YOUR

MOVE

Bulgaria: Food & Beverage Sector

2006 InvestBulgaria Agency

WHY Bulgaria? Bulgaria has the largest number of mineral water deposits in Europe - more than 250 mineral water deposits and over

500 sources and boreholes in the country (France – 64; Spain - 89)

Strong traditions in wine making – 2% of the world market share

Very high quality organic products (ban on GM products)

EU food legislation integrated in the Bulgarian legislation

Unique climate conditions support wide variety of crops, fruit and vegetables

Environmentally clean and fertile soil

L ATESTdeals

Vendor Investor Target Size (EUR m)Familia Equest Partners (UK) Acquisition of 30% of the Bulgarian supermarket chain Familia 26

Modernization Karnobat Winery Upgrade of production facilities 9

Carlsberg Bulgaria Investment Fund for CEE (Denmark) 20% of Carlsberg Bulgaria 7.5

Ikken/Bora Consult Discopm Holding Bankya Mineral Water (bottling company) acquisition 7

Greenfield Domain Menada New winery 4

Extension Nestle Bulgaria Distribution center 2.6

Government Coca Cola HBC (Greece) 20-year mineral water concession 2.1 EUR/m3

Greenfield Azi Agro Holding (Italy) Strawberries processing plant 2

Greenfield Brewinvest (Coca Cola HBC/Heineken J/V)

New hi-tech brewing facility 2

Zagorka AD Bulmalt Ltd Acquisition of Zagorka’s malt plant in Chirpan 1.35

Modernization Vitabal Meat processing plant modernization 1.2

Greenfield Tefenlili Gida (Turkey) Nuts factory 0.5

Rusteco Protein Provimi (Holland) Animal feed producer Undisclosed

Discopm Holding Coca Cola / Coca Cola HBC 100% of Bankya Mineral Water Undisclosed

Pipeline projectsVendor Investor Target Size (EUR m)Greenfield Wine sector Planting 5,000 ha of new vineyards a year in 2005 and 2006 200

Extension Carlsberg Bulgaria New production facilities in its two Bulgarian breweries 18

Greenfield Sammisound (South Korea) Spaghetti Factory (Korean type of spaghetti) 15

Belvedere Capital Management EBRD EUR 7 m long-term secured debt + EUR 2 m for acquisition of 10-20% share in the company 9

Greenfield Icefruit Processing, freezing and canning plant 6

Modernization BBB Group Implementation of new technologies 5

Greenfield Boni Holding New slaughterhouse 3.6

Extension Lactina Probiotics plant completion 2

Extension Norex Agro (Bulgarian-Dutch J/V) 8 silos and auxiliary facilities 1.5

Greenfield BiV Herbs (Bulgarian-Dutch J/V) Herb processing plant 1

Modernization Bravo Boosting output capacity by 70% to 50 tons of meat products daily 1.5

Acquisitions Metro Cash & Carry (Germany) Opening of approx. 200 stores in Bulgaria under the Aro brand through acquisitions n.a.

1

FOOD & BEVERAGE Fact SheetImportance of the food & beverage industry for Bulgaria

Export

Sources: National Statistics Institute, Bulgarian National Bank

Attractive subsectorsMineral water More than 250 mineral water deposits and over 500 sources and boreholes in the country (France – 64; Spain - 89) Capacity of different mineral sources varies from 0.5 to 63 l/sec Overall capacity of mineral water sources in Bulgaria - over 3100 l/sec Depth of water sources – 400 - 1500 meters Temperature varies from 13ºC to 102ºC Hottest mineral spring in Bulgaria – Sapareva Bania (102ºC) Degree of mineral water resources usage – 37% Annual consumption of soft drinks in 2004 – 1,070 million liters which is 138 l/capita Market share of soft drinks in 2003 – 55% Consumption of mineral water has increased 5 times since 1991 and is still rising Mineral water consumption in 2004 – 419 million liters (54 l/capita) per annum

Wine-making 2% of the world market share Amongst the top 15 wine producing and exporting

nations in the world Industry is 100% private as of 2000 About 50 cellars producing bottled and bulk red, white

and sparkling wines More than 80% export production Wine export has 2% share of Bulgarian exports in

value terms Total production of wine industry in 2003 is 1.7 million

hl and is expected to rise to 3.6 million hl in 2005

Case studies Amylum Bulgaria Nestle Bulgaria

Amylum entered the Bulgarian market in 1993 The company produces wide range of starches, glucose syrups, crystalline and

liquid dextrose, high fructose corn syrups (HFCS) and maltodextrins The produce of the company is applicable to different sectors of the industry

- Food & Beverages, Pharmaceuticals, Fermentation, Paper and Corrugated Board, Compound Feed Industry, etc.

Investment value – USD 52 m (1993-2004) Employees in 2004 - 210

The largest food company in Bulgaria Nestle S.A. entered the Bulgarian market in 1994 after the purchase of the largest

confectionery plant in the country, located in the outskirts of the capital Sofia. Investment (1994-2004) – USD 33 m The company’s microbiological laboratory in Bulgaria was certified as the Nestle

laboratory ensuring the most precise analyses in the world 25% year-on-year sales increase in 2004 Capital in 2004 - EUR 4.3 m Employees in 2005 – 975

Carlsberg Bulgaria Trakia Water Present in Bulgaria since 2002 Carlsberg Breweries A/S (Denmark) purchased Shumensko Pivo JSC and

Pirinsko Pivo JSC USD 70 m invested till the end of 2004 About 20% market share (3rd place in Bulgaria) 670 employees Major Carlsberg brands in Bulgaria: Shumensko pivo, Pirinsko pivo and Tuborg In 2004, Carlsberg Bulgaria JSC sold 20% of the shares to Investment Fund

for Central and Eastern Europe Shumensko Pivo is the most dynamically developing brewery in Carlsberg group

Trakia Water JSC is a Swiss-German-Bulgarian company, based in Plovdiv Size of investment – EUR 1 million Trakia Water JSC holds the concession for the “Vojvodinovo” mineral source in

Voivodinovo village, Municipality of Maritsa The main scope of activities of the company is bottling of natural mineral water, sparkling

natural mineral water and production of soft drinks based on natural mineral water The company owns a modern bottling factory, provided with high- tech and completely

automatic equipment Trakia Water JSC realizes its production on the export and home markets under the

trade mark АquaТRAKIA.

Share of Food processing in Bulgaria’sindustrial gross output, 2004

Food processing

16.2%

Production of Food, beverages & tobacco (EUR m), 2000 - 2004

1756 18241937

2108

2364

1000

2000

3000

2000 2001 2002 2003 2004

EUR

mill

ion

Share of employees in Food processing in thetotal workforce, 2004

Food processing

3.6%

Export of the Food & Beverage industry, 2000-2004 (EUR m)

146172

321

218

279

172219

247

300

349

83 77 75 73 73

0

100

200

300

400

2000 2001 2002 2003 2004

Raw materials for the food industry Food Beverages

Export of the Food & Beverage industry as % of the total export of Bulgaria, 2004

Total export of Bulgaria - EUR 8 bn

8.8%

Annual average gross salary in the food,beverages and tobacco industries

(Private sector data)

1,4841,319

1,2271,182

0

400

800

1200

1600

2000

2001 2002 2003 2004

EU

R

2

Legal4.1. Registration of the vineyardsAuthority Executive Agency for the Vine and Wine at the Ministry of Agriculture and Forestry

Required documents Individuals and companies producing wine grape must register at the Executive Agency for Vine and Wine.

The application for registration must be accompanied by:

1. Declaration form issued by the Executive Agency for the Vine and Wine for the location of the vine plants;

2. Certificate of incorporation/registration – for corporate entities;

3. BULSTAT card register.

Timeframe 14 days

Legal framework Wine and Alcoholic Beverages Law

4.2. Registration for production of spirits, distillates and alcoholic beveragesAuthority Minister of Economy

Required documents Production of spirits, distillates and alcoholic beverages can be carried out only by persons registered as entrepreneurs in the meaning of the

Commercial Law, entered in the register of the producers of spirit, distillations and alcoholic beverages at the Ministry of Economy upon submit-

ting an application accompanied by:

1. Court decision for registration and certificate of actual state

2. Technical information about opened and closed production sites and storehouses

3. Permit for using the production site

4. Technical specifications for the production of spirits, etc.

5. Sanitary permit for exploitation of the production site

6. List of technicians managing the production process

7. BULSTAT card

8. Declaration from the producer that he has not produced spirits without license

9. Receipt for paid state taxes

Timeframe 14 days

Legal framework Wine and Alcoholic Beverages Law

4.3. Registration of food - producing enterprises Authority 1. Regional office of the Regional Inspection for Preservation and Control of the Public Health (RIPCPH) at the Ministry of Health

2. Regional office of the Veterinary Supervision at the Ministry of Agriculture and Forestry

Required documents The RIPCPH registers the sites of production of foodstuffs of non-animal origin and of the trading places of foodstuffs, with exception of the

wholesale trading places for foods of animal origin. The regional veterinary office registers the sites for obtaining, production, processing, stor-

ing, packing and re-packing of raw materials and foodstuffs of animal origin, as well as the sites of wholesale trade of foodstuffs of animal origin.

In order to register the persons file an application form, accompanied by:

1. Certificate for actual state of the applicant

2. Permit for use of the production site under Spatial Planning Law

3. List of the foods that will be produced

Timeframe 30 days for inspection of the documents and 14 days for completing the registration

Legal framework Foods Law

4.4. Production and trade of animal foods Authority Minister of Agriculture and Forestry

Required documents The individuals and the corporate entities producing and/or trading with products or substances designated for animal food must register at the

Ministry of Agriculture and Forestry not later than 30 days after start of activity.

The registration is made upon submitting an application to the Minister of Agriculture and Forestry

Timeframe Not specified

Legal framework Fodder Law

3

COMPET I T ION , PARTNERS , suppliers

5.1. Top companies in the food & beverage industry

Company ActivityNet sales

(EUR ‘000)Number of employees

Year

1 Nestle Bulgaria (Sofia) Sugar and chocolate products 52,203 975 2004

2 Amylum Bulgaria (Razgrad) Production of cereal related products 40,055 216 2001

3 Chipita Bulgaria (Kazichene) Croissants, flour and food-stuffs 38,774 523 2004

4 Coca Cola HBC Bulgaria (Sofia) Bottling of water and soft drinks 35,300 1,100 2004

5 Sugar Plants (Gorna Oryahovitza) Sugar production 32,691 1,250 2004

6 Danone Serdika (Sofia) Production of dairy products 28,710 324 2004

7 Meat Factory-Lovech (Lovech) Meat and meat products 28,613 430 2004

8 Kaliakra-Dobrich (Dobrich) Refined oils and fats 26,426 410 2004

9 Agrima (Sofia) Beverages 18,049 573 2004

10 Sofia Mel (Mill factory Kraps-Mel 1) (Sofia) Production of flour, grain 15,206 218 2004

11 Brezovo (Brezovo) Meat and meat products 13,618 133 2004

12 Delta - Bulgaria (Delvi-P) (Sofia) Ice-cream production 11,110 602 2004

13 Day and Night (Gorna Oryahovitza) Wafers manufacturing 10,720 111 2004

14 Pobeda - Burgas (Burgas) Production of rusks, biscuits; pastry goods and cakes 10,179 594 2004

15 Dobrudzhanski hlyab (Dobrich) Bread production 10,122 330 2004

16 Prestige - 96 (Veliko Tarnovo) Production of biscuits; pastry goods and cakes 10,091 n.a. 2004

17 Kendy (Bankya) Mineral water and soft drinks 9,717 127 2004

18 Meggle-MJ (Sofia) Production of dairy products 9,235 134 2004

19 Slanchevi lachi Bulgaria (Sofia) Production of vegetable oil 9,233 205 2004

20 Tandem-V (Sofia) Meat and meat products 9,172 157 2004

5.2. Top beer, wine and spirits producers

Company ActivityNet sales

(EUR ‘000)Number of employees

Year

1 Zagorka (Stara Zagora) Beer production 74,649 464 2004

2 Kamenitza (Sofia) Beer production 69,842 1,796 2004

3 Carlsberg Bulgaria (Sofia) Beer production 42,840 670 2004

4 Domaine Boyar (Sofia) Wine production 13,266 309 2004

5 SIS Industries (Sofia) Spirits production 12,300 1,038 2004

6 Boliarka VT (Veliko Tarnovo) Beer production 11,742 236 2004

5.3. Top companies in agriculture

Company ActivityNet sales

(EUR ‘000)Number of employees

Year

1 Gradus - Ivan Angelov–55 (Panagyurishte) Farming of poultry 19,535 79 2004

2 Viand (Sofia) Growing of crops, farming of animals 12,483 48 2004

3 Eggs and Chicken Company - Zora (Donchevo) Poultry and eggs 7,581 350 2004

4 Industrial and Hybrid Animal Breeding Brothers Commerce (Shumen) Animal breeding 7,388 333 2004

5 V & VGD Green-houses - Petrich (Petrich) Production of vegetables & seedlings 6,708 262 2003

6 Svinecomplex Samuil (Russe) Farming of swine 5,063 n.a. 2004

7 Svinecomplex Brashlen (Brashlen) Farming of swine 4,975 n.a. 2004

8 Hybrid Centre for Pig-breeding (Shumen) Farming of swine 4,134 72 2004

9 Klokotnica - Haskovo (Haskovo) Farming of swine 4,024 140 2003

10 South Wine (Burgas) Vine-growing 3,735 n.a. 2004

Source: Bulgarian Industrial Association

4

6.1. Educated workforce

University / College Location Majors (sector related)U2 Agricultural University - Plovdiv

www.au-plovdiv.bg Plovdiv General Agronomy

Animal Breeding and Husbandry Agronomy – Horticulture with

Viticulture

Agro engineering Tropical and Subtropical Agriculture Agricultural Economics Plant Protection

C1 Bulgarian-German Agricultural College within Trakia University www.uni-sz.bg

Stara Zagora Farming Agronomy

Agricultural Economics Agro engineering

C2 Higher School Agricultural Collegehttp://agricollege.hit.bg

Plovdiv Technologies in horticulture and wine-production

Agricultural economics Farming

6.2. Sector-related exhibitions in BulgariaExhibition Name Location (City) Dates Frequency For more infoVinaria (International exhibition of vine-growing & wine produc-ing; national wine & spirits tasting)

Plovdiv International Fair (Plovdiv)

16 - 20 Feb 2005 Annually www.fair.bg

Agra(International agricultural exhibition)

Plovdiv International Fair (Plovdiv)

22 - 26 Feb 2005 Annually www.fair.bg

Varna MeatMania 2005 Palace of Culture and Sports (Varna)

2 - 5 Mar 2005 Annually http://amb.dir.bg

International Consumer Goods and Technologies Fair Plovdiv International Fair (Plovdiv)

9 - 14 May 2005 Annually www.fair.bg

Foodtech(International exhibition of food products and technologies)

Plovdiv International Fair (Plovdiv)

9 - 14 May 2005 Annually www.fair.bg

Bulpek 2005 (International exhibition for bakery and confectionery) “Festivalna” Hall (Sofia) 26 – 29 Oct 2005 Annually www.fbcb-bg.org

Interfood & Drink (Food products and beverages) Inter Expo Center (Sofia) 16 - 19 Nov 2005 Annually www.bulgarreklama.com

The World of Milk (Milk products and specialized equipment) Inter Expo Center (Sofia) 16 - 19 Nov 2005 Annually www.bulgarreklama.com

Salon De Vin (Wines, spirits and accessories for wine and spirits) Inter Expo Center (Sofia) 16 - 19 Nov 2005 Annually www.bulgarreklama.com

Meatmania (Meat products and delicacies) Inter Expo Center (Sofia) 16 - 19 Nov 2005 Annually www.bulgarreklama.com

WORTH

7. Useful contacts and linksOrganization Phone Web siteMinistry of Agriculture and Forestry +359 2 985 11 255 www.mzgar.government.bg

National Agricultural Advisory Service +359 2 917 6068; +359 2 917 6070 www.naas.government.bg

Association of Bulgarian Agricultural Producers +359 2 873 2911 www.azpb.org

FoodBulgarian Association of Food and Drink Industry +359 2 952 09 89 www.bafdi.com

Association of Meat Processing Enterprises in Bulgaria +359 2 540 193 www.amb.dir.bg

Federation of Bakers and Confectioners in Bulgaria +359 2 945 4519 www.fbcb-bg.org

Union of Sugar and Sugar Products Producers +359 2 248 969; +359 32 952 3756 www.usspp.com

Union of Canning Companies in Bulgaria +359 2 978 5456; +359 2 978 3314 www.canning.bafdi.com

Union of Vegetable Oil and Oil Products Producers in Bulgaria +359 2 989 2408; +359 2 989 9481 www.sunoil-bg.org

Beverages, beer, wine and spiritsBulgarian Soft Drinks Association +359 2 983 2422; +359 2 983 2687 www.bsda-bg.org

Executive Agency on Vine and Wine +359 2 970 8111 www.eavw.com

National Vine and Wine Chamber +359 2 981 1674 www.bulgarianwines.org

Union of Brewers in Bulgaria +359 2 986 5090 www.bia-bg.com/bia/branch/brewers.htm

AgroWebBulgaria www.mzgar.government.bg/agroweb

Bulgarian Agribusiness Online www.bgagro.com

knowing University of Food Technologies (Plovdiv) www.vihvp.bgMajors (sector related)

Technology of beer and wine Technology of grain, bread and fodder products Technology of milk and milk products Canning and refrigeration technology Technology of meat, fish and eggs Technology of tobacco and tobacco products Technology of sugar, sugar products, starch and starch hydro isolates Technology of vegetable and essential oils, perfumery and cosmetics Biotechnology Refrigeration and ventilation technologies Analysis and control of food products Technology of fermentation processes (in French) Packaging and packaging technologies for the F&B industry and biotech

5