Polish brewer Kompania Piwowarska slashes 80 jobs in an effort to cope with the slump

July 31, 2009 - PRLog -- In the Business Environment Ratings for Q309, Poland is placed eighth, having previously been ranked third out of the 14 key markets within Central and Eastern Europe (CEE). As with a number of other markets in the region, Poland’s attractiveness has suffered from the effects of adverse economic conditions. In fact, a flash estimate provided by the Central Statistical Office shows Polish economic growth slowing to 3.0% year-on-year (y-o-y) during Q408 from 4.8% the previous quarter. We expect growth to continue slowing through 2009, with the economy likely to dip into recession during H209, although the situation will not be as dire as in the Czech Republic and Hungary.

In the meantime, consumer spending in Poland has already taken a turn for the worse, which will have a major impact on the food and drinks values in the current year. In a blow for the alcoholic drinks industry, the government recently increased its excise duty on alcohol and tobacco products, intent on reviving its flagging tax revenues. Concurrently, mass grocery retail (MGR) sales through supermarkets and hypermarkets are suffering from the rise of private label goods and increased popularity of the discount format.

Domestic producers are also feeling the negative effects of a flagging domestic market as well as import demand by key trading partners, including the US, the UK and Germany. Indeed, a number of Polish companies are already looking to mitigate the consequences of the economic crisis. Among these are Alta Capital Partners, a Baltics-based investment fund, which recently announced its intention to divest a majority share it holds in Polish confectionery producer Mieszko, which has amassed considerable debts.

Similarly, Polish brewer Kompania Piwowarska, a subsidiary of multinational SABMiller, announced that it will be slashing 80 jobs in an effort to cope with the slump in the domestic beer market. In order to guard against the possibility of flat volume growth in 2009, the brewer may decide to take a hit on its margins to ease the burden on its consumers. In the meantime, Danish Royal Unibrew sold its lossmaking Polish brewery Koszalin to Van Pur, as part of the former’s restructuring plan that also includes a transfer of Koszalin’s capacity to its other Polish brewery at Lomza.

On a positive note, the Polish market will receive considerable foreign investment in the course of 2009 despite the crisis, as larger players exploit the weaknesses of smaller operators. For example, Polish food manufacturer Nestlé Polska, a subsidiary of the Swiss based food giant, was in March 2009 exploring possible acquisition targets in Poland as it looks to expand its production capacity – although the reason for the acquisition is the reduction of its reliance on expensive imported ingredients. In the near term, a successful expansion campaign would probably allow Nestlé Polska to pass on a portion of the efficiency savings provided by its larger size and greater control over input costs to consumers, which is undoubtedly a key strategic objective as consumer spending takes a turn for the worse in 2009. Around The same time, leading multinational consumer product firm Unilever opened its first food product development centre in Poland, which is also the first such centre within the CEE region.

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