Opportunities In Confectionery
The past year or so has been a challenge for the Polish consumer. Following a sustained boom that lasted even through the 2008-2009 period when nearly all of Europe grinded to a halt, real GDP growth has since slowed significantly. Indeed, Poland was the only European country to escape recession in 2009, and the strength of its private consumption-oriented economy was a key factor. Despite the recent challenges, we have often highlighted the opportunities in Poland's retail sector, paying particular attention to hard discounter Biedronka - owned by the Portuguese retailer Jeronimo Martins. In addition to retail, the country's confectionery industry has caught our eye. Confectionery has been doing well and looks well placed to keep growing nicely in line with our Europe team's expectations for a rebound in private consumption over the next few years.
While companies such as Nestlé and Mondel?z International (owner of Cadbury) are well represented in Poland's confectionery market, there are also some interesting Polish companies that have been performing well. Arguably the most impressive performer over the past few years has been Wawel, which is a fast growing company that registered annual sales of US$171mn in its last financial year. The company focuses on chocolate as well as various confectionery products including biscuits and wafers. As the first chart illustrates, the company's share price has performed remarkably well over the past few years.
In terms of per capita volume sales, there remains much room from growth in chocolate consumption in Poland. Wawel and the multinational companies in Poland - with their more premium products - therefore look set to do well over the next few years, particularly given the upbeat outlook for private consumption. Wawel sells most of its products through organised retail channels such as Biedronka and Tesco.
|Wawel Growing From A Low Base Relative To Peers|
|Selected Companies - Annual Sales Last Financial Year (US$mn, LHS) & Asset/Turnover Ratio (RHS)|