GFK - Desk Research FMCG Distribution Channels - Romania

GfK GfK
Custom Research FMCG Distribution Channels - Romania June 2007

Romania
Growth from
Knowledge
GfK Romania 1
FMCG Distribution Channels -

Romania
GfK Custom Research FMCG Distribution Channels - Romania June 2007
Romania
Content
2
1. ROMANIAN ECONOMY IN GENERAL
- Basic information about Romania 9

- Selected economic indicators of Romanian economy 15
- Comparison of selected economic indicators: Romania vs. EU 25; EU 15; in 2005
17
- Purchasing power comparison in Europe 19
- Personal consumption structure evolution 2003-2005 21
- Household structure – family life cycle 22
- Average net wages evolution 2000 – 2005 24
- Average net wages and employment by selected sectors
25
- Romania map – Incomes per capita
26
- Macroeconomic situation – an overview 27
2. RETAILERS DISTRIBUTION IN ROMANIA
- Population distribution vs. Retailers distribution by regions and main counties 30

- Purchasing Power Index by counties
31
- Top 10 valuable companies in Romania – 2005
Romania
Content – PART 3
3
• RETAIL TRADE MARKET
3.1. MAJOR PLAYERS ON THE SCENE

- Retail sales by type of outlets 37
- Market share by type of outlets 38
- Evolution of number of stores 39
- Main players market share 40
- Carrefour (SWOT, mission and developments) 42
- Rewe (SWOT, mission and developments) 43
- Delhaize Group (SWOT, mission and developments) 44
3.1.1. CASH & CARRY - MAJOR PLAYERS ON THE SCENE
- Sales Structure 49
- Evolution of Number of Stores 50
- Retail Structure by Sales Area 51
3.1.2. HYPERMARKETS - MAJOR PLAYERS ON THE SCENE
3.1.3. SUPERMARKETS - MAJOR PLAYERS ON THE SCENE
3.1.4. DISCOUNT STORES - MAJOR PLAYERS ON THE SCENE
Romania
Content – PART 3
4
3.1.5. FORECOURT STORES - MAJOR PLAYERS ON THE SCENE

3.2. A GENERAL OUTLOOK ON ROMANIAN SHOPPING HABITS (source: GfK

ConsumerTracking)
- Outlet types – market shares 75
- Outlet types – distribution by regions 76
- Outlet types – distribution by community size 77
- Outlet types – distribution by product baskets 78
- Count of promoted products by retailers – food and beverages 79
- Count of promoted products by retailers – personal care 80
- Count of promoted products by retailers – clothing, footwear, mercery 81
- Purchasing structure by outlet type 82
- Purchasing behavior in Romania – value of average spending by community size 83
- Retail trade market – summary 84
Romania
Content – PART 3
5
2. RETAIL TRADE MARKET
3.3. A CLOSER LOOK INTO PRIVATE LABELS

- Private Labels shares within FMCG baskets 87
- Private Labels by retailers leaflets’ activity 88
- The importance of Private Labels across CEE markets 89
- Selected categories with high Private Labels shares 90
- Closer look into private labels – summary 91
4. ROMANIAN RETAIL TRADE MARKET OVERVIEW 92

Romania
– Romanian ECONOMY IN GENERAL –

Romania
Romania – BASIC INFORMATION

7
2005
Population
21.681
(in thsd.*)
GDP, billion RON (current prices) 287.2
GDP per capita, RON 13.282
GDP real growth, % 4.1
Gross external debt, mld. Euro 20130.4
Industrial production, growth rate in% 2.0
Coverage of imports by exports, % 68.3
Consumer price index 2005/2004, % 8.6
Investment Indices (Volume) % 113.4
Average monthly gross earning, RON 968
Average monthly net earning, RON 746
Unemployment, % 7.2
Source: National Institute of Statistics - Romania

Romania
POPULATION STRUCTURE (2004 census)

8
Romania Population Structure by Sex Romania Population Structure by Age
N= N= N= N= N= N=
21,623,849 11,879,897 9,743,952 21,623,849 11,879,897 9,743,952
9,3 7,4
12,6
8,1
9,6
47,9 11,2
48,8 49,8 13,8
12,8
11,4
12,8 14,8
10,4
16,0 16,7 14,9
51,2 52,1 50,2

15,8 14,1
17,1
13,6 13,8
13,4
Total country Urban Rural environment
environment
10,0 8,7 11,6
Women Men
Total country Urban environment Rural environment
0-9 y.o. 10-19 y.o. 20-29 y.o.

30-39 y.o. 40-49 y.o. 50-59 y.o.
60-69 y.o. 70 y.o. and over
Source: National Institute of Statistics - Romania;

Romania

9
Number of counties Number of inhabitants

ROMANIA COUNTIES

Absolute figures % from total Absolute figures % from total
Total 42 100,0 21,623,849 100,0
Less than 300,000 inh. 6 14,3 1,584,292 7,3
300,000 – 399,999 inh. 10 23,8 3,494,146 16,2
400,000 – 499,999 inh. 9 21,4 4,097,876 19,0
500,000 – 599,999 inh. 6 14,3 3,397,661 15,7
600,000 – 699,999 inh. 4 9,5 2,620,168 12,1
700,000 – 799,999 inh. 4 9,5 2,863,292 13,2
800,000 inh. and over 3 7,2 3,566,414 16,5

Romania

10
Number of municipalities/
Number of inhabitants
communes

Absolute % from
Absolute figures % from total
figures total
Municipalities
Total 314 100,0 11,879,897 100,0
Less than 3,000 inh. 5 1,6 12,848 0,1
3,000 – 4,999 inh. 15 4,8 63,392 0,5
5,000 – 9,999 inh. 96 30,6 709,031 6,0
10,000 – 19,999 inh. 93 29,6 1,252,321 10,5
20,000 – 49,999 inh. 59 18,8 1,789,788 15,1
50,000 – 99,999 inh. 21 6,7 1,490,022 12,6
100,000 – 199,999 inh. 14 4,4 1,870,262 15,7
200,000 – 999,999 inh. 10 3,2 2,767,274 23,3
1,000,000 and more inh. 1 0,3 1,924,959 16,2
Communes
Total 2,850 100,0 9,743,952 100,0
Less than 1,000 66 2,3 48,908 0,5
1,000 – 1,999 554 19,4 877,763 9,0
2,000 – 4,999 1766 62,0 5,725,172 58,7
5,000 – 9,999 443 15,6 2,852,876 29,3
10,000 and more 21 0,7 239,233 2,5

Romania
POPULATION STRUCTURE
Romania – Population by counties (2004 census) Population
(inh.)
11
Cities
more than 200 th. inh.
between 100 and 200 th. inh.
Source:
Source: GfK
National RegioGraph
Institute of Statistics - Romania;
Romania
SELECTED ECONOMIC INDICATORS

12
GDP, real growth rate in %
8,4
5,7
5,1 5,2
4,1
2,1
2000 2001 2002 2003 2004 2005
GDP, billion RON

287,2
246,4
197,6
151,5
116,8
80,4
2000 2001 2002 2003 2004 2005

Romania

13
Inflation rate %
40,7
30,3
17,8
14,1
9,3 8,6
2000 2001 2002 2003 2004 2005
Unemployment rate
%
8,4 8,0
6,9 7,0 7,2
6,4
2000 2001 2002 2003 2004 2005

Romania
Comparison vs. EU and other countries – 2005
14
GDP, real growth rate in % GDP per capita in

PPS*
Romania 4,1 Romania 35
EU 25 1,7 EU 25 100
EU 15 1,5 EU 15 108
Bulgaria 5,5 Bulgaria 32
Croatia 4,3 Croatia 49
Turkey 5,8 Turkey 31
* The volume index of GDP per capita in Purchasing Power Standards (PPS) is expressed in relation to the European Union (EU
25)
average set to equal 100. PPS is a common currency that eliminates the differences in price levels between countries.
Source: National Institute of Statistics; WIIW

Romania
Comparison vs. EU and other countries – 2005
15
Consumer prices – inflation Unemployment rate

rate
Romania 8,6 Romania 7,2
EU 25 2,2 EU 25 8,8
EU 15 2,1 EU 15 7,9
Bulgaria 5,0 Bulgaria 10,1
Croatia 3,3 Croatia 17,9
Turkey 8,2 Turkey 10,0
Source: National Institute of Statistics; WIIW;

Romania
Purchasing power comparison in Europe
Year 2006
16
Parity of purchasing power (Austria=100%)
100 Austria = 100

88 89
80
69
67 66
62
58
50 50
47 44 42 40 41
32
29 27 26
22 22 21 22
A EU 15 G E CY GR SLO P CZ H SK EST LT PL HR LV RUS RO BG TR UA BA MAC SER*
Source: WIIW, February 2006 *Without Montenegro

Romania
Purchasing power comparison in Europe
Year 2006
17
Parity of purchasing power (Germany=100%)

112
98 100
Germany = 100
90
77 75 74
70
65
57 56
52 49 47 45 46
36
33
30 29
24 25 24 25
A EU 15 G SP CY GR SLO P CZ H SK EST LT PL HR LV RUS RO BG TR BA UA MAC SER*
Source: WIIW, February 2006 *Without

Romania
PERSONAL CONSUMPTION
18
Average annual personal consumption per household,
%
Food and beverages
Alcoholic drinks and tobacco
46 44
49 Clothing and footwear
Housing and energy *
6 Furniture, equipement and

6 6 maintenance
6
6 Health services
6
15 16
15 Transport and communication
4 4
4 4 4 Education; Recreation and
3
11 culture
9 11
Hotels and restaurants
5 5 5
1 31 1
3
3 Other goods and services
2003 2004 2005
Source: National Institute of Statistics

Romania
PERSONAL CONSUMPTION
19
2005/2004
real growth rate
personal consumption structure is slightly

-4,7Food and beverages -4,7 improving;
Alcoholic
-1,7 drinks and tobacco
-1,7 financing essential needs still takes most of the
budget;
Clothing
-1,6 and footwear -1,6
food and beverages expenses are in decline, but
Housing and energy6,1
* 6,1 still
cover more than 40% of the household budget;
Furniture, equipement and maintenance
basic existential expenses for Housing and

Health services 5,6 5,6
energy
increased;
Transport and communication
7,5 7,5
consumption of luxuries slightly decreased

Education; Recreation
6,3and culture 6,3
(Alcohol
and tobacco);
Hotels and restaurants
stable expenses for Furniture, equipment and

Other goods and services
7,1 7,1
maintenance, as well as for Hotels and
restaurants;
positive trends for ‘quality of life’ items (Health

services 5,6% increase; Education, recreation
and
culture 6,3% increase);
Romania
HOUSEHOLD STRUCTURE – Family Life Cycle

20
Household structure according to HH members,

members, %
10 10 10
Young, still studying
8 9 9
5 5 Young singles
10
9 9
8 Young couples without children
6 6 5
Small families with small children
16 15 12
Large families with small children
7 4
6
10 Small families with school children
8 8
Large families with school children
31 31 33 Older employed without children
Older unemployed without children
2004 2005 2006
Source: GfK Romania - Omnibus

Romania
AVERAGE NET WAGES

Average net wages, in RON 21
746
599
484
379
302
214
2000 2001 2002 2003 2004 2005
Average net wages real growth rate, in %; Growth rate trendline
40,5 41,2
25,5 27,7
24,5
23,7
2000 2001 2002 2003 2004 2005

Romania
AVERAGE NET WAGES BY SELECTED SECTORS

22
Average monthly net earnings (RON)
746 735
National Economy 599 600 575

Agriculture 531
484 487 483
Industry 439
378 364
Commerce
2003 2004 2005

Employment – average number of employees, by
activity of national economy
Agriculture 2003 2004 2005

13,7 3,3 14,7 3,2 15,3 3,2
Industry 36,7
8,5 40,3 8,5 39,0 8,4
Construction
6,8 6,8 7,0
Commerce
Transport, 7,5 7,0
7,1
communication 12,8 7,1 13,4 14,8
7,2 7,6
Health,
social assistance
Education
Other activities of national economy

Romania
AVERAGE
Romania – NET WAGES
Incomes per BY SELECTED SECTORS Counties/ Avg. income
Euro per capita/ yearly
capita
23
Cities
more than 200,000 inh.
Source: GfK RegioGraph between 50 and 100 th. inh.

Romania
MACROECONOMIC SITUATION IN ROMANIA – AN
OVERVIEW
24
 despite positive trends in other fields, Romania has faced a high inflation rate level, decreasing though,
comparing to
2004;
 the inflation target proposed by the Government and the National Bank for 2007 is 5% (+/- 1),
considered as
hard to achieve by the FMI representatives;
 in 2005 GDP increased with a slower pace (4,1%) compared to 2004 (8,4%);
 compared to Slovenia, Czech Republic and Hungary, Romania records considerable gaps, but the
analysts are
optimistic, estimating that these gaps can be diminished , considering that Romania recorded the
fastest growth in
GDP among UE members between 2000-2006;
 compared to EU average level, Romania has a good position regarding unemployment rate;
 in 2005 industrial production growth rate was 2%, while the exports covered 68% of the imports;
 comparing the purchasing power in Europe by taking Austria as reference (100%), Romanian level
reaches 29%,
behind Russia (32%), but ahead of Bulgaria (27%) and Turkey (26%);
Romania
MACROECONOMIC SITUATION IN ROMANIA – AN
OVERVIEW
25
 analyzing household structure by family life cycle, we can notice that older families without children
(employed or
unemployed) are dominant (43% in 2006) – with an upward trend compared to 2005 (39%);
 from one year to another, the percentage of families with school children decreased (from 23% in 2004
to 16% in
2006);
 fortunately, young couples with children recorded a significant increase in 2006;
 overall net wages have risen continuously, but beginning with 2002 the growth rhythm has slowed
down;
 the average number of employees in industry sector decreased compared to previous years, while for
commerce the
percentage slightly increased.
Romania
– RETAILERS’ DISTRIBUTION IN Romania –

Romania
RETAILERS DISTRIBUTION IN ROMANIA – BY REGIONS

27
% of
% of number of
Households number of
outlets *
(Census 2002) outlets *
TOTAL ROMANIA 100,0 352 100,0
Bucharest 9.9 100 28.4
Muntenia, Dobrogea 25.0 63 17.9
Oltenia 10.6 21 6.0
Banat, Crisana, Maramures 13.6 47 13.4
Transilvania 19.8 73 20.7
Moldova 21.1 48 13.6
Main Counties by retailers’ presence

Prahova 3.8 17 4.8

Timis 3.3 16 4.5
Brasov 2.9 15 4.3
Cluj 4.1 15 4.3
Constanta 3.3 14 4.0
Hunedoara 2.3 11 3.1
Bacau 3.5 10 2.8
Iasi 3.7 9 2.6
Sibiu 2.0 9 2.6
Alba 1.7 7 2.0
Arad 2.4 7 2.0
Caras-Severin 1.5 7 2.0
Dambovita 2.3 7 2.0
Galati 3.1 7 2.0
Maramures 2.1 7 2.0
Source: own calculation according to Census 2002; National Institute of Statistics; GfK Desk Research – March 2007
* Carrefour, Cora, Trident, Pic, Real, Interex, Spar, Kaufland, Metro C&C, Selgros C&C, Profi, Plus, Penny Market, MiniMax Discount, Hard-Discount,
Billa, Gima, Artima, Angst, Primavara, Cris-Tim, Fidelio, Mega Image, Albinuta, La Fourmi
Romania
28
Romania
THE MOST VALUABLE COMPANIES

29
10 MOST VALUABLE COMPANIES IN 2005
Company Economic Activity Value (million Euro)
1. PETROM Energy 8.977
2. BCR Financial Services 6.070
3. ORANGE IT & Communications 4.813
4. VODAFONE IT & Communications 4.337
5. BRD Financial Services 3.570
6. HIDROELECTRICA Energy 2.700
7. ROMTELECOM IT & Communications 2.455
8. ROMGAZ Energy 2.295
9. ELECTRICA MUNTENIA SUD Energy 1.250
10. RAIFFEISEN BANK Financial Services 1.242
Source: ‘Ziarul Financiar’ Newspaper – 15 November 2006

Romania
THE MOST VALUABLE FMCG COMPANIES & RETAILERS

30
THE MOST VALUABLE FMCG COMPANIES & RETAILERS - 2005
TOP 10 FMCG COMPANIES TOP 5 RETAILERS

1. COCA – COLA HBC (659 1.METRO CASH & CARRY (1.191
mil. Euro) mil Euro)
2. PROCTER & GAMBLE (445 2.SELGROS CASH & CARRY ( 365
mi. Euro) mil Euro)
3. BRITISH AMERICAN TOBACCO (409 mil. 3. CARREFOUR ( 312
Euro) mil Euro)
4. BRAU UNION (325 4. BILLA ROMANIA ( 147
mil. Euro) mil. Euro)
5. PHILIP MORRIS ROMANIA (309 5. CORA ( 124
mil. Euro) mil. Euro)
6. URSUS BREWERIES (295
mil. Euro)
7. INTERBREW ROMANIA (249
mil. Euro)
8. EUROPEAN DRINKS (186
mil. Euro)
9. JTI ROMANIA (168
mil. Euro)
10. DANONE (144
mil. Euro)
Source: ‘Ziarul Financiar’ Newspaper – 15 November 2006

Romania
RETAILERS DISTRIBUTION IN ROMANIA – SUMMARY

31
 Bucharest concentrates more than a quarter of the total number of major accounts* in Romania,
operating for the 9,9% households living here;
 for Muntenia, Dobrogea; Oltenia and Moldova the number of outlets is low, compared to the
percentage of households living in each area;
 retailers are well represented in counties like Prahova, Timis, Brasov, Constanta and Hunedoara,
according to the households distribution by areas;
 the most valuable companies in 2005 come from areas of economic activities like Energy, Financial
Services and IT & Communication;
 Petrom is on top, evaluated in 2005 at 8.977 million Euro, followed by BCR, Orange, Vodafone and
BRD;
 among FMCG companies, the most valuable in 2005 were Coca-Cola HBC, Procter & Gamble, British
American Tabacao, Brau Union and Philip Morris, while among retailers, Metro Cash & Carry was the
leader, by far.
* Carrefour, Cora, Trident, Pic, Real, Interex, Spar, Kaufland, Metro C&C, Selgros C&C, Profi, Plus, Penny Market, MiniMax Discount, Hard-Discount, Billa, Gima, Artima,
Angst, Primavara, Cris-Tim, Fidelio, Mega Image, Albinuta, La Fourmi
Romania
– RETAIL TRADE MARKET –

Romania
3.1
MAJOR PLAYERS ON THE SCENE

Romania
RETAIL SALES BY TYPE OF OUTLETS (EUR MN)

34
Source: Planet Retail
Retail sales by type of

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
outlets (EUR mn)
Cash & carries 908 1.149 1.542 1.880 2.313 2.590 2.928 3.198 3.505 3.851
Discount stores 41 65 94 175 540 779 1.100 1.445 1.742 2.038
Forecourt stores 35 48 97 107 113 126 138 141 146 149
Hypermarkets 100 153 365 620 1.201 2.273 3.480 4.636 5.724 6.856
Supermarkets 137 208 325 866 923 1.039 1.241 1.452 1.627 1.808
Other stores 8.990 9.151 10.718 11.925 12.945 15.249 15.837 16.180 16.585 16.058
Total 10.211 10.774 13.141 15.573 18.035 22.056 24.724 27.052 29.329 30.760
PLANET RETAIL DEFINITIONS:
Cash & Carry: membership-based wholesale format intended for resellers and commercial customers. In the food retail sector, usually a source for independent shop
operators. Customers serve themselves as in a supermarket and pay for their merchandise at the checkout (unlike delivered wholesale, where merchandise is brought
to the customer). In some countries, cash & carry outlets also sell to private consumers, e.g. in some Eastern European states.
Discount Store: large format (2,500 square metres-plus) general merchandise superstore that carries a wide assortment of non-foods, general merchandise, health
& beauty products and groceries. Stores typically have a strong focus on low prices. Grocery accounts for around 30-40% of the range.
Forecourt Store: convenience outlet located at a petrol station. Occasionally operated in a joint venture between an oil company and a grocery retailer.
Hypermarket: self-service store with a sales area of more than 5,000 square metres and generating high turnover, offering both a comprehensive food range and a
wide choice of non-food items. Depending on the individual operation, the non-food offer can be as deep and wide as in a department store.
Supermarket: self-service store with a grocery product offer, ranging from 400 to 2,500 square metres.
Depending on individual store sizes, there are also non-food items available.
Romania
MARKET SHARE BY TYPE OF OUTLETS %
35
Other stores
52
60 57
64 Supermarkets
72 69
77
85 82
88
Hypermarkets
6
6
5 Forecourt stores
5
22
5 20
5 17
14
6 10 Discount stores
7
3 4 7
2 3 3 4 4 5 6
11 12 12 13 12 12 12 12 13 Cash & carries

9
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Romania
EVOLUTION OF NUMBER OF STORES

36
Evolution of
number of stores 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(modern retail)
Cash & carries 20 25 29 34 36 42 45 48 52 56

Discount stores 12 19 31 71 121 146 197 246 289 337
Hypermarkets 1 3 5 10 37 64 88 110 132 154
Supermarkets 191 310 447 510 507 552 605 648 691 734
Forecourt stores 293 534 1.139 1.063 996 1.138 1.143 1.147 1.152 1.156
•The distance between modern retail and the traditional one could widen in the following years in favor of the large
stores due to the extension plans of the international commerce networks as well as to the consumers’ behavior
changing habits.
•The transformations of the modern retail foreseen for the following 4-5 years represent the greatest opportunity for the
distribution companies.
•The first years after the integration in EU will bring a growth of the FMCG consumption and of the dealers’ businesses
based on the emergence of new brands and stores networks but also on the living standards.
•In Bucharest can be noticed that the market tends to become impenetrable due to the fact that the proper spaces for a
retail activity are hard to find and, if in case of the large surfaces they have already been secured, the neighborhood
stores and the supermarkets have low chances to enter on the market. A solution for this problem can be represented by
the purchasing of the competitors and it will surely be used more and more often from now on.
•Faster or slower, all the international traders extend by opening new stores using Greenfield investments. A real
competition in Romania will exist in the moment when it will be possible to extend or to enter on a market by making an
acquisition.
Romania
MAIN PLAYERS MARKET SHARE %

37
Market Share
Retail Banner 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sales %
Auchan 0,0 0,0 0,0 0,0 0,1 0,3 0,6 0,7 0,8 0,9
Caprabo 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Carrefour 1,0 1,2 2,0 2,8 3,4 4,0 5,3 6,5 7,3 8,1
CBA 0,0 0,0 0,0 3,1 2,9 2,6 2,6 2,5 2,5 2,6
Delhaize Group 0,4 0,5 0,4 0,4 0,5 0,5 0,6 0,6 0,7 0,7
Gima 0,2 0,2 0,3 0,2 0,0 0,0 0,0 0,0 0,0 0,0
ITM (Intermarché) 0,1 0,1 0,1 0,2 0,2 0,2 0,3 0,3 0,3 0,3
Louis Delhaize 0,1 0,8 1,1 1,4 1,6 2,3 3,1 3,8 4,3 4,9
Lukoil 0,1 0,2 0,2 0,2 0,2 0,2 0,1 0,1 0,1 0,1
Maxima 0,0 0,0 0,0 0,0 0,1 0,1 0,0 0,0 0,0 0,0
Metro Group 7,3 8,4 9,4 9,5 9,9 9,6 10,0 10,4 10,9 11,7
MOL 0,0 0,0 0,1 0,1 0,1 0,1 0,0 0,0 0,0 0,0
OMV 0,1 0,2 0,4 0,4 0,4 0,3 0,3 0,3 0,3 0,3
Rewe 2,5 3,6 4,0 4,6 6,9 7,1 8,3 9,0 9,4 10,2
Schwarz Group 0,0 0,0 0,0 0,1 1,4 2,6 3,5 4,2 4,8 5,5
Shell 0,1 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Tengelmann 0,0 0,0 0,0 0,2 0,5 0,9 1,2 1,6 1,9 2,2
Univers'all 0,1 0,2 0,2 0,2 0,1 0,0 0,0 0,0 0,0 0,0
Others 88,0 84,9 81,6 76,6 71,8 69,1 64,1 59,8 56,6 52,2
Romania
SWOT CARREFOUR
38
Strengths Weaknesses
 Number 3 on the market but without competition
 Given the potential of the market, opening 20
in hypermarkets
hypermarkets doesn’t seem to be overtly ambitious
 The 1st hypermarket in Romania exceed 3 times the
original sales projection  No intention to introduce discount stores
 Due to the increasing sales is the biggest hypermarket
 Introducing Carrefour's global multi-banner
operator on the Romanian market strategy seems out of reach
 Pioneer with hypermarkets in Romania
 The Romanian market is characterized by
 A network of up to 40 stores within a couple of years in
modest profit margins and tightening competition
capital and all cities >200000 inhabitants
 Has brought modern retailing to Romania
 Excellent local sourcing
 Has built a network of reliable suppliers from zero
 Romania’s GDP has been growing by between 4 to 5%  Tightening competition can cut down
annually since 2001 Carrefour’s profit.
 After Poland, Romania is the second largest market  Carrefour’s current monopoly is threatened
in Central Europe by new and aggressive hypermarket competition
 Hyparlo and Carrefour share their investments 50:50. (Cora and Kaufland)
Revenues from the sale of Hyparlo’s Italian supermarkets
 Substantial investments
can be reinvested in Romania. – UDS 25 to 30 million for a hypermarket in the capital
 Following its divestment of Italy, Hyparlo can fully – USD 20 million outside
concentrate on Romania, now its only foreign
investment.
Opportunities Threats
Romania
CARREFOUR
39
Corporate mission 20007
 Planning to open at least three shops per year, Carrefour has as final goal to operate at least one
store in every town exceeding 150,000 inhabitants. On the background of an increasing competition at
the country level, the retailer tries to be the first to arrive on the hypermarket segment in major cities
outside Bucharest.
 Carrefour investments in the country in 2007 will exceed EUR280 million(USD371 million) while the
predicted sales reach EUR 700 million(USD892.2 million) backed by network expansion.
 In 2007, Carrefour will continue its strategy of securing the best quality-price ratio along with the
discount policy.
Developments
 Carrefour is accelerating its expansion in the country with an extra EURO60 million (USD 79.1 million)
to its budget to support the extension of the hypermarket network in 2008. The five outlets intended to
built and to become operative by the end of 2008 are to be located in the Romanian cities of Bucharest,
Oradea, Arad, Suceava and Pitesti.
 In 2007 are planned to be opened 4 hypermarkets : 1 in Bucharest( Unirea Square) and 3 in the
country (1 in Cluj-Napoca and 2 in Iasi).
 There are approximately 55,000 products listed in the Carrefour hypermarkets (with 70% to 90% of
local origin) and after the country’s integration in EU this number will reach 60,000 products, “mainly
due to the imported products”.
Romania
REWE
40
Ownership & Concept
 SC Billa and SC Rewe in Romania are owned by Rewe Group via its Austrian Eurobilla
subsidiary.
 Rewe is present in Romania by Billa Supermarkets, by its Penny (including XXL) discounters
and by Selgros cash&carries.
 Billa is a modern-style supermarket with large sections for fresh food. Extensive selections are
provided on customer service counters for meat and cheese. There are about 7,500 articles.
 Penny is a discounter with about 1,200 label products, selected branded products and a fresh
meat/ vegetable self-service area.There is a good range of non-food articles including household
appliances.
 Renamed in January 2007 Penny Market XXL, the discounter has 2500 articles on sale and is
based on a price competitive philosophy but with extensive fresh food sections.
 Selgros is a cash & carry with a large food and non-food store design. Articles range in the
economy to premium price range. The stores are officially accessible only to business wholesales
customers but in fact are used by private shoppers as well. It is likely that these form the main
client base so Selgros does compete with hypermarkets in Romania.
The cash & carries mainly sell domestically produced food, simply for supply chain reasons and
because they need to be price competitive.
Romania
REWE
41
Developments
 Rewe intends to open further stores, both under its Billa and Selgros banners.
 In 2007 Rewe’s cash & carry chain Selgros will open three stores located in the Eastern part of
the country (in Suceava, Iasi and Galati).
 Rewe’s local supermarket operation Billa plans to open between 8 and 10 new stores this year
in cities from northwestern Romania and southern Romania and expand its network in the
country to 30 units by the end of 2007.
 Rewe’s Penny discount store banner will see significant investments and a fast extension after
the first Penny outlets were opened in 2005 and its XXL Mega Discount were rebranded under
Penny XXL stores in early 2007.
 Rewe intends to build 30 Penny stores in Romania by the end of the year.
 The Billa supermarket chain is to accelerate expansion in the country where it plans to
establish a network of between 150 and 200 stores over the next 10 to 15 years.
Romania
SWOT REWE
42
 Even though the XXL Mega Discount stores have
 Second largest retailer in the market, with three
an attractive low cost concept, their size limits
different formats established
their locations to the periphery of towns.
 Substantial lead ahead of its international rivals. 
Billa supermarkets are confined to more affluent
city area, of which there are not many
 Billa supermarkets have a good position in their
at the present time.
city centre location, leaving them plenty of
opportunities to expand once the economy  Slow growth in cash & carry sector
develops further compared to Metro.
 Further expansion of the three banners,

increasing the lead on this potentially  Kaufland stores represent a direct and serious
lucrative market. competition to XXL Mega Discount stores.
 All three formats have a specific and valuable
customer base.  The Romanian market will experience a surge in
 Introduction of Penny discount stores to fill in the interest as the economy develops and after
gaps in residential areas where XXL Mega the EU integration
Discount stores are too large to open.
Romania
DELHAIZE GROUP
43
Ownership & Concept
 Delhaize is present in Romania through its fully-owned Mega Image operation, which is started
buying in May 2000.
 Supermarkets heavily based in the Bucharest area (although there are also one store each in
Ploiesti and Constanta), with a strong focus on fresh produce.
 In terms of pricing, Mega Image benefits from the fact that it is the market leader in the
capital.
 Some recently-opened stores have been much larger than the older units, featuring roughly
2,000 square meters per outlet. In these larger outlets, the non-food offer is playing a more
prominent role than previously , including items such as cosmetics ranges and children’s
products.
Developments
 The Mega Image plans to expand to a total of 24 stores by the end of 2007 through
investments worth around EUR1 million for each newly opened store.
 The company is planning to open 6 supermarkets this year, including three or four in
Bucharest.
 The retailer stated its strategy of starting on an investment drive to open stores outside
the capital.
 Mega Image remains well placed to maintain a market-leading position in the supermarket
Romania
SWOT DELHAIZE GROUP

44
 Market leader in Bucharest; expansion into
further cities under way.  Currently limited growth potential as local
incomes are low.
 There are few competing modern groceries chains.
 Small network = limited buying power.
 Good reputation for quality and store design
appealing to the wealthy.  Increasing presence of the Western European
retailers.
 Dual format strategy to appeal to different
 Slow progress in expansion of its networks.
customer types.
 Better price competitiveness through private label.
 EU membership from 2007 will see economy

pick up.
 Romania now on radar of many Western
 Company can benefit from rising middle class. grocers – competition due to increase.
 Increased centralization of buying will bring
improved quality control.
Romania
3.1.1
– CASH & CARRY –

Romania
CASH & CARRY SALES STRUCTURE %

46
18 21 20 21
26
30 32 31 31 32
Selgros
82 79 80 79
74 70 68 69 69 68
Metro
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
€ 908 1,149 1,542 1,880 2,313 2,590 2,928 3,198 3,505 3,851
mn
Romania
EVOLUTION OF NUMBER OF STORES – CASH & CARRY

47
35 33
31
29
30
27
25
25 23 23 23
21 21
19 19
20 18
17
15
15 13
11
10
7
5
4
5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Metro Selgros
Romania
CASH & CARRY - RETAIL STRUCTURE BY SALES AREA (sq.m.)

48
27 26
31
40
44 47
48 48 48 49
Selgros
72 73
68
60 56
52 52 53 52 51
Metro
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total
sales
165,850 208,850 246,850 305,000 327,000 387,000 414,000 441,000 479,000 517,000
area
(sq.m.)
Romania
ROMANIAN RETAIL MARKET – MAJOR PLAYERS*

49
www.metro.ro
part of German Metro Group

opened the first distribution center in Romania, located in Bucharest, in 1996
has 23 outlets
more than 20.000 food brands and almost 30.000 non-food brands.
8.382 employees in 2006
private labels: Aro, Metro Quality
turnover increased in 2006 with 15% compared to 2005.
interest for opening a new cash & carry store in Valea Jiului
www.selgros.ro
part of Germany’s Rewe Group; present on Romanian market since 2001

the network counts 15 cash & carry stores
has more than 5.250 employees
about 37.000 food and non-food products
recently opened two new stores in Iasi and Suceava
posted a turnover of around 616 millions Euro in 2006, up by 34% against 2005
plans to develop 5 new cash & carry stores
* Top 10 retailers in 2006, by value shares

Romania
3.1.2
– HYPERMARKETS –

Romania
HYPERMARKETS SALES STRUCTURE %

51
16 Kaufland
21 25 24 25
27 25 25
28
8 3 4 4 4 4
Auchan
14 14 14 14 14
19
100 19 20
20 20 20 Real
84
73 70
50 Cora
39 38 38 37 37
Carrefour
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
€ 100 153 365 620 1,201 2,273 3,480 4,636 5,724 6,856
mn
Romania
EVOLUTION OF NUMBER OF STORES – HYPERMARKETS

52
30
ACTUAL FIGURES 80 FORECAST
70
70
25
60
60
20 50
50
18
40
15 40
33
30
28
30
10 23 24
7 21
18 18
20
5 8 15 14
4 12
5 13 10
3 8
2 2 10 10 13
1 1 1 3 6 11
1 9
7
0 0 5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Carrefour Cora Real Auchan Kaufland
I will now show you some cards with diseases and I will ask you to order them by how serious you think they are.
One answer only, prompted.
Romania
HYPERMARKETS - RETAIL STRUCTURE BY SALES AREA

(sq.m.)
53
19 Kaufland
31 34 31 31 31 31 31
46
Real
34
23 23 24 24 24
26
100
Cora
17 17 16 16 16
69 16
54
47 15 Carrefour
17 16 16 15
20
14 13 13 13 13
5 Auchan
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total
sales 972,74 1,168,86 1,364,99
8,700 34,900 51,539 93,538 310,156 573,080 776,620
area 4 8 2
(sq.m.)
Romania

54
www.carrefour.ro
part of Hyproma Group, entered the Romanian retail market in 2001

present with 8 hypermarkets in Bucharest, Brasov, Constanta, Ploiesti
4,200 employees
private labels: No. 1
the biggest hypermarket network in terms of sales, with a turnover of 608.9 millions Euro in 2006
this year intends to open 4 new stores in Bucharest, Iasi and Cluj-Napoca, while for 2008 another 5 are planned.
www.cora.ro
 part of Delhaize Group, entered the Romanian retail market in 2003

3 hypermarkets: 2 in Bucharest and 1 in Cluj - Napoca
private labels: Winny, Cora
fidelity card
turnover in 2005: around 158 millions Euro
a new hypermarket will be located in Sun Plaza Bucharest in 2008
www.kaufland.ro
 part of Germany’s Lidl & Schwarz Group; present in Romanian market since 2005
 has 23 hypermarkets in present, after an investment of 30 million Euro
employed about 4.700 people
intend to have 50 hypermarkets on local market until 2008
private labels: Soft Maximo, Grand Maximo, Clean Maximo, Aile, Amelia, Vitae D’Oro, Stilla, Benita, Mammita, Katy,
Classic Caterine, Classic Grande, Vita Star.
Romania
3.1.3
– SUPERMARKETS –

Romania
HYPERMARKETS SALES STRUCTURE %

56
11 CBA Super
17 14
9
9 Gamma
7 4 47 46 44
5 5 51
56 57 56
Delvita City
25 18
26
6 Gima
5 6 Superstore
5 13
3 1 12 12 Univers'all
2 5
4 4 11
4 10
9
8 InterEx
51 54
44
36 37 38
32 Mega-Image
25 27 28
Billa
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
€ 137 208 325 866 923 1,039 1,241 1,452 1,627 1,808
mn
Romania
EVOLUTION OF NUMBER OF STORES – SUPERMARKETS

57
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
ACTUAL FIGURES FORECAST

Billa 11 12 15 23 24 27 44 50 56 62
Mega-Image 12 15 15 16 18 24 29 34 39 44
InterEx 1 1 2 6 8 10 12 14 16 18
Univers'all 3 9 9 13 4 1 0 0 0 0
Gima Superstore 2 2 4 0 0 0 0 0 0
Delvita City 0 0 1 2 0 0 0 0 0 0
Gamma 1 1 1 0 0 0 0 0 0
CBA Super 161 270 400 450 453 490 520 550 580 610
Romania
SUPERMARKETS - RETAIL STRUCTURE BY SALES AREA
(sq.m.)
58
CBA Super
Univers'all
63 62 60 Billa
65 65
72 72 73 71
76
InterEx
Gima
Superstore
4
5 23 24 Delvita City
5 22 22
17 4 15
15
13 11 14
Mega-
3 8 8 9 9
7 7 Image
3 5
8 6 4 6 6 6 7 7
4 5
Gamma
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total
sales 187,65 264,00 313,00 434,72 470,42 506,12
123,963 312,164 342,976 399,020
area 0 0 8 0 0 0
(sq.m.)
Romania

59
www.artima.ro
opened first supermarket in Romania in 2001
in present operates 19 supermarkets in Transilvania and Banat
has more than 1190 employees
in 2006 the turnover was 274 mil. RON
all stores promote special offers by low price products every week (e.g. permanent low prices, the lowest price and the
big discounts)
in 2007 are planned new stores openings in the following cities: Slatina, Timisoara, Sf. Gheorghe, Deva, Campina
www.billa.ro
 part of Germany’s Rewe Group is the first international retail network that entered the local market in 1999
 has 22 supermarkets in all country
almost 2.000 employees
more than 80% of Billa products are coming from the local market
private label: Clever
ranked as one of the top companies in the Romanian trade sector with a turnover of 250.4 mil Euro in 2005
8-10 new stores will be opened this year, starting with Medias, Giurgiu, Bucharest – Henri Coanda Airport
 Mega Image is a well-known retail company, part of Delhaize Group

19 supermarkets present in Bucharest, Constanta and Ploiesti
private label: 365, Delhaize
no. of employees: about 1100 people
easy shopping system for the future
expansion plans: new 7 stores in Bucharest this year
* Top 10 retailers in 2006, by value shares

Romania
3.1.4
– DISCOUNT STORES –

Romania
DISCOUNT STORES SALES STRUCTURE %

61
0 0 2 3 3 2 0 0 0 0
8 7 6 6
9 8
Albinuta
27
24 21 19
37 24 22
39 26
31
Profi
32 34
35 28
24
17
Penny XXL
73
63
59
20
Plus
40 40 41 42 41 41
17
Penny
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
€ 41 65 94 175 540 779 1,100 1,445 1,742 2,038

mn
Romania
EVOLUTION OF NUMBER OF STORES – DISCOUNT STORES

62
70 180
180
64
60 160
150
140
50
120 120
40 40
34 100
35 90 80
30
30
26 80 70
24 62
21 26 60 50
20 18 65
15 58
54
16 40
48
10 10 5
4 4 5 7 20 9 10 11 12
8
2 6
0 0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Penny Plus Penny XXL Profi Albinuta

Romania
DISCOUNT STORES - RETAIL STRUCTURE BY SALES AREA

(sq.m.) 63
Plus
27
35 34
47 50 49 51 55 58 59 Penny
21 XXL
12
15
16 Penny
17 13
13
11
11 10
9 17
53 21 18
50 50 18 Albinuta
17 16
27
17 21 18 16 15 14
Profi
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total
sales
area 15,000 24,000 33,900 72,306 121,600156,050210,900263,700311,900364,000
(sq.m.)
Romania

64
www.pennyromania.ro
 part of Germany’s Rewe Group; opened in Romania first discount store in 2005
 counts 39 outlets: 34 Penny Market and 5 XXL Mega Discount
starting with January 2007 - XXL Mega Discount became Penny Market XXL
the discounter have 2 format stores: classic one - 750 m² area with more than 1,200 products and the big size one of
around
2500 m² and with around 3500 food/non food products
private labels: Boni, Top Floris
www.plus-discount.ro
part of Tengelmann Group;

38 discount stores; almost 1000 employees
turnover 35.4 million Euro for May 2005 – April 2006.
plans to open 26 new discount stores by the end of 2007 in all towns with more than 20.000 inhabitants
private labels: Filia, New Pack, Carat, Bravour, Intuition, Ahorn, Bright&Shiny, Touching, Feeling, Serving, Alphorn,
Alpa, Famili, Morning Sun, Spagat, Gold Cake, Siembra
Romania
3.1.5
– FORECOURT STORES –

Romania
FORECOURT STORES SALES STRUCTURE %

66
5 3 3 3 3 3 3 3
13 10 11 10 9 9 9 9
23 7 Select
4
10
27 27 26 27 27 28
9 27 27
Ciao Agip
14
35
MOL
29
59 60 59 60 62 62 60 60
Lukoil
38
26
Viva Shop
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
€ 35 48 97 107 113 126 138 141 146 149

mn
Romania
EVOLUTION OF NUMBER OF STORES – FORECOURT STORES

67
680
645
592 665 660 655 650
600
530
500
400
350 360
330 340 370
310 320
300
300
191
200
187 137
91 120 115 113 110 108
81 77 105
100 81
50
48 52 58 26 28 30 32 34
24 36
23 23 24
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Viva Shop Lukoil MOL Ciao Agip Select
I will now show you some cards with diseases and I will ask you to order them by how serious you think they are.
One answer only, prompted.
Romania
FORECOURT STORES - RETAIL STRUCTURE BY SALES AREA
(sq.m.)
68
4
13
Select
24
57 53 57 56 56
36 59 58
19 Viva Shop
60
14
8 MOL
10 8 7
11 8 8 8
5
36 40 Lukoil
32 35 31 32 33 34 35
29
7 4 2 2 2 2 2 2 2 3 Ciao Agip
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total
sales 13,49
25,904 56,560 51,820 49,620 56,790 57,080 57,330 57,620 57,780
area 4
(sq.m.)
Romania
MAJOR ACCOUNTS – SUMMARY

69
 major players cover almost 20% of the home consumption expenses; the percentage doubled in 2006
compared to 2004 (from 9,4% in 2004 raised up to 18,9% in 2006);
 Billa, Carrefour, Penny Market/XXL Mega Discount, Cora and Kaufland improved their value shares,
while the other accounts were stable;
 with 19% value share for major accounts, Romania is placed as a still young market in terms of
concentration, together with countries like Bulgaria (15%), Serbia (28%), Bosnia & Herzegovina (29%);
 most concetrated markets are Slovakia (71%), Czech Republic (62%), Croatia (61%) and Hungary
(60%);
 at the opposite side are countries like Russia (7% ) and Ukraine (9%);
 among the most important retailers, Metro and Selgros have the most dynamic activity in FMCG
promotion leaflets;
 with 23 outlets at the end of March 2007, Kaufland plans the next opening on April 19th in Constanta,
followed by another new outlet in Roman on April 26th;
 Carrefour plans to open 4 new outlets in 2007 (1 in Bucharest – Piata Unirii, 2 in Iasi, 1 in Cluj-Napoca)
, having by the end of the year a total of 11 outlets and intends 5 new openings in 2008 (Pitesti,
Romania
3.2
A GENERAL OUTLOOK OF ROMANIANS

SHOPPING HABITS
Romania
GfK Consumer Tracking Romania – Outlet Types
definitions
71
 General Store: a big shop with food and non-food products or a group of shops with a different assortments
situated in the same building. For example: Big, Complex, etc.
 Supermarket: store with food and non-food products, mainly self-service and minimum two check-outs.
Include Key Accounts Supermarkets (La Fourmi, Mega Image, Billa, G’ Market, Angst, Amtima,
Univers’all, Spar, etc.) and supermarkets which are not part of a chain.
 Hypermarket: Carrefour, Cora, Interex, Kaufland, Pic, Real, Spar, Trident, Auchan.
 Discounters: modern shops with small prices for food and non food products: XXL Mega Discount, Profi, Plus,
MiniMax Discount and Penny Market.
 Cash & Carry: include Metro C&C, Selgros C&C and Gamma C&C.
 Wholesalers: include traditional en-gross shops with mixed assortments.
 Boutique: traditional shops, which you can enter and find food and non-food products. Generally these
are rather small shops that you can very easily find on the ground floor of the blocks in urban area
and are very popular in the rural area as well – where people dedicate one room of their house to a small
shop where they sell different assortments of food and non-food stuff.
 Kiosks: small shops which you can not enter, but you can find a variety of products. The service is
done through the small window, specific for this type of store.
 Agro & Food Store: traditional over-the-counter shops for food, but you can buy also products for
personal and household care. These are basically the old “Alimentara” stores.
 Street Vendors: include also market hall and open market vendors (open spaces for trade, especially for food
products).

Other Shops specialized stores: cosmetics shops, beverages shops; gas stations; drugstores; “Economat”
stores; bought from abroad etc.
Romania
OUTLET TYPES – MARKET SHARES & PURCHASING
STRUCTURE
72
Share of outlet types, value %
Supermarkets
8 11 13
Hypermarkets 16 16
7 1
1 2
7 1 4
Discounters 13 7 2 8
12 7 4
Cash&Carry/ Wholesalers 12 6
11
Agro&Food 10
Boutiques 44
43 43
Kiosks 43 41
General Stores 3
6 3 2
Street vendors 6 6 2
9 7 5 1
4
6
Others 10 5 4
9 8 5 6
2002 2003 2004 2005 2006
value per
frequency of
Period: 2006 value share, % penetration % purchase act,
purchase
RON
Total Romania 100,0 100 209.6 7.0
Hypermarkets 7.8 37.9 14.6 20.1
Cash&Carry 4.2 27.1 6.9 31.5
Supermarkets 16.1 61.6 31.3 11.9
Discounters 3.9 32.8 14.3 11.5
Source: GfK Consumer Tracking, based on measured FMCG basket

Romania
OUTLET TYPES – Regions

73
12 11 14 15
20 20 19 18 17 17 18
23 3 7
2 7 1 6 1 1
5 5 2 4 1 6 3
1 5 3 10 4
8 4 4 7
11 13 6 7
23 7 8 12
9
30 8 12
8 19
2 21
4
5 2
5 56 47 42 44
4 54 38 42
41 38
28 34
23
1 2
3 2 1 7 1
1 1 2 9 6 4 5
6 1 5 1 7 4 4 5
6 5 4 8 6 3 2 8
8 3 2 3 7
5 4 4 6 5 3 6 7 7 5
2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006
BUCHAREST*
BUCHAREST* MUNTENIA, OLTENIA BANAT-CRISANA- TRANSILVANIA MOLDOVA
DOBROGEA MARAMURES
Supermarkets Hypermarkets Discounters Cash&Carry/Wholesalers

Agro & food Boutiques Kiosks General Stores
Street Vendors Others
Source: GfK Consumer Tracking

* Without SAI
Romania
OUTLET TYPES – Size of Community

74

6 6
13 13 1
1 3
20 23 23 5 2
28 28 28 1
1 3 4
6 5 7
8
3
2 7
23 2
3 7 7 19
9
30 11 6 20
15 7
2 10 4
4
5 12 9 63
2 62
5 12
4 43
31 38
28 25
23 30
23
3 3 1 2
1 1 2 2 7 1 6
6 1 7 2 4 6 5 6
6 4 6 4 3 3 4 3
8 5 7 6 5 5 6 5 7 6
2005 2006 2005 2006 2005 2006 2005 2006 2005 2006
BUCHAREST*
BUCHAREST* 150-350 thsd. inh 50-150 thsd. inh. Up to 50 thsd. inh. Rural Community
Supermarkets Hypermarkets Discounters Cash&Carry/Wholesalers


* Without SAI
Romania
OUTLET TYPES – FMCG SEGMENTS

75
Share of outlet types, Value %
16 19 15 17 16
8 6
8 3 11 11
4 5
6 5 4 5
6 11 7 10
10
12 8
7
41 48 34
35 35
1
1 4 1
1 4 1 4 5
4 4
4 5 3 11 4
6 6 5 5
Total FMCG Food Basket Beverages Basket Personal Care Basket Home Care Basket
Supermarkets Hypermarkets Discounters Cash&Carry/ Wholesalers


Fact: value share (%)
Period: 2006
Romania
FOOD & BEVERAGES by RETAILERS Leaflets Activity

76
14000 Metro C&C
12647
Selgros C&C
12000
Carrefour
Count of Promoted Products
10000 G’market
7563 Cora
8000 6842
Kaufland
6000 5267 Real

4591
XXL Mega Discount
3807
4000 3638
2801
Billa
2137
2000
2035 1968 1899
1689 Univers’all
1258 1219
La Fourmi
0
Mega Image
Profi
1 record=1 promoted product
Angst
Penny Market
Source: GfK Leaflet Monitor

Period: 2006
Romania
PERSONAL CARE by RETAILERS Leaflets Activity

77
1200 Metro C&C
Selgros C&C
10 10
1000 Carrefour
867
809
Cora
800
G’market
6 39 639
Real
600 53 8
Univers’all
4 33
377 Kaufland
400
328
2 84 269
256
Mega Image
200
1 80
14 3 1 37
La Fourmi
Billa
0 XXL Mega Discount
Profi
Angst
Artima

Period: 2006
Romania
CLOTHING – FOOTWEAR - MERCERY by RETAILERS Leaflets
Activity
78
3500 Metro C&C
32 57
Selgros C&C
3000
Carrefour
247 9 Cora
2500
Real
2000 1 861
G’market
1659
Kaufland
1500
XXL Mega Discount
953
1000
80 6 Plus Discount
4 37
Penny Market
500 332
235
1 41 119 118 Brico Store
47 45 35
0 MiniMAX Discount
Billa
Profi
Praktiker

Period: 2006
Romania
Small shopping < 14.51 RON/purchase
PURCHASING STRUCTURE BY OUTLET TYPES act
Big shopping >= 14.51 RON/purchase
act
2006 Value share, % purchasing frequency
value per purchase act, 79
Total ROMANIA RON
purchases 100,0 209.6 7.0
Small shopping 78.4 216.5 6.0
Big shopping 21.6 127.5 21.4
HYPERMARKETS
Total purchases 100,0 14.6 20.1
Big shopping 77.7 15.1 29.0

SUPERMARKETS
DISCOUNTERS
CASH & CARRY
Total purchases 100 6.9 31.5
SMALL GROCERY SHOPS (Boutiques, Kiosks, Agro& Food Stores)

Romania
VALUE OF AVERAGE SPENDING, FREQUENCY OF PURCHASE BY
COMMUNITY SIZE
80
2004 2005 2006
Frequency of purchase (every x-th day) 0.69 0.64 0.57
Average number of purchasing occasions per month 20.9 19.5 17.5
Average purchase (RON) 4.18 5.73 7.01
Average monthly FMCG spending per household (RON) 87.49 111.61 122.44
150-350 50-150 Up to 50
Bucharest* Rural
thsd.inh. thsd. inh. thsd. inh.

Frequency of purchase (every x-th day) 0.42 0.53 0.51 0.61 0.63
Average number of purchasing occasions per
month 12.8 16.0 15.5 18.5 19.2
Average purchase (RON) 12.04 8.55 8.59 7.44 5.30
Average monthly FMCG spending / hh (RON) 154.60 136.60 133.34 137.40 101.89

* Without SAI
Romania
RETAIL TRADE MARKET – SUMMARY

81
 traditional trade still holds almost 70% of the expenses, but continues to lose ground in favor of
modern trade;
 hypermarkets doubled their value share in 2006 (8%) compared to 2005 (4%), as well as
discounters that raised from 2% in 2005 to 4% in 2006;
 in Cash & Carry and Hypermarkets, people tend to spend more, but less frequently, while in
supermarkets they are going more often, spending less;
 looking over the value shares of different types of outlets by regions, it is obvious the increasing
importance of hypermarkets in Bucharest; Muntenia-Dobrogea and Transilvania also recorded
significant share increase for hypermarkets;
 in rural community and small urban, traditional trade is still dominant, but perspectives are
optimistic for the modern trade in the future;
 Cash & Carry and wholesalers have significant importance for big cities (150-350 thsd.
inhabitants);
 when shopping for food, buyers tend to prefer supermarkets, as well as agro & food stores, while
for beverages they prefer proximity stores (boutiques);
 the situation is different when shopping for personal care and home care products, for which
modern trade is preferred due to large range of offered products and brands from which buyers can
Romania
RETAIL TRADE MARKET – SUMMARY

82
 analyzing the purchase structure by outlet type - considering small shopping to be less than 14.51
RON per purchase act and big shopping, the purchase acts that exceed this amount - we can
conclude that:
-> 78% of the 2006 FMCG expenses were made in frequent shopping occasions (small
shopping trips) with an average amount spent per purchase act of 6 RON;
-> high expenses per purchase act are made, as expected, in cash & carry (94%) and
hypermarkets (78%), but also in supermarkets (52%) and discounters (50%);
-> small shopping is typical for traditional trade (an average of almost 7 RON/purchase
act).
 the average monthly FMCG spending per household increased by 40% in 2006 compared to 2004,
when the expenses per month were of only 87.49 RON (for the measured FMCG products);
 while Bucharest inhabitants are spending 12.04 RON per purchase act, rural inhabitants are
spending only 5.3 RON; in rural, though, the low expenses per purchase act are compensated by a
higher number of purchasing acts per month of 19 occasions, compared to 13 occasions in
Bucharest;
 this trend finds explanation in the importance of modern trade for Bucharest buyers, who prefer to
spend more at one purchase occasion and go shopping less frequently.
Romania
3.3
A CLOSER LOOK INTO PRIVATE LABELS

Romania
PRIVATE LABELS – HOW BIG IS THEIR PIECE OF THE PIE?

84
Total FMCG Market
1%
Private Labels
99%
Branded
Private Labels
Segments
12% 1% 9% Food
Beverages
78%
Personal Care
Home Care

Measure: value share (%); Period: 2006
Romania
RETAILERS’ LEAFLETS with PRIVATE LABELS

85
PL BILLA 27
PL CARREFOUR 37
PL CORA 35
PL G`MARKET 5
PL KAUFLAND 54
PL MEGA IMAGE 23
PL METRO 168
PL MINIMAX 14
PL PLUS 51
PL PROFI 27
PL REAL 32
PL REWE-DISCOUNTERI 12
PL SELGROS 47
PL XXL 4
No. of Leaflets with PL in 2006

Period: 2006
Romania
PRIVATE LABELS – PIECE OF THE PIE VARIES ACROSS THE
REGION
86
Private Labels Romania
Branded 1% Slovakia
99% 23%
Poland 77%
16%
84%
Russia
0%
Czech Republic 100%
17%
83%
Ukraine
0%
100%
Hungary
22%
78%
Croatia
7%
93%
Bosnia & Serbia Bulgaria

Herzegovina
0% 3%
0% 97%
100%
100%
Source: GfK Consumer Tracking; Calculation based upon consumer basket including monitored product categories; Measure: value share (%); Period: 1HY
Romania
PRIVATE LABELS – SELECTED CATEGORIES WITH HIGH PL
SHARES
87
Edible Oil
Napkins
11 9
12 11 Handkerchief
10 9
89 91
88 89
90 91
volume % value %
volume % value %
volume % value %
Liver & Vegetable Pate Private Labels
4 3 Branded
Breakfast Cereals
6 3
96 97
Tinned Vegetable
4 4
94 97
volume % value %
96 96
volume % value %
volume % value %

Period: 2006
Romania
CLOSER LOOK INTO PRIVATE LABELS – SUMMARY

88
compared to other CEE markets, with a value share of 1% in Romania, private labels are still in an
incipient stage and have enough space to develop in the next years;
 countries where private labels are well represented are Slovakia (23%), Hungary (22%), Czech
Republic (17%) and Poland (16%);
 some selected categories for which the development of private labels is noticeable in Romania are
Edible Oil, Breakfast Cereals, Paper products (Napkins and Handkerchiefs);
 continued private label growth in neighboring countries and the beginning of such development in
Romania, could lead to the progressive consumer attention towards products belonging to both
segments – low end and premium , at the cost of the middle segment.
Romania
ROMANIAN RETAIL TRADE MARKET
OVERVIEW
Romania
ROMANIAN RETAIL TRADE OVERVIEW

90
The year 2006 ended a phase for both Romanian history and retail industry, since 2007 places our
country in a European context and starts a new development phase for what we call retail and FMCG. The past
three years showed that we are more and more a society with changing needs, for which the consumption
begins to receive a different dimension.
After the 2005 explosive growth, the rising trend of consumption continued last year with a lower
growth rate. The beginning of the year was the most promising time, continuing somehow the 2005 euphoria,
while the following quarters brought significantly lower growth. Most products showed a rising trend, based on
less spending for bulk and home-made products and more on brand/industrialized goods.
Modern retail development, one of the main factors that encouraged consumption growth in 2005,
continues to play an important role on the Romanian market. Nevertheless, in 2006 the story took a different
turn, therefore hypermarkets and discounters played the major part. Supermarkets, the most dominant retail
form in the country, consolidate their position, reaching a market share of 23%.
Attracting a larger number of consumers was the determining factor, influencing evolution of
modern retail in 2006, with hypermarkets and discounters almost doubling customer traffic. However, the
number of such clients is significantly lower than supermarket customers, which benefit from a better
geographic spread, with more than 60% of Romanian families shopping at supermarkets for their FMCG.
Romania
ROMANIAN RETAIL TRADE OVERVIEW

91
Besides an almost double figure of hypermarkets and discounters consumers, another trend of
Romanian retail is that both shopping frequency in modern retail and the money spent during one shopping
trip rose significantly, unlike traditional trade, where both factors declined.
If the main conclusions for 2006 were the development of modern retail and changing shopping
habits due to increased income, 2007 marks the beginning of a period which will outline several strong
trends. EU accession brings a new context for retail evolution, therefore, dissolving the borders between
Romania and EU will change the familiar notion of import/export into a new form of transfer/exchange of
goods among the EU members states.
European experience shows that only the strongest brands will appear on shelves, the others being replaced
by private label items.
Based on the above scenario and even more, we can definitely say that growth has been
recorded on every level, which together with the neighboring countries experiences, made us estimate a 50%
market share for modern trade in year 2010.

GFK - Desk Research FMCG Distribution Channels - Romania

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Custom Research FMCG Distribution Channels - Romania June 2007

FMCG Distribution Channels -

1. ROMANIAN ECONOMY IN GENERAL

- Basic information about Romania 9

2. RETAILERS DISTRIBUTION IN ROMANIA

- Population distribution vs. Retailers distribution by regions and main counties 30

• RETAIL TRADE MARKET

3.1. MAJOR PLAYERS ON THE SCENE

3.1.5. FORECOURT STORES - MAJOR PLAYERS ON THE SCENE

3.2. A GENERAL OUTLOOK ON ROMANIAN SHOPPING HABITS (source: GfK

2. RETAIL TRADE MARKET

3.3. A CLOSER LOOK INTO PRIVATE LABELS

4. ROMANIAN RETAIL TRADE MARKET OVERVIEW 92

– Romanian ECONOMY IN GENERAL –

Romania – BASIC INFORMATION

GDP, billion RON (current prices) 287.2

GDP per capita, RON 13.282

GDP real growth, % 4.1

Gross external debt, mld. Euro 20130.4

Industrial production, growth rate in% 2.0

Coverage of imports by exports, % 68.3

Consumer price index 2005/2004, % 8.6

Investment Indices (Volume) % 113.4

Average monthly gross earning, RON 968

Average monthly net earning, RON 746

Source: National Institute of Statistics - Romania

POPULATION STRUCTURE (2004 census)

16,0 16,7 14,9

51,2 52,1 50,2

0-9 y.o. 10-19 y.o. 20-29 y.o.

60-69 y.o. 70 y.o. and over

Source: National Institute of Statistics - Romania;

POPULATION STRUCTURE (2004 census)

Number of counties Number of inhabitants

Total 42 100,0 21,623,849 100,0

Less than 300,000 inh. 6 14,3 1,584,292 7,3

300,000 – 399,999 inh. 10 23,8 3,494,146 16,2

400,000 – 499,999 inh. 9 21,4 4,097,876 19,0

500,000 – 599,999 inh. 6 14,3 3,397,661 15,7

600,000 – 699,999 inh. 4 9,5 2,620,168 12,1

700,000 – 799,999 inh. 4 9,5 2,863,292 13,2

800,000 inh. and over 3 7,2 3,566,414 16,5

Source: National Institute of Statistics - Romania;

POPULATION STRUCTURE (2004 census)

Source: National Institute of Statistics - Romania;

between 100 and 200 th. inh.

between 50 and 100 th. inh.

SELECTED ECONOMIC INDICATORS

2000 2001 2002 2003 2004 2005

GDP, billion RON

2000 2001 2002 2003 2004 2005

Source: National Institute of Statistics - Romania;

SELECTED ECONOMIC INDICATORS

2000 2001 2002 2003 2004 2005

2000 2001 2002 2003 2004 2005

Source: National Institute of Statistics - Romania;

GDP, real growth rate in % GDP per capita in

Romania 4,1 Romania 35

Bulgaria 5,5 Bulgaria 32

Croatia 4,3 Croatia 49

Turkey 5,8 Turkey 31

Source: National Institute of Statistics; WIIW