The consumer goods market continued to expand in the first four months of this year at a pace similar to that witnessed in 2006, of 11% (in RON), against the same period of last year, according to the data released by GfK market research firm.
FMCG (fast moving consumer goods) consumption rose by 10% in RON, in 2006 year-on-year, according to GfK. Signals pointing to Romanian consumers' rising purchasing power, the higher penetration rate of FMCG products, the increase in the value of the shopping basket in large stores, the shift toward brands, as well as the effects of companies' marketing policies, are visible this year, too, market players explain.
For many multinationals present on the domestic market, Romania is also the most important market in the region. For instance, Unilever SCE derives 75% of turnover on the Romanian market. Alex Suciu, customer development manager with the company, emphasised the Romanian market's potential by comparing the level of consumption in Romania with that of more developed European countries. Thus, the domestic market, with an average consumption of 1,700 euros per capita, is still lagging far behind countries such as Hungary or the Czech Republic, with annual consumption of 3,000 euros per capita.
Gaps are much bigger when comparing the purchasing power of domestic consumers with that of consumers in Western Europe, GfK data also show.
However, international retailers see in statistical data on Romanian consumption one of the most significant growth potentials for their businesses outside their country of origin.
The rising consumption and the expansion of store networks have boosted the sales of the 5 biggest players (Metro, Rewe, Carrefour, Kaufland and Louis Delhaize) by around 1bn euros in 2006 against 2005, to over 3.5bn euros, according to data released by the companies.
International retailers' moves have generated the most dynamic year of modern consumer goods trade and the plans the major networks have announced for 2007 already project record sales by yearend.
As the Bucharest market is getting more crowded, retailers are increasingly tapping into other cities.
Foreign investors in FMCG retail expect the real estate market to settle. Alexandru Vlad, general manager with Selgros Cash&Carry Romania, says land prices, going as high as 1,200 euros per square metre in Bucharest, do not allow retail investors to amortise investments in land over a reasonable period of time, of 5-10 years.
Players expect to see further segmentation in terms of FMCG retail, once the market develops. At present, segmentation is visible through the expansion of international chains mainly centred on the food segment and of those in the field of construction materials, furniture or electronics and electrical home appliances.
FMCG market
Continued to advance in the first four months of this year at a pace similar with that registered in 2006, of 11% (in RON), against the same period of last year
FMCG consumption rose by 10% in RON in 2006 against the previous year
The rising consumption and the expansion of store networks bolstered sales of the 5 biggest players by around 1bn euros in 2006 against 2005, to over 3.5bn euros, with record sales projected for this year, as well.
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