CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN POLAND

CBI MARKET SURVEY

The tableware, kitchenware and other household articles market in Poland

Publication date: November, 2009
Introduction This CBI market survey gives exporters in developing countries information on some main developments in the tableware, kitchenware and other household articles market, hereafter called table- and kitchenware, in Poland. The information is complementary to the information provided in the CBI market survey The tableware, kitchenware and other household articles market in the EU, which covers the EU in general. That survey also contains an overview and explanation of the selected products dealt with, some general remarks on the statistics used, as well as information on other available documents for this sector. It can be downloaded from http://www.cbi.eu/marketinfo. 1 Market description: consumption and production

In this chapter, data from the Prodcom (production) database and CN (imports and exports) database as supplied by Eurostat are used to indicate apparent consumption. The apparent consumption consists of the sum of production and imports, minus exports. Therefore, the data should be used as indications and with care. For more information about the databases, refer to Appendix A of the CBI market survey covering the EU market. Consumption Poland is one of the bigger medium-sized consumers of table- and kitchenware in the EU. In 2007, the total consumption amounted to 326 million / 216 thousand tonnes. Between 2003 and 2007, the consumption increased by 12% annually on average in terms of value, but decreased by 0.8% annually in volume terms. This indicates an increasing consumer price (as also confirmed in chapter 4 of this survey). Poland is one of the most successful of the transition economies of Eastern Europe. Besides, market competitiveness is increasing as a result of the EU membership. Although the Polish economy was growing steadily, the current global economic crisis is interfering. However, the effect of the crisis on the Polish economy is less strong than for other EU countries. While consumption is increasing, confidence in the economy is still poor and a weak spending power still influences Polish consumers to choose their table- and kitchenware products based on low price. Poles buy the cheapest product available and do not pay much attention to quality standards. Common items in Polish homes are tempered glassware (i.e. Duralex), stainless steel cutlery and plastic storage containers, according to Euromonitor. In 2007, the Polish consumption consisted of metalware (34%), plasticware (29%), china & porcelain (14%), ceramicware (9.0%), cutlery (8.9%) and glassware (5.8%). Woodware consumption is negligible. Except for glassware, consumption of all other product groups increased, indicating that Poland is still a growth market. Strong annual increases can be seen in consumption of ceramicware (20%), metalware (20%), plasticware (14%) and cutlery (14%). Consumption of china and porcelain increased by 5.5% annually on average between 2003 and 2007. In contrast, consumption of glassware declined by 10% annually in this period. Poland has a population of 38 million, of which 52% is female. Of this population, 16% is aged between 15 and 24, 28% is aged between 25 and 44, 27% is aged between 45 and 64, and 13% is 65 years or older. This indicates the different market segments in Poland, based on gender and age. Please refer to the CBI market survey covering the EU market for more information on segmentation.

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN POLAND Production Poland is quite a large producer of table- and kitchenware in the EU, with production amounting to 519 million / 214 thousand tonnes in 2007. Between 2003 and 2007, the total production increased by 10% annually on average in terms of value, but decreased by 8.4% annually in terms of volume, indicating that the country increasingly produces higher-value products. The increase in production value contradicts EU developments. In general, it can be said that prospects for Polish manufacturers look good, at least in the short and medium term. EU membership opened up the large EU market, in which Poland has the competitive advantage of a cheap labour force. However, in the long run, due to gradual wage harmonisation within the EU, Poland will gradually lose this competitive advantage. However, Polish manufacturers of table- and kitchenware also struggle to combat competition from low-cost labour countries (i.e. China), like other EU countries. Consequently, several manufacturers, unable to decrease production costs and compete in the market, focus on exports. In 2007, the Polish production of table- and kitchenware consisted of glassware (40%), plasticware (40%), glassware (31%), china & porcelain (17%), metalware (6.7%), ceramicware (2.8%), woodware (1.0%) and cutlery (0.5%). Compared to other EU countries production of cutlery is low. Moreover, Polish cutlery production decreased by 19% annually during the review period. Production of china & porcelain and ceramicware also decreased in the review period, by 3.4% and 1.9% annually respectively. Production of the other product groups increased during the period under review. The largest growth occurred in the production of glassware, which increased by 20% annually on average in the review period. Furthermore, the production of plasticware increased by 15% annually on average between 2003 and 2007, while production of metalware and woodware increased by 9.1% and 3.0% annually on average in this period. Interesting glassware producers in Poland are Krosno (http://krosno.com.pl), Rozalia (http://www.rozalia.com.pl) and Valsa (http://www.valsa.pl). A well-known producer of ceramicware in Poland is the Polish Table (http://www.polishtable.com). Opportunities and threats + The Polish market for table- and kitchenware is significant and is expected to grow. During the review period, consumption increased by 12% annually in terms of value. +/- Because Polish manufacturers struggle with competition from low-cost labour countries (i.e. China), the domestic market is interesting for suppliers in developing countries, as they are also able to produce at relatively low costs. However, this also means that the Polish market is becoming more competitive, and developing country producers will face strong competition from China in the low-end market segment. This forms a particularly strong threat, as Polish consumers still focus mainly on price. - Production of table- and kitchenware is increasing in Poland. When the economy becomes stronger and consumers have more disposable income, it is possible that Polish producers will be interested in investing in the domestic market. - Besides, the production is already much larger than the consumption, indicating Poland is not dependent on imports. Production of glassware and plasticware is especially strong and increasing rapidly. + Interesting product groups could be cutlery, china & porcelain and ceramicware, because consumption of these product groups increased, while production decreased during the review period. Please note that the same development or trend can be an opportunity for one exporter and a threat to another. Exporters should therefore analyse if the developments and trends discussed in this chapter provide opportunities or threats. The outcome of this analysis

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN POLAND depends on the specific situation of an exporter. Chapter 7 of the CBI market survey covering the EU market provides an example of such an analysis. 2 Trade channels for market entry

Generally, it can be said that table- and kitchenware is distributed through many different channels such as manufacturers, importers, agents, wholesalers, retailers and consumers. The main distribution intermediaries for exporters in developing countries are agents / sales offices, importers/wholesalers and retailers. Please refer to the EU market survey on tableand kitchenware for a detailed description of these channels. Poland is considered a favourable country for retailing investors. The recent accession to the EU has boosted positive trends in the retailing market. At the moment, retail channels like discounters, hypermarkets, supermarkets and convenience stores are developing rapidly (Euromonitor, 2008). The retailing industry is now highly competitive. Multinationals dominate the market, although local players dominate the small groceries and convenience stores. The retailing industry is expected to consolidate during the coming few years, as large players are starting mergers and acquisitions to stay competitive. The French hypermarkets Carrefour (http://www.carrefour.pl), E.Leclerc (http://www.e-leclerc.pl/home.php), Auchan (http://www.auchan.pl) and the Dutch Ahold / Hypernova (http://www.ahold.pl) are leading hypermarkets in the Polish market. Furthermore, shopping via the Internet is growing in popularity in Poland, as prices are lower and the products are delivered at home. Although this channel is still underdeveloped in Poland, a significant growth is expected during the coming years (Euromonitor, 2008). Online shops of interest are the German companies Quelle (http://www.quelle.pl) and Tchibo (http://tchibo.pl). Furthermore, a large shopping centre in Warsaw is Arkadia (http://www.arkadia.com.pl), with 180 shops in the building. Centrum Janki (http://www.chjanki.pl) is also a big (75 thousand m2) shopping mall in Poland. Department stores of interest in Poland are the Bracia Jablkowscy (http://www.braciajablkowscy.pl), Galeria Centrum (http://www.galeriacentrum.com) and Marks & Spencer (http://www.marks-and-spencer.com.pl). Finally, the retailer IKEA (http://www.ikea.com/pl/pl) has been present in the Polish market since 1990. It is essential to note that different prices and margins apply throughout the various trade channels, depending for instance on quality of the product, design and so on. For information about the price margins, please refer to the CBI market survey covering the EU. Useful sources Polish Glass and Ceramics Institute http://www.isic.waw.pl Polish International Freight Forwarders Association http://www.pisil.pl Websites for finding trading partners of table- and kitchenware in Poland are: Europages - http://www.europages.com Alibaba http://www.alibaba.com 3 Trade: imports and exports

Eurostat data on glassware are unreliable for the years 2004 and 2006, and are therefore replaced by data from 2003 and 2005. Imports Poland has become a medium-sized EU importer of table- and kitchenware, accounting for 3.2% of the total imports by the EU in 2008. Between 2004 and 2008, imports increased considerably, by 17% annually in terms of value, and by 12% annually in volume terms. These growth rates are exceptionally high compared to other EU importers of this size. In 2008, total

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN POLAND imports of table- and kitchenware amounted to 370 million / 157 thousand tonnes. Although the production of table- and kitchenware increased between 2003 and 2007, consumption showed a higher growth rate in this period, which explains the increase in imports. Moreover, Poland increasingly exports its production to other countries. In 2008, total imports consisted of metalware (33%), glassware (23%), plasticware (18%), cutlery (9.9%), ceramicware (8.6%), china & porcelain (6.8%), and woodware (1.4%). The imports of all product groups increased significantly during the review period. The highest growth rates were for plasticware and metalware, with annual growth rates of 20% and 19% respectively between 2004 and 2008. Furthermore, the imports of ceramicware increased by 17% annually on average in this period. The lowest growth rate was for glassware (11%). Developing countries accounted for 40% of the total imports by Poland, which was comparable to the EU average of 39%. However, in contrast to the previous review period, the share of developing countries in Polish imports decreased between 2004 and 2008. Imports from developing countries still increased, by 9.6% annually on average, but imports from intra-EU countries increased by 15% annually in the period under review. The leading supplier is China, accounting for 33% of the supplies to Poland. Imports from China increased by 23% annually on average between 2004 and 2008. Other developing country suppliers are Turkey, India and Thailand, accounting respectively for 2.4%, 1.3% and 1.0% of total Polish imports. Imports from these three countries increased by 27%, 4.6% and 16% annually respectively between 2004 and 2008. Emerging suppliers are Vietnam, Ukraine and Indonesia, as these countries show high growth rates in their supplies to Poland, although they are still relatively small suppliers. Exports Poland is the sixth largest EU exporter of table- and kitchenware, accounting for 5.2% of the total exports by the EU. In 2008, Poland exported 553 million / 205 thousand tonnes of table- and kitchenware. Between 2004 and 2008, these exports increased by 3.9% annually on average in terms of value, and by 2.0% annually on average in terms of volume. These rates were above the EU average growth rates. The main country of destination was Germany, receiving 21% of the exports. The main exported product groups are glassware (42%) and plasticware (33%). As Poland is a large producer of glassware and plasticware, re-exports seem to play a minor role here. Except for china & porcelain and ceramicware, the exports of all product groups increased between 2004 and 2008. The strongest increase occurred in the exports of cutlery, with an average annual growth rate of 24%, although it was still the smallest exported product group. Furthermore, the exports of plasticware increased by 12% annually on average during the review period. Opportunities and threats + Poland is an interesting country for developing countries, since it is a growth market in the EU; this is reflected in the exceptionally high increase in imports during the review period. Furthermore, developing countries account for a significant share in imports. - However, the share of developing countries in Polish imports declined during the review period, as imports from intra- and other extra-EU countries increased at stronger rates. - It should be noted that although the share of developing countries in imports of table- and kitchenware into Poland is high, the major part is accounted for by China. This means that other exporting developing countries have to compete with China, if they wish to penetrate Poland. + Besides China, several other developing countries saw a significant increase in their supplies to Poland, indicating opportunities for other developing countries. + In terms of developing countries share in imports, woodware, ceramicware and china & porcelain are interesting product groups. However, regarding the latter two product groups, the share of developing countries in imports declined. Furthermore, interesting product

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN POLAND groups could be plasticware and metalware, as imports increased considerably in the review period, and the share of developing countries in these imports increased. Exporters should take into account that the same trend can be an opportunity for one exporter and a threat to another. Please review these opportunities and threats according to your own situation. Chapter 7 of the CBI market survey The tableware, kitchenware and other household articles market in the EU presents an example of an analysis of whether a trend/development is an opportunity or a threat. Useful sources EU Expanding Exports Helpdesk - http://exporthelp.europa.eu Eurostat official statistical office of the EU - http://epp.eurostat.ec.europa.eu; Understanding Eurostat: Quick guide to easy comext http://epp.eurostat.ec.europa.eu/newxtweb/assets/User_guide_Easy_Comext_20090513.pdf 4 Price developments

As mentioned in the CBI EU market survey on table- and kitchenware, price is an important aspect of this sector. However, there is such a broad range of items, qualities, materials, and styles, that it is not possible or meaningful to give typical prices. However, Table 4.1 below gives the Harmonised Index of Consumer Prices (HICP) for the glassware, tableware and household utensils market in general, which indicates inflation and price stability. Table 4.1 HICP for glassware, tableware and household utensils in Poland, price index, 2005=100
2004 2006 2008 May 2009

98

101

108

109

Source: Eurostat (2009)

Between 2004 and 2008 (the review period), the consumer prices of glassware, tableware and household utensils increased in Poland. Furthermore, in contrast to EU average developments, prices also increased between 2008 and May 2009, although at a slower pace. This indicates that the economic crisis limits the economic growth in the country. As also described in chapters 1 and 3 of this survey, consumption and import prices of table- and kitchenware increased during the review period. The best way to obtain information about prices and price levels in the EU, or in the separate EU countries, is by visiting one of the major trade fairs (see Section 6 of this survey). Alternatively, comparisons can be found in the prices given in catalogues from mail-order houses, large department stores and from the Internet sites of companies. Window-shopping in the prospective market place, at several retail shops, is another good way of getting information about prices. Apart from prices, window-shopping gives you a good impression of the wide variety of products, qualities, fashions, colours and promotions. The Internet is also a useful source of price information. Prices of table- and kitchenware in Poland can, for example, be found on the following website: http://www.patery.com.pl/index.php?language=en 5 Market access requirements

As a manufacturer in a developing country preparing to access Poland, you should be aware of the market access requirements of your trading partners and the Polish government. For information on legislative and non-legislative requirements, go to Search CBI database at http://www.cbi.eu/marketinfo, select table- and kitchenware and Poland in the category search, click on the search button and click on market access requirements. Detailed information on packaging can be found at the website of ITC on export packaging: http://www.intracen.org/ep/packaging/packit.htm

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN POLAND Information on tariffs and quota can be found at http://exporthelp.europa.eu 6 Doing business

Information on doing business like approaching potential business partners, building up a relationship, drawing up an offer, handling the contract (methods of payment, and terms of delivery) and cultural differences can be found in CBIs export manuals Export Planner, Your image builder and Exporting to the EU. These can be downloaded from http://www.cbi.eu/marketinfo - go to search publications. For more information on doing business in Poland, visit the following websites: Trade associations Polish Glass Manufacturers Federation - http://www.polish-glass.pl/english.php Polish Chamber of Commerce - http://www.chamberofcommerce.pl Trade fairs Glass-Tech - http://www.targikielce.pl a trade fair for glass and ceramics; the fair is held once every year, and the third one will be held in April 2010. Home Dcor - http://www.homedecor.pl the fair is held once a year, and the next one will be in May 2010. Trade press Elle Decoration Poland - http://www.mohodesign.com/prasa Dom & wnetrze - http://polki.pl/dom_i_wnetrze.html Burda media - http://www.burdamedia.pl/gazeta1.php?g=mpd Ambiente Poland - www.promedia.biz.pl trade journal for housewares

This survey was compiled for CBI by ProFound Advisers In Development Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

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