Poland Processed Meat Market: Business

Environment, Competitive Landscape and

Future Prospects.

Contents
Abstract...................................................................................................................... 3
1. Introduction....................................................................................................... 4
1.1. Background information................................................................................. 6

1
2. Literature review................................................................................................ 10
2.1. Polands Meat Industry in Recent years.......................................................10
2.2. Competitiveness in Polish Meat Industry.....................................................12
2.3. Innovations and competitiveness................................................................13
2.4. Frameworks to analyse the competitive landscape.....................................14
2.5. Polish Consumer Behaviour: New Promising Niche......................................15
3. Methodology...................................................................................................... 18
4. Results............................................................................................................... 20
4.1. Porter Five Forces......................................................................................... 20
Buyer power....................................................................................................... 20
Supplier power................................................................................................... 21
New Entrants...................................................................................................... 22
Threat of substitutes.......................................................................................... 23
Degree of rivalry................................................................................................ 23
4.2. Some major market players in Polish meat market......................................24
Tesco Polska Sp.................................................................................................. 24
Pamapol SA........................................................................................................ 25
Jeronimo Martins Polska SA................................................................................ 27
Sokolow SA......................................................................................................... 27
Animex Sp - Smithfield Foods.............................................................................28
Indykpol............................................................................................................. 28
5. Discussion.......................................................................................................... 29
5.1. Competitive Landscape...............................................................................29
5.2. Competitive Prospects................................................................................. 32
Conclusion................................................................................................................ 33
References................................................................................................................ 34

Word count: ~8,000

Abstract
Despite the huge variations in the market estimations and some differences

in the opinions on the market trends, most of the sources were consistent

when it comes to the description of current market landscape and future

prospects on the market.

2
The literature review has revealed that the meat industry of Poland has

experienced a considerable growth since the accession to the EU, benefiting

from the common market and country's comparative advantages in this

sector. However, after the crisis of 2009, the market experiences the

stagnation, and local producers are increasingly focusing on exports. Polish

meat industry is rather competitive, however, it lags behind some other

countries when it comes to innovativeness. One important reason for that is

lack of industry integration. The literature review has also revealed that

Porter Five Forces analysis framework is very effective way to analyse the

competitive environment. The review also revealed that some niches, such

as organic food, are regarded as rather promising.

Considering the five forces analysis, the buyer power is high, supplier power

is moderate, threat of new entrants is also rather small, while threat of

substitutes is small but growing fast. the current level of rivalry is rather

high, it is expected to increase even further.

3
 1.Introduction
This chapter show how and why the researcher has chosen the topic of the

research and what is the background and the context of this research.

Meat is a crucial element of the average diet of Polish people. With the

average per capita consumption of about 80kg per year, Poland has one of

the highest level of meat consumption in Europe and World. Polish

consumers do love beef, lamb, pork and poultry. Meanwhile the self-

sufficiency in case of meat production is very high in case of Poland;

moreover, Poland exports meat in a number of European and Asian

countries. In general, the food sector is a crucial sector of nations economy

and indicates the level of the development of a region.

However, the preliminary study has revealed that in case of the processed

meat industry, Polish companies lag behind the companies from developed

EU member states, particularly when it comes to quality and marketing

capabilities. The researcher has an experience of working in this industry and

interest in the research on this industry, which is why the topic of Polish

processed meat industry was selected. The researcher was not able to

conduct an original and useful study on consumer preferences among Polish

consumers, because such research would require considerable resources

(see methodology), thus the topic of business environment in Polish

processed meat industry was selected. The literature review has revealed

the lack of the analysis of competitive landscape and competitive prospects

in case of business environment in Polish processed meat industry. In

addition, the existing studies mainly focus on the microenvironment of the

4
entire agro-culture or/and food sector of Polish economy, but not on the meat

industry. However, it should be noted that different research companies

developed a number of existing reports on the market shares and market

size.

Taking into account the lack of such research and interest of the researcher

in this topic, the following two major research questions were formulated:

1. What is the completive landscape in Polish processed meat market?

2. What are the competitive prospects for Polish processed meat industry

players?

Answering the first question will also include the brief analysis of

microenvironment using the Porter Five Forces framework and brief analysis

of the major market players on the meat market of Poland. The second

research question will be mainly based on the synthesis of the information

from the existing literature, and from the analysis of the results and

Three representatives of the industry who kindly shared some of the

information and their internal corporate reports to help the researcher

investigate this topic provided some additional thought. However, the

research mainly uses the synthesis of a number of secondary data sources,

including those available only in Polish and those not available online

(internal reports, internal statistics from some of the companies). Hence,

despite of the lack of the emphasis on primary data collection, the research

can be considered as an original one. This is why the researcher believe it

important to write about.

5
The analysis of porter five forces on the market will be the part where the

results are discussed in the context of the original aim of the analysis of

business environment for Polish meat market players, taking into account the

information presented in both the literature review part and information

collected from different sources. Some of the sources contradicted each

other and the researcher had to compare and contrast different views to

present these results. The discussion part will help to answer the two

research questions directly.

The research will subsequently explore why Polish meat companies face the

increasingly challenging competitive landscape and how they can improve

their positions using the better creation and delivering value to the

customers.

1.1. Background information

Considering the definition of market, different sources and respondents have

different interpretation of what can be regarded as the market of processed

meat. For this research, the market includes not only the processed meat but

also poultry and products with a predominantly meat content. In some

considerations over the business environment, the larger context is used, as

meat processed segment is the part of the meat industry. While the meat

alternatives and substitutes are considered in certain part of the analysis,

they are excluded for the overall research focus, similarly to meat snacks,

and chilled plain whole, deboned or portioned meat.

6
In terms of the absolute sizes, the market can be considered as rather

stagnating in the recent years, and most of the forecasts predict it will

remain on the level of about 90,000 tones in the following years (Figure 1)

Figure 1. Volume of the market of processed meat in absolute size

However, this also means that per-capita consumption is only on the level of

2-3 kilos out of overall 80 kilos of meat consumed, which means a huge

potential for growth if the consumption patterns of Polish people would

change and become similar to the ones German or Czech consumer have.

The market value is however increasing rather fast, it has increased from

about 1.5 billion of PLN to more than 2 billion of PLN in 2015; the growth is

explained by the increase of average price per piece of production due to

gradual increase of the quality of products (Figure 2).

7
 Figure 2. Value of the market of processed meat in PLNs

The total market is divided between the chilled processed meat (about 1.1.

billion of PLNs) and shelf stable processed meat (about 800 million of PLNs)

as the following Figure 3 shows.

Figure 3. Major segments in the market of processed meat in PLNs

There is a huge variation in how different sources interpret the market shares

of the major players in processed meat industry and thus how they consider

the competitive landscape. Some notice that the major share is held by the

retailers, taking into account their large sales of own-labeled metal; other
8
sources focus not on the brand owners, but on the original producers which

often gives the largest share to medium enterprises who act as the

producers for other companies. In any case, most of the report notice that

Smithfield Foods (Animex is its local subsidiary) and Sokolow S.A. are the two

major companies in this market (Figure 4).

Figure 4. Processed Meat: Company retail market share by value

9
 2. Literature review
This chapter presents the existing studies on this topic and provides the

overview on the existing debates about the competitively of Polish meat

industry. Thus chapter will also briefly show why Porter Five Forces was

chosen as the framework to interpret the results on the competitive

landscape of Polish meat industry.

The analysis of existing literature has shown that there are few academic

studies on Polish meat industry, and no academic study exist on the

competitive landscape of the processed meat market/industry of Poland.

However, a number of studies have analysed the topic of competition within

the Polish industry, the history of Polish meat industry, the competitiveness

of Polish meat industry and the ways the competitiveness can be enhanced.

2.1. Polands Meat Industry in Recent years

Polands EU accession had a very positive impact on the growth of export

rate of highly processed products in the meat industry (Grzelak and Roszko-

Wjtowicz, 2015). The meat was among the major agro-food export products

in the latest years, account for 20% of agro-food export; integration of meat

industry with larger European companies was fast, but worse than expected

(Grzelak and Roszko-Wjtowicz, 2015).

In 2003, for the first time in a decade, Poland was able to have a positive

balance of trade in agro-products; the growth of the meat exports from $0.5

to about $1 billion has played an important role here (Czyzewski and

Smedzik-Ambrozy, 2013). Despite the country lags in the level of efficiency

in the agricultural sector compared to the Western member states of the EU,
10
the agricultural sector has increased its efficiency significantly in 2005-2015

(Czyewski and Smdzik-Ambroy, 2015). In 2005-2015, the gap between

the development of the food sector in Poland and the EU-15 has decreased

significantly; the pace of the development of agro-food industry was one of

the fastest in the EU, largely due to the benefits of the Single European

Market (Tereszczuk and Mroczek, 2015). Considering the financial situation in

2005-2010 after the accession, the overall situation has slightly improved in

food industry; the meat sector was among those performed higher than

average in the food industry (Czerwinska-Kayzer et al., 2014). EU funds and

programme of subsidies loans helped to improve the competitiveness of

Polish meat industry in 20022013 (Kierepka et al., 2014). In 2005, the

Polish market for packaged foods and meats market grew by 1.8% in 2005

and the volume was 9.3 billion kg; the market value was $22.5 billion

(Datamonitor, 2005). About 49% of market sales were via supermarkets and

hypermarkets; the market was very fragmented as three major companies

had less than 9.2% of total market value. These three major companies were

Drop S.A.; Drosed Siedleckie Zaklady Drobiarskie S.A. and Pamapol SA. In

the following two years, the market had a robust growth of 3.5% per year. In

2007, the major segment of package food and meat market were bakery and

cereals, while meat, fish and poultry had only 16.8% of the total market of

$22 billion. The economic crisis originated in 2008 had a considerable effect

on the consumer behaviour of Polish people considering the meat

consumption; about 20% of surveyed consumers has changed its meat

consumption patterns significantly (Kosicka-Gebska and Gebski, 2013). The

most important changes were the reduction of the total volume of meat

consumption, increased the share of cheaper meat, and buying meat in

11
smaller portions (Kosicka-Gebska and Gebski, 2013). Poland has experienced

a considerable decrease of its food market capacity since the economic

turmoil of 2009, however, the local food industry was rather competitive and

the companies were able to compensate the decrease of local sales by

exports (Rytko, 2016). For example, the exports of food and drinks have

increased by about 400% in 2005-2014 (Rytko, 2016). Polish meat is among

the products that are now competitive on the European markets (Rytko,

2016). Polish meat producers were among the global market winners in the

period of 2005-2015 (Ozturk et al., 2015). Poland has enhanced its

comparative advantages meat trade not only on the EU markets, but also in

the Eastern European markets (Szajner, 2016). Poland was able to provide a

significant volume of export of meat to China, this resulted in the fact many

Chinese investors became interested in the local meat industry (Drelich-

Skulska et al., 2014). The liberalisation of trade with the ASEANcountries

might have the same positive impact on Polish meat exports as the

accession to the EU, the possible positive outcomes are growing the volume

of exports of pork and shortage of poultry meat in this region. However, in

the case of poultry meat, Polish exporters face the increasing competitive

pressure from Brazilian and American counterparts (Kita, 2016).

2.2. Competitiveness in Polish Meat Industry

The market capacity and market competitiveness are two major areas to

consider when it comes to food industry of a particular nation (Rytko, 2016).

The market itself had high volume-low margin structures, and retailers had a

very strong buyer power, despite the large chains controlled less than 50%

of total market. The period of 2005-2007 was the start of a rather evident

12
trend when some retailers attempting backwards integration with

supermarkets developing their own brands of meat products, putting market

players under even greater pressure. Retail grocery concentration is also

evident among the academic researchers, and it bring a number of new

factors to the business environment of the agro-business in Europe (pika,

2016). Considering the supply power, Polish meat producers now try to find

the new ways to hedge the risks associated with the supply of input products

and raw materials (Krawiec, 2013). Considering the labour force, many

specialists and workers of meat industry from Poland who workers all over

the Europe are now going back to their homeland because of the greater

opportunities in employment due to the growth of Polish meat exports, which

also means additional opportunities to local industry thanks to the influx of

experienced labour force (Wagner, 2015).

Polish and, for example, Dutch meat industry are very successful on the

international markets, however, the latter also benefit from wider

implementation of innovative technologies, thus offering products of higher

added value or compensating the lack of natural resources (Janiuk et al.,

2016). Among the crucial success factors that can bring higher sales in the

market of processed meat in Poland are better pricing strategic, greater

adaptation to changing local tastes, learning by doing, better

implementation of innovations and e-commerce (Feldmann, 2016). However,

underestimation of competition and competitive environment, developing

the retail network slowly and lack of fund to enhance the expansion are

among the major reason of retail market failures in Poland (Feldmann, 2016).

In case of commoditized and liberalised markets, such as meat market of

Poland, increased attention towards branding might help in achieving better

13
competitive positions (Larsen, 2014). Marketing activities have to be

intensified. While the meat producers in Poland increasingly appeal to

wellness and quality, they also now benefit from the value of tradition in

marketing, because appealing to tradition in marketing also often reflect the

naturalness raw materials (Brya, 2015).

2.3. Innovations and competitiveness

In the food-and-farming sector and meat industry in particular Polish

companies has been ranked as the least innovative among the EU countries

in the recent decade; however, the situation was gradually improving

(Luczka, 2014). According to Luczka (2014), the important factor was the

disintegration of the industry, as companies were not able to benefit from

the economies of scale in establishing new equipment investing into R&D

activity. Meanwhile, a number of studies have shown that profitability and

competitiveness are directly associated with the intensity of R&D activity and

innovative efforts (Szopik, 2007; Szybiga and Prymon, 2009). Enhanced

network interrelations also lead to the higher innovativeness of the industry

(Ratajczak-Mrozek, 2009). Meanwhile, the Polish meat industry players

mostly invest in purchase and modernisation of machines and software

licensing, while training is less common; the major stated aims of

investments in innovations are improving the quality of products and

enhancing the competitiveness of the market (Luczka, 2014). The study by

Luczka (2014) revealed that Polish meat companies do not cooperate with

each other to attract the investments or benefit from bulk purchase of

equipment or other innovative solutions.

14
 2.4. Frameworks to analyse the competitive landscape
The competitiveness can be measured at three levels, at the corporate level,

at the industry level and at the national/international level (Krugman, 1994;

Pitts and Lagnevik, 1998). These three levels are not always interrelated

because the high competitiveness of the nation does not mean it is

successful in all the sectors (Rytko, 2016). Most of the competitive theories

are based on the ideas of comparative and/or competitive advantages

(Banterle, 2005). The competitive landscape analysis helps to identify the

primary rivalries that exist on the market. It is crucial to reveal and analyse

the major competitors on the market and then how they interact with each

other and with other forces on the market (Hitt and Reed, 2000). The

framework of Porter's five forces model is the most widely used way to

analyse the competitive landscape on the market (Grundy, 2006; Galbreath

and Galvin, 2008). The following Figure 5 shows what factors are taken into

considerations when using the framework of Five Forces

Figure 5. Porters Framework of Five Forces: Major Factors to Consider

15
It should be noted that Five Forces analysis was widely used in the analysis

of competitive landscape in food industries and meat market in particular

(Kumar and Budin, 2006; Wijnands et al., 2008).

2.5. Polish Consumer Behaviour: New Promising Niche

The analysis of Polish consumer behaviour shows that the market can be

divided intro three major clusters, which are the enthusiasts, conservative

and ultra-conservative (akowska-Biemans et al., 2017). Thus, the

conservative agenda remains important in the marketing strategies in

Polish meat market; for example, the major factors for eating meat were the

taste perceived healthiness and suitability to prepare traditional Polish meals

(akowska-Biemans et al., 2017).

However, the paper by Brya (2016) concludes that marketing strategy of

focusing on organic food can be rather effective as polish consumer

generally believe organic products and meat, in particular, can be healthier,

tasty but also more expensive. The companies who want to participate in this

sector should ensure the local consumer trust in the quality and more strict

controls they employ in meat processing (Brya, 2016). The major obstacles

to the boom of the market are rather a low consumer awareness, but also

low availability/visibility of organic products, not to mention the higher price

that might be tool high for Polish consumers (Brya, 2016). Polish lags in the

development of organic food sector compared to some other EU countries;

however, this also means the country has a large potential for the growth of

this sector (Brya, 2016). The most frequently bought organic products were

16
fruit and vegetables (58-69%), while 42% of organic food lovers also tend to

buy organic processed meat rather frequently (Brya, 2016). In general,

Niche segments, such as organic and halal food, can bring not only the

additional revenue for local meat producers, but also shed some light on the

new ways to improve the effectiveness and sustainability of the business

(Adamek, 2015)

Finally, OlewnikMikoajewska et al., (2016) notice that despite the market is

dominated by conservative consumers, the significant share of the

customers are ready to try new and innovative products. The higher share of

such consumer are among the among respondents purchasing meat and

sausages in natural food shops, many of those who buy meat in large malls

and supermarkets are also among the innovators or early adopters.

17
 3. Methodology

This chapter shows how the research was conducted. Initially, the researcher

wanted to analyse the consumer preferences in the meat market of Poland.

However, the analysis of the studies on the consumer preferences and

consumer behavior in case of Poland and meat industry shows that it

requires the resources unbearable for an individual researcher. For example,

akowska-Biemans et al. (2017) note that the study can bring results if at

least 500 of respondents from difference segments would participate in it.

Similarly, the study by OlewnikMikoajewska et al. (2016) on the consumer

behavior of Polish meat lovers noted the important threshold of few hundred

of the respondents. The research mainly uses the synthesis of a number of

secondary data sources, including those available only in Polish and those

not available online (internal reports, internal statistics from some of the

companies). Hence, despite of the lack of the emphasis on primary data

collection, the research can be considered as an original one. Considerable

share of information (internal reports) and additional suggestions about the

Polish market were given by three respondents who helped to collect the

data:

Aleksandra Smorawa, Director of Strategic Planning from Pamapol S.A.

Aleksandra Michalik, Assitant to Managing Director at INDYKPOL S.A.
Jaroslaw Dubinski, Polski Koncern Miesny DUDA3

Considering the ethical sides, all the respondents were informed about the

reason of enquiry (including the topic of the research and later change in the

focus of the topic). The participation was absolutely voluntary and they were

18
asked to share only non-confidential information (thus, private, but the one

that is not confidential). There was not any deliberately misleading of the

participants in any way.

Considering the reliability, it can be concluded that the research has rather

high reliability as most of the suggestions are based on the numerical data

from internal and external sources, which can be tested and reinterpreted

with the same result. The validity is ensured by the implementation of a well-

known and proved frameworks.

19
 4. Results
In terms of the analysis of external environment including in the framework

of porter five forces, the collected data has revealed that many sources

contradict each other, particularly when it comes to the share on the market,

size of the company and volume of the sales. One possible reason is that

market can be defined using different approaches, some sources talk about

meat and poultry market, others focus only on the market of meat, third type

of the resources analyse the food market of Poland and meat segment being

the part of it. There is also considerable difference between what is defined

as Polish meat market and Polish meat industry. In addition, there might be

considerable differences in the evaluations of level of sales between the

industry reports (for example, by Marketline or Euromonitor) and internal

information that is often more precise but also can exaggerate some

statements. The researcher thus had to compare and contract different

statements and opinions to present the most realistic and reliable ones.

4.1. Porter Five Forces

The following part discussed the revealed results using the framework of Porter Five
forces.

Buyer power
Taking into account that local consumers can benefit from a large number of

agricultural products not only from Poland but also Europe, the power of

buyers is not weak. In addition, in case of Poland, large retailers, notable are,

Groszek, Tesco, Biedronka, Metro, and others; up to 20 major market chains

are the major buyers of meat products on the market. Major buyers have

20
different policy towards processing, some are acting as wholesale dealers

and buy unprocessed meat, but in most of the cases only food processing

companies buy unprocessed meat. In any case, the large chains have very

strong negotiation power with both meat companies and processing

companies, meat companies are ready to provide discount as they are bulk

buyers with strong contractual arrangements. However, as negotiation power

is more on the side of retailers, the contracts are usually in favour of

retailers. Another factor that decreases the power of meat companies in

favour of buyers is low switching costs. In most of the cases, major meat

companies cannot have any strong product differentiation, this also

increases the buyer power. It was noted previously that promoting own

products as organic and locally sourced can enhance the product

differentiation, thus there is a potential for the growth of this niche that could

decrease the buyer power somewhat. On the other hand, the common

European market limits the buyer power, as producers are able to export

own products in case they are not satisfied with the purchase prices of local

retailers, the global exports of Polish meat industry is also growing fast.

Some trend of forward integration in the segment of organic and locally

sourced is evident as some farmers sell the products directly thanks to the

farm store outlets. Despite this segment is now small it has a potential to

influence the behaviour of large buyers. In general, it can be concluded that

the buyer power is strong.

Supplier power
Because of the growth of farming in Poland and increasing intensification of

equipment renovation globally, there is a strong and ever increasing demand

21
for agro-machinery, agro- and food equipment and other inputs and products

necessary for food industry. In terms of fertilizers and compound animal

feedstuff, several large players on the European market offer the consistent

level of quality and reliability supplies. There is a high volatility of input

products in the meat industry. Paradoxically, the meat industry much

depends on the prices of nitrogen-based fertilisers, which in turn are

interrelated with the fluctuations in the prices for natural gas and other

commodities. In general, the current situation on the market of commodities

decreases the power of suppliers. The common European market also

increases the opportunities for switching the suppliers; however, in some

cases, the switching costs might not be low. In addition, the growing demand

from organic products including the organic meat also increases the pressure

towards the suppliers of usual compound animal feedstuff. All these factors

make the supplier power in the meat industry/market moderate.

New Entrants
There is an evident trend of industry consolidation, in much it is due to the

growing pressure of European regulation that is often seen as an obstacle to

the new market players. Many consider the increasing complex of European

regulation as the way large European agro-food companies lobby the

increase of the barriers of entry. In addition, because of the growing

importance of technologies and innovations in the industry, the entrants

need considerable resources to purchase the latest machinery and the

provision of working capital for current operations. This, the problems of

higher operating costs and low profit merging often means the unbearable

22
entry barrier. The industry consolidation is largely due to the necessity of

benefiting from economic of scale amid such an environment. Because of the

land and equipment, small market players has no opportunities for

expansion, in most of the cases they are bought by the larger players.

However, in case of Poland, the entrance of the new players is partially

facilitated by a number of loan programs that promote local agro-cultural

industry. In addition, the meat industry has very low level of differentiation,

which also facilities easier entrance of new market players; some of them

offer differentiated products and thus can occupy the new and growing

niche. Finally, the market entrance is also facilities by the very low brand

loyalty, in most of the cases, the final buyers of meat are not aware of the

supplier of the product. The threat of new entrants can be considered as

moderate, because the complex business environment and rather modest

rate of growth weakens it, but a number of other factors increase this threat.

Threat of substitutes

It can be concluded that in the case of meat products, there is not

considerable threat of the substitutes. However, some might not want to eat

meat (vegans), but industry experts believe the share of such consumers

will not rise to a certain level that would threaten Polish met industry. In

addition, Polish consumers has the lowest level of average seafood

consumption among the large European countries. Thus, Polish meat

producers are confident that the demand for production will remain strong. In

23
a certain way, the small but growing niche of locally produced organic meat

can be considered as a threatening substitute to traditional industrially

produced meat. But the switching costs in this case can be considered as

rather high. Local producers should have a certain strong specialist

knowledge about how meat should be produced and licensed, taking into

account strict European regulation. On the other hand, three are more than

1.5 million of farmers in Poland that are considered as underemployed and

they sooner or later can realize the potential of producing the meat and

other products that can be regarded as locally sourced and organic. This

factor can be regarded as rather important and worth considering. However,

in general, it can be concluded that the threat of the substitutes is low for

this market.

Degree of rivalry

In general, the current environment means that all the market players are

primarily competing for establishing long-term contract relationships will

large and medium retail chains. The trend of retail consolidation and

consolidation on the meat market means that this increases the rivalry for

decreased number of retailers among the larger companies. Another

important factor is the lack of any differentiation, which also pushes the

rivalry higher. In meat industry, differentiation is usually for small niches (i.e.

halal meat, organic meat), and this does not decrease the rivalry on the

market in general. The share and importance of modern equipment and

latest development in agriculture is increasing from year to year, the

suppliers has a certain power, while the profit margin becomes thinner. On
24
the other hand, the provision of state and EU subsidies for agro-producers

decreases the rivalry somewhat, mostly with the help of Common

Agricultural Policy, another important factors is subsidies loans for agro-

producers in Poland. However, with the recent reform of the Common

Agricultural in 2013-2015, the importance of subsidies is decreasing, and

Common Agricultural Policy is expected to decrease in the near future. All

these means that while current level of rivalry is rather high, it is expected to

increase even further.

4.2. Some major market players in Polish meat market

The result part not only includes the information on the meat producers, but

also major retailers as now they are engaged in backwards integration and

increasingly engage in meat processing and meat production.

Tesco Polska Sp

Tesco Polska Sp is a major market player with more than 30,000 employees,

with the revenue of more than PLN12 billion (about 2.7 billion) and more

than 460 outlets owned by the company. The Large corporate group, Tesco,

which is based in the UK, owns the company. While the company is planning

to cut certain costs in the ordinary retail format, it increasingly spends on

new retail formats, including online channels with free delivery. By the end of
25
this year, the company plans to decrease its sales area by more than 40

thousand square meters. Another decision is the stop of the expansion

program in smaller cities of Poland. Considering the Tesco Polska Sp zoo, the

subsidiary plans to increase the revenue thanks to offering additional

services including meat processing, food preparation and fuel stations. It can

be noted that the company has a very strong coverage, as all the large Polish

cities are covered, it also has a great national outlet network among smaller

cities and countrywide coverage in the most profitable areas. The company

plans to increase the share of own-produced meat under own label,

particularly in the case of Tesco Polska SP zoo that offers lower-end products.

The company also plans to reconsider the existing contracts with suppliers as

the part of cost-cutting efforts. The company benefits from the experience

and market power of its parent company, Tesco. The growth of the private

label sales is the part of the current strategy of growth.

Pamapol SA
Pamapol SA is a medium-sized company particularly focused on processed

meat; it has less than 600 employees, and the revenue of PLN300 million

(less than 70). Pamapol SA was established in 1993 by two brothers

Mariusz and Pawel Szataniak is the strategic and dominant arm of Pamapol

Grupa Kapitalowa (capital group). The companys headquarters are located

in Rusiec near Belchatw. Pamapol became a joint-stock company in 2004,

when it transformed from a public limited company. Since June 2006, the

company has been listed on the Warsaw Stock Exchange.

Pamapol has particularly strong positions in the segments of packaged food

and ready meals, while the company does not plan to increase the sales of
26
unprocessed meat because of the lower profitability of this segment. The

company's major goal is offering the large range of the high-quality and

reasonably-priced products, focusing on the urban consumers who want

tasty semi-processed meals that are easy to prepare. The company has also

solid positions on the market of canned/preserved food and soup. The

company can be considered as rather good in changing towards the needs of

consumers at is has drastically changed its product mix before and three

years after the listing on the Warsaw Stock Exchange, to reflect the changes

in the business environment after the crisis. The company has a strong

marketing department that focuses on finding the changes in the market

trends and in consumer states and eamdsn in Poland to change the product

portfolio. The company plans to open its line of organic meat products

(although the term organic can be disputed). The company has the

nationwide coverage and contracts with several major national retailers.

Considering the innovations, the company has established the latest

processing facilities in Rusiec, the new product range Pamapol Dania Gotowe

is rather innovative on the market of ready meals. The share of the ready

meals is however decreasing in the total revenue of company in 2013-2015,

however, the share of canned/preserved meat and soup is growing. The

major reason according to the company is intensifying competition in the

lower-end segment. The company still holds the third place in the national

share of canned and preserved ready-meals in Poland, the current strategy

states the major goals is to achieve the first place by 2025. The company

believes that current heavy investments into promotion, including the

investments into new media ads can bring the larger share. Final step in the

27
strategy is the gradual growth of the share of premium products among its

product portfolio (including organic meat and other products).

Jeronimo Martins Polska SA

Jeronimo Martins Polska SA is a large company with more than 55,000

employees and the revenue of about 13 billion. The company is part of

Portuguese corporate group, Jernimo Martins SGPS, which operates in food

distribution production, with stores located in Poland, Portugal and Colombia.

The major share of the revenue comes from Biedronka discounters, which

offer a variety of products, including premium, economy and private label.

The company is increasing the share of own products, including the meat

products.

The companys overall value share of packaged food was equal to 6% in

2015 and it ranked in first place among companies present in Poland. The

company has a small growth, mostly due to the growth of the share of

discounters and private label, including the private label meat and organic

products. The company is expected to increase it revenues in the following

years, because of the projections of the growth of discounters segment.

Sokolow SA
The company had the revenue of about 750 million in 2015, and the net

income of about 30 million in 2015. The company's headquarters is located

in Sokolow Podlaski. The company has 7 production plants in Sokolow

28
Podlaski, Kole, Robakowo, Debica, Czyewo, Jaroslaw and Tarnow and

livestock farms, Falcons Falcons Service and Logistics. The company also has

an office in Warsaw. Its strongest brands are: Sokoliki, Gold, Feast Qulinarne,

Naturrino, Darz Bor. The company produces about 28 thousand tons of meat

and meat products per month. Current strategy is expanding the range of

the products by introducing products for the people who care about a

balanced diet - that do not contain phosphates, sodium glutamate or artificial

colors (including a series of Feast Qulinarne - beef with Sokolow, Naturrino

whether, for example. Chips, Beef, Pork and Poultry). About qutner of total

production is exported, mainly to European countries.

Animex Sp - Smithfield Foods

Animex, (according to some estimations) is the largest players on Polish

market of processed meat. The company specialises in the production of

pork, poultry, meat preparations and down and feathers. The company

ismanufacturing for the domestic market and export more than quater of its

total production. Animex has 9 factories in Poland, (Elk, Suwalki, Iawa,

Morliny, Starachowice, Debica, Szczecin, Opole, Krakw), and employs more

than 7,800 people. Animex markets its products under the brands of Krakus,

Morliny, PEK, Yano and Mazury. The company operates as a subsidiary of

Smithfield Foods.

29
Indykpol
Indykpol is the major player on the segment of turkey meat and processed

meat goods. The major focus is made on the whole birds, poultry elements,

turkey meat and turkey processed goods. The company uses its company's

name as the major brand; significant part of the goods goes to the European

Union market. The company had the revenue of about $320 million and

increased its own revenue by more than 15% in 2013-2015. The company

has a rather slim profit margin, the net profit was about $7 million, but the

company has managed to increase its profit by about 50% in 2013-2015. The

company expanded on Russian market (Tatarstan) in 2007 and had a relative

success there. In the year of 2009 crisis, the company established the

renovated and well-equipped line for slaughter and butchery the Lublin plant,

it also started the Jedynak kabanos sausage. In 2010, it has merged with

Biokonwersja and renovated its line for slaughter and butchery in the Olsztyn

plant in 2010. In 2011-2012, the company has bought Wytwornia Pasz w

Olsztynku.

5. Discussion

5.1. Competitive Landscape

According to some estimations, Sokolow SA is the largest market player on

the rather deconsolidated market of meat in Poland, it had the share of

13.4% in the total market as for 2015. The share of the second largest

30
player, Animex Sp zoo was about 8.1% in 2014 (and was expected to achieve

the level of 8.3% by 2016). However, the company has been recently

acquired by the Chinese meat international conglomerate - Shineway Group,

holds more than 16.1% of total market share in Poland (includes its different

subsidiaries).

The Animex Sp discounter Jeronimo Martins Polska SA is an important player

on the market because of the large assortment of private label meat

(however, it should be noted that considerable share of meat production is

actually outsourced). The overall portfolio of meat products helped to

company to achieve the level of 81% of total value share of the market. All

three leaders are benefiting from the nationwide coverage, either with the

help of partnering retailer, or with the help of own network of outlets.

Sokolow SA and Animex Sp zoo mostly focused on the frozen and chilled

processed meat. Jeronimo Martins Polska SA has rather strong positions in all

the segments of meat market (except for organic), mainly because of its

Biedronka private label brand that is considered as a trustworthy ones

among the customers of budget retailers.

The highest growth rate in 20-15 was by the Polsoja sj, it has increased its

sales in the segment of meat substitutes (its core segment) by about 25% in

2014-2016. The company increases its sales of meat substitute products,

based on soy and tofu, thus it is not affected by the threat of meat

substitutes. The company benefits from a weak competition in this segment,

it also offers premium soy-and tofu-based products for vegans, often the

prices much higher than meat-based products.

31
Major tool to attract the consumers is offering price promotions, discounting

has also become prevalent since 2009-2010. All three largest market players

have their own distribution network, which means greater market power, all

three spend excessively on the promotion and marketing strategy to

increase their share in the Polish market. In-house sales and distribution

system decreases the total operational costs, while increasing the profit

margin.

Polish consumers are pay rather high attention to what is written on the

package of processed meat compared to other European customers, they

mostly pursuer the products of higher quality; in recent years there is a

greater emphasis on the price to value ratio. The market of processed has a

number of prominent international brands. However, it should be noted that

the foreign brands often use the meat that is locally produced. Jeronimo

Martins Polska SA is now becoming very competitive on the market thanks to

its Biedronka brand.

Local Profi SA can be considered as very perspective players because it

offers innovative products that blend the meat and seafood and offers the

new flavors in its ready-to-eat meals; it also focuses on promoting its

branded meat as very healthy, organic and without artificial ingredients.

Sokolow SA has launched a massive promotional campaign at the end of

2015, with the focus on promoting its chilled red meat products as crunchy

and particularly attractive and tasty. The company also realizes the

importance of new consumption trends of urbanized consumer and

emphasizes the convenience of the products and ease of their preparation.

32
On the other hand, Polish market is still rather conservative, as most of the

consumers prefer to cook and prepare meat by themselves.

The processed meat is in the major focus of the marketing activities and

promotional campaign in the Polish meat industry. The major market players

now implement and comprehensive promotional campaigns that includes the

BTL in-store promotions, the sue of national television, including the non-

conventional ads on TV, the use of printed media that is still rather popular

in Poland and the promotion via social media marketing. In their promotional

campaigns, the major focus is usually on the quality and price-to-quality ratio

of the products, one often story used is the larger amount of meat in the final

processed product and lack of any artificial and non-organic ingredients. The

experts note that packaging becomes and important source of advantage in

the market, as the resent success of Sokolow and Biedronka new products

suggests. In 2015-16, the major examples are the meat products by Sokolow

SA that now uses the attractive cardboard boxes developed in a way

consumers would prefer it not only for convenience but also attractive

design. Urban consumers want are increasingly buying the processed

products with sophisticated recipe, including the combination of meat or fish

content. On the other hand, the major share of consumer are now rather or

very price-sensitive, and they are more interested in economy products or

products with a greater price-to-value ratio. Private label products are now

increasingly considered as products with the price-to-value ratio.

33
 5.2. Competitive Prospects
There is an evident trend of growing quality in processed meat segment as

the method to increase the competitive positions, it is expected to continue

further. The growing number of consumers want to consumer products

labelled as organic, they want to be sure that the meat has less artificial

preservatives, while the meat products are mostly actually made of meat.

The major Polish and international retailers in Poland are expected to

increase the share of private label products in all the segments, in many

cases, however, this only means a decreased market power of meat

producers, as retailers often outsource the production and control the quality.

Experts predict that the revenue of processed meat is expected to grow less

than 1.6% in 2016-2020 (in constant price value), which means an

intensification of competition and consolidation, as major market players

stated the considerable increase of their sales as their major goal for the

following ears. One important factor that might decrease the growth of even

further the increasing popularity of vegetarian diets and other diets with

lower share of meat among the consumers. While it will not decrease the

volume of the market, it will certainly affects its growth rate. However, with

the greater share of higher-quality product in meat processed segment

(which means that meat products will have a larger share of meat), the

growth might remain on the forecasted level. Meanwhile, the shelf stable

meat is expected to increase it share in the following years, in addition to the

chilled stable meat substitutes. Both segments are expected to grow few

times faster than the meat market, mostly due to increasing number of

vegetarians and vegans in Poland and those who want to decrease the

consumption of meat as the part of their diet. In addition, the frozen

34
processed fish/seafood is also expected to grow, also because of the

increased focus on healthy diets among the Polish consumers.

The average prices for meat are forecasted to decrease, because of the

growing competitive pressure inside and outside the meat segment. Another

crucial factor is the growth of the volume and growth of the share of private

label products, they would mostly impact the prices for processed frozen

meat. Companies are forecasted to enhance the value among the existing

product line, while some companies are expected to enlarge their product

lines to include the fish products and meat-substitute products for vegans.

Existing large market players are expected to use different brands to

promote the new organic meat products. The major focus in promotion is

expected to be the enhanced health and general focus on wellness; there will

be a certain shift from quality and taste to quality and health benefits in

the promotion of meat products. Experts predict the increase of investments

in social media promotion and in traditional promotion given this shift and

enhanced competition.

Generally, the new launches of products are expected to stimulate the

competition even further, the particular attention should be paid towards the

segments of organic and healthy meat products, convenient and well-

packaged ready-to-eat meat products and meat substitute products.

Conclusion
In conclusion, it can be suggested that the research has answered its two

major questions revealed in the introduction part.

35
Despite the huge variations in the market estimations and some differences

in the opinions on the market trends, most of the sources were consistent

when it comes to the description of current market landscape and future

prospects on the market.

The literature review has revealed that the meat industry of Poland has

experienced a considerable growth since the accession to the EU, benefiting

from the common market and country's comparative advantages in this

sector. However, after the crisis of 2009, the market experiences the

stagnation, and local producers are increasingly focusing on exports. Polish

meat industry is rather competitive, however, it lags behind some other

countries when it comes to innovativeness. One important reason for that is

lack of industry integration. The literature review has also revealed that

Porter Five Forces analysis framework is very effective way to analyse the

competitive environment. The review also revealed that some niches, such

as organic food, are regarded as rather promising.

Considering the five forces analysis, the buyer power is high, supplier power

is moderate, threat of new entrants is also rather small, while threat of

substitutes is small but growing fast. the current level of rivalry is rather

high, it is expected to increase even further.

36
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