Frozen Food Adria Region Market overview

STRICTLY CONFIDENTIAL
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market
 Adria region: market with approx. 33 million consumers*

Croatia Serbia*
GDP €45,0 mlrd GDP €31,3 mlrd
GDP2012.-17p CAGR 1,9% GDP2012.-17p CAGR 2,2%
Population 4,4 mn Population 7,6 mn
Budapest
Food spending per capita €1.968 Food spending per capita €1.403
Food spending per capita. est 2017p €2.421 Food spending per capita est.2017p €1.723
S&P rating BBB- Hungary S&P rating BB-

SIovenia
Zagreb
Slovenia Ljubljana Montenegro
Croatia
GDP €36,2 mlrd GDP €3,3 mlrd
GDP2012.-17p CAGR 1,6% Belgrade GDP2012.-17p CAGR 2,0%
Population 2,0 mn Bosnia & Population 0,6 mn
Food spending per capita €2.817 Food spending per capita €1.146
Food spending per capita est .2017p €3.440 Herzegovina Serbia Food spending per capita est.2017p €1.435
S&P rating A S&P rating BB-
Sarajevo

Hungary Montenegro Pristina FYROM

Podgorica Kosovo
Skopje GDP €7,6 mlrd
GDP €100,8 mlrd
GDP2012.-17p CAGR 3,6%
GDP2012.-17p CAGR 1,5%
Population 10,0 mn Macedonia Population 2,1 mn
Food spending per capita €966
Food spending per capita €1.931 Food spending per capita est.2017p €1.216
Food spending per capita est.2017p €2.443
S&P rating BB
S&P rating BB+

Bosnia i Hercegovina
GDP €13,0 mlrd
GDP2012.-17p CAGR 3,0%
Population 3,9 mn
Food spending per capita €1.075
Food spending per capita est.2017p €1.376
S&P rating B

* including Kosovo
** ISour: Planet Retail, S&P
 Economic recovery on it’s way

Adria region countries have experienced significant GDP-a growth therefor most HISTORICAL AND PROJECTED REAL GROWTH OF GDP
of them accomplished growth bigger then 4% per year between 2005.and 2008. (CAGR)
World economic crises has influenced on negative GDP rate
approx -1% on average in period of 2009.-2011(some positive in 2012-Serbia). But
it’s estimated that in period 2013.– 2017. Adria region countries will have growth
of GDP on average yearly rate of 1,5-3,5%, which will be accomplished by
netto export, direct foreign investments, as well as increase of local consumption
potrošnje
Future economic growth is also expected to be supported by process of entering
region in EU which is ongoing:
Slovenia already a member since 2004.
Croatia became a member on 01.07.2013.
Serbia officially got the date of starting of negotiations(already a candidate)
Montenegro and FYROM are officially candidates GDP PER CAPITA: 2011. vs 2017 est. (€)
25.000

20.000 20.890
With beginning of process of entering in EU the countries has strengthen 17.898

their capabilities which influence consumption although crises are influencing fall.15.000 13.173 13.017
10.224
First step towards liberalization was made in 2006. with establishment of 10.000 10.099
7.327
free trade zone called CEFTA, in which next countries and regions are: 4.960 5.258 5.408
4.580 4.136
Serbia, Bosnia and Hercegovina, Croatia, Kosovo, 5.000 3.348 3.680

FYROM, Montenegro and Albania

0
BiH Croatia Hungary FYROM Montenegro Serbia Slovenia

2011 2017
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo :
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market
 Frozen food market in Adria region

Frozen food market in Adria region is estimated on

approx 106.100 tons* in 2011. (236.000 tons including Hungary)
Frozen food consumption in Adria region is still quit low
comparing to European average: in countries in region consumption is 55%
lower then in EU or in actual numbers- 5,7 kg per capita in Adria
vs 13,2 kg per capita in EU
Increased presence of frozen food in the region
in last decade was pushed by changes in consumers behavior which have
started turn towards easy to cook meals.
Consumer have added frozen food as a part of their regular everyday diet
This trend has been supported by increased presence in
super/hipermarkets, as well as better cooling equipment in shops and at home

In mid term period it’s expected that with income increase

consumption of frozen food will continue to grow. CROATIA
SERBIA
Frozen processed vegetables, fish and sea fruits will remain Volume (tons) 35.000 Volume (tons) 26.500
most important subcategories in sense of value. Value (EUR mil) 83 Value (EUR mil) 39
Consumption per capita (kg)
Big domestic producers are dominating the market of frozen food. 7,9 Consumption per capita. (kg) 3,5
(Ledo/Frikom, Podravka), although the presence of PL is bigger then BOSNIA AND HERCEGOVINA
MONTENEGRO
in ice cream market. Domestic producers have significant advantage because of Volume (tons) 9.900
Well developed sales and logistics as well as consumers loyalty to local brands Volume (tons) 2.800
Value (EUR mil) 19 Value (EUR mil) 6,5
Consumption per capita (kg) 2,5 Consumption per capita (kg) 4,4

Source: Datamonitor, AC Nielsen, Planet Retail SLOVENIA

* Market size and consumption per capita in Adria region do not include FYROM and Kosovo Makedoniju i Kosovo because of lack of relevant data
31.900
Volume (tons)

Value (EUR mil) nema

Consumption per capita (kg) 15,8

Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market

15
Frozen food market in Croatia

CONSUMPTION PER CAPITA(2011., kg)

Total frozen food market in Croatia is estimated on
approx 35.000 tons and 617 millions kuna (cca EUR 83
13,2
millions) in 2011.

7,9
It’s expected that frozen processed food will have growth
5,7
on average yearly rate 3,9% in period of 2013-2016
due to expected economical recovery

Frozen food products suitable for the Croatian

consumers needs for simple and affordable meals CROATIA Adria region (average) EU (average)
and they continue to strengthened its image as
Source: Datamonitor, ACNielsen, Planet Retail
more healthier food compared to canned food
Quantitative Value
Presence of coolers in Croatia is high and almost
each household is equipped with freezer.
Ready Pastry Ready Pastry
Frozen food producers are equipping stores meals 11% meals 10%
with cooling chests thus providing a high level 14% 22%
Fruit and vegetables
equipment on the market as well as market
Fish 35.000tn 83 mil EUR 27%
coverage
25%
Fruits and
The dominant distribution channel are super / vegetables Fish
hypermarkets (58% market share) and small stores (23%). 50% 41%
The overall share of large retail chains (hyper /
supermarkets, discount chains) will continue to increase MARKET SHARE (2011. – volume in retail)
over the period until 2014.
Domestic producers have achieved about 80% of sales Pastry Fruits and vegetables Fish Ready meals
Rest Stanić Rest
of frozen food in the 2011. Ledo is a market leader Rest 6% ZMH H 3% 6% Rest
7%
with over 55% market share in all segments, ie. Jami 14% 4% 12%
pastry, fruits and vegetables, fish and ready meals 3% Private Private 5%
Private
Label Label
15% Label
15%
Private 8%
Label
21% 62%
Vindija
73% 71%
17% 57%
17
Source: Euromonitor, Nielsen
Source: Nielsen 2011.
Frozen food market in Serbia

CONSUMPTION PER CAPITA(2011., kg)

Frozen food market in Serbia in 2011. is estimated to approximately 13,2

26,500 tons and 4.4 billion dinars(approximately EUR 39 million)

It is expected that market will grow at an average annual rate 5,7
3,5
from 5.1% in 2016. The most of Serbian households are equipped
with a cooling freezers. Serbia Adria region (average) EU (average)

Source: Datamonitor, Nielsen, Planet Retail

Individual small retail stores remain the main channel for
frozen food in Serbia. However, modern retail channels PRODUCT SHARE PER SEGMENT (2011.)

like hyper / supermarkets continually gaining market Quantitative Value

Dough Fish Dough
size and are expected to develop in the future Fish 21% 26% 21%
17%
Dough Fruits and vegetables
Most of the stores are equipped with grocers cooling chests,
RSD 4,4
26.500t mlrd
with which are mainly supplied by manufacturers of frozen food
Fruits and Fruits and
Frikom is a market leader in all segments in which it operates vegetables
pekarska
vegetables
62% 53%
on the market: 10%

Frikom holds 70% market share in frozen vegetables, 34% MARKET SHARE (2011. – volume in retail)
Soorce: Nielsen 2011.
share in frozen fish and 36% of the frozen dough Dough Fruits and
vegetables Fish
Rest
The main competitors are Mara Sombor in the segment of frozen 14% Tropic
Rest
Rest 7%
31% Private 9% 34%
Dough-pastry (12% market share), Cooling Company Apatin in frozen label Principal
Beogradska 16% 14%
vegetables (6% market share) and Principal Duo in fish (14% of market
Pekarska
36%
share) Industrija 10% Private
Private 70%
Label Mara Label
11% 12% 36%
18
Source: Euromonitor, Nielsen
Frozen food market in BiH

CONSUMPTION PER CAPITA (2011., kg)

Frozen food market in BiH is estimated at approximately 9,900 tons
and USD 38 million (approximately EUR 19 million) 13,2

in 2011th.
It is expected steady growth in sales with average annual growth rate of 4.2% 5,7
until 2016. years, thanks to rising values of presence of super / hypermarkets in total 2,5

distribution and improved equipment inside stores with freezers BiH Adria region (average) EU (average)

Also, this category has constructed an image of healthier food than canned food Source: Datamonitor, Nielsen, Planet Retail

or chilled processed prepared food due to less use of additives and preservatives
PRODUCT SHARE PER SEGMENT (2011.)
In 2011 super / hypermarkets accounted for approximately
Quantitative Value
30% of the total sales of frozen food. It is expected that this proportion will rise Dough Dough
Fish 8% 9%
in the period 2012 until 2014. The domestic producers accounted for approximately 30%
Fish
90% of sales of frozen food in the 2011. 9.900t 44% BAM 38
mn
According to Nielsen retail panel, Ledo has a leading Fruits and Fruits and
vegetables vegetables
position in all its segments, ie. 81% in fruits and vegetables, 62% 47%

82% of fish and 44% in frozen dough

MARKET SHARE (2011. – volume in retail)

Dough Fruits and Vegetables Fish

Rest Rest
Private 13% Viciunai Rest
12% 7%
label 4%
Klas 6% Fratello-
10%
Trade
Sprind 7%
11%
Jami 44% 81% 82%
23%
Source: Euromonitor, Nielsen Source: Nielsen 2011.
Frozen food future growth drivers

RATIO OF FROOZEN FOOD PER CAPITA AND

Compared to Western European countries, frozen food consumption AVAILABLE INCOME PER CAPITA
is still underdeveloped with very low per capita consumption High sensitivity on Developed frozen food markets
disposable income
The manufacturers of frozen food in the last ten years had significant investments
to improve the distribution infrastructure, increasing cooling equipment
chests, product availability and increasing consumer awareness of frozen food products
The market is currently at the beginning of a new phase of development that will be

Developed countries
supported with increasing presence of modern distribution, new habits such as the need for
affordable food, awareness of healthy eating and search for high-quality
and affordable products, which currently can be seen in the EU markets
Frozen food market in the future should be developed from market with relatively simple
ingredients products to market offering sophisticated products with added value
such as frozen ready meals.
Countries of Adria region are showing strong potential consumption growth

Countries in development
up to levels of consumption in European countries. The expected increase in disposable
income on the basis of economic growth and integration in the EU will
enhance future consumption of frozen food

Hrvatska, Srbija, Ma arska,

Slovenija, BiH

Source: Euromonitor, Datamonitor

20
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom/Ledo
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market

21
 Competition market coverage and share
Ledo/Frikom absolute leader in the region

#2
income in 2011 in Adria region

Income ( Income in mil

HRK

CROATIA 1,027

SERBIA 530

BOSNIA AND HERCEGOVINA 247

SLOVENIA 110

MONTENEGRO 85

HUNGARY 30

FYROM 14

KOSOVO 9

TOTAL 2,052

Source: AC Nielsen 2011.

Top 3 markets are 88% of total income

24
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market

26
Power of brand

Power of brand
Innovative and creative, dynamic and flexible
Ledo/Frikom – synonym for quality
Understanding specifics of each market
Development of recipes adjusted to consumers preferential

27
Power of brand

Up to 95% brand awareness*

Up to 98% brand awareness*
Up to 97% rate of tasting 81% “on top of mind” brand

BRAND STRATEGY

Brand building
Consistency in communication (talking about quality and tradition, campaign “Frozen is healthy”
for frozen food)
Continues product and marketing innovations
Full coverage of product segment – from basic to premium products
Creating completely new product segments(traditional ready meals, products for kids,
functional , healthy products)

* BrandPuls brand awareness research 2011.

28
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market

31
Power of Sales and Distribution

During summer season:

40.000 km
dnevno
Daily visit 20.000 point of sales
220.000 boxes daily delivered to sales points
815.000 kg daily delivered
4 million ice creams daily sold during season

32
Most developed distribution network

FROZEN SEGMENT COVERAGE

From ice cream to frozen food

Budapest

Hungary
CHANNEL COVERAGE SIovenia
Zagreb
Ljubljana
From retail To HoReCa Croatia

Belgrade
Bosnia &
BARRIER FOR ENTERING MARKET Herzegovina Serbia
Sarajevo
Only integrated logistic and production
company in the region and wider capable Montenegro Pristina
of delivering goods everywhere Podgorica Kosovo
Skopje
KEY DATA
Macedonia

Around 50.000 point of sale

123.387 freezers
38 warehouse with capacity of 58.000 pallets:
18 Distribution Centers
Production facilities
14 Cross-Docking Centers Distribution centers
460 cooling vehicles Cross-docking centers

33
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH Route to the market

37
 Modern production facilities

Frikom/Ledo has four manufacturing plants located in the heart of Croatia, Serbia, Bosnia and Herzegovina, Hungary
Total annual production capacity is 48,430 tons of ice and 68,300 tons of frozen food, of which capacities in Croatia and Serbia to 86%
of total capacity. The total production of ice cream in the 2011th amounted to 28.440 tons or 59% of total capacity while the total frozen
food was 39.821 tones or 58% of total capacity
Two mentioned plants, exported about 20% of the quantities produced, in other markets. Bosnia and Herzegovina imports from these two plants
about 30% of the amount sold in the country.

Ledo Frikom Ledo Čitluk Ledo Kft Irida

Croatia - Zagreb Serbia - Belgrade BiH - Čitluk Hun. - Budapest Croatia - Daruvar

Ice cream
Frozen food

Production lines 15 20 3 1 5

Production capacity Ice cream 21.000 19.000 1.500 6.930 -

(tn/year.) Frozen food 20.900 39.400 2.000 - 6.000
Ice cream 14.720 10.597 962 2.161 -
Produced quantity
in 2011. Frozen food 10.029 25.423 1.138 - 3.231
Average utilization rate in Ice cream 70% 56% 64% 31% -
2011. Frozen food 48% 65% 57% - 54%

38
Content
Macro economical environment in Adria Region
Attractive frozen food market
Market and competition overview per country
Competition overview Frikom
Key factors of success of Frikom/Ledo:
- Power of brand, marketing, research and development
- Sales and distribution
- Modern production facilities
FFH route to the market