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Polish Alcohol Market in Line for Reshuffling


Bartosz Boćko, president of Toorank Polska S.A., talks to Bożenna Osucha

The Central European Distribution Corporation (CEDC) has announced the signing of a binding agreement to sell its Polish alcohol distribution business to Eurocash S.A. for zl.400 million. How will this affect the alcoholic beverage market?

I have been an observer and participant of the alcohol industry for 11 years. CEDC’s strong position first as an importer and later also as a distributor and manufacturer of alcoholic beverages gave that single market player an exceptionally strong competitive advantage. Such an allocation of market power meant that neither supermarket chains nor suppliers, be it domestic or foreign, had much choice in terms of their sales strategy in Poland. Due to the concentration of famous commercial brands such as Bols, Metaxa and Camus, the CEDC group had a very strong bargaining power. With CEDC selling its distribution business and focusing more on the manufacturing business, the industry will gain new opportunities to develop. As we know, the agreement between CEDC and Eurocash S.A. provides for a six-year distribution agreement that guarantees CEDC the right to distribute, market and offer discounts on its own products as well as those which until now were imported exclusively by CEDC in the Eurocash S.A. network.

Don’t you think that despite the agreement, following an anti-trust approval procedure, there will be some reshuffling in the area of distribution, sales and marketing in the third quarter of 2010?

Definitely, this is an opportunity for many operators on the domestic market as well as exporters from France, the UK, etc. We are about to see some reshuffling of power on the alcoholic beverage market. The question is how many of the distribution companies currently grouped within CEDC will stay on the market. What sales policy will Eurocash S.A. adopt irrespective of the agreement? What will be the reaction of supermarket chains like Kaufland or Makro Cash & Carry should Eurocash S.A. offer to provide them with products that used to be imported by CEDC? How many products will flow out from CEDC to more efficient operators who guarantee better quality of sales, service and communication between partners? All we can do is monitor the environment, bearing in mind the Newtonian order which drives the industry—namely the strong link between cause and effect, with the companies deciding for themselves which strategy to choose.

 

 




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