Title: Country Presentation Serbia
1Country Presentation Serbia
Updated November 2007
2Contents
- Retailers covered include
- Map
- Demographics
- Political Outlook
- Economic Overview
- The Retail Market
- Europanel Data
- Top 10 Retailers
- Challenges and Opportunities
3Summary
- Area 102,170 sq. km
- Capital City Belgrade
- National Currency Dinar
- Population (2006)8.17 million inhabitants
- Population Density 80 people/km
- President Boris Tadic
- Ruling PartyDemocratic Party of Serbia
- Prime Minister Vojislav Kostunica
Source CIA
4Demography 10 most populated Cities
Source City Population, 2002
5Demographics
Population Growth Forecast (000s) Serbia
Montenegro
Population Split by Age, 2006 ()
www.igd.com/analysis/datacentre
Source IGD Datacentre, 2006, UN
6Political Outlook
- The Socialist Federal Republic of Yugoslavia
broke up in 1991/1992 following the independence
of Slovenia, Croatia, Bosnia and Herzegovina, and
Macedonia. Two remaining republics of Yugoslavia,
Serbia and Montenegro, formed in 1992 a new
federation named Federal Republic of Yugoslavia
(In 2003 this state was transformed into the
State Union of Serbia and Montenegro). - The Government of Serbia and new Yugoslavia
supported Croatian and Bosnian Serbs in the wars
from 1991 to 1995. During this time, the country
was under economical and political sanctions,
which resulted in economical disaster that forced
thousands of young Serbian citizens to emigrate
from the country. - Serbia declared its independence on June 5 2006,
following Montenegro's declaration the previous
month. This marked the final dissolution of the
State Union of Serbia and Montenegro, and the
re-emergence of Serbia as an independent state,
under its own name, for the first time since
1918. - Fiercely independent and recovering from
political turmoil, Serbia is now working towards
EU membership, although problems concerning war
crimes have halted proceedings. - The country is supported by international
agencies with funds directed at developing
frameworks within which civil society
organisations can develop.
7Economic Overview
www.igd.com/analysis/datacentre
Source IGD Datacentre estimates, Unicredit, IMF
8Grocery Retail Market Sizes 2007e
Top 10 Global Markets
Top 10 Eastern European Markets
www.igd.com/analysis/datacentre
Source IGD Datacentre estimates
9The Retail Market
Source IGD Datacentre estimates
www.igd.com/analysis/datacentre
- IGD Grocery Retail Market corresponds to the
total annual turnover (excluding VAT) of retail
outlets predominantly selling food. It includes
the sales of non-food articles (i.e. health
beauty, pet care, clothing, DIY etc) sold by
hypermarkets, supermarkets, discounters,
neighborhood stores, specialised food stores
(bakeries, butchers, etc) and open markets. It
excludes all cash carry, delivered wholesale,
foodservice and drugstores/chemists. - IGD Total Grocery Market includes is a wider
definition of the grocery universe and is the sum
of the grocery retail market and the cash and
carry outlets.
10Retail Consumer Spend Per Capita Serbia
Source IGD Datacentre
www.igd.com/analysis/datacentre
11Retail Legislation
- New custom and tax laws have reduced illegal
imports into the country, but corruption and the
black market remain a major problem. - The state retains discretionary authority over
price changes of basic grocery goods, including
milk, bread and cooking oil. - The Law on Trade regulates the activities of
wholesalers and retailers. Wholesalers act as a
distribution intermediary for retailers. - Franchise operations are not widely practiced,
although there is no specific law affecting them.
- Joint ventures are ruled by the Foreign
Investment Law (2002). International investors
are expected to provide capital, equipment and
merchandise, whilst domestic investors provide
personnel, warehouse space and channels for
distribution. - On September 24 2005, the new Competition
Protection Law (CPL) took effect in Serbia. The
competition law regulates instances where - control over all or a part of one or more
enterprises is acquired by another enterprise (a
concentration) - there is an agreement between parties that would
materially prevent, restrict or distort
competition on the Serbian market - there is abuse of a dominant position on the
market.
12The Grocery Retail Market Format Development
Source IGD
13The Grocery Retail Market Structure By Format
- Traditional retail formats dominate the grocery
sector, with approximately 30,000 independent
stores operating the country. - Modern retail development is focused in Belgrade
and other large cities, with cash carry formats
first represented by Delta Ms first Tempo store
in 2004 and Metro in 2005. - The discount sector is undeveloped in the
country, providing an opportunity for
international discounters to capitalise on the
price-sensitive Serbian consumers. - Foreign investment laws, adopted in 2004, have
proved beneficial to investors. It has given
investors the right of free profit repatriation,
duty free equipment imports and simplifies the
employment procedure.
14Breakdown of Shoppers by Housewife Age (Europanel
Data)
of buyers
52 w/e December 06
15Breakdown of Shoppers by Household Size
(Europanel Data)
of buyers
52 w/e December 06
16Breakdown of Shoppers by Presence of Children
(Europanel Data)
of buyers
52 w/e December 06
17Market Share
Note Grocery data. Total may not add up to 100
due to rounding. Bracketed figures 2005 data
18Top Retailers 2006
Grocery Retail Market Shares excludes cash
carry operations. Data is for grocery formats
only except Total Sales which includes
non-grocery if applicable.
Source IGD Datacentre, Company Reports
19- Serbian conglomerate Delta Holding operates four
retail chains under its Delta M subsidiary - Maxi supermarkets
- C-Market- supermarkets (51 stake acquired in
2005). - Pekabeta convenience stores
- Tempo cash carry
Key C/F Convenience Forecourt, CC Cash
Carry, S/S Superstore/Supermarket, HHypermarket
Source IGD estimates, 2006.
20- Maxi operates under three banners Mini Maxi
(convenience), Maxi (supermarkets) and Super Maxi
(hypermarkets). It also operates shopping
centres. - Sales areas range between 500 sqm and 3,000 sqm
and stores offer an average of 8,000 SKUs. It
operated approximately 80 stores in 2006. - Delta M plans to invest 700m by 2009 with the
expansion of Maxi into Montenegro and Macedonia.
- Pekabeta is Delta Ms convenience store format.
- The retailer currently operates approximately 160
stores, mainly in Belgrade. - The stores have an average sales area of 200sqm
and offer between 3,500 and 7,500 SKUs. - Expansion planned into the densely populated
urban areas around Serbias main cities and towns.
21- C Market was acquired by Delta M in 2005.
- The retailer currently operates approximately 250
supermarkets. 60 of the chains turnover comes
from its Belgrade stores. - C Market is considering diversifying into a
hypermarket format. - It has also been reported that it is considering
acquiring fellow Serbian retailer Si-Market.
- Delta M opened its first cash carry store in
2004. It currently operates one store in
Belgrade. - The store has a sales space of 10,000sqm and
offers 20,000 SKUs. - Further expansion of the chain, with stores
planned in Novi Sad, Belgrade, Kragujevac and Nis.
22Delta M Delta Agrokor merger
- In November 2006, it was reported in the Serbian
press that domestic conglomerate Delta Holding
and Agrokor, owners of Croatian retailer Konzum,
had started the merger process between their
retail divisions. - The collaboration will strengthen the retailers'
positions in Eastern Europe and enable access of
Serbian goods onto the Croatian market and vice
versa. The merger is likely to be completed in
2008. - Delta M has reportedly forecast sales of 5bn in
2009 when it plans to float the merged company on
the London Stock Exchange. - The collaboration between Agrokor and Delta M
will result in strong competition for Slovenian
retailer Mercator, who challenged Delta M's
leading position with its joint-venture with
Serbian chain Rodic MB in May 2006. - The Mercator-Rodic alliance came amidst rumours
that Delta M was planning a hostile takeover of
the Slovenian chain, and recent press reports
suggest that Mercator had been considered as a
potential third party in the Agrokor-Delta M
collaboration.
23- In April 2006, Rodic negotiated a joint-venture
with Slovenian retailer Mercator. - Rodic MB became a co-owner of Mercators
Slovenian stores and Mercator acquired Rodics
Serbian stores. - The new joint-companies, named M-Rodic in Serbia,
are operated centrally from a single
headquarters. New trade centres are planned in
Novi Beograd and Novi Sad.
Key S/S Superstore/Supermarket
Source IGD, 2006 estimates. Total sales are Net.
24- Metro entered the Serbian market in January 2005.
It opened two new cash carry stores in the
country in 2006. - In 2006, turnover increased 97 from 69m to
136m, making it one of Metro's fastest growing
markets. - The company plans to have eight to 10 stores in
Serbia over the next three years.
Key CC Cash Carry
www.igd.com/analysis/datacentre
25- Simpo is a production company with interests in
furniture, food beverages, trade
transportation. - It established its food retail subsidiary in 1997
through a merger with PC Vema. - Simpo currently operates approximately 85
Si-Market stores in Vranje and 90 in Belgrade and
Pancevo. - It has been speculated that Delta Holdings C
Market subsidiary is considering acquiring the
chain.
Source IGD 2006 estimates.
Key S/S Superstore/Supermarket
26- Vero is owned by Greek company Veropoulos.
- It entered the Serbian market in 2002 and
currently operates 3 hypermarkets, under the
Super Vero fascia, in Belgrade. - It plans to invest 20m euro in 5 Serbian
hypermarkets by 2008.
Source IGD estimates 2006.
Key H Hypermarket
27- Mercator entered the Serbia Montenegro market
in 2002 with the opening of a hypermarket in
Belgrade. - In September 2006, Mercator received a 40m loan
from the IFC to fund its Bosnia-Herzegovina and
Serbian expansion plans. - In April 2006, Mercator entered a joint-venture
with Serbian retailer Rodic MB. - Rodic MB became a co-owner of Mercators
Slovenian stores and Mercator acquired Rodics
Serbian stores. - The group plans to invest 200m in expansion in
Serbia  Montenegro by 2008.
Key H Hypermarket, SSupermarket,
C/FConvenience Forecourt
Source IGD 2006. Total Sales are Net.
28- Intermarchés entry into the Serbian market in
2004 formed part of the groups move eastwards
and followed previous entries into Bosnia
and Romania. - ITM plans to operate 11 stores in Serbia over
time and aims to make Belgrade the centre of its
southeast European region. Future developments
include expansion into Bulgaria and Macedonia.
Source IGD Datacentre estimates, 2006.
Key S/S Superstore/Supermarket
29Challenges and Opportunities
- Serbia remains one of the poorest CEE market.
Furthermore, political uncertainty has hampered
economic development and will remain a challenge
until a clear programme for EU accession can be
agreed. - The potential EU accession does, however,
highlight that the country has strong growth
prospects. - High inflation and unemployment undermines
business and investor confidence. The government
tackling FDI by creating a one-stop-shop for
investors to reduce bureaucracy and corruption. - Delta Holding is the clear market leader making
it difficult for foreign retailers to enter the
country through acquisition. - Mercator and Rodics joint-venture has provided a
strong challenger to Delta Holding and will
provide opportunities for suppliers seeking to
grow their business in the country.
30Market Share Definitions
- IGD Market Shares
- IGD defines the grocery retail market as all
food, drink and non-food products (i.e. health
beauty, pet care, clothing, DIY, tobacco etc)
sold through all retail outlets selling
predominantly food in a given country. This
definition includes modern retail formats such
supermarkets and hypermarkets as well as
traditional retail formats such as open air
markets and traditional food stores such as
bakers. However, it excludes cash carry and
drugstores. - IGD Market sizes are derived from national
statistical sites wherever possible. In all other
cases, the figures published in this report
represent IGD estimates and are based on a
consistent methodology and knowledge of local
markets. - For each retailer, the turnover used is total
grocery (rather than total company), and
therefore excludes non-food formats (such as DIY,
electrical stores, department stores etc). IGD
also excludes cash carry formats and retailers
and drugstores / chemists from this measure to
ensure a consistent market share figure.
Therefore these shares are based on IGD Grocery
Retail Market Sizes. - 1.Retail turnover is excluding VAT
- 2.Retail turnover is excluding non-food formats
(e.g. furniture, electrical stores etc) - 3.Metro cash carry operations are excluded
- 4.Where known, we have subtracted the cash
carry operations of players such as Carrefour and
Rewe to use a pure grocery retail estimate of
turnover. - IGDs market shares differ from ACNielsen or TNS
data due to the different methodologies applied
to calculate the market shares (till roll data
and customer panel information respectively
from limited categories). - Europanel Data
- Europanel market shares are based on purchases
made by private households, and cover the
purchasing of fmcg products bought in all outlets
even if they do not sell primarily food
(e.g. pharmacies). - In many countries, the definition excludes large
items bought in hypermarkets (e.g. television,
washing machine). - It does not cover Cash Carry (except where
private households buy directly from them),
institutions who may buy some of their products
from retail outlets (e.g. hospitals, schools etc)
and purchases made for out of home consumption
(e.g. caterers, offices etc).
31For More Information
- Visit the Serbia hubpage on Retail Analysis.
- Use the IGD Datacentre for key macroeconomic data
on Serbia, plus statistics on retailers
operations by banner and format. - Got an iReports subscription? Try checking our
International Research reports. - To find out how an IGD Customised Briefing can
bring you up to speed on the market and the key
players, email nick.everitt_at_igd.com -
- Still cant find what youre looking for?
Contact us igd_at_igd.com or 01923 857141.