A shift in consumer thinking; price increases of basic food products and attempts by the state to regulate them; new store openings and rebranding of well-known chains… These were the key events on the FMCG market in Bulgaria in the past 2012.

Despite attempts by government institutions to suggest the end of the crisis, consumers changed their way of thinking. A Nielsen report in the middle of 2012 showed that amid harsh economic reality and price increases most Bulgarian consumers buy only the essentials (45%) actively look for promotions (26%) and buy less (23%). The agency research of the market indicated the following trends – Bulgarians spend more time at home to save on expenditures on eating out and entertainment. The 2012 economic environment forced consumers to re-evaluate their market, format and brand of choice. There’s increased interest in stores offering a good balance between quality and price, a variety of own labels in different price segments that can be a satisfactory alternative to leading brands. Consumers pay attention to promotions in own labels, too.

Price increases appear to have had a major impact on fresh foods and confectionery – fresh foods, in particular, are purchased in smaller quantities. At the same time, categories such as soft drinks, personal care products and snacks seem to be less affected by this trend. However, promotions remain critical to drinks and impulse buys. When choosing personal and home care products consumers are swayed by promotions and discounts, too.

The past year was marked, too, by a series of speculations about drastic price increases of certain basic foods. In an attempt to contain consumer panic, the state opted to promote itself actively in the media, trying to assume the role of mediator between businesses and end consumers. Due to price increases of feed meat producers warned of possible price increases in sausages, meat and dairy. Some even claimed that a 30% price increase in feed may cause a 15% price increase in meat products and dairy. Poor harvest and a price increase of wheat on international markets led to speculations that bread may reach BGN 2 per kilogram in 2012.

In August, after intense communication with representatives of some market chains, Miroslav Naydenov, Minister of Agriculture and Food, declared that the prices of 10 basic foods produced in Bulgaria will be “frozen” for three months. Among them were bread, yogurt and milk, white cheese, cow butter, yellow cheese, pork and chicken, eggs and wieners. Through brokering the freeze the Ministry of Agriculture and Food was convinced it was helping impoverished Bulgarian consumers, while the decision itself was qualified as “promoting” market chains. Most political parties, and businesses in particular, were unanimous in criticizing the freeze harshly, branding it aggressive and unregulated intervention by the state in the market economy. The Bulgarian government’s policy was declared detrimental to small- and medium-sized businesses in Bulgaria, which, too, were hit hard by the crisis.

The fact that some chains took part in the agreement with the government was interpreted as an attempt by the sellers themselves to deal with their ever-increasing competition. After Lidl’s entrance into the Bulgarian market competition between modern trade representatives intensified ostensibly. Everyone expanded their media presence in order to attract more clients and win over new ones. Most chains focus on lower prices and a higher number of promotion activities, and stress their new policy both in their TV commercials and when communicating with consumers on the spot – in the store itself. A number of international chains, represented by hypermarkets, switched to smaller formats such as local supermarkets to stay closer to consumers. Others opted for rebranding and active preparation of new own labels.

Elina Pulcheva

PROGRESSIVE Magazine Bulgaria