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Bulgaria’s organic farming contracts despite growth in consumer demand 

Bulgaria’s organic farming contracts despite growth in consumer demand 
Photo: Pixabay

Bulgarian consumer demand for organics has grown in recent years due to economic stability, improved purchasing power, and increased popularity for products perceived as healthful. In 2020, the Bulgarian organics market was valued at about US$38 million (USDA data), with growing sales of packaged foods and beverages, but declining sales of fresh produce due to pandemic-related farmers markets closures. Demand growth is expected to increase by the end of 2021 and in 2022 due to favourable consumer trends and better prospects for the hotel, restaurant, and institutional (HRI) sectors.

Bulgarian agricultural land under organic production (fully converted and under conversion) at the end of 2019 declined by 9% from 2018. 2019 organic land accounted for 2.34% of Bulgaria’s total agricultural area, down from 2.56% in 2018. Certification, compliance, and domestic support for organic farmers remain as policy priorities for the Government of Bulgaria.

Conversely, the number of processors and traders of organic foods continued to grow in 2019 by 1.3% and 32.2%, respectively, over 2018. This development was encouraged by higher consumer demand for processed products, newly built processing facilities in Bulgaria, and increasingly efficient value chains. As a result, the number of Bulgarian organic food processors in 2019 has increased 47% since 2014 and the number of traders in 2019 has tripled since 2015.

Bulgaria’s organic horticultural area declined in 2019 from 2018. The fresh vegetable area declined by 19% and the organic orchard crop area declined by 10%. Nevertheless, vegetable production increased by 7.8% and orchard crop production by 7.6% due to higher yields, with pome fruits the notable exception. Higher demand from processors and for direct consumption for fresh organic produce has incentivised farmers to improve and inputs for better yields.

 

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Bulgaria’s apple crop falls 13%

Bulgaria’s apple crop falls 13%

 

In the 2019/20 campaign, Bulgaria’s total fresh deciduous fruit crop fell 7%, according to FAS/Europe data. Apple production was down 13% from MY 2018/19, due to unfavourable weather conditions.  However, pear production reached record levels due to higher area harvested and yields. Table grape production remained stable. While strong demand drove imports during the first half of MY 2019/20, COVID-19 response measures led to lower demand and reduced imports after March. Fresh consumption decreased, while demand for shelf-stable processed products led to record-high levels of apple and pear processing. Fresh consumption is expected to rebound if COVID-19 wanes in 2021.

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Lidl opens 100th store in Bulgaria

Lidl opens 100th store in Bulgaria

 

German Discount retailer Lidl has opened its 100th store in Bulgaria. According to a press release, the new outlet covers 1,892 square metres and will offer 20 jobs. This was the seventh store Lidl opened in Bulgaria in 2019 Lidl, along with a renovation programme for 60 of its existing stores. The retailer plans to open at least five new stores in 2020, most of which will be located in the larger cities on the Black Sea coastline. Lidl entered the Bulgarian market in 2010 and currently operates stores in 47 cities in the country, employing 2,700 people. 

 

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Rise in Bulgaria’s production of fruits and vegetables

Rise in Bulgaria’s production of fruits and vegetables

Bulgaria’s production of plums, cherries and nuts has reached new heights in Bulgaria, much of which is exported, according to experts at the InteliFresh forum. Bulgarian farmers work in cooperation with Dutch partners, who assist with production, trade, transfer of knowledge and technology. The potential of Bulgarian agriculture was highlighted at the second edition of InteliFresh on 22 February in Plovdiv that brought together Bulgarian vegetable and fruit growers, large supermarkets, processors, local retailers and foreign dealers, as well as suppliers of equipment and technologies of the chain “from the garden to the shop”. The forum covered global trends in the vegetable and fruit markets, export opportunities for the Romanian market, international quality certification and funding new vegetable and fruit programmes, as well as new technologies for plant protection, processing and storage.

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A third of EU residents don’t eat fruit or veg daily

Regular consumption of fruit and vegetables is considered an important part of a healthy and balanced diet. In the EU, however, slightly more than a third of the population aged 15 or over did not  eat them on a daily basis in 2014,

More than a third of the European Union population aged 15 or over did not eat fruit and vegetables on a daily basis in 2014.

And less than 15% consumed at least the recommended 5 portions a day, according to a Eurostat press release.

The European Union’s statistical office also said the daily consumption of fruit and vegetables differs widely between EU member states.

In Romania, for instance, almost two-thirds (65.1%) of the population aged 15 and over does not eat fruit and vegetables on a daily basis, while in Belgium, at the other end of the scale, it’s 16.5%.

Similarly, a third of those in the UK eat at least 5 portions of fruit or veg daily, compared to 3.5% in Romania and 4.4% in Bulgaria.

And when it comes to differences between men and for women, Eurostat said the daily consumption of fruit and vegetables seems to also be influenced by the level of education – the higher the education level, the higher the share of the “5-a-day” population.

The widest gap between low and high educated persons for “5-a-day” consumption was in the UK, where 40.5% of those with a high education consumed at least five fruit or vegetables each day compared to 25% for those with a low education level.

image: http://ec.europa.eu/agriculture/sfs/index_en.htm

 

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Key role for greengrocers in Bulgaria’s retail market

Bulgaria’s retail market is seeing an emerging wave of small specialised stores for fruit and vegetables.

Bulgaria’s retail market is seeing an emerging wave of small specialised stores for fruit and vegetables.

Along with those for dairy and meat products, these stores focus on consumer convenience and the need for fresh, local, and organic food of high quality – something which so far has not been the strongpoint of the country’s modern retailers.

A USDA Gain report also says fresh produce grocery retailers seem to be the only category which was not heavily harmed by the economic crisis, thanks to the fact groceries are a necessity which can’t be cut from the family budget.

The report notes that the outlook in Bulgaria is for traditional retail to underperform compared to modern trade as large retailers plan to move towards densely populated town centers by opening convenient stores and smaller supermarkets. But it says one exception will be the small specialised stores for fruit, vegetables, and dairy and meat products, which focus on convenience and fresh produce.

Meanwhile, hypermarkets and discounters are forecast to keep growing fast in Bulgaria in 2016/17, with Kaufland and Lidl expected to hold leading positions and increase their market shares this year. Convenience stores are expected to be the third fastest growing channel for grocery retailers.

The retail sector’s leader is the German discounter Kaufland, which in 2015 held a market share estimated at 13.2%, followed by Metro with 7.1%, Lidl with 6.3%, and Billa with 5.5%. The only local player among the lead retailers is Fantastico, which currently operates 38 outlets situated only in the capital city Sofia.

A new player, the largest Macedonian food retail chain KAM, recently announced an ambitious plan to enter the Bulgarian market by opening 20-25 outlets by the end of 2016 and as many as 80 outlets by 2018. It will apply a ‘hard discount’ model. KAM’s current outlets import from Greece, Turkey, Germany, Italy, and other European countries. “KAM self-defines as the Macedonian version of Aldi and also aims to take as much of the share freed up after Penny’s withdrawal,” the report says.

Price consciousness dominates

Bulgarian consumers are known as traditionally price sensitive. The report says this is not surprising given Bulgaria is the EU country with the lowest GDP/capita. In recent years, retailers have thus striven to lower prices while maintaining quality in order to increase sales.

Consumer price consciousness is expected to dominate in the next few years due to projections for no significant improvement in job creation in medium term as well as negative predictions about the demographic situation and expectations for up to 3% decline of population, the report says. (The country’s population last year was around 7.2 million, according to tradingeconomics.com.)

Value of Bulgaria’s retail market

The report says Bulgaria has been on the path to recovery since 2014 and reached annual growth of 3% in 2015. In 2015 GDP was U.S. $51 billion with a GDP per capita of $6,960. Real GDP growth is forecast to slightly decelerate to 2.1% in 2016 before picking up to 2.5% in 2017.

According to Euromonitor data and local sources, in 2015 the retail market was estimated at nearly 10 billion leva (U.S. $5.7 billion).

At the time of the Gain report’s preparation, the number of modern grocery outlets in Bulgaria stood at 4,225, which accounted for just over a tenth of all grocery retail outlets.

Last year, the sales in modern grocery retail reached almost BGN 5.4 billion (U.S. $3.05 billion) and held a combined market share of 55%, which is likely to slightly increase to 56% in 2016, and 57% in 2017.

The remaining 45% or almost BGN 4.4 billion (U.S. $2.5 billion) was held by almost 35,900 traditional grocery outlets throughout the country.
 

Source: GAIN Report Number: BU1624, dated 7/14/2016, Bulgaria Retail Market Update
Main image: The Bulgarian city of Plovdiv, by Klearchos Kapoutsis from Santorini, Greece (Plovdiv) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons