Alcoholic Drinks in Bulgaria

Euromonitor International's Alcoholic Drinks in Bulgaria market report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data, allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new product developments, packaging innovations, economic/lifestyle influences, distribution or pricing issues. Forecasts illustrate how the market is set to change.

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Product coverage

Beer; Cider/perry; RTDs/High-strength premixes; Spirits; Wine

Executive summary

Alcoholic Drinks Sales Continued to See Healthy Growth in 2008

In 2008, the alcoholic drinks market continued its positive volume development, which had started earlier in the review period. The volume development was only marginally below the review period’s CAGR, which indicates that the market still has capacity to expand. However, not all areas performed equally well – while beer, wine and cider developed positively, spirits stagnated and RTDs continued to lose sales to rival categories.

Consumers Favouring Heavily Advertised or Healthy Products

Despite varying degrees of success for the various alcoholic drinks categories, generally brands that enjoyed a high level of advertising support or ran innovative public relations campaigns scored better than competitively priced brands with low levels of marketing spending. This phenomenon was particularly evident in beer, where the heavily supported brands of multinational companies gained share at the expense of local products. A similar development pattern was exhibited by local and imported spirits brands, which enjoy a fair amount of marketing investments. Moreover, the image of wine as being healthy and the positive reputation of producers were behind the success of domestically produced wine brands.

Mergers and Acquisitions Create Turbulent Competitive Environment

The competitive environment in 2007 and 2008 was particularly turbulent as a result of exits (spirits) and acquisitions (wine) as well as the potential for two further acquisitions (beer). As a result, the alcoholic drinks market is becoming more concentrated, with a few large companies dominating sales and a large number of small ones providing choice at the higher price points.

Dominance of the Off-Trade Channel Continues

Three quarters of alcoholic drinks are consumed at home in Bulgaria, which is indicative of the preference of local consumers to “chill out” at home and buy economy and standard brands for this purpose. The only exception is RTDs, which has been traditionally orientated towards the on-trade channel. Imported spirits, premium beer and wine, on the other hand, have good positions in the on-trade as they allow for better returns.

Modern Retail Trade Gradually Gaining Share from the Traditional Channels

The supermarkets/hypermarkets channel increased its share within the retail split over the review period. However, independent small grocers is still the main channel for the bulk of alcoholic drinks sales, as such outlets stock popular economy and standard brands. The food/drink/tobacco specialists channel still commands a relatively small volume share, but they are important outlets for the purchases of exclusive wines and spirits, which may not be available through the other channels.

Slower Volume but Stronger Constant Value Growth Expected Overall

Volume growth in the forecast period is expected to slow down compared to the review period. While spirits sales will only be stagnating (year-on-year), a/the slowdown in beer sales will be the main factor behind the lower growth rates overall. However, beer will still display the best performance of all core alcoholic drinks sectors. Wine is expected to develop at rates comparable to those of the review period and RTDs is expected to continue to decline rapidly. Cider will remain of marginal importance for alcoholic drinks as it relies on purchases by foreign tourists.

EU Membership to Impact Company-level Strategies

On 26 September 2006, the European Commission reported that Bulgaria had made sufficient progress to be in a position to take full EU membership, and Bulgaria subsequently joined the EU on 1 January 2007. The EU membership has opened opportunities and created obligations for the new member state.

Current Impact

The EU membership could aid the competitiveness of the Bulgarian wine, spirits and beer producers, which could come as a result of two main factors: improved market access and availability of EU funding. On the other hand, the membership obligations are in the form of requirements to bring production processes into line with EU norms and align them with the rules of the Common Market.

With respect to the improved market access, both beer and wine producers have taken advantage of the opportunities for expansion and exports. For example, local breweries Lomsko Pivo AD and Boliarka VT AD have reacted to export opportunities in the years following the accession. Wine producers did not benefit to the same extent because, under the EU Association Agreement, signed in 1995, Bulgaria already enjoyed preferential terms of trade. However, the abolition of all import duties benefited all the main alcoholic drinks sectors – beer, wine and spirits.

EU grants, previously administered under the SAPARD programme and under the current structural funds, have been used to improve the competitiveness through encouraging the adoption of technological advances, developing the human resource potential and securing regular input supply. The wine industry has been the main recipient of these funds, attracting EUR70 million.

However, the EU membership has also brought with it some obligations, which relate to product traceability and organisation of the production process. For example, in the EU member states, production of wine is separated from the production of spirits. In Bulgaria prior to EU accession one company could carry out both types of production. In line with EU measures aimed at securing supply chain traceability from the vine to the end product, spirits and wine production now should be carried out by separate entities and this measure was integrated into the Law on Vine and Wine. Under the separation measure processors can access funds for compulsory distillation.

Outlook

The EU membership will undoubtedly continue to contribute towards improving the welfare of Bulgarian alcoholic drinks producers. Availability of EU grants will be the most important factor that will induce change. The most direct outcome is expected to be improved input supply, product quality and marketing expertise. In theory, these three variables should aid companies’ attempts to enter new markets or penetrate existing ones.

The wine industry will benefit most from these grants – the sector will be entitled to EUR166 million in the 2008-2015 period, and the subsidies will be directed to cover much-needed activities – export promotions in non-EU countries, conversion measures, crisis management, modernisation of wine production and research and development spillover. The conversion and replanting subsidies will have an effect on improving grape supply and final wine quality.

Measures designed for the rural areas can encourage the setting up of small wineries and microbreweries. This will have an effect on both wine and beer market sizes and will also boost the value generation potential of the consumer foodservice channel. Since spirits production uses wine bi-products as inputs, it is very likely that the wine industry will experience indirect benefits.

Future Impact

It is likely that the effects of the EU subsidies will not be felt before 2010. In the second half of the forecast period the alcoholic drinks industry is expected to become much more competitive and segmented.

Spirits is not likely to be affected much in terms of industry structure, firms’ marketing strategies and new product development. The beer industry is expected to experience changes, with these changes likely to primarily affect the domestic premium segment. They will occur as a result of the entry of new players that operate boutique production and thus are differentiated from the large-scale multinational breweries. However, they are bound to remain small regional players and will not challenge the leading firms’ positions in volume terms. Most interesting developments will occur within wine. As the number of small and medium-scale wineries is expected to increase, this will bring variety in the mid- and high price bands. In order to compete with the growing number of wine companies, the new players will need to adopt proactive market-orientated strategies – tailoring varietal structure, expanding distribution, and managing public relations and marketing activities. By the end of the forecast period the exit of some companies is envisaged, since not all new entrants will be equally successful in their production and marketing strategies.

Home Production of Wine and Spirits Hinders the Commercial Sector’s Growth

Home production is considered to be the greatest hindrance to the alcoholic drinks industry in Bulgaria, competing in volume terms with industrial produce. This situation has been thriving for years and even the imposition of an excise tax on non-industrially produced alcohol in January 2007 could not curb home production. Both the spirits and wine businesses suffer from the size of home production, which also confines growth in these industries.

Current Impact

According to the Executive Agency on Vine and Wine, in 2007 as much as 38% of the grape harvest was accounted for by the private non-commercial sector. This percentage has traditionally been high and even the imposition of an excise tax on non-industrially produced spirits in 2007 could not curb home production. Falling revenues from excise stamp collection in the first full year when the new tax legislation was enforced (see the Taxation and Duty Levies section) indicates that home production is still flourishing.

Despite gradually increasing incomes and greater availability of wine and spirits products, low-priced and low-quality home-made rakia and wine remain popular. They are not only purchased for their very competitive prices, but because of traditions and beliefs that all home-made products (rakia, wine, jams and preserves etc) are “natural” and do not contain chemicals and preservatives. Home-made alcohol production is not just a problem for commercial producers seeking greater sales for their brands. In fact, a proportion of the non-industrially produced alcohol finds its way into commercial establishments and the thriving tourist industry provides a boon for such products. The negative impact comes from the tax evasion, poor quality control and disloyal competition.

Outlook

Since January 2007, however, those who wish to make their own home-made spirits have had an excise duty at the rate of BGN2.20 per litre imposed on them, if no more than 30 litres are produced. Quantities above 30 litres are taxed at BGN4.40 per litre. The excise was levied as part of Bulgaria’s agreements with the EU, where the minimal rate of excise should be at least EUR550 per hectolitre of pure alcohol. Exceptions are only made for small non-commercial distilleries. In Bulgaria the ethyl alcohol (rakia) produced in such places is taxed at BGN550 per hectolitre of pure alcohol. Similar agreements on home-made spirits were reached during negotiations with Slovakia and the Czech Republic.

Future Impact

The administration of the volume restrictions and excise collections on home production will be quite difficult because of the large number of distilling pots and the lack of an effective system to track exact quantities of grapes that are brought in for distillation. Owners of distilling pots are only obliged to sign a declaration form that they will not surpass the maximum permitted quantity of distillate. The current system for excise collection for non-commercially produced spirits is often breached and it is likely that the so-called home production will continue at least in the short term.

The poor control over the rural distilling pots will not encourage switching to better-quality commercially produced spirits. Most affected will be the producers of rakia in the economy segment, since a significant proportion of rakia drinkers perceive the home-made and industrially produced spirit as substitutes. Similarly, excise tax collection is also likely to be hampered because of the many caveats in the collection enforcement system.

Factors that may gradually alleviate the situation and lead to a gradual decline in the consumption of home-made rakia and wine are EU monitoring on the administration of excise duties, the change in generations, busier lifestyles, increasing disposable incomes and the access to a modern retail environment. Undoubtedly, changes in the form of ownership of the rural distilling pots (if they become part of large commercial organisations) can also lead to an improved tax collection, but it may not be so good at curbing the spillover of home-made spirits onto the market.

Micro and Macro Trends Encourage Premiumisation of the Alcoholic Drinks Market

Several micro- and macroeconomic factors contributed to the penetration of premium spirits, beer and wine brands in Bulgaria in 2008. On the macro level, EU membership and abolition of the import duties, GDP growth and increasing consumer expenditure on alcoholic drinks have contributed to the penetration of more expensive brands. At the micro level, the marketing strategies of local producers, importers and retailers, competitive pricing of imported wines and spirits and domestic production of premium lager have further expanded possibilities for these segments. Finally, opportunities to travel, work and study abroad have exposed even greater numbers of Bulgarians to foreign and more expensive brands.

Current Impact

Growing disposable incomes of Bulgarian consumers (gross income as a percentage of a country’s total income), which increased by 1% in 2008, enabled consumers to afford and buy more expensive alcoholic drinks. Also, the abolition of the Communist regime in 1989 and the EU membership in 2007 enabled more people to work, travel and study abroad, which, in turn, improved their welfare and made them more demanding with respect to quality. Since the imported wines and spirits and domestic premium lager retail at higher prices, their penetration in Bulgaria has contributed to the market value growth.

The abolition of the import duties for EU-manufactured alcoholic drinks has prompted national brand owners to increase variety within their lines and engage in a number of below-the-line activities to communicate the improved price competitiveness. Furthermore, eight international beer brands (Amstel, Beck’s, Staropramen, Tuborg, Stella Artois, Kaltenberg, Holsten and Kaiser) are now produced domestically, which has favoured the size of the domestic premium segment.

The premiumisation trend is still in its infancy in all three main areas of the market. For example, local spirits’ volume share stagnated in 2008, while importers indicated that the category of imported spirits realised 15-20% growth. Also, premium lager increased by 14% between 2007 and 2008, which made it the fastest-developing area in beer. In wine, industry sources indicate that imported wine in the upper mid-price band (BGN8.00-11.99) is benefiting from the organic market growth and point-of-sale and promotional activities in chained retailers’ brochures.

Outlook

Volume growth figures indicate that the premiumisation trend will continue to be particularly strong in domestic premium lager, imported spirits and wine in the BGN8.00-11.99 and higher price bands. While the total alcoholic drinks market is expected to grow by a total of 8% in volume terms between 2008 and 2013, all these categories are expected to demonstrate above-average growth. Domestic premium lager is expected to lead with a 50% volume increase. This will boost its volume share in overall beer sales from 21% in 2008 to 26% in 2013. Forecasts based on trade interviews indicate that imported spirits will be the second fastest growth area. In volume terms, in 2007, imports of spirits exceeded wine imports, and this ratio is likely to remain unchanged during the forecast period. Currently, imported spirits command a volume share of no more than 10% of total spirits sales, but this percentage is bound to increase. Imported spirits are not likely to overtake the positions of locally produced ones, but greater penetration and a 25% volume share by 2013 will be a very good result.

Future Impact

The premiumisation trend will certainly be manufacturer led with brand owners contributing serious proportions of their marketing budgets to new product development and advertising. The three local branches of the multinational companies InBev, Heineken NV and Carlsberg A/S will certainly be most active in this respect. Entry of new brands will certainly occur as a result of InBev’s merger with Anheuser-Bush. This merger can leverage InBev’s Bulgarian positions and aid the company to regain its number one position in Bulgaria, which was lost to Heineken NV’s local branch.

With respect to mid- and premium-priced wine, its “status” and “prestige” image is likely to be enhanced by marketing spending from both producers and with the aid of generic promotional and EU wine funds. Intensive entry of new players, which occurred since 2000, created a very competitive environment, which is bound to boost the importance of marketing and selling.

The levelling out of material and labour costs in Bulgaria and the EU will certainly lead to diminishing price differences between the local and international spirits. Moreover, strong brand image-orientated marketing of importers and adoption of separate product strategies for the on- and off-trade will boost the positions of imported spirits.

Despite Increasing Demand for Premium Products, Consumer Tastes Remain Traditional

The Bulgarian consumer has responded positively to producers’ new product developments in domestic premium lager, spirits and wine. However, market value growth came from improving sales of products sold at a margin, rather than the launch of true innovations.

Current Impact

The global alcoholic drinks industry is increasingly being innovation driven. This is particularly true for the developed markets where companies are looking for a competitive edge by launching products, which present brand new concepts in alcoholic drinks, or replicate trends in other food and drink sectors. Flavouring of beer, wine and spirits, crossovers between different product categories (eg beer and wine, addition of beauty ingredients in alcoholic drinks) or segmenting consumers according to age and gender have not yet been employed by Bulgarian companies. Currently, the new product development strategies largely focus on the image and perceived high quality and exclusivity of products. This marketing approach has been employed by spirits importers (Brown-Forman Corp, Maxxium Bulgaria, Diageo Bulgaria), wine producers in the mid- and high-priced segments (Damianitza AD, Domaine Boyar AD, Belvedere Bulgaria) and the three leading beer companies (Zagorka AD, Kamenitza AD and Carlsberg Bulgaria AD). Their new product development is based on quality improvements and brand penetration strategies. Despite marketing support for the innovative products (for example, Heineken NV’s BeerTender for draught lager and RTD cocktails), they have not proved popular because they do not yet serve specific consumer needs.

Outlook

The Bulgarian alcoholic drinks industry will not be isolated from the global trends. While, currently, consumer tastes are traditional, changing consumer demographics and input supply issues are likely to impact firms’ research and development decisions. Increasing urbanisation, growing numbers of households, a rising propensity to dine out and the low starting age of alcoholic drinks consumption will provide a boon for those companies that introduce new concepts in product design and perceived taste characteristics. Price factors, however, should be considered because in the coming five years disposable incomes will still be below the EU average. Supply deficiencies are also likely to impact the Bulgarian alcoholic drinks market. The shortage of glass packaging is becoming a real threat at a global level and, if it extends to Bulgaria, the alcoholic drinks industry is likely to suffer because of the large percentage of glass packaging employed. This will spur companies to be more innovative in terms of packaging materials and designs.

Future Impact

The Bulgarian alcoholic drinks market is still in its development stage, with volume and value growth potential for the coming five years looking positive. Only traditional products such as rakia, fortified wine and vermouth, mastika and RTD products, which displayed a short lifecycle, will follow a different path of development. This will result in two distinct types of producer strategies – producers of traditional products are likely to compete on a brand image and price basis, while spirits importers and beer and wine producers are likely to engage in the launch of innovative products, because they target different consumer groups. With respect to the latter group, in the first half of the forecast period it is likely that the focus will be on increasing the category penetration and attracting new users. As the market develops, the advertising and educational campaigns of brand owners are likely to result in increased awareness for concepts that in 2008 were still considered as novel (eg flavoured vodka, rosé wines). As a result, current trends in the developed alcoholic drinks market are likely to be seen in the latter half of the forecast period. The main influences will be the Western lifestyles and the Mediterranean culture of eating and drinking. However, revolutionary concepts such as alcoholic drinks fortified with guarana, ginseng or beauty ingredients are not likely to be introduced because they are too foreign to the lifestyle of Bulgarian consumers. Innovations in wine are likely, so they could attract new users (eg wines targeting women, wines for novice drinkers). In beer players are likely to build upon the current trend of decreasing the alcohol content of lager (eg launching “light” beers). In spirits the innovative concepts are likely to target existing users but induce them to trade up (eg flavoured liqueurs, premium vodkas and whisk(e)y).

Specialist Retailers

The specialist retailers channel in Bulgaria did not witness much development in 2008. The specialists channel in alcoholic drinks, as defined in Western countries (ie off-licences, liquor stores), is not common in Bulgaria. The main chained specialist retailers are Cheers, Premium, Bai Gencho and Tobi Nazdrave. There are also individual specialist shops, with this form of ownership more common in Bulgaria.

Current Impact

The slow development of chained specialist retailers indicates that there are other channels for the purchasing of beer, wine and spirits. At present companies that comprise the specialists channel only account for a tiny percentage of sales of alcoholic drinks, and they are limited to the larger cities. Sofia is certainly leading the trend, where there is much greater demand for these types of retail outlets and better opportunities for the financial sustainability of such narrow specialisation. On the other hand, the super-/hypermarkets have grown to become important places for the purchasing of wine and spirits and are expected to attract an even greater consumer base by employing marketing tools such as price promotions and wine tasting. In fact, the product range of the specialist channel differs greatly from what is offered in the chained multiples. The first difference is the prevalence of products in the higher price bands, a second is the availability of a large number of imported products, and a third the availability of expert staff in the specialist channel.

Outlook

The specialist retailers sell some really expensive boutique products alongside the best-selling brands in most ranges within alcoholic drinks. Their number is, and is expected to remain, low, because, with the exception of premium whisk(e)y, connoisseurs prefer to shop directly from importers because of the competitive prices. In this respect, importers have acted on this market opportunity and adopted a quasi-specialist role. Many operate mailing lists with special offers, organise wine dinners and provide door-to-door delivery services.

As a result, the number of chained specialists increased only marginally with only 1-2 notable additions in Sofia. There has not been any entries or exits of players either. Cheers and Premier, which are the best-known specialist retailers, have shops in Sofia, large cities and resorts. They are important for the sales of expensive whiskies, but also stock a good selection of premium wine brands, which are not widely distributed, but which are expected to increase in importance. Another chained specialist is Bai Gencho, which has five outlets, but, in contrast with the previous two, is orientated towards the low- and mid-priced segments. Examples of independent specialist retailers that operate one to two stores include Vinopolis, Semela and Bohem.

Future Impact

The specialist channel will witness further development during the forecast period. The importance of importers and the convenience of internet shopping are likely to continue to hinder the specialists’ development in the future. Independent specialists (or chained specialists with 3-4 shops) are expected to remain the most important format during the forecast period. Such establishments are likely to continue to be important outlets for the purchasing of whisk(e)y, other super-premium spirits and wines.

As a result of marketing investment, importers will continue to challenge specialist importers’ positions in Bulgaria. Consumers will continue to be attracted by the good price offers of importers and the convenience of one-stop shopping at the chained supermarkets/hypermarkets. In the future the specialised shops will find it hard to compete with the chained supermarkets and importers on a price and service basis. The chained super-/hypermarkets are expected to be the ones to benefit most from this situation. The ones that compete in the mid-and high-priced segments (Elemag and Piccadilly) are likely to expand their ranges of imported and exclusive local wines and spirits and attract potential consumers from the specialised shops. On the other hand, chains such as CBA, Evropa and Fantastico will gain from their convenient locations and abundant choice of mid-priced wines, local and imported beers and spirits.

Market Merger and Acquisition Activity

The situation in the local alcoholic drinks industry continued to be dynamic in 2007 and 2008 due to one strategic acquisition and several more expected mergers or acquisitions. After several years of cashflow problems, one of the leading wine producers and exporters, Domaine Boyar AD, was acquired by an investment fund. Owners of the spirits producer Select Distillery AD and brewing companies Lomsko Pivo AD and Bulbrew Holding are now looking for suitable investors.

Current Impact

The acquisition of Domaine Boyar AD was completed in the first few months of 2008. The offshore registered company Santa Ana Ventures Ltd purchased 52% of its shares. The rest still remain in the hands of Boyar Estates SA and private entities. Company sources confirmed that Santa Ana Ventures is an investment fund, but did not reveal any financial details. After the completion of the deal, a new company, named Domaine Boyar International, was formed and it controls Boyar’s main production units in Sliven, Korten and Shumen. The reason for the much-awaited merger are twofold: on the one hand, Domaine Boyar AD invested US$15 million into the state-of-the-art Blueridge winery, but, on the other hand, strong competition on international markets and worsening image of Bulgarian wines deprived Boyar of access to its key Western European markets. The Domaine Boyar and Blueridge brands suffered share losses on both the domestic and international markets and the strategic acquisition was expected to provide much-needed financial resources to meet operational expenses. It has not yet had a significant impact on the company’s positions and industry insiders claim that the company is seeking to attract additional shareholders that can contribute to improving its financial situation.

The eighth largest local spirits producer, Select Distillery AD, closed down production in August 2007 and is now looking for a strategic investor. The company’s top managers claim that unfair competitive practices of the leading spirits manufacturers were the reason for the worsening company performance. However, impartial observers point out that for many years Select Distillery has lagged behind the industry’s technological and marketing practices. The lack of focused marketing and insufficient resources to spend on advertising had been to Select’s disadvantage. It is not yet clear who the strategic investor might be, as the potential buyer will be investing in the declining segment of local spirits. Also, the strong positions of the local leaders Vinprom Peshtera AD and SIS Industries OOD pose very high barriers to entry.

Acquisitions are also expected to take place within the beer sector, with two of the top 10 leading companies looking for new buyers. Agro Invest Engineering, which holds 98% of ninth-placed Lomsko Pivo AD shares, is seeking to move out of beer and concentrate on its core electricity business. In 2007, a public offering for 40% of Lomsko Pivo’s shares was made through the Bulgarian Stock exchange and now Agro Invest Engineering is seeking a strategic investor. Although the owners of the fifth largest local beer producer Bulbrew have not given an indication that they would like to divest, the falling company share held by Bulbrew and the dominance of the multinational beer companies might determine its owners to exit the industry and enter a more profitable business. Most likely, in both cases, the investment will come from a local non-beer company, but foreign investment from a Central or Southeast European beer company is also a possibility.

Outlook

The most likely future targets are small-scale wineries, which were established since 2000. The underdeveloped state of the wine market, projections for increasing wine consumption and, most importantly, money available under several EU accession programmes resulted in an upsurge in the number of domestic wineries. Some 10-15 new ones were opened, but less than half of them are really active. The discrepancy between good production investment and poor managerial skills and know-how in wine production, is likely to lead to industry exits and a desire on the part of owners to sell their assets. EU grants, which can reach up to 60% of the wine investment, will be available to the wine industry up to 2010, and are likely to bring more new players into wine, despite increasing competitive pressure.

Future Impact

With respect to the current acquisition targets – Select Distillery AD, Lomsko Pivo AD and Bulbrew – potential buyers are still missing and the takeovers may take longer before they are completed. The most likely reason for prolonged procedures is the high price of the targets. Moreover, all three sectors are moving towards consolidation and optimisation of production. The largest beer, wine and spirits companies have already invested significant resources in the purchasing of assets and are not likely to bid for Lomsko Pivo AD, Bulbrew and Select Distillery AD.

The acquisition activity is expected to intensify in the medium and long term because the spirits business is becoming increasingly consolidated and the small brand owners will find it hard to maintain competitive prices and invest in their brands. Also, a large number of companies are investing in wineries and launching high-quality and handcrafted ranges on the market. However, while there are indications that wine will see accelerated growth, this may not happen fast enough to accommodate the quantities launched at premium prices. The winery owners will have to rethink their price and distribution policies, but some may decide to sell their assets.

Table of contents

ALCOHOLIC DRINKS IN BULGARIA : MARKET INSIGHT

EXECUTIVE SUMMARY

Alcoholic Drinks Sales Continued to See Healthy Growth in 2008

Consumers Favouring Heavily Advertised or Healthy Products

Mergers and Acquisitions Create Turbulent Competitive Environment

Dominance of the Off-Trade Channel Continues

Modern Retail Trade Gradually Gaining Share from the Traditional Channels

Slower Volume but Stronger Constant Value Growth Expected Overall

EU Membership to Impact Company-level Strategies

Home Production of Wine and Spirits Hinders the Commercial Sector’s Growth

Micro and Macro Trends Encourage Premiumisation of the Alcoholic Drinks Market

Despite Increasing Demand for Premium Products, Consumer Tastes Remain Traditional

Specialist Retailers

Summary 1 Leading Specialist Retailers 2007

Market Merger and Acquisition Activity

Summary 2 Speculated Merger and Acquisition Activity 2007-2008

MARKET BACKGROUND

LEGISLATION

TAXATION AND DUTY LEVIES

Table 1 Taxation and Duty Levies on Alcoholic Drinks 2008

Table 2 Typical Wholesaler and Retailer Off-trade Mark-ups by Selected Sectors 2008

Table 3 Selling Margin of a Typical Domestically Produced Beer Brand 2008

Table 4 Selling Margin of a Typical Domestically Produced Wine Brand 2008

Table 5 Selling Margin of a Typical Imported Spirits Brand 2008

OPERATING ENVIRONMENT

MARKET INDICATORS

Table 6 Retail Consumer Expenditure on Alcoholic Drinks 2003-2008

MARKET DATA

Table 7 Sales of Alcoholic Drinks by Sector: Total Volume 2003-2008

Table 8 Sales of Alcoholic Drinks by Sector: Total Value 2003-2008

Table 9 Sales of Alcoholic Drinks by Sector: % Total Volume Growth 2003-2008

Table 10 Sales of Alcoholic Drinks by Sector: % Total Value Growth 2003-2008

Table 11 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: Volume 2008

Table 12 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: Value 2008

Table 13 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: % Volume 2008

Table 14 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: % Value 2008

Table 15 Company Shares of Alcoholic Drinks by Global Brand Owner 2004-2007

Table 16 Off-trade Sales of Alcoholic Drinks by Distribution Format: % Value Analysis 2008

Table 17 Off-trade Sales of Alcoholic Drinks by Sector and Distribution Format: % Volume Analysis 2008

Table 18 Forecast Sales of Alcoholic Drinks by Sector: Total Volume 2008-2013

Table 19 Forecast Sales of Alcoholic Drinks by Sector: Total Value 2008-2013

Table 20 Forecast Sales of Alcoholic Drinks by Sector: % Total Volume Growth 2008-2013

Table 21 Forecast Sales of Alcoholic Drinks by Sector: % Total Value Growth 2008-2013

DEFINITIONS

Sources

Summary 3 Research Sources

LOCAL COMPANY PROFILES - BULGARIA

BELVEDERE BULGARIA - ALCOHOLIC DRINKS - BULGARIA

STRATEGIC DIRECTION

KEY FACTS

Summary 4 Belvedere Bulgaria: Key Facts

Summary 5 Belvedere Bulgaria: Operational Indicators

COMPANY BACKGROUND

PRODUCTION

Summary 6 Belvedere Bulgaria: Production Statistics 2007

COMPETITIVE POSITIONING

Summary 7 Belvedere Bulgaria: Competitive Position 2007

BOLIARKA VT AD - ALCOHOLIC DRINKS - BULGARIA

STRATEGIC DIRECTION

KEY FACTS

Summary 8 Boliarka VT AD: Key Facts

Summary 9 Boliarka VT AD: Operational Indicators

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

Summary 10 Boliarka VT AD: Competitive Position 2007

LOMSKO PIVO AD - ALCOHOLIC DRINKS - BULGARIA

STRATEGIC DIRECTION

KEY FACTS

Summary 11 Lomsko Pivo AD: Key Facts

Summary 12 Lomsko Pivo AD: Operational Indicators

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

Summary 13 Lomsko Pivo AD: Competitive Position 2007

SIS INDUSTRIES OOD - ALCOHOLIC DRINKS - BULGARIA

STRATEGIC DIRECTION

KEY FACTS

Summary 14 SIS Industries Ltd: Key Facts

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

Summary 15 SIS Industries Ltd: Competitive Position 2007

VINPROM PESHTERA AD - ALCOHOLIC DRINKS - BULGARIA

STRATEGIC DIRECTION

KEY FACTS

Summary 16 Vinprom Peshtera AD: Key Facts

Summary 17 Vinprom Peshtera AD: Operational Indicators

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

Summary 18 Vinprom Peshtera AD: Competitive Position 2007

BEER IN BULGARIA

HEADLINES

TRENDS

Production, Imports and Exports

COMPETITIVE LANDSCAPE

PROSPECTS

SECTOR BACKGROUND

Lager Price Band Methodology

Summary 19 Lager by Price Band 2008

Published Data Comparisons

SECTOR DATA

Table 22 Sales of Beer by Subsector: Total Volume 2003-2008

Table 23 Sales of Beer by Subsector: Total Value 2003-2008

Table 24 Sales of Beer by Subsector: % Total Volume Growth 2003-2008

Table 25 Sales of Beer by Subsector: % Total Value Growth 2003-2008

Table 26 Sales of Beer by On-trade vs Off-trade Split: Volume 2003-2008

Table 27 Sales of Beer by On-trade vs Off-trade Split: Value 2003-2008

Table 28 Sales of Beer by On-trade vs Off-trade Split: % Volume Growth 2003-2008

Table 29 Sales of Beer by On-trade vs Off-trade Split: % Value Growth 2003-2008

Table 30 Beer: Production, Imports and Exports: Total Volume 2002-2007

Table 31 Beer Exports by Country of Destination: Total Volume 2002-2007

Table 32 Beer Exports by Country of Destination: Total Value 2002-2007

Table 33 Beer Imports by Country of Origin: Total Volume 2002-2007

Table 34 Beer Imports by Country of Origin: Total Value 2002-2007

Table 35 Company Shares of Beer by National Brand Owner 2003-2007

Table 36 Company Shares of Beer by Global Brand Owner 2003-2007

Table 37 Brand Shares of Beer 2004-2007

Table 38 Forecast Sales of Beer by Subsector: Total Volume 2008-2013

Table 39 Forecast Sales of Beer by Subsector: Total Value 2008-2013

Table 40 Forecast Sales of Beer by Subsector: % Total Volume Growth 2008-2013

Table 41 Forecast Sales of Beer by Subsector: % Total Value Growth 2008-2013

CIDER/PERRY IN BULGARIA

HEADLINES

TRENDS

SECTOR DATA

Table 42 Sales of Cider/Perry: Total Volume 2003-2008

Table 43 Sales of Cider/Perry: Total Value 2003-2008

Table 44 Sales of Cider/Perry: % Total Volume Growth 2003-2008

Table 45 Sales of Cider/Perry: % Total Value Growth 2003-2008

Table 46 On-trade vs Off-trade Sales of Cider/Perry: Volume 2003-2008

Table 47 On-trade vs Off-trade Sales of Cider/Perry: Value 2003-2008

Table 48 On-trade vs Off-trade Sales of Cider/Perry: % Volume Growth 2003-2008

Table 49 On-trade vs Off-trade Sales of Cider/Perry: % Value Growth 2003-2008

Table 50 Cider/Perry Production, Imports and Exports: Total Volume 2002-2007

Table 51 Cider/Perry Exports by Country of Destination: Total Volume 2002-2007

Table 52 Cider/Perry Exports by Country of Destination: Total Value 2002-2007

Table 53 Cider/Perry Imports by Country of Origin: Total Volume 2002-2007

Table 54 Cider/Perry Imports by Country of Origin: Total Value 2002-2007

Table 55 Forecast Sales of Cider/Perry: Total Volume 2008-2013

Table 56 Forecast Sales of Cider/Perry: Total Value 2008-2013

Table 57 Forecast Sales of Cider/Perry: % Total Volume Growth 2008-2013

Table 58 Forecast Sales of Cider/Perry: % Total Value Growth 2008-2013

RTDS/HIGH-STRENGTH PREMIXES IN BULGARIA

HEADLINES

TRENDS

Production, Imports and Exports

COMPETITIVE LANDSCAPE

PROSPECTS

SECTOR DATA

Table 59 Sales of RTDS/High-strength Premixes by Subsector: Total Volume 2003-2008

Table 60 Sales of RTDS/High-strength Premixes by Subsector: Total Value 2003-2008

Table 61 Sales of RTDS/High-strength Premixes by Subsector: % Total Volume Growth 2003-2008

Table 62 Sales of RTDS/High-strength Premixes by Subsector: % Total Value Growth 2003-2008

Table 63 On-trade vs Off-trade Sales of RTDS/High-strength Premixes: Volume 2003-2008

Table 64 On-trade vs Off-trade Sales of RTDS/High-strength Premixes: Value 2003-2008

Table 65 On-trade vs Off-trade Sales of RTDS/High-strength Premixes: % Volume Growth 2003-2008

Table 66 On-trade vs Off-trade Sales of RTDS/High-strength Premixes: % Value Growth 2003-2008

Table 67 RTDS/High-strength Premixes Production, Imports and Exports: Total Volume 2002-2007

Table 68 Company Shares of RTDS/High-strength Premixes by Global Brand Owner 2003-2007

Table 69 Company Shares of RTDS/High-strength Premixes by National Brand Owner 2003-2007

Table 70 Brand Shares of RTDS/High-strength Premixes 2004-2007

Table 71 Forecast Sales of RTDS/High-strength Premixes by Subsector: Total Volume 2008-2013

Table 72 Forecast Sales of RTDS/High-strength Premixes by Subsector: Total Value 2008-2013

Table 73 Forecast Sales of RTDS/High-strength Premixes by Subsector: % Total Volume Growth 2008-2013

Table 74 Forecast Sales of RTDS/High-strength Premixes by Subsector: % Total Value Growth 2008-2013

WINE IN BULGARIA

HEADLINES

TRENDS

Production, Imports and Exports

COMPETITIVE LANDSCAPE

PROSPECTS

Published Data Comparisons

SECTOR DATA

Table 75 Sales of Wine by Subsector: Total Volume 2003-2008

Table 76 Sales of Wine by Subsector: Total Value 2003-2008

Table 77 Sales of Wine by Subsector: % Total Volume Growth 2003-2008

Table 78 Sales of Wine by Subsector: % Total Value Growth 2003-2008

Table 79 Sales of Wine by On-trade vs Off-trade Split: Volume 2003-2008

Table 80 Sales of Wine by On-trade vs Off-trade Split: Value 2003-2008

Table 81 Sales of Wine by On-trade vs Off-trade Split: % Volume Growth 2003-2008

Table 82 Sales of Wine by On-trade vs Off-trade Split: % Value Growth 2003-2008

Table 83 Volume Sales of Still Red Wine by Price Segment 2003-2008

Table 84 Volume Sales of Still White Wine by Price Segment 2003-2008

Table 85 Volume Sales of Still Rosé Wine by Price Segment 2003-2008

Table 86 Volume Sales of Other Sparkling Wine by Price Segment 2003-2008

Table 87 Sales of Still Red Wine by Grape/Varietal Type 2003-2008

Table 88 Sales of Still White Wine by Grape/Varietal Type 2003-2008

Table 89 Sales of Still Rosé Wine by Grape/Varietal Type 2003-2008

Table 90 Sales of Still Red Wine by Quality Classification 2003-2008

Table 91 Sales of Still White Wine by Quality Classification 2003-2008

Table 92 Sales of Still Rosé Wine by Quality Classification 2003-2008

Table 93 Wine Production, Imports and Exports: Total Volume 2002-2007

Table 94 Wine Exports by Country of Destination: Total Volume 2002-2007

Table 95 Wine Exports by Country of Destination: Total Value 2002-2007

Table 96 Wine Imports by Country of Origin: Total Volume 2002-2007

Table 97 Wine Imports by Country of Origin: Total Value 2002-2007

Table 98 Company Shares of Still Light Grape Wine by National Brand Owner 2003-2007

Table 99 Company Shares of Still Light Grape Wine by Global Brand Owner 2003-2007

Table 100 Brand Shares of Still Light Grape Wine 2004-2007

Table 101 Company Shares of Champagne by National Brand Owner 2004-2007

Table 102 Company Shares of Champagne by Global Brand Owner 2004-2007

Table 103 Brand Shares of Champagne 2004-2007

Table 104 Company Shares of Other Sparkling Wine by National Brand Owner 2003-2007

Table 105 Company Shares of Other Sparkling Wine by Global Brand Owner 2003-2007

Table 106 Brand Shares of Other Sparkling Wine 2004-2007

Table 107 Company Shares of Fortified Wine and Vermouth by National Brand Owner 2004-2007

Table 108 Company Shares of Fortified Wine and Vermouth by Global Brand Owner 2004-2007

Table 109 Brand Shares of Fortified Wine and Vermouth 2004-2007

Table 110 Forecast Sales of Wine by Subsector: Total Volume 2008-2013

Table 111 Forecast Sales of Wine by Subsector: Total Value 2008-2013

Table 112 Forecast Sales of Wine by Subsector: % Total Volume Growth 2008-2013

Table 113 Forecast Sales of Wine by Subsector: % Total Value Growth 2008-2013

SPIRITS IN BULGARIA

HEADLINES

TRENDS

Production, Imports and Exports

COMPETITIVE LANDSCAPE

PROSPECTS

SECTOR BACKGROUND

Vodka, gin and other blended Scotch whisky price band methodology

Published Data Comparisons

SECTOR DATA

Table 114 Sales of Spirits by Subsector: Total Volume 2003-2008

Table 115 Sales of Spirits by Subsector: Total Value 2003-2008

Table 116 Sales of Spirits by Subsector: % Total Volume Growth 2003-2008

Table 117 Sales of Spirits by Subsector: % Total Value Growth 2003-2008

Table 118 Sales of Spirits by On-trade vs Off-trade Split: Volume 2003-2008

Table 119 Sales of Spirits by On-trade vs Off-trade Split: Value 2003-2008

Table 120 Sales of Spirits by On-trade vs Off-trade Split: % Volume Growth 2003-2008

Table 121 Sales of Spirits by On-trade vs Off-trade Split: % Value Growth 2003-2008

Table 122 Sales of Other Blended Scotch Whisky by Premium/Super-premium Split 2003-2008

Table 123 Sales of Gin by Premium/Super-premium Split 2003-2008

Table 124 Sales of Vodka by Premium/Super-premium Split 2003-2008

Table 125 Sales of Flavoured vs Non-flavoured Vodka 2003-2008

Table 126 Spirits Production, Imports and Exports: Total Volume 2002-2007

Table 127 Spirits Exports by Country of Destination: Total Volume 2002-2007

Table 128 Spirits Exports by Country of Destination: Total Value 2002-2007

Table 129 Spirits Imports by Country of Origin: Total Volume 2002-2007

Table 130 Spirits Imports by Country of Origin: Total Value 2002-2007

Table 131 Whisk(e)y Production, Imports and Exports: Total Volume 2002-2007

Table 132 Brandy & Cognac Production, Imports and Exports: Total Volume 2002-2007

Table 133 Vodka Production, Imports and Exports: Total Volume 2002-2007

Table 134 Gin Production, Imports and Exports: Total Volume 2002-2007

Table 135 Rum Production, Imports and Exports: Total Volume 2002-2007

Table 136 Tequila Production, Imports and Exports: Total Volume 2002-2007

Table 137 Liqueurs Production: Total Volume 2002-2007

Table 138 Other Spirits Production: Total Volume 2002-2007

Table 139 Company Shares of Spirits by National Brand Owner 2003-2007

Table 140 Company Shares of Spirits by Global Brand Owner 2003-2007

Table 141 Brand Shares of Spirits 2004-2007

Table 142 Forecast Sales of Spirits by Subsector: Total Volume 2008-2013

Table 143 Forecast Sales of Spirits by Subsector: Total Value 2008-2013

Table 144 Forecast Sales of Spirits by Subsector: % Total Volume Growth 2008-2013

Table 145 Forecast Sales of Spirits by Subsector: % Total Value Growth 2008-2013