AN(12)6957:1. PICK International challenges

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Lisa Cain
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1 AN(12)6957:1 PICK International challenges

2 THE STRUCTURE OF BONAFARM GROUP The three food processing companies are Pick Szeged Zrt. (meat processing), Sole-Mizo Zrt. (dairy production) and Csányi Winery. Four agricultural companies produce the necessary raw materials: Bóly Zrt., Dalmand Zrt., Bonafarm- Bábolna Feedstuff, and Fiorács Kft. Bonafarm Zrt. Is in charge of creating the Group strategy and implementing cooperation. The annual turnover of the Group exceeds EUR 550 mn The total number of employees in the Group is over 5500 Our aim is to be one of the key food processors in the Central-Eastern- European region

, Bonafarm- Bábolna Feedstuff, and Fiorács Kft. Bonafarm Zrt. Is in charge of creating the Group strategy and implementing cooperation.

3 Food processing Our products are made from natural raw material grown or produced on our own farms The food processing companies of the Group are key players in the Hungarian meat, dairy and wine sector. Raw material comes from the agricultural producers of the Group or from long time business partners Thus it is ensured that only the finest materials enter the production process

4 PICK SZEGED Established in 1869 Estimated market share in Hungary is around 30% Field of operation covers phases from slaughtering to the process of meat products More than pigs are slaughtered annually Annual sales of the famous Winter Salami is around 3 mn pieces The company produces more than tones of meat products every year Plants are situated in Szeged, Baja, Alsómocsolád and Pécs The annual income is around HUF 60 bn, one third coming from exports 3

famous Winter Salami is around 3 mn pieces The company produces more than 45 000 tones of meat products every year

5 The brand leader product 4

6 And many other products Brands: 5

7 Forrás: Pick Szeged Zrt. 6 Pick is an export oriented company located in Hungary MEAT SALES 53% 47% Domestic Market Export MEAT PRODUCT SALES 29% 71% Domestic Market Export

8 Forrás: Pick Szeged Zrt. 7 We export to 35 countries Our products are present in more than 200 retail chains around the world

9 Forrás: Pick Szeged Zrt. 8 GERMANY, AUSTRIA, SWITZERLAND We are at home! 4000 ton sales per year Ungarische salami appreciated category Germany High brand awareness Listed in every chain Switzerland Austria Subsidiary close to Munich

10 Forrás: Pick Szeged Zrt. 9 Russia Our 2nd largest market 2200 ton sales per year Russia Subsidiary in Moscow Listed in every major chain Ringa bacon is a houshold name

11 Forrás: Pick Szeged Zrt. 10 JAPAN Our 3rd largest market 400 ton sales per year Japan Representative office in Tokyo deep knowledge of the market Food service frankfurters tailor-made recipes Mangalica is a highly appreciated spciality

12 Forrás: Pick Szeged Zrt. 11 Hong Kong, Taiwan, Thailand, Malaysia, Singapore and China Markets of the future Representative office in Hong Kong Products: China Taiwan Salami, liver pate Frozen meat Mangalica Thailand Malaysia Hong Kong Singapore

13 Forrás: Pick Szeged Zrt. 12 Canada, USA Pick Wintersalami is one of the very few imported European salamis 80 ton sales per year Focus on ethnic stores Canada USA

14 Forrás: Pick Szeged Zrt. 13 United kingdom Fastest growing European market 100 ton sales per year Listed in the largest chains United Kingdom Co-branding Fierce European competition Strict quality requirements High animal welfare standards

15 Forrás: Pick Szeged Zrt. 14 Netherlands brand 90 ton per year Co-branding Netherland Representative office

16 Forrás: Pick Szeged Zrt. 15 Sweden More than 40 years presence 180 ton sales per year Listed in the largest chains Sweden Strong in food service Healthy and environmentally aware consumers

17 Forrás: Pick Szeged Zrt. 16 CENTRAL EUROPE High Pick brand awareness ton sales per year Poland Listed in every country The fastest growing market is Slovenia Subsidiaries Czech Republic Ukraine Slovakia Slovenia Romania Croatia Bulgaria Serbia

200 ton sales per year Poland Listed in every country The

18 Forrás: Pick Szeged Zrt. 17 The secret of the international success 1. Product: Wintersalami, original recipe since 1869, traditional technology, only natural ingredients 2. Traditional BRAND 3. Expertise of decades, committed colleagues in production and sales 4. Knowing the local markets, personal connections 5. Premium Price Pick Salami is the highest quality and most expensive in its category on every shelf!

19 Forrás: Pick Szeged Zrt. 18 Consequences The sole source of growth and survival is export (especially with the high value, high quality traditional product, like ours, and specially being in Hungary with the decreasing disposable income) The target regions of growth were shifted to the far east (Japan, China, Hon Kong, Thailand, etc.) Consumer behaviour is changing, but trends are not obvious (need for healthy products, weakening brand loyalty, price sensitivity increases everywhere) Unfavourable global trends (growing population, ethnical changes, climate, more alternatives for the use of crop, increasing feed price, etc.) Unreliably market reaction even on very short term (Unstable market mechanism, speculation) Growth can only be based on improved efficiency and higher added value

disposable income) The target regions of growth were shifted to the far east (Japan, China, Hon Kong, Thailand, etc.

20 Forrás: Pick Szeged Zrt. 19 Consequences On micro level we have no other chance but to adopt to the global trends in many areas in a confusing word. E.g. Consumer income (better quality in smaller amounts vs. cheaper products) Consumer behaviour and brand awareness (less income vs. increasing need for healthier products) Taxation (different VAT level in neighbouring countries) Transport cost (growing markets are very far) Differences in import regulations (free trade vs. stronger protectionism, even applied in the private sector) Market structure, business culture, negotiation power of retail (reliable, strategic relationships, vs. unfair trade)

increasing need for healthier products) Taxation (different VAT level in neighbouring countries) Transport cost (growing markets are very far) Differences in

21 Forrás: Pick Szeged Zrt. 20 Consequences With regard to the proposed new CAP system, we fully agree with the opinion of COPA-COGECA as submitted to the Commission. NOTES: To make clear preferences between targets (efficient production, create jobs, save the environmental) To maintain subsidies dependent on producing (to a certain extent) is unavoidable to serve the targets Agriculture is for food production, so the whole food chain should be regarded as the object of matter, and subsidies must serve the development of the whole food sector The more extensive bureaucracy does not fit to higher efficiency CAP is a critical investment, and probably the last occasion for the EU countries to spend on agriculture from common source

22 Thank you for your attention! 21

41 T Korea, Rep. 52.3. 42 T Netherlands 51.4. 43 T Japan 51.1. 44 E Bulgaria 51.1. 45 T Argentina 50.8. 46 T Czech Republic 50.4. 47 T Greece 50.

41 T Korea, Rep. 52.3. 42 T Netherlands 51.4. 43 T Japan 51.1. 44 E Bulgaria 51.1. 45 T Argentina 50.8. 46 T Czech Republic 50.4. 47 T Greece 50. Overall Results Climate Change Performance Index 2012 Table 1 Rank Country Score** Partial Score Tendency Trend Level Policy 1* Rank Country Score** Partial Score Tendency Trend Level Policy 21 - Egypt***