located on a shelf at their eyelevel.

Table 5.1.4 Retail structure of the candies sales SALES OF CANDIES IN EACH TYPE OF SHOP

SALES VALUE TYPE OF SHOP EUR % All 181 617 750 100 Hypermarkets >2500m2 21 500 000 11,8 Supermarkets <2500m2 32 523 500 17,9 Large groceries 19 238 000 10,6 Medium groceries 41 551 000 22,9 Small groceries 50 344 750 27,7 Newsagents 10 508 250 5,8 Confectionery shops 3 225 250 1,8 Chemists 2 726 750 1,5 Source: ACNielsen, data for period December 2003 – November 2004

64 Proexport Colombia Confectionery and milling in Poland

5.2 Confectionery products most frequently sold in groceries

In the survey carried out on behalf of Trader Guide, owners of the groceries of size not bigger than 400 m2 declared best sellers among confectionery products.

Chart 5.2.1 Chocolate tablets most frequently sold in the shops smaller than 400 m2 (%)

Wedel 86%

Alpen Gold 40%

Milka 37%

Goplana 20%

Terravita 4%

Source: Institute for Opinion and Market Research PENTOR-PoznaĔ, October 2004

Chart 5.2.2 Chocolate spread most frequently sold in the shops smaller than 400 m2 (%)

Nutella 66,8% 8% Milky Way 7% Terravita 7% 6% Choco Nut Cream 4%

Source: Institute for Opinion and Market Research PENTOR-PoznaĔ, October 2004

Proexport Colombia 65 Market Researches in Eastern Europe

Chart 5.2.3 Chocolate bars most frequently sold in the shops smaller than 400 m2 (%)

Snickers 51% Mars 41% Wedel 16% Paweáek 10% Lion 10% 8% Milky Way 6% Kit Kat 5% 5% Kinder Bueno 4%

Source: Institute for Opinion and Market Research PENTOR-PoznaĔ, October 2004

Chart 5.2.4 Chocolate wafers most frequently sold in the shops smaller than 400 m2 (%)

GrzeĞki 40% Princessa 33% Jutrzenka 23% Prince Polo 15% Skawa 13% Tago 8% Wedel 7% Goplana 4% Nestle 4%

Source: Institute for Opinion and Market Research PENTOR-PoznaĔ, October 2004

66 Proexport Colombia Confectionery and milling in Poland

Chart 5.2.5 Candies most frequently sold in the shops smaller than 400 m2 (%)

Wedel 46% Goplana 25% Wawel 15% SolidarnoĞü 15% Mieszko 10% Jutrzenka 6% Odra 6% Kukuáki 6% Michaáki 5% Fazer 4% Zozole 4% Raczki 4% Krówki 4%

Source: Institute for Opinion and Market Research PENTOR-PoznaĔ, October 2004

Worth mentioning is the seasonal character of the market. The confectionery products are best sold in the time of national holidays: Christmas and Easter. In months like July and August there is less demand in the market. Exposition and display of the products is very important. Experts state that goods, especially chocolate tablets should be grouped regarding their brands and then by kinds and flavors. Customers decisions are based on the trademark and linked to that, price.

5.3 Recommendations

The choice of distribution channel depends on the kind of product offered. To attract the consumer’s attention in the shop an adequate pricing strategy and eye-catching display are desired. Also a strategic cooperation in Poland should be considered, for instance with a significant importer of confectionery products or a well known distributor.

When entering the Polish market through supermarkets or big chains of shops, it is highly recommendable to contact them directly. This formula is adaptable also for smaller distributors throughout Poland. The direct approach is a best way to negotiate cooperation terms. The business language in Poland is English. Super- and hypermarkets usually require a quotation of an offer (price is usually a first indicator of considering further cooperation) in advance as a beginning of the cooperation. First contact should be made with a manager, responsible for a certain group of products. Local distributors should be contacted directly to arrange an opening conversation meeting.

Proexport Colombia 67

6. Commercial Access Guide

6.1 Preferential tariffs

All goods entering the EU are subject to import duties. External trade conditions are mostly determined by EU regulations. Poland also uses the EU´s Harmonized Tariff Schedule (Nomenclature) on the TARIC (Integrated Tariff of the European Community) which is issued by the Commission and the Member States for the purpose of applying Community measures relating to import and exports. The level of the tariffs depends on the country of origin and the product. If there is not a special trade agreement in force, the general import tariff (conventional duty) applies.

In January 2005 Commission Regulation (EC) No 1810/2004 entered in force which is binding in all Member States. In its Part Two “Schedule of Customs Duties”, subcategories 1704,1806 and 1905 deal with ”Sugar confectionery”, “Chocolate and other food preparations containing cocoa” and “Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products”.

Colombia is included in the general system of preferences – GSP. This agreement allows products originating in the countries concerned to be imported at preferential tariffs or, for the least developed countries, duty-free. A “Certificate of Origin Form A” has to be filled in by the exporter and issued by the competent authorities. Tariff contingents and tariff ceilings do not exist anymore.

According to international agreements Colombia is included in the SPGE group of preferences and therefore benefits from 0% tariff preference on the basis on Regulation (EC) No 2501/2001 and Commission Regulation (EC) No 2331/2003. Untill July 1st 2005, this meant that Colombian exporters could introduce so- called “non-sensitive” products at a 0% tariff rate and “sensitive” products, such as all products under nomenclatures code 1704, 1806 an 19 at a 3.5% reduced rate.

However since July 1st 2005, Colombia is a member of the GSP Plus program, which assists the countries of the Andean Community, such as Colombia, in their battle against drugs. The GSP Plus will officially enter into force on the 1st January 2005, but has already started to run in its preliminary form for 14 countries on the 1st July 2005. Exporters based in one of the GSP Plus programs are also exempt from duties on sensitive products. Therefore all confectionery and milling products can be imported into the European Union from Colombia duty free. Proexport Colombia 69 Market Researches in Eastern Europe

6.2 Tariffs imposed on major competitors

The tariffs for different countries are according their membership in the tariff group. In some cases there are exceptions and the preferences are not valid for certain countries, in which case the full amount of these tariffs has to be paid. On overview of those tariffs is presented below. All the preferential tariffs are applicable only with the Certificate of origin.

The major competitors in the confectionery and milling branch are all European Union memberstates, such as Germany, Poland, Slovakia and Spain. They do not face any tariffs or duties of any kind, because they all belong to the European common market.

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Figure 6.2.1 Overview of examples of import tariffs countries similar to Colombia or potential competitors

Group of Examples of products according TARIC numbers preferences Country 1806 10 1704101100 1905 20 10 according 15 international agreements 0 % + 27.1 EUR / 100 0 % + 18.3 EUR / Colombia SPGE 0 % kg MAX 17.9 % 100 kg 2.7 % + 27.1 EUR / 5.9 % + 18.3 EUR Argentina SPGL 2.8 % 100 kg MAX 17.9 % / 100 kg 0 % + 27.1 EUR / 100 0 % + 18.3 EUR / Bolivia SPGE 0 % kg MAX 17.9 % 100 kg 2.7 % + 27.1 EUR / 5.9 % + 18.3 EUR Brazil SPGL 2.8 % 100 kg MAX 17.9 % / 100 kg 0 % + 18.3 EUR / 0 % + 27.1 EUR / 100 1.7 % or 100 kg or 5.9 % Chile CL/SPGL kg MAX 17.9 % 2.8 % + 18.3 EUR / 100 kg 2.7 % + 27.1 EUR / 5.9 % + 18.3 EUR China SPGL 2.8 % 100 kg MAX 17.9 % / 100 kg EU EEA 0 0 0 countries 2.7 % + 27.1 EUR / 5.9 % + 18.3 EUR India SPGL 2.8 % 100 kg MAX 17.9 % / 100 kg 2.7 % + 27.1 EUR / 5.9 % + 18.3 EUR Indoasia SPGL 2.8 % 100 kg MAX 17.9 % / 100 kg MX, 0 % + 27.1 EUR / 100 9.4 % + 18.3 EUR Mexico 8 % America kg MAX 17.9 % / 100 kg 0 % + 27.1 EUR / 100 0 % + 18.3 EUR / Peru SPGE 0 % kg MAX 17.9 % 100 kg Russian 2.7 % + 27.1 EUR / 5.9 % + 18.3 EUR SPGL 2.8 % Federation 100 kg MAX 17.9 % / 100 kg No 6.2 % + 27.1 EUR / 9.4 % + 18.3 EUR USA 8 Preferences 100 kg MAX 17.9 % % / 100 kg 0 % + 27.1 EUR / 100 0 % + 18.3 EUR / Venezuela SPGE 0 % kg MAX 17.9 % 100 kg Source: EU tariff schedule – TARIC

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6.3 Norms of origin

To be able to benefit from the GSP Plus 0% duties on sensitive and non-sensitive products it is necessary to prove that the product that is being imported is really from Colombia or another GSP (Plus) country. Some products clearly originate in a given country, e.g. because they are grown there from local seed. These are called “wholly obtained” goods. But increasingly in today’s world, others are not produced in a single country.

In general terms, products are wholly obtained in a particular beneficiary country (or in the EC, in the case of cumulation) if only that country has been involved in their production. Even the smallest addition or input from any other country disqualifies a product from being "wholly obtained".

In practice, except for naturally-occurring and related products, situations where only a single country is involved in the manufacture of a product are relatively rare. Globalisation of manufacturing processes has resulted in many products being made from parts, materials etc. coming from all over the world. Such products are not of, course, wholly obtained, but they can nevertheless obtain originating status.

The condition is that the non-originating materials used (in practice: the materials imported into the beneficiary country) have undergone "sufficient working or processing". It must be stressed that only the non-originating materials need to be worked or processed sufficiently. If the other materials used are by themselves already originating (either by virtue of being wholly obtained, or by having been worked or processed sufficiently), they do not have to satisfy the conditions set out.

What can be considered as sufficient working or processing, depends on the product in question. For the products that belong under subcategory 1704, all sugar confectionery products, the requirements are that the working or processing carried out on non-originating materials, which confers originating status is manufacture from:

- Materials of any heading, except that of the product, and in which the valu of all the materials of Chapter 17 used does not exceed 30% of the ex-works price of the product

For the products that belong under subcategory 1806, all chocolate products, the requirements are that the working or processing carried out on non-originating materials, which confers originating status is manufacture:

- from materials of any heading, except that of the product, and - in which the value of all the materials of Chapter 17 ( and sugar confectionery) used does not exceed 30% of the ex-works price of the product

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For the products that belong under subcategory 1905, all bread, pastry, cakes, biscuits and other bakers' wares, the requirements are that the working or processing carried out on non-originating materials, which confers originating status is manufacture:

- Manufacture from materials of any heading, except those of Chapter 11 (milling products)

There are three principal forms of proof used in the context of the EC GSP: x The certificate of origin Form A7, used as proof of origin at import into the EC and in regional cumulation. o Regional cumulation can be present between the countries of one of the regional groups recognised by the EC GSP4.8 Materials originating in one country of the group which are further worked or processed in another beneficiary country of the same group are considered to originate in the latter country. x The Invoice Declaration, which can be used for goods whose total value does not exceed € 6000 (Article 89). x The Movement Certificate EUR1, which may be used as may an invoice declaration, when goods are exported to beneficiary countries from the EC in the context of bilateral cumulation. (Article 90a). o Under bilateral cumulation, materials originating in the EC, within the meaning of the EC GSP RoO, and further worked or processed in a beneficiary country, are considered to originate in the beneficiary country.

The period of validity of a proof of origin is 10 months

6.4 Barriers

Levying of any customs duty or charge having an equivalent effect and the application of any quantitative import restriction or measure having an equivalent effect are prohibited in trade with third countries.

7 We kindy refer you to the annexes for an example of Form A 8 The regional groups (listed in Article 72) are: - Group I: Brunei-Darussalam, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam; - Group II: Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Peru, Venezuela; - Group III: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka.

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For exporters in developing countries legislative standards enforced through EU legislation and possibly through EU member states, increasingly pose obstacles when exporting to the EU. Although standards are developed in order to protect consumers, environment or improve the harmonization of the internal EU market; they are often seen as technical, non-tariff barriers to trade or as a green wall protecting the fortress of Europe when looking at environmental standards.

When looking at the situation of exporters in developing countries who would like to access the EU market, there are many differences to overcome. Differences between the EU and third countries in their technical regulations and conformity assessment procedures are based on legitimate origins, such as differences in local preferences regarding health, safety and the environment, and differences in levels of income and labour conditions.

Moreover, exporters in developing countries often are critically constrained by the lack of important issues such as: - Access to credit and insurance and investment climate - Human and physical capital, management and marketing skills - Sufficient facilities for transport and storage infrastructures - Transparent legal and regulatory framework - Awareness and knowledge - Participation in the development of standards - Certifying bodies, test laboratories, standardization institutes etc.

Therefore, the standards in the EU could be seen as obstacles when accessing the EU market, though official barriers do not longer excist.

6.5 Licenses

There are no specific licences stated on confectionery and milling products.

6.6 Quotas

There are no import quotas stated on confectionery and milling products.

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6.7 Approvals & 6.8 Technical standards

Health control of foodstuff of non-animal origin

Imports of foodstuffs of non-animal origin into the European Union (EU) must comply with general conditions and specific provisions designed to prevent risk to public health and protect consumers' interests.

The general rules applicable to these products are as follows:

1. General rules of hygiene for foodstuffs 2. General conditions concerning contaminants in food 3. Special provisions on Genetically Modified (GM) food and Novel food 4. General conditions of preparation of foodstuffs 5. Official control of foodstuffs

Besides, in view of fulfilling food and feed safety conditions in the EU, specifically in relation with requirements for traceability, importers are required to keep documentation available in order to identify the exporter in the country of origin, as established by Regulation (CE) 178/2002.

1. General rules of hygiene for foodstuffs

The general rules of hygiene for foodstuffs and procedures for verification of compliance with these rules are laid down in Directive 93/43/EEC (OJ L-175 19/07/1993).

All imported foodstuffs must comply with these rules so that they ensure their safety and wholesomeness. These measures cover preparation, processing, manufacture, packaging, storage, transport, distribution, handling, sale and supply of foodstuffs.

Member States may introduce more specific hygiene provisions if they are not less stringent and do not constitute a restriction to trade in foodstuffs. If a hygiene problem likely to pose a serious risk to human health arises or spreads in the territory of a third country, the European Commission may suspend imports from all or part of the third country concerned or take interim protective measures regarding the foodstuffs concerned, depending on the seriousness of the situation.

2. General conditions concerning contaminants in food

Contaminant substances may be present in food as a result of the various stages of its production and marketing or due to environmental pollution. Since they represent a real risk for food safety, the EU has taken measures to

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minimise the risk by setting maximum levels for certain contaminants in foodstuffs. a) Maximum levels of certain contaminants in foodstuffs

Certain foodstuffs (i.e. fruit, vegetables, nuts, cereals, fruit juices, etcಹ) must not, when placed on the market, contain higher contaminant levels than those specified in Regulation (EC) 466/2001

This Regulation covers four different categories of contaminants: nitrates, aflatoxins, heavy metals (lead, cadmium, mercury) and 3-monochloropropane- 1,2diol (3-MCPD).

The maximum contaminant levels relate to the edible part of the foodstuffs but apply also to the ingredients used for the production of compound foodstuffs. b) Maximum levels of pesticide residues in and on food

Member States may restrict the putting on the market within their territories of certain products containing pesticide residues if the quantity of these residues exceeds the maximum levels permitted. These limits depend on the toxicity of the substance in question.

Pesticides residues in food are regulated by three Council Directives 76/895/EEC (OJ L-340 09/12/1976) 86/362/EEC (OJ L-221 07/08/1986) and 90/642/EC (OJ L-350 14/12/1990) which cover the following products: fruit and vegetables, cereals and other products of plant origin.

This legislation is also applied to the same products after being dried or processed or after their inclusion in a composite food in so far as they may contain pesticide residues. c) Maximum levels of radioactive contamination of foodstuffs

Regulations (EC) 3954/1987 (OJ L-371 30/12/1987) and 944/1989 (OJ L-101 13/04/1989) lay down the maximum permitted levels of radioactive contamination of foodstuffs (either immediately or after processing) which may be placed on the market following a nuclear accident or any other case of radiological emergency.

There is a list of minor foodstuffs (i.e. those which are consumed least) for which the maximum permitted levels are considerably higher (ten times higher)

76 Proexport Colombia Confectionery and milling in Poland d) Materials intended to come into contact with foodstuffs

Materials and articles intended to come into contact with foodstuffs must be manufactured so that they do not transfer their constituents to food in quantities which could endanger human health, change the composition of the food in an unacceptable way or deteriorate the taste and odour of foodstuffs.

The Regulation (EC) 1935/2004 establishes a list of groups of materials and articles (such us plastics, ceramics, rubbers, paper, glass, etc.) which may be covered by specific measures that include a list of the authorised substances, special conditions of use, purity standards, etc. Specific measures exist for ceramics, regenerated cellulose and plastics.

3. Special provisions on Genetically Modified (GM) food and Novel food

In order to ensure the highest level of protection of human health, EU legislation provides for a single authorisation procedure for the placing on the market of food containing, consisting of or derived from Genetically Modified Organisms.

An application must be sent to the competent authority of a Member State and then referred to the European Food Safety Authority (EFSA) which carries out a risk assessment.

On the basis of the opinion of EFSA, the Commission drafts a proposal for granting or refusing the authorisation, which must be approved by the Standing Committee on the Food Chain and Animal Health. The authorised food and feed are entered in the Community Register of GM food and feed. GM food lawfully placed on the EU market prior to 18 April 2004 may continue to be placed on the market, used and processed provided that they are notified to the Commission before 18 October 2004.

Novel foods (i.e. foods and food ingredients that have not been used for human consumption to a significant degree within the EU before 15 May 1997) must also undergo a safety assessment before being placed on the EU market. Companies that want to place a novel food on the EU market must submit their application to the competent body of a Member State for risk assessment purposes. As a result of this assessment, an authorisation decision may be taken. The authorisation decision defines the scope of the authorisation, the conditions of use, the designation of the food or food ingredient, its specification and the specific labelling requirements.

Novel foods or novel food ingredients considered by a national food assessment body as substantially equivalent to existing foods or food ingredients may follow a simplified procedure, only requiring notifications from the company.

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4. General conditions of preparation of foodstuffs

EU legislation lays down the rules relating to treatment of foodstuffs, food ingredients and their conditions of use in order to protect the health of consumers and guarantee the free circulation of foodstuffs in the European Union market.

Moreover, specific provisions for groups of foods are laid down in specific Directives. These include compositional requirements, hygiene requirements, list of additives, purity criteria, specific labelling requirements , etc. a) Authorised food additives and flavourings

The scope of the Directives covers food additives and flavourings used as ingredients during the manufacture or preparation of food and which are part of the finished product.

The only substances which may be used as food additives are those included in the approved common lists and then only under the conditions of use mentioned in those lists (e.g. colorants, sweeteners, preservatives, emulsifiers, stabilisers, raising agents, etcಹ). b) Preparation and treatments of certain foodstuffs

Rules in relation with the manufacture, marketing and importation of foods and food ingredients that are subject to specific treatments (e.g. ionising radiation or quick-freezing) must be fulfilled. c) Specific provisions for certain groups of products and for foodstuffs for particular nutritional purposes

Specific provisions are applied to certain groups of products (such as cocoa, sugar, etc.) and to foodstuffs intended for particular nutritional uses (baby foods, dietary foods, gluten-free foods...). These may include specific requirements on composition, hygiene, labelling (e.g. declaration of the energy value, carbohydrate, protein and content), list of additives, purity criteria, etc. The Directives establish the procedures to be followed if a particular foodstuff, though complying with the relevant specific Directive, is believed to endanger human health.

5. Official control of foodstuffs

Directive 89/397/EEC (OJ L-186 30/06/1989) provides for official inspections of foodstuffs, food additives, vitamins, mineral salts and other elements as well as materials or articles intended to come into contact with foodstuffs to ensure 78 Proexport Colombia Confectionery and milling in Poland

that they comply with the provisions designed to protect the health and interests of consumers.

The control may apply to import into the EU and/or to any other stage of the food chain (manufacture, processing, storage, transport, distribution and trade) and may include inspection, sampling and analysis, inspection of staff hygiene, examination of written and documentary material, examination of verification systems set up by the food operator and of the results obtained.

Inspection will be carried out by the Member State competent authorities regularly, and/or where non-compliance is suspected.

The general methods of sampling and analysis that must be carried out by official laboratories for the monitoring of foodstuffs are established in Directive 85/591/EEC (OJ L-372 31/12/1985) and their implementing measures.

Additional information for Poland

Control Procedure

Health controls are carried out at designated control points. The importer, or his representative, must request a health inspection by submitting the first part of the application form, together with the documents related to the consignment. Depending on the cases, the product may also go through a documentary check, an identity check and/or a physical inspection, which may lead to sample taking for analysis. The result of the inspection is reflected in the second part of the application form. The product can only be released for consumption after favourable result. Competent authority / competent bodies

Glówny Inspektor Sanitarny (Chief Sanitary Inspectorate) ul. Dluga 38/40 PL-00-238 Warsaw Tel: (+48) 22 635 45 81 Fax: (+48) 22 635 61 94 E-mail: [email protected] Website: http://www.gis.gov.pl

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6.9 Packaging

Packaging EU

Care must be given to the packaging of products if one intends to export to the EU countries. It is obvious that the packaging must be travel-resistant. As required, products should also be protected against the elements, changes of temperature, rough handling and theft. Besides these basics issues, some importers may have specific demands concerning packaging, like information concerning the order printed on the boxes (order number, box number, name department or contact person etc.).

For environmental reasons packaging made from materials like PVC is less popular with consumers and in some cases is or will be forbidden by governments. Exporters in developing countries should be prepared to discuss this issue with potential clients and should anticipate the cost of special packaging in their selling price, if required.

The European Directive on Packaging and Packaging Waste (94/62/EC) establishes overall legislation for the treatment of packaging waste, consisting of quantitative objectives to be achieved by each of the EU member states. The member states have the responsibility to translate the Directive into national legislation.

It is becoming increasingly difficult and expensive to dispose of waste in Europe. In principle, the importer is held responsible for disposal of the packaging waste for all goods from outside the EU. It is therefore crucial, when planning exports to the EU, to take the packaging of your products (both sales packaging and transport packaging) into consideration. To fulfil the requirements of the target market, good communication with the importer about packaging is necessary.

Outer containers should bear the consignee's mark and port mark and be numbered, in accord with packing list, unless the contents can be otherwise readily identified. The following items must appear on the two vertical sides of each outer container:

x the sales contract number x the consignee's instruction number x the import licence number (if applicable) x gross and net weights

A number of issues must be addressed when selecting packaging. Broadly, they can be grouped into questions of containment for the logistics of distribution; protection to ensure the produce arrives at the point of sale in the best possible

80 Proexport Colombia Confectionery and milling in Poland condition; marketing to present the produce in a preferred style; and environmental impact relating to the handling of the used packaging.

There is now increasing pressure to create a more environmentally friendly means of handling packaging waste. Some EU governments, rather than wait for an EU wide directive, have already enacted legislation regarding packaging and packaging waste. Their common objectives include the minimisation of waste, re- use by re-cycling and safe disposal where no other use is possible.

Labeling9

All foodstuffs marketed in the European Union (EU) must comply with EU labelling rules, which aim at ensuring that consumers get all the essential information to make an informed choice while purchasing their foodstuffs.

Hence, the applicable labelling provisions are as follows:

x General rules on food labelling x Specific provisions for certain groups of products: o Labelling of Genetically Modified (GM) food and Novel Food o Labelling of foodstuffs for particular nutritional purposes o Labelling of materials intended to come into contact with food o Labelling of particular foodstuffs

Besides these mandatory rules, there is also additional information that may be included by the manufacturers on a voluntary basis provided that it is accurate and does not mislead the consumer. For example, nutritional labelling is not obligatory unless a nutritional claim (e.g. "low fat", "high fibre") is made on the label or in advertising material. In this case, nutritional claims must comply with a standardised format, pursuant to Council Directive 90/496/EEC (OJ L-276 06/10/1990). Similarly, Council Regulation (EEC) 2092/91 (OJ L-208 24/07/1992) sets out rules governing the use of the organic label.

General rules on food labelling

Labels of foodstuffs according to the general rules laid down by Council Directive 2000/13/EC must contain the following particulars:

x The name under which the product is sold. No trademark, brand name or fancy name may substitute the generic name but rather may be used in addition. Particulars as to the physical condition of the foodstuff or the specific treatment it has undergone (powdered, freeze-dried, deep-frozen,

9 Source: DG Trade

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concentrated, smoked, irradiated or treated with ionizing radiation) must be included where omission of such may confuse the purchaser. x The list of ingredients, preceded by the word "Ingredients", must show all ingredients (including additives) in descending order of weight as recorded at the time of their use in the manufacture and designated by their specific name. In the case of those products that may contain ingredients liable to cause allergies or intolerances, such as alcoholic beverages, a clear indication should be given on the label by the word “contains” followed by the name of the ingredient. However, this indication will not be necessary provided the specific name is included in the list of ingredients. x The net quantity of pre-packaged foodstuffs in metric units (litre, centilitre, millilitre) for liquids and (kilogram, gram) for non-liquids. x The date of minimum durability consisting of day, month and year in that order and preceded by the words "best before" or "best before end" or the "use by" date for highly perishable goods. x Any special conditions for keeping or use. x The name or business name and address of the manufacturer, packager or importer established in the EU. x Place of origin or provenance x Instructions of use, where appropriate. x Indication of the acquired alcoholic strength for beverages containing more than 1.2% by volume. x Lot marking on pre-packaged foodstuffs with the marking preceded by the letter "L".

These particulars must appear on the packaging or on a label attached to pre- packaged foodstuffs. In the case of pre-packaged foodstuffs intended for mass caterers (foodstuffs sold in bulk), the compulsory labelling particulars must appear on commercial documents while the name under which it is sold, the date of durability or use-by-date and the name of manufacturer must appear on the external packaging.

The labelling must not mislead the purchaser as to the foodstuffಬs characteristics or effects nor attribute the foodstuff special properties for the prevention, treatment or cure of a human disease. The information provided by labels must be easy to understand, easily visible, clearly legible and indelible and must appear in the official language(s) of the Member State where the product is marketed. However, the use of foreign terms or expressions easily understood by the purchaser may be allowed. Specific provisions for certain groups of products

There are also labelling provisions which apply to specific groups of food products in order to give the consumers more detailed information on the contents and the composition of these products:

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Labelling of Genetically Modified (GM) food and Novel food

Products consisting of or containing Genetically Modified Organisms (GMOs) and food products obtained from GMOs which have been authorised for the placing on the EU market are subject to labelling requirements pursuant to Regulations (EC) 1829/2003 and 1830/2003.

In the case of pre-packaged products, operators are required to state on a label that ಯThis product contains genetically modified organismsರ. This labelling obligation also applies to highly refined products (e.g. oil obtained from genetically modified maize) as well as GM additives and flavourings.

Labelling of foodstuffs for particular nutritional purposes

In addition to the rules applicable to foodstuffs in general, specific provisions (e.g. declaration of the energy value, carbohydrate, protein and fat content, etc.) for groups of foods for particular nutritional uses (baby foods, dietary foods for special medical purposes, foods for weight reduction, foods for sportspeople, etc.) are laid down in specific Directives.

These products must be suitable for their claimed nutritional purposes and marketed in such a way as to indicate their suitability.

Labelling of materials intended to come into contact with food

According to Regulation 1935/2004, articles intended to come into contact with foodstuffs, including packaging materials and containers shall be labelled "for food contact" or shall bear the symbol with a glass and fork.

Additional information for Poland

The contents of the label must be at least in Polish. The compliance with the labelling requirements and the accuracy of the information contained in the label can be checked at any stage of the distribution chain (e.g. customs clearance, distributors warehouses, wholesalers or retailers outlets …). Competent authority / competent bodies x Ministerstwo Zdrowia (Ministry of Health) ul. Miodowa 15 PL-00-952 Warsaw Tel: (+48) 22 634 96 00 Fax: (+48) 22 634 92 13 E-mail: [email protected] Website: http://www.mzios.gov.pl/

Proexport Colombia 83 Market Researches in Eastern Europe x Glówny Inspektorat Jakosci Handlowej Artykulów Rolno-Spozywczych (The Agricultural and Food Quality Inspection) ul. Wspólna 30 PL-00-930 Warsaw Tel: (+48) 22 621 64 21 Fax: (+48) 22 621 48 58 E-mail: [email protected] Website: http://www.ijhar-s.gov.pl

6.10 Required documentation for import

When importing products from a third country, like Colombia, into the European Union six different documents are required;

1) Commercial invoice

The commercial invoice is a record or evidence of the transaction between the exporter and the importer. Once the goods are available, the exporter issues a commercial invoice to the importer in order to charge him for the goods.

The commercial invoice contains the basic information concerning the transaction and it is always required for customs clearance.

It is similar to an ordinary sales invoice, though some entries specific to the export-import trade are added. The minimum data generally included are the following:

x Information on the exporter and the importer (name and address) x Date of issue x Invoice number x Description of the goods (name, quality, etc.) x Unit of measure x Quantity of goods x Unit value x Total item value x Total invoice value and currency of payment. The equivalent amount must be indicated in a currency freely convertible to EUR or other legal tender in the importing Member State x The terms of payment (method and date of payment, discounts, etc.) x The terms of delivery according to the appropriate Incoterm x Means of transport

No specific form is required. The commercial invoice is to be prepared by the exporter according to standard business practice and it must be submitted in the original along with at least one copy. It generally needs not be signed. In practice,

84 Proexport Colombia Confectionery and milling in Poland the original and the copy of the commercial invoice are often signed. The commercial invoice may be prepared in any language. However, a translation into English is recommended.

2) Customs Value Declaration

The Customs Value Declaration is a document which must be presented to the customs authorities where the value of the imported goods exceeds EUR 10 000. The Customs Value Declaration must be draw up conforming to form DV 110, laying down provisions for the implementation of the Community Customs Code. This form must be presented with the Single Administrative Document (SAD). The main purpose of this requirement is to assess the value of the transaction in order to fix the customs value (taxable value) to apply the tariff duties. The customs value corresponds to the value of the goods including all the costs incurred (e.g.: commercial price, transport, insurance) until the first point of entry in the EU. The usual method for establishing the Customs value is using the transaction value (the price paid or payable for the imported goods). In certain cases the transaction value of the imported goods may be subject to adjustment which involve additions or deductions. For instance: x commissions or royalties may need to be added to the price; x the internal transport (from the entry point to the final destination in the Community Customs Territory) must be deducted.

The customs authorities shall waive the requirement of all or part of the customs value declaration where: x the customs value of the imported goods in a consignment does not exceed EUR 10 000, provided that they do not constitute split or multiple consignments from the same consignor to the same consignee, or x the importations involved are of a non-commercial nature; or x the submission of the particulars in question is not necessary for the application of the Customs Tariff of the European Communities or where the customs duties provided for in the Tariff are not chargeable pursuant to specific customs provisions.

3) Freight insurance

The insurance is an agreement by which the insured is indemnified in the event of damages due to a risk covered in the policy. Insurance is all-important in the transport of goods because of its exposure to risks during handling, storing,

10 Please see the annexes for a sample of a DV1 form Proexport Colombia 85 Market Researches in Eastern Europe loading or transporting cargo, and other rare risks, such as riots, strikes or terrorism.

There is a difference between the goods' transport insurance and the carrier's responsibility insurance. The transport insurance is a contract whose covered risks, fixed compensation and indemnity are let to the holder's choice. Nevertheless, the haulier's responsibility insurance is determined by different regulations depending on the means of transport, indemnity is limited by the weight and value of the goods and is only given if the transporter was unable to evade responsibility.

The insurance invoice is required for customs clearance only when the relevant data do not appear in the commercial invoice indicating the premium paid for insuring the merchandise.

The standard extent of the transporter's responsibility is laid down in the following international conventions:

1. Road freight

International transport of goods by road is governed by the Convention for the Contract of the International Carriage of Goods by Road (CMR Convention) signed in Geneva in 1956.

Under this Convention, the road haulier is not responsible for losses of or damages to the goods if he proves that they arise from:

x the merchandise's own defect(s); x force majeure; x a fault by the loader or consignee.

There is no European Union's regulation regarding indemnifications for road freight.

2. The rail carrier

International transport of goods by rail is regulated by the the Convention concerning Intercarriage by Rail (CIM Convention), signed in Bern in 1980.

The rail carrier is not responsible for losses of or damages to the goods if he proves that they arise from:

x the merchandise's own defect(s); x force majeure; x a fault by the loader or consignee.

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With reference to compensation, there is currently no European regulation. Indemnification is normally limited to a maximum amount per gross kilo lost or damaged. This system means that, for the most part, the company is unlikely to receive anything approaching the value of its goods.

3. The shipping company

The 1968 International Convention on Bill of Lading, better known as "The Hague Rules" or the "Brussels Convention" dictates the marine carrier's responsibilities when transporting international goods.

The shipping company is not responsible for losses of, or damage to, the goods if it proves that they arise from:

x the merchandise's own defects and loss in weight during transport; x a nautical mistake by the crew; x a fire; x if the ship is not seaworthy; x force majeure; x strikes or a lock-out; x a mistake by the loader; x hidden defects on board ship, which went unnoticed during rigorous inspection; x an attempt to save lives or goods at sea.

As far as compensation is concerned, there is currently no harmonisation at the European Union level. It is normally limited to a certain sum per kilogram of lost or damaged goods. This system causes the same problems as with rail accidents, the exporter is likely to lose much of the value of the goods.

4. The air carrier

The 1929 Warsaw Convention as well as the Montreal draft Treaty of 1975 determine that the air carrier is not responsible for damages or loss of goods if it is proved that:

x the carrier and associates took all the measures necessary to avoid the damage or that it was impossible for them to be taken (force majeure); x the losses arise from a pilotage or navigation mistake; x the injured party was the cause of the damage or contributed to it.

Concerning the injured party's indemnification, there is no European standard. Compensation is normally limited to a set amount per gross kilogram of damaged or lost goods.

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The air carrier can state specific reservations at the time of receiving the cargo. These reservations will be written on the air consignment note (ACN) (air transport contract) and will be used as evidence. However, airlines will normally refuse dubious packages or those not corresponding to the ACN.

4) Customs Import Declaration (SAD) All goods imported into the European Union (EU) must be declared to the customs authorities of the respective Member State using the Single Administrative Document (SAD)11, which is the common import declaration form for all the Member States, laid down in the Community Customs Code (Regulation (EEC) 2913/92. The declaration must be drawn up in one of the official languages of the EU which is acceptable to the customs authorities of the Member State where the formalities are carried out. The SAD may be presented either by:

x Using an approved computerised system linked to Customs authorities; or x Lodging it with the designated Customs Office premises.

The main information that shall be declared is:

x Identifying data of the parties involved in the operation (importer, exporter, representative,....) x Custom approved treatment (release for free circulation, release for consumption, temporary importation, transit,....) x Identifying data of the goods (Taric code, weight, units), location and packaging x Information referred to the means of transport x Data about country of origin, country of export and destination x Commercial and financial information (Incoterms, invoice value, invoice currency, exchange rate, insurance...) x List of documents associated to the SAD (Import licenses, inspection certificates, document of origin, transport document, commercial invoice...) x Declaration and method of payment of import taxes (tariff duties, VAT, Excises, etc)

The SAD set consists of eight copies, the operator completes all or part of the sheets depending on the type of operation. In the case of importation generally three copies shall be used: one is to be retained by the authorities of the Member State in which arrival formalities are completed, other is used for statistical purposes by the Member State of destination and the last one is returned to the consignee after being stamped by the customs authority.

11 See annexes 88 Proexport Colombia Confectionery and milling in Poland

Documents associated to the SAD

According to the operation and the nature of the imported goods, additional documents shall be declared with the SAD and shall be presented together with it. The most important documents are:

x Documentary proof of origin, normally used to apply a tariff preferential treatment x Certificate confirming the special nature of the product x Transport Document x Commercial Invoice x Customs Value Declaration x Inspections Certificates (Health, Veterinary, Plant Health certificates) x Import Licenses x Community Surveillance Document x Cites Certificate x Documents to support a claim of a tariff quota x Documents required for Excises purposes x Evidence to support a claim to VAT relief

5) Freight documents

Depending on the means of transport used, the following documents are to be filled in and presented to the customs authorities of the importing European Union (EU) Member State (MS) upon importation in order for the goods to be cleared:

x Bill of Lading x FIATA Bill of Lading x Road Waybill (CMR) x Air Waybill (AWB) x Rail Waybill (CIM) x ATA Carnet x TIR Carnet

Bill of Lading

The Bill of Lading (B/L) is a document issued by the shipping company to the operating shipper which acknowledges that the goods have been received on board serving as proof of receipt of the goods by the carrier obliging him to deliver the goods to the consignee. It contains the details of the goods, vessel and port of destination. It evidences the contract of carriage and conveys title to the goods, meaning that the bearer of the Bill of Lading is the owner of the goods. The Bill of Lading may be a negotiable document. A number of different types of bills of lading can be used. "Clean Bills of Lading" state that the Proexport Colombia 89 Market Researches in Eastern Europe

goods have been received in an apparent good order and condition. "Unclean or Dirty Bills of Lading" indicate that the goods are damaged or in bad order, in this case, the financing bank may refuse to accept the consignor's documents. FIATA Bill of Lading

The FIATA Bill of Lading is a document designed to be used as a multimodal or combined transport document with negotiable status which has been developed by the International Federation of Forwarding Agents' Associations (FIATA). Road Waybill (CMR)

The road waybill is a document containing the details of the international transportation of goods by road, set out by the Convention for the Contract of the International Carriage of Goods by Road 1956 (the CMR Convention). It enables the consignor to have the goods at his disposal during the transportation. It must be issued in quadruplicate and signed by the consignor and the carrier. The first copy is intended for the consignor; the second remains in the possession of the carrier; and the third accompanies the goods and is delivered to the consignee. Usually, a CMR is issued for each vehicle. The CMR note is not a document of title and is non-negotiable. Air Waybill (AWB)

The air waybill is a document proving the transport contract between the consignor and the carrier's company. It is issued by the carrier's agent and falls under the provisions of the Warsaw Convention. A single air waybill may be used for multiple shipment of goods, it contains three originals and several extra copies. One original is kept by each of the parties involved in the transport (the consignor, the consignee and the carrier). The copies may be required at the airport of departure/destination, for the delivery and in some cases, for further freight carriers. The air waybill is a freight bill which evidences a contract of carriage and proves receipt of goods.. The IATA Standard Air Waybill is used by all carriers belonging to the International Air Transport Association (IATA) and it embodies standard conditions associated to those set out in the Warsaw Convention. Rail Waybill (CIM)

The rail waybill (CIM) is a document required for the transportation of goods by rail. It is regulated by the Convention concerning International Carriage by Rail 1980 (COTIF-CIM). The CIM is issued by the carrier in five copies, the original accompanies the goods and the duplicate of the original is kept by

90 Proexport Colombia Confectionery and milling in Poland

the consignor and the three remaining copies are intended for internal purposes of the carrier. It is considered the rail transport contract. ATA Carnet

ATA carnets are international customs documents issued by chambers of commerce in most major countries throughout the world for the purpose of allowing the temporary importation of goods, free of customs duties and taxes. ATA carnets can be issued for the following categories of goods: commercial samples and advertising film, goods for international exhibition and professional equipment.12 TIR Carnet

TIR carnets are customs transit documents used for the international transport of goods a part of which has to be made by road. They allow the transport of goods under a procedure called the TIR procedure, laid down in the 1975 TIR Convention, signed under the auspices of the United Nations Economic Commission for Europe (UNECE)13 The TIR system requires that the goods travel in secure vehicles or containers, all duties and taxes at risk throughout the journey are covered by an internationally valid guarantee, the goods are accompanied by a TIR carnet, and customs control measures in the country of departure are accepted by the countries of transit and destination.

6) Packing list

The packing list (P/L) is a commercial document accompanying the commercial invoice and the transport documents, and providing information on the imported items and the packaging details of each shipment (weight, dimensions, handling issues,etc.)

It is required for customs clearance as an inventory of the incoming cargo.

The data generally included are:

x Information on the exporter, the importer and the transport company x Date of issue x Number of the freight invoice x Type of packaging (drum, crate, carton, box, barrel, bag, etc.) x Number of packages x Content of each package (description of the goods and number of items per package)

12 Further information may be obtained in the International Chamber of Commerce's website: http://www.iccwbo.org/index_ata.asp 13 Website; http://www.unece.org/trans/bcf/tir/welcome.html.

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x Marks and numbers x Net weight, gross weight and measurement of the packages

No specific form is required. The packing list is to be prepared by the exporter according to standard business practice and it must be submitted in the original along with at least one copy. It generally needs not be signed. However, in practice, the original and the copy of the packing list are often signed. The packing list may be prepared in any language. However, a translation into English is recommended.

6.11 Import modalities or regimes involved in the process

What might be interesting for exporters of goods to the EU to know, is the fact that there are so called free zones. These are special areas within the customs territory of the Community (EU). Goods placed within these area are free of import duties, VAT and other import charges. Free zone treatment applies to both Community and non-Community goods. Non-Community goods stored in the zone are perceived as not yet imported into the Customs territory.

With regards to the import of goods, free zones are mainly destined for storage of non-Community goods until they are released for free circulation. No import declaration has to be lodged as long as goods stay at free zone storage. In addition, there may be special relieves available in free zones from other taxes, excises or local duties. The free zones are mainly a service for traders to facilitate trading procedures by allowing fewer custom formalities.

List of free trade zones in Poland can be found on the website: http://europa.eu.int/comm/taxation_customs/customs/procedural_aspects/imports /free_zones/index_en.htm and also in the table beneath:

Table 6.10.1 Free zones in Poland FREE ZONE (CONTROL TYPE 1) ADDRESS OF CUSTOMS AUTHORITY (ART.804 CCIP) WOLNY OBSZAR CELNY na terenie Izba Celna w Warszawie ul. ModliĔska MiĊdzynarodowego Portu Lotniczego 4 PL-03-016 WARSZAWA Warszawa OkĊcie ul. Zwirki i Wigury 1 PL-00-906 WARSZAWA WOLNY OBSZAR CELNY w Gliwicach Izba Celna w Katowicach Plac ul. Portowa 28 PL-44-100 Gliwice Grunwaldzki 8-10 PL-40-127

WOLNY OBSZAR CELNY w Terespolu Izba Celna w Biaáej Podlaskiej ul. ul. Wojska Polskiego 47 PL-21-550 Póánocna 19 PL-21-500 Biaáa Podlaska Terespol WOLNY OBSZAR CELNY w Izba Celna w Szczecinie ul. Szczecinie ul. Bytomska 7 PL-70-603 Energetyków 55 PL-70-952

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Szczecin WOLNY OBSZAR CELNY w Izba Celna w Szczecinie ul. ĝwinoujĞciu ul. Jana Soltana 1 PL-72- Energetyków 55 PL-70-952 Szczecin 602 ĝwinoujĞcie WOLNY OBSZAR CELNY w GdaĔsku Izba Celna w Gdyni ul. Polska 8 PL-81- ul. ZamkniĊta18 PL-80-955 GdaĔsk 339 Gdynia WOLNY OBSZAR CELNY w Izba Celna w Warszawie ul. ModliĔska Mszczonowie ul. Fabryczna 6/10 PL- 4 PL-03-016 WARSZAWA 96-320 Mszczonów Source: www.europa.eu.int

6.12 Requirements for import of samples and accompanied luggage

The requirements for the import of samples are the same as for the general import of confectionery and milling products, because they are perishable and consumable goods.14

6.13 Website links to rules and regulations

ƒ www.mf.gov.pl - Customs Service of the Republic of Poland (SáuĪba Celna Rzeczypospolitej Polskiej) ƒ www.mgip.gov.pl - Ministry of Economic Affairs and Labor (Ministerstwo Gospodarki i Pracy) ƒ www.sejm.gov.pl - Sejm of Republic of Poland (Sejm Rzeczypospolitej Polskiej) ƒ www.europa.eu.int - Euro Lex ƒ www.polbisco.pl - Association of the Producers of the Chocolate, Biscuits& Confectionary Industries of Poland ƒ www.foodbiz.pl - Food Business Centre (Centrum Biznesu ĩywnoĞciowego);

14 Source: Dutch Customs Office Proexport Colombia 93 Market Researches in Eastern Europe

6.14 Flow chart of the process and related costs

6.14.1 Flow chart of the process and related costs15

Customs Transportation of Goods guarantee goods to the inland Customs and Office Import documen ts Customs Declaration agent or for the Polish chosen subsidiary customs regime

The duties Confirmation of Handling of are paid or customs customs the custom declaration proceeding debt is that serves as secured VAT documentation

Source: Calculation by EUNITE BV

In general, only EU entities can clear goods for customs in Poland. Non-EU entities can carry out customs proceedings only on goods under the transit regime or under temporary admission. In other cases, foreign entities can clear goods for Polish customs only in exceptional cases with the permission of the Customs Office.

A foreign company exporting to Poland and wishing to import into the country must either establish a Polish subsidiary to handle importation or engage a customs agent to handle customs proceedings. It is usual practice that the Polish purchaser of imported goods will handle the customs proceedings.

When imported goods reach the EU border, they are released to the transit regime. The customs debt (all import duties that would apply on import under free circulation) must be secured with a customs guarantee at this time. The goods

15 The prices of customs agents differ according the value and quantity of goods – see chapter 7.10. There are approximate prices of their basic services. All the exact prices are available on request at the customs agencies – see the contacts in Chapter 7.4.

94 Proexport Colombia Confectionery and milling in Poland must then be transported to the inland Customs Office of final destination without delay. Here the goods are declared for the chosen customs regime based on the customs declaration filed by the importer (or his customs agent). The final customs debt assessed by the Customs Office is either paid or guaranteed, depending on the import regime and the conditions negotiated with the Customs Office.

If import duties are properly paid (or the customs debt is secured), the Customs Office issues a confirmed customs declaration, which serves as a VAT document for the reclaiming of import VAT. In general, import VAT is applied on the total declared customs value of imported goods and the applicable amount of customs duty and any other charges levied by the Customs Office (e.g., excise duty).

From 1 January 2005, importers can reclaim the amount of import VAT paid, by including the amount in their regular VAT returns, provided the importer is registered for Polish VAT.

VAT rates are the same as for domestic products, currently 22%, 7% or 3%). Importers registered for Polish VAT can normally recover import VAT costs, provided a valid customs declaration (tax document) is obtained from the Customs Office. The VAT rate for confectionery and milling products is currently 22%.

6.15 Recommendations

Documents requested to export chocolates and sugar confectionery to Poland are: invoice, certificate of origin issued by Colombian authorities and Single Administrative Documents (SAD). On the Polish customs clearance all the documents will be verified and necessary customs duties and taxes will be calculated.

The customs office has the right to take samples for testing. The procedure of custom clearance is finished when all taxes and tariffs are paid.

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7. Physical Access

7.1 Available transportation infrastructure

Poland has developed all transportation infrastructures: roads network, railways, airports connections as well as sea ports.

Picture 7.1.1 Polish roads network

Source: www.gddkia.gov.pl

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Picture 7.1.2 Polish roads - January 2005

Source: www.gddkia.gov.pl

98 Proexport Colombia Confectionery and milling in Poland

Picture 7.1.3 Polish roads – executed projects and plans

Source:www.gddkia.gov.pl

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Picture 7.1.4 Polish railroads network

Source: PKP (Polish State Railroads)

100 Proexport Colombia Confectionery and milling in Poland

Picture 7.1.5 Airports in Poland

Source: http://www.lemon.travel.pl/samoloty/lotniska/polskie.jpg

International airport im. Fryderyka Chopina in Warsaw ul. ĩwirki i Wigury Warszawa tel.: +48 (22) 650 42 20 www.lotnisko-chopina.pl

International airport im. Jana Pawáa II Kraków - Balice Sp. z o.o. ul. Kpt. M. Medweckiego 1 32-083 Balice tel.: +48 (12) 639 30 00 fax: +48 (12) 411 79 77 www.lotnisko-balice.pl

GórnoĞląskie Towarzystwo Lotnicze S.A. Internation Airport Katowice Al. Korfantego 38 40-161 Katowice tel.: +48 (32) 201 06 33 fax: +48 (32) 201 06 34 www.gtl.com.pl

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Airport PoznaĔ-àawica Sp. z o.o. ul. Bukowska 285 60-189 PoznaĔ tel.: +48 (61) 849 20 00 fax: +48 (61) 849 23 17 www.airport-poznan.com.pl

Airport GdaĔsk Sp. z o.o. ul. Sáowackiego 200 80-298 GdaĔsk tel.: +48 (58) 348 11 54 fax: +48 (58) 345 22 83 www.airport.gdansk.pl

Airport ,,Mazury-Szczytno'' Sp. z o.o. w Szczytnie Port Lotniczy Szczytno-Szymany ul. Wielbarska 5 12-100 Szczytno tel.: +48 (89) 624 32 81 fax: +48 (89) 624 22 94 www.airport.szczytno.pl

Airport Wrocáaw S.A. ul. SkarĪyĔskiego 36 54-530 Wrocáaw tel.: +48 (71) 358 11 00, 358 13 10 fax: +48 (71) 357 39 73 www.airport.wroclaw.pl

Lublinek Sp. z o.o. ul. Gen. S. Maczka 35 94-328 àódĨ tel.: +48 (42) 688 84 14 fax: +48 (42) 688 83 84 www.airport.lodz.pl

Airport Zielona Góra-Babimost skr. pocztowa 4 6-110 Babimost tel.: +48 (68) 351 23 00 fax: +48 (68) 351 27 29

Airport Rzeszów-Jasionka 36-002 Jasionka 942 tel.: +48 (17) 852 00 81 fax: +48 (17) 852 07 09 102 Proexport Colombia Confectionery and milling in Poland

Airport Bydgoszcz S.A. ul. Grodzka 12 85-109 Bydgoszcz tel.: +48 (52) 345 95 96 fax: +48 (52) 322 52 32

Airport Szczecin-Goleniów Sp. z o. o. 72-100 Goleniów tel.: +48 (91) 418 28 64 fax: +48 (91) 418 33 83 www.airport.com.pl

There are 4 big marine ports in Poland: GdaĔsk, Gdynia, ĝwinoujĞcie, Szczecin and 8 small ones: Daráowo, Elbląg, Hel, Koáobrzeg, àeba, Police, Wáadysáawowo, Ustka.

Chart 7.1.6 Cargo handling In Polish marine ports

Cargo handling 2003 [thous. tons]

Coal:

GdaĔsk 5926

Gdynia 1442

Szczecin i 5943 ĝwinoujĞcie

Total: 13311

Ore:

GdaĔsk 99

Gdynia 0

Szczecin i 2008 ĝwinoujĞcie Proexport Colombia 103 Market Researches in Eastern Europe

Total:2107

Other mass:

GdaĔsk 2582

Gdynia 1776

Szczecin i 1974 ĝwinoujĞcie

Total: 6332

Corn:

GdaĔsk 397

Gdynia 872

Szczecin i 979 ĝwinoujĞcie

Total:2248

Wood:

GdaĔsk 2

Gdynia 162

Szczecin i 33 ĝwinoujĞcie

Total:197

104 Proexport Colombia Confectionery and milling in Poland

Package freight:

GdaĔsk 2295

Gdynia 7107

Szczecin i 4584 ĝwinoujĞcie

Total:13986

Liquid fuels:

GdaĔsk 9991

Gdynia 297

Szczecin i 125 ĝwinoujĞcie

Total:10413

Source: Central Statistical Office (GUS), 2003

Chart 7.1.7 Nr. of Ships entering Polish marine ports in 2002

GdaĔsk 2506

Gdynia 3483

Koáobrzeg 353

Police 269

Szczecin 3493

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ĝwinoujĞcie 9950

Total: 30212 Source: Central Statistical Office (GUS), 2003

7.2 Identification of ports, airports, roads – border passes – railways, waterways

The goods may be transported from Colombia to Poland by air, by sea, combined air/sea or air/truck. In case of confectionery products the sea transportation is the most recommended way of transportation. The costs are relatively low (for more detailed information please see chapter 7.7.).

Transportation by sea is very popular. There are about 20 national and international shipping lines operating in the Caribbean harbors. The vast majority of trade, approximately 80 percent, leaves from Pacific ports of Buenaventura and Tumaco and the Carribean ports of Barranquilla, Cartagena and Santa Marta. These harbors are equipped with many ports and extensive storing capacity. Container harbors exist in Cartagena, Barranquilla and Buenaventura. The most important shipping lines are the FLOTA MERCANTE GRANCOLOMIANA, AGROMAR S.A., COLOMENARES LTDA and GERMEINCO. The transportation to the Polish ports Gdansk, Gdynia and Swinoujscie will take approximately 27 days.

The combined transportation to Poland would involve the goods to be shipped to Rotterdam or Amsterdam in the Netherlands and then transported by air, ship or truck to Poland. There are many possibilities to enter Poland from other European countries.

Table 7.2.1 Methods of transportation from Colombia Method of Time of delivery Security Factor Cost Freight Capacity Transportation Air freight 2 days Excellent Very expensive Often difficult Sea freight 28-30 days Insufficient Cheap Sufficient By sea/air 18-20 days Excellent Expensive Not always Source: www.usergioarboleda.edu.co

According to transporting companies, the cheapest and fastest way to transport goods from Southern America to the EU is via the port of Hamburg (Germany). However, Southern-American countries also often use the Port of Rotterdam (the Netherlands).

Most Southern-American exporters transport their goods to the EU as follows; 106 Proexport Colombia Confectionery and milling in Poland

x Colombia (or another Southern-American country) – Europe by ship. For transport by ship, most countries world wide, including Southern-American countries, use one of the main ports in Europe to enter the EU. Besides Rotterdam, Hamburg is an important port as well, The port of Gdansk (Poland) is, due to its geographical position, of lesser importance than Rotterdam and Hamburg. For distances between the mayor European ports and Poland, we refer to table 7.2.2

x Colombia (or another Southern-American country) – Europe by plane. In case exporters would like to bring the goods by plane, then it is better to choose a big European airport, like Frankfurt or Amsterdam instead of the airport of Warsaw and from there transport the goods further to Poland. As a stop-over in Amsterdam or Frankfurt will be necessary anyway, it is cheaper and more efficient to use road transport for further transportation. A minority of goods is transported further by ship.

For the transportation of chocolate confectionary, it is recommended to take special care, as chocolate products are sensitive for temperature changes. The optimum storage and transport temperatures of chocolate are 10-18°C. At as low as at 21°C, chocolate becomes soft. At the temperature of 28°C the cocoa butter in the chocolate starts to melt, which makes the chocolate unmarketable. Therefore, chocolate products have to be packed isolated. Standard containers do not offer sufficient protection against temperature changes, so the transport has to take place in refrigerated containers.

Virtually all road transporters in the EU, like for example Raben Group16, offer transportion in suitable, climate controlled trucks.

Table 7.2.2 Distances from the most important ports to Warsaw Port Country Distance to Warsaw (km) Hamburg Germany 747 Bremerhaven Germany 840 Gdansk Poland 256 Rotterdam Netherlands 1129 Amsterdam Netherlands 1096 Source: investigations EUNITE

7.3 Description of status, operation, security, costs, distances, transportation arrangements and intercommunity customs

For transportation of confectionery products it is also possible to use air transportation from Colombia to Poland. However, the costs are very high and

16 For contact details of Raben Group, please see paragraph 7.7 Proexport Colombia 107 Market Researches in Eastern Europe there is at least one trans-shipment necessary during the transport. Most exporters from Southern-American countries prefer to transport their goods by ship to one of the main ports in Europe and then transport them further by road.

LOT, the Polish airlines, is able to arrange all the flights from Colombia to Poland. The air freight would approximately take 17 to 26 hours from Bogota, via New to Warsaw or Krakow. The loading takes place in one of the two available airports in NY: JFK Airport or EWR Newark Airport. The shortest recommended operating time needed for the transit in NY is 4 hours. The trans-shipment is organized by handling agents, specialized companies that deal with loading and redirecting it. The transportation order should be delivered to the company that deals with the logistics. This is usually Cargo Agent or Airfreight Forwarder. The route of the transport should be included in the order, with the indication of each involved carrier. The sender as well as the receiver of the transported goods is obliged to possess permissions, export/import licenses that are subjects to customs law and sanitary rules in each country of transit.

Rates and charges published by the airline are based on the units of measurement. They cover only the carriage of consignment between airports. Such charges do not include the following services and charges: pick-up and delivery, storage, insurance, customs clearance, disbursements, airport taxes and charges, expenses for the repairing of faulty packing and other similar advanced charges.

These arrangements and costs are negotiated separately on the basis of an individual order. Prices depend on the amount of the transported goods, weight, frequency of orders, but also on the person negotiating the rates. Agents from the logistics centres are the most suitable persons to arrange these rates with.

The other airline, KLM Cargo is operating on the route Amsterdam – Warsaw. KLM as well as LOT offers flights from Amsterdam to Warsaw 3 times a day. The rates and general conditions from KLM Cargo are valid on the services within the current KLM Cargo network. All shipments are governed by the General Conditions of KLM Cargo. KLM states that the amount of goods transported from Amsterdam to Poland by air is very limited due to the high air cargo transport cost versus the low trucking costs. The transportation costs are less than 25% of the air cargo costs. Furthermore, there is no container air cargo capacity between Amsterdam and Warsaw, only loose belly capacity. The operating time by air is 2 hours.

108 Proexport Colombia Confectionery and milling in Poland

7.4 Identification of other handling and distribution infrastructure

The sea connections from Colombia to Poland:

The sea service is provided by domestic companies only for the route Poland- Colombia. It is the international operators that deal with the transportation from Colombia to Europe.

Table. 7.4.1 Sea connections from GdaĔsk port to Colombia Destination Carrier Frequency Type of cargo Agent Barranquilla Venbulk Service Every 6th week Containers/package MAG GmbH freight Source: www.portgdansk.pl

Table. 7.4.2 Sea connections from Gdynia port to Colombia Destination Carrier Frequency Type of cargo Agent Cartagena Conti Lines Month Conv. Okmarit Barranquila Spliethoff Month Conv. Pomorscy Maklerzy OkrĊtowi Turbo Spliethoff Month Conv. Pomorscy Maklerzy OkrĊtowi Source: www.port.gdynia.pl

These Polish agents arrange transportation of goods such as steel and metal equipment. This is called conventional cargo and is packed as loose cargo and transported on pallets not in the containers. In case of confectionery transportation should be arranged in containers.

Transportation by sea from Colombia to Poland is offered by:

x Maersk Sealand. As a leading, world-class ocean carrier, they offer second to none door-to-door transportation service. With more than 300 container vessels, one million containers and own terminals, trucks and trains they ensure getting a reliable worldwide coverage. Their offices in more than 125 countries ensure that the cargo will receive an excellent service in all corners of the world.

Table 7.4.3 Transit time and possible schedule from Cartagena to Gdynia

LOCATIONS SCHEDULE 1 SCHEDULE 2 Dep.: 30.Jun.05(Thu) 08.Jul.05(Fri) By: AURETTE A ROTHORN Cartagena, Lloyds no.: 9242285 9126986 CO Voyage no.: 0520 0520 Build year: 2002 1996

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Manzanillo, Arr.: 02.Jul.05(Sat) 09.Jul.05(Sat) PA Dep.: 04.Jul.05(Mon) 11.Jul.05(Mon) By: JEPPESEN OLIVIA MAERSK MAERSK Lloyds no.: 9215165 9251638 Voyage no.: 0510 0510 Build year: 2001 2003 Bremerhave Arr.: 20.Jul.05(Wed) 27.Jul.05(Wed) n, DE Dep.: 26.Jul.05(Tue) 02.Aug.05(Tue) By: FELICITAS FELICITAS Lloyds no.: Voyage no.: 0523 0525 Build year: 1996 1996 Gdynia, PL Arr.: 28.Jul.05(Thu) 04.Aug.05(Thu) Transit time: 28 days 27 days Container type: Dry, Reefer Dry, Reefer Source: www.maersksealand.com

Picture 7.4.4 The route from Colombia to Poland

Source: www.maersksealand.com

x MSC Mediterranean Shipping Company S.A., of Geneva, Switzerland is a privately owned shipping line, founded in 1970, which has rapidly grown from a small conventional ship operator to become one of the leading global shipping lines of the world. During recent years MSC's

110 Proexport Colombia Confectionery and milling in Poland

maritime fleet has expanded substantially to consolidate its position in 2003 as the 2nd largest carrier in respect of container slot capacity and of the number of container vessels operated. MSC operates in excess of 255 container vessels with an intake capacity of 670,000 TEUs. MSC provides an unparalleled service network via dedicated own offices throughout the world and remains a truly independent and private company able to respond quickly to market changes and implement long term plans, without unnecessary interference or delay. With a streamlined management structure in Geneva, MSC has become a leading customer focused and cost effective global transportation solution for many shippers.

MSC prices are slightly higher than Maersk Sealand rates.

7.5 Identification of carriers that transport goods imported from Colombia

The providers of air connections from Colombia to Poland and from the Netherlands to Poland are:

x LOT – Polish Airlines x KLM – Royal Dutch Airlines

The providers of road transportation throughout Europe are:

x Fresh logistics (Raben-Group) - developed, as one of the first logistic companies, a special dedicated system for fresh products. The quality of performed services was confirmed by obtaining a HACCP certificate. The modern solutions guarantee the highest quality of servicing the market, flexible reaction to its needs, faster and prompt deliveries, professional stock management and detailed administration. Fresh Logistics delivers goods of various volumes to indicated addresses - from one consignment to full truck loads. Domestic deliveries to retail-, wholesale- and network consignees are executed on the next working day. The company offers services of international forwarding of consignments:

- groupage loads from 50 to 3 000 kg (fresh products from +2 to +6°C) - part loads over 3 000 kg (fresh products from +2 to +6°C) - full truck loads (frozen products, fresh products from +2 to +6°C, food products with various temperature ranges: -18°C; +12°C; +18°C)

For more information please see: www.freshlogistics.com or the carrier website www.raben-group.com

x Cargo Sped - Cargo Sped specializes in forwarding of all types of freights. They offer road, railway and sea transportation services for Proexport Colombia 111 Market Researches in Eastern Europe

export, import, transit and domestic traffic. The trans-shipment services at the borders, in the harbors and terminals are also offered. It also arranges agency services in customs and administrative matters, cargo insurance and customs securities.

x AXA – AXA company was established in the year 1991, and since then it developed and improved the quality of services that are offered to customers. The experienced personel and the variety of transportation which might be suitable to the individual needs of clientele are some of the features they provide. Known as reliable, dynamic company. Promptness in picking up the cargo from the loading up places and delivering it to their destinations is company goal. It specializes in the transportation all over Europe and CIS countries.

7.6 International Freight or Transportation Costs

SEA TRANSPORTATION:

The costs of transportation are based on the container’s size. Maersk Sealand offers containers as follows:

Table 7.6.1 Description of containers Dry/steel

Type Size m3 ft3

» 20' standard 20' x 8' x 8'6" 33 1,170

» 40' standard 40' x 8' x 8'6" 67 2,390

» 40' high 40' x 8' x 9'6" 76 2,714

» 45' high 45' x 8' x 9'6" 85 3,040

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Dry/aluminium

Type Size m3 ft3

» 45' high 45' x 8' x 9'6" 86 3,071

Source: www.maersksealand.com

Maersk Sealand's dry containers come in several sizes and designs:

x 20' with a payload of up to 28.3 metric tonnes x 40' - both 8'6" and 9'6" high cube - with a payload of up to 30.4 metric tonnes x 45' - 9'6" high cube - with a total capacity of 86 cubic metres

Table 7.6.2 The base freight for the routes from Colombia to Poland for 20’container

Base Exp. Siz. Orig Dest Comm Freight Date GDYNIA DRY CARGO : BARRANQUILLA 20 1690.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES GDYNIA DRY CARGO : CARTAGENA 20 1700.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES GDANSK DRY CARGO : CARTAGENA 20 1800.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES GDYNIA DRY CARGO : BUENAVENTURA 20 1800.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES SZCZECIN DRY CARGO : BARRANQUILLA 20 1700.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES GDANSK DRY CARGO : BUENAVENTURA 20 1900.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES GDANSK DRY CARGO : BARRANQUILLA 20 1770.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES SZCZECIN DRY CARGO : CARTAGENA 20 1700.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES SZCZECIN DRY CARGO : BUENAVENTURA 20 1800.00USD (port), CLASS 1 31Jul2005 (port), COLOMBIA POLAND COMMODITIES

Source: www.maersksealand.com

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Table 7.6.3 Additional charges

Ocean Freight 1,700.00USD per Container Redefining Basic Ocean Freight TLI Rate CARRIER SECURITY CHARGE 6.00USD BAF-NCSA To Europe (BAF) 70.00USD PORT SECURITY CHARGE 3.00USD DOCUMENTATION FEE - DESTINATION 15.00EUR DOCUMENTATION FEE - ORIGIN 50.00USD ======Total Charges 1847.16 USD Source: www.maersksealand.com, charges as of 27 July 2005 The above rate quotation is valid for 30 days. All rates published in the tariff at the time of receipt of cargo will be applicable and supersede the above quoted rates. Rate quote may not include local destination charges such as but not limited to: Cleaning, Port fees, Primage, Overweight charges, Documentation fees, or Customs inspections. These fees may be assessed to and settled locally by the cargo receiver.

Seagoing vessels in GdaĔsk port:

Tonnage Dues for Seagoing Vessels in GdaĔsk port are described below: (for more information see http://www.portgdansk.pl/index.php?id=charges&lg=en )

Tonnage dues for entry of seagoing ship to port and departure of ship from port, transit through port area, and assurance of ship waste reception for recycling or treatment (excluding ships specified in § 5) per 1 GT:

Fee No. Ship size and type (EUR/1 GT) 1 Car carrier 0.14 2 General cargo vessel 0.45 3 Reefer carrier 0.52 4 Container vessel 0.22 5 "Ro-Ro" ship 0.20 6 Bulk carrier 0.51 7 Passenger ship 0.13 8 Ferry 0.09 9 Passenger - cargo ship 0.09 10 Tanker up to 38.000 GT 0.57 11 Tanker over 38.000 GT 0.64

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12 Towing and pushing vessels 0.48 13 Other seagoing ships 0.45

Tonnage dues for line shipping and ferries entering port: x at least 8 times a week amount to 40% x at least 6 times a week amount to 45% x at least 4 times a week amount to 50% x 3 times a week amount to 60% x 2 times a week amount to 65% x 1 once a week amount to 70% x less than once a week amount to 75% of the pertinent fee rate specified in clause 1.

For seagoing new buildings and newly constructed hulls leaving port or shipyard, arriving for repair, conversion, dismantling, scrapping, performance of towing power tests or bunkering fuel or provisions or equipment, and not involved in commercial activity, if their stay in port or shipyard is limited to the time necessary to perform these , the charge amounts to 25% of the pertinent fee rate specified in clause 1. Please rephrase the sentence above. Not clear. Use short sentences!

For vessels staying in the roadstead for loading or discharging cargo or for passenger clearance the charge is 50% of the fee stipulated in clause 1. For seagoing ship entering the port for other than commercial purposes the charges amount to 25% of the pertinent rate specified in clause 1.

For ships passing in transit through the port area and not conducting commercial activity, fees are charged for one way passage and amount to 50% of the pertinent fee rate specified in clause 1.

Seagoing ships involved in commercial activity and next proceeding to the shipyard, or involved in commercial activity on leaving the shipyard, are charged with full tonnage dues.

Tonnage Dues for Seagoing Vessels in Gdynia port are described below17:

1. The following are the tonnage due charged for:

No. Type and size of vessel Amount of due [EUR/1 GT] 1. Car carriers 0,18 2. General cargo vessels 0,49 3. Reefer vessels 0,49

17 For more information see www.port.gdynia.pl Proexport Colombia 115 Market Researches in Eastern Europe

4. Container vessels 0,31 5. "Ro-ro" vessels 0,26 6. Bulk carriers 0,52 7. Passenger and cruise vessels 0,13 8. Ferries 0,13 9. Tankers 0,59 10. Tugs, pusher-tugs, push trains and towing 0,40 trains 11. Fishing vessels and boats less than 35 m 0,00 12. Other seagoing vessels 0,49

2. Tonnage due for seagoing liners and ferries entering the port: a) at least 8 times a week amount to 40%, b) at least 6 times a week amount to 45%, c) at least 4 times a week amount to 50%, d) 3 times a week amount to 60%, e) twice a week amount to 65%, f) once a week amount to 70%, g) less than once a week (but not less than once a month) amount to 75% of the relevant rate of dues specified in § 3 Section 1.

3. The amount of the tonnage due charged for the seagoing vessels carrying homogeneous cargo to/from Gdynia and with the frequency not less than 8 calls a quarter - is 80 % of the relevant rate of the due specified in § 3 Section 1 Is this correct? . The reduction of dues is granted, provided that the Port accepts the service declared by the ship operator.

4. For the seagoing vessels which are newly built and for the vessels calling at the port or at a shipyard with the purpose of repair, conversion, demolition, ship breaking, refuelling, replenishment of provisions or equipment materials or crew replacement and which do not perform any commercial operations - if they stay in port or in shipyard is only for the time necessary to perform the above mentioned operations - the amount of due charged is 25 % of the relevant rate specified in Section 1 above.

5. For the seagoing vessels calling for a stay in port without performing any commercial operations, the amount of due charged shall be 25 % of the rate specified in Section 1 above.

6. The seagoing vessels which perform commercial operations in the port and then go to a shipyard or the other way around, shall be charged the full tonnage due.

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Costs for further transportation within the EU.

AIR TRANSPORTATION:

The arrangements and costs are negotiated separately on the basis of an individual order.

General costs air freight Amsterdam to Warsaw with LOT Cargo;

Based cost B is EUR 34,03 which is a fixed cost Each kilogram of the parcel is counted EUR 1,56.

In the case of a long-term partnership there is a possibility to negotiate the prices.

Prices of KLM Cargo (Amsterdam- Warsaw) as comparable to the prices of LOT Cargo

Also Lufthansa offers daily cargo flights from Frankfurt (Germany) to Warsaw. However, this option is only interesting when the route from Colombia to Europe is been made by plane to Frankfurt, as Frankfurt has no direct sea connections.

General costs air freight Frankfurt to Warsaw with Lufthansa Cargo are calculated individually for each client. No price offer was made by Lufthansa.

ROAD TRANSPORTATION:

Following prices (per truck) and time of the delivery for the distance from the Netherlands to Poland:

Amsterdam – Warsaw EUR 1000

Amsterdam – PoznaĔ EUR 1200

Prices from Rotterdam are the same as from Amsterdam.

7.7 Physical distribution services address book

SERVICES ADDRESS BOOK:

SEA TRANSPORTATION:

1. MSC Poland Plac Kaszubski 8 Proexport Colombia 117 Market Researches in Eastern Europe

81-350 Gdynia Phone: +48 58 666 1000 Fax: +48 58 666 1001 E-mail: [email protected] www.mscgva.ch/index.html

The worldwide agents may be found at: www.mscgva.ch/contact/contact_page.html

COLOMBIA City Company Phone Fax Bogota MSC Colombia +57 1 611 2787 +57 1 610 7347 Buenaventura MSC Colombia +57 2 241 8926 +57 2 241 7809 Cartagena MSC Colombia +57 5 667 1111 +57 5 667 0953

2. Maersk Sealand Ul. Kwiatkowskiego 60 81-127 Gdynia Phone: +48 58 660 39 39 Fax: +48 58 660 39 38 E-mail: [email protected] www.maersksealand.com

COLOMBIA City Company Phone Fax Bogota Maersk Colombia S.A +57 1-6449600 +57 1-3760960 Cali Maersk Colombia S.A. +57 2-6618217 +57 2-6534871 Medellin Maersk Colombia S.A. +57 4-3134865 +57 4-3136884 Buenaventura Maersk Colombia S.A. +57 2-2411400 +57 2-2418683 Cartagena Maersk Colombia S.A. +57 5-6502405 +57 5-6502407 Barranquilla Maersk Colombia S.A. +57 5-3602936 +57 5-3607315 POLAND City Company Phone Fax Gdynia Maersk Polska Sp. z o.o. +48 58 6603939 +48 58 6603938 Krakow Maersk Polska Sp. z o.o. +48 12 4212006 +48 12 4228727 Warsaw Maersk Polska Sp. z o.o. +48 22 5414250 +48 22 5414251

Polish sea operators:

2. MAG (Morska Agencja Gdynia Sp. z o.o.)

ul. T. Wendy 15

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81-341 Gdynia Phone: (+48 58) 661 41 41 Fax: (+48 58) 621 06 08 E-mail: [email protected] www.mag.gdynia.pl

3. Okmarit Sp. z o.o.

Armii Krajowej 30 street 81-366 Gdynia Phone: (+48 58) 661 22 61 Fax: (+48 58) 661 69 65 E-mail: [email protected]; www.okmarit.com.pl

4. Pomorscy Maklerzy OkrĊtowi Sp. z o.o.

ul. Chopina 6 81-752, Sopot Phone: (+48 58) 550 20 62 Fax: (+48 58) 550 20 18 E-mail: [email protected]

AIR TRANSPORTATION:

5. LOT Cargo agent in the Netherlands:

www.lot.com

Zygene European Freight Consult BV. Flamingoweg 31, room 316, 1118 EE Schiphol-Zuid, The Netherlands. Tel : 31-(0)-20-6530007 Fax : 31-(0)-20-6530581 E-Mail : [email protected] www.zygene.nl

6. KLM Cargo in the Netherlands:

www.klmcargo.com

Schiphol Airport Building 551 PO Box 7700 1177 ZL Tel.: (31) 206498000

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Fax.: (31) 206494553 E-mail: [email protected]

Rotterdam Arlandabaan platformzijde 52 3045 AB PO Box 12039 3004 GA Tel.: (31) 104379455 Fax.: (31) 104370731 E-mail: [email protected]

7. Lufthansa Cargo Charter Agency GmbH Langer Kornweg 34 H 65441 Kelsterbach Tel: (49) 6107 777 721 Fax: (49) 6107 777 881 E-mail: [email protected]

ROAD TRANSPORTATION:

8. Raben Transport Spóáka z o.o. ul. PoznaĔska 71 62-023 Gądki k/Poznania tel.: +48 (61) 650 65 00 fax: +48 (61) 650 65 01 e-mail: [email protected] www.raben-group.com

9. Cargo Sped ul. Bokserska 66 02-690 Warszawa tel.: +48 22 455 76 00 e-mail: [email protected] www.cargosped.com.pl

10. AXA ul. Bukowiecka 92 03-893 Warszawa tel.: +48 22 678 88 22 e-mail: [email protected] www.axa.waw.pl

120 Proexport Colombia 8. Recommendations to the exporter

As a member of the EU, Poland has an opportunity to enhance and substantiate trading relations with Colombia and other South American countries. This is mainly due to the “Strategy of the Republic of Poland for cooperation with developing countries” which focuses on 4 priority countries (Brazil, Argentina, Mexico and Chile) and 2 countries of great importance (Venezuela and Colombia).

It is recommendable to encourage Colombian entrepreneurs to enter the Polish market. Poland has developed a status of a fully reliable partner, especially thanks to accession to the EU. All the regulations for import and customs, regarding the membership, are now unified with majority of European countries, whereas only few matters are treated separately. The formalities are sometimes facilitated, especially for non-Community countries, for example through the possibility to benefit from the free zone in the country of imports destination. On the other hand Poland still has its own currency (weaker than the euro, therefore cheaper).

The big and growing market of confectionery products in Poland is undoubtedly attractive for sellers because their margins are still higher than average margins in the food sector. However, it has been very difficult to operate on this market because of increasing competition resulting from investments of international food concerns which dominated the domestic market.

Key characteristics of the confectionery sector include: strong brand names, impulse buying, product innovation and strong merchandising. Poles are open to new products on condition that it is a good quality and is well-known, which means supported by marketing actions. Producers need to use more sophisticated means of promotion due to growing maturity of consumers.

The negative aspect of potential confectionery export to Poland is a 22% VAT rate for the product. Also, the already established trademarks, attached instinctively by consumers with their price (established buyers habits), may be some kind of obstacle for entering the Polish market.

However, in many categories Poles statistically consumes less than the average EU citizen. The model of consumption is changing as the living standards of Poles are improving, with more money being spent on confectionery. Polish confectionery market has big growth potential, which should be considered as a chance for new market possibilities. The gap between Polish and European consumers, which amounts 8-12 kg, is an opportunity awaiting.

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Annexes

Annex 1: Health inspection application form

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126 Proexport Colombia Confectionery and milling in Poland

Annex 2: Certificate of origin form A

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Annex 3: DV1 Form

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Annex 4: Single Administrative Document (SAD)

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Annex5: Photo material

In this annex, packaging and products of the most popular brands in Poland are shown.

Chocolate Confectionery

Cadbury Wedel Sp. z o.o.

Chocolate Covered Marshmallows Lemon Wedel chocolate slabs Different flavours, pack 100g. Different flavours, slab 100g.

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Wedel chocolate with nuts Wedel chocolate bars with fruit filling Slab 300 g. Slab 100 g.

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Kraft Foods Polska S.A.

Alpen Gold chocolate slabs Milka Chocolate slabs 100 g. 100 g.

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Mleczna Kraina Filled Chocolate Bars Pack 4 pcs, 50 g.

134 Proexport Colombia Confectionery and milling in Poland

Nestle Polska S.A.

Nestle Stratiatella Chocolate, also in Cocos Smarties Mini Choclolates Slab 90 g. Pack 100 g.

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Wawel S.A.

Wawel Chocolate with nuts Wawel Chocolate Slab 100 g. Pack 100 g.

136 Proexport Colombia Confectionery and milling in Poland

Milling products

Lu Polska

Lu Petitki Wafers Lu Lakotki Cookies Pack 84 g. Pack 146 g.

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Thie Lorenz Bahlsen Snack-Wols Sp. z o.o.

Lajkonik Cocos Biscuits Bahlsen Choco biscuits 225 g. Pack 100 g.

138 Proexport Colombia Confectionery and milling in Poland

Sugar Confectionery

Leaf Poland Sp. z o.o.

Mieszko

Hops Fruit/ Mint Hard Candies Zozole Orange (Hard Candies, also in Cherry, Apple, Cola, Tropical Fruit, Grapefruit Bag 100 g. Bag 100g.

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STORCK Sp. z o.o.

Nimm2 Fruit Bonbons Ice Fresh Mint Bonbons Bag 150 g. Bag 150 g.

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Annex 6: Companies Directories

Companies Directory Country: Poland Sector: Confectionery and milling Página Web Idioma Idioma del Información General de Empresas Requiere Información Contenido Disponible sin Costo Registro Adicional con Costo Directorios Europeos http://www.kompass.com/ E E; I; O Contenido: Nombre de la empresa; SI SI País; Dirección; Teléfono; Fax; Sitio Web; Numero de empleados; Fecha de constitución; Capital; No de registro; Identificación del IVA. Descripción: Información de empresas para 70 Países. Opciones de Búsqueda: País; Productos/Servicios; Empresa; Sector; Subsector; Marcas; Dirigentes; Códigos. http://worldyellowpages.com/ I I Contenido: Nombre de la empresa; SI NO País; Dirección; Teléfono; Fax; E- mail; Sitio Web; Descripción corta de la empresa y sus productos. Descripción: Paginas amarillas - Lista alfabética de productos y servicios; lista de empresas; Permite acceder a las páginas amarillas de cada País; Acceso a una pagina de Información de negocios con algunos Países entre los que se encuentran Polonia y Republica Checa. Opciones de Búsqueda: País; Productos/Servicios; Empresa; Listado de productos; Listado de países; Oportunidades de negocio con algunos países. http://www.europages.com/ E; I; O E; I; O Contenido: Nombre de la empresa; SI SI País; Dirección; Teléfono; Fax; Sitio Web; Productos/Servicios. Descripción: Directorio en línea (en 25 idiomas) de la empresas europeas mas dinámicas; Consulta gratuita de las licitaciones publicadas en el diario oficial de la Unión Europea; Directorio impreso (en 6 idiomas) de los compradores europeos mas dinámicos; Directorio en CD-Rom (en 14 idiomas) de la empresas europeas mas dinámicas. Permite contactar las empresa vía intra mail. Opciones de Búsqueda: Productos/Servicios; Empresa; Temática; País; Sector. Directorios Polacos

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Companies Directory Country: Poland Sector: Confectionery and milling Página Web Idioma Idioma del Información General de Empresas Requiere Información Contenido Disponible sin Costo Registro Adicional con Costo http://www.teleadreson.pl/ P; I P; I Contenido: Nombre de la empresa; NO NO Nombre corto; Dirección; Ciudad; Zip Code; Nombre del contacto; Teléfono; Fax; Tipo de entidad; Estatus legal; E- mail; Sitio Web; Empleados; Año de fundación; NACE (No de Actividad de la Comunidad Europea); SIC(Clasificación Industrial Estándar). Descripción: Permite elegir los capítulos arancelarios como criterio de búsqueda de las empresas. Opciones de Búsqueda: Texto; NACE (No de Actividad de la Comunidad Europea); SIC (Clasificación Industrial Estándar); Estado nuevo - antiguo; Tipo de entidad; Año de Fundación; Numero de empleados. http://www.panoramafirm.pl/ - PP Contenido: Nombre de la empresa; NO NO www.pf.pl Dirección; Teléfono; Fax; Sitio Web; E-mail; Productos/Servicios. Descripción: Información de empresas polacas. Permite contactar las empresa vía mail. Opciones de Búsqueda: Texto; Sector (Categorías temáticas). http://www.polishproducts.gov.pl/ - PP Contenido: Nombre de la empresa; NO NO http://www.polishproducts.gov.pl/ Categoría; País; Dirección; Teléfono; Descripción. Descripción: Portal de promoción de exportaciones del ministerio de comercio polaco. Opciones de Búsqueda: Texto; País; Categoría. http://www.polandcompany.com/ P; I; A I; W Contenido: Descripción corta de la NO NO empresa y sus productos; Link al sitio Web de cada empresa. Descripción: Portal descriptivo de las empresas polacas, clasificadas por Categorías de productos. Opciones de Búsqueda: Sector. www.pkt.pl P P; I Contenido: Nombre de la Empresa; NO SI Dirección; Teléfono; E-mail; Sitio Web; Sector; Productos/Servicios; Códigos; Mapa. Descripción: Información de empresas polacas. Permite contactar las empresa vía intra mail Opciones de Búsqueda: Texto; Sector; Productos/Servicios; Empresa http://www.infodata.pl/ P; I P; I Contenido: Nombre; Ciudad; NO NO Actividad o sector; Códigos de Identificación; VAT; Código postal; Teléfono: Fax; E-mail; Contacto; Sitio Web. Descripción: Base de datos de empresas polacas - InfoData. Opciones de Búsqueda: Negocios - Base de datos; Nombre de la empresa; Ciudad; Actividad. Directorios por Sector

142 Proexport Colombia Confectionery and milling in Poland

Companies Directory Country: Poland Sector: Confectionery and milling Página Web Idioma Idioma del Información General de Empresas Requiere Información Contenido Disponible sin Costo Registro Adicional con Costo http://www.foodtrader.com/ I I Contenido: Información sobre SI SI potenciales compradores. Descripción: Pagina especializada en las industrias de alimentos y agricultura. Opciones de Búsqueda: Productos/Servicios; Categorías http://www.foodnavigator.com/ I I Contenido: Descripción corta de la NO NO empresa y sus líneas de productos; Sitio Web. Descripción: Página de noticias de Alimentos y Bebidas en Europa. Hay una suscripción gratuita para recibir vía e-mail noticias sobre las 100 empresas top de la industria de bebidas y alimentos. Opciones de Búsqueda: Noticias de Productos y proveedores; Por patrocinador. Idioma: E: Español; I: Ingles; A: Alemán; C: Checo; H: Húngaro; P: Polaco; O: Otros; W: Idioma del Sitio Web

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