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LARIVE ROMANIA SRL international business development

LARIVE ROMANIA SRL international business development

SUBJECT: ACCESS FOR THAI FOOD AND BEVERAGE PRODUCTS

TO ROMANIA’S MARKET

FOR: THE ROYAL THAI EMBASSY

CONSULTANTS: LARIVE ROMANIA IBD

DATE: MARCH 2009

Executive Summary SUBJECT: ACCESS FOR THAI FOOD AND BEVERAGE PRODUCTS TO ROMANIA’S MARKET

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INTRODUCTION

Background

The Royal Thai Embassy in Romania is interested to promote trade and investment from Thailand to Romania, therefore the Thai Embassy in Romania has contracted Larive Romania to draw up a report on business and investment opportunities for Thailand in Romania. The report includes the following main aspects:

• Overview of the food and beverage sectors;

• Potential target markets in the food and beverage sector, attractive for Thai trade and investment in Romania;

• Possible ways of distribution, promotion and marketing of Thai food and beverage products into the Romanian market;

• Logistics from Thailand and other relevant countries to Romania and to main cities in Romania – some suitable solutions / alternatives;

• Key financial aspects / arrangements on doing business in Romania;

• Key laws and regulations – relevant to Thai exporters of food & beverage products.

To ensure a better understanding of the Romanian targeted markets by the potential Thai investors and business people, the report is structured in such a way to offer general information about the Romanian food and beverage industry and more in - depth information regarding trends and opportunities offered by those sectors that fits the Thai growing industries and / or the products and services that are mostly promoted through exports.

Methodology

The data research gathering was conducted over the period of October 2008 – January 2009 based on desk research as well as on primary data collection from the following available information sources:

• Local business databases and directories;

• Internet directories and relevant sites;

• Relevant statistical data from local institution such as: The National Institute of Statistics, The Chamber of Commerce and Industry of Romania, The National Prognosis Commission, and other relevant Romanian Authorities;

• Publications, reports and Larive’s data base;

• Telephone interviews and / or direct interviews with industry experts involved in the target sectors. In order to get an accurate and update overview of the situation from each target sector, 1 - 2 interviews has / have been performed, with key persons currently active in the analyzed industry / sector / market segment.

Several specific indicators have been used to evaluate the Romanian key economic sectors and target industries / market segments, as follows:

• Turnover of the industry – this indicator reflects the size of each analyzed industry / market segment. This indicator is computed as a sum of the turnovers of those companies which had as main income source, in the specified year, the identified / target NACE division (General Name for Economic Activities in the European Union). This information is provided by The Chamber of Commerce and Industry of Romania, according to the annual financial records registered by the Romanian companies to the Ministry of Economy and Finance;


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• Relative modification of a specific industry indicator (Y / Y %) – this figure is showing the rate (% modification) at which a specific indicator has performed in a defined period of time compared to a previous period of time. The relative modification has the following computing formula: Y / Y (%) = (End Value – Begin Value) / Begin Value * 100;

• Annual average growth rate – this indicator is computed as an arithmetic mean of the year to year relative modification for a specific indicator (industry turnover, production level, market sales and others), for a defined period of time;

• CAGR (compound average growth rate) – is a historical measure and it calculates the growth rate of an indicator over a period of time. CAGR = ((End Value / Begin Value)(1 / N) ) – 1, where N is the number of years for the period of time considered;

Reservations

The research was made on a best effort basis. The following important reservations should be made when studying the report:

• Subsequent events – Global Financial Crisis (GFC) – the GFC’s negative effects started to be felt by the Romanian economy (including the analyzed markets) at the beginning of December 2008 and yet, few information / studies are available regarding the assessment of its impact on the Romanian economy. Thus, all the quantitative and qualitative information summarized in this report presents the target markets before the effects of the GFC. However, some assumptions regarding the GFC impact on the analyzed markets, based on interviews with industry experts and press articles, have been included in it.

• There is scarce centralised statistical information about the size / production level of the target markets for 2008 and sometimes even for 2007, therefore in some cases the information presented in the report is based on opinions / estimations of industry experts from target industries;

• The value of the turnover of the companies registered under a specific NACE classification (NACE classification valid in 2007) communicated by the Chamber of Commerce and Industry of Romania, does not necessarily reflect the exact value of the industry / sector turnover, due to the fact that there is a certain part of the economic operators which have not registered their financial information to the Ministry of Economy and Finance;

• The frozen processed seafood market segment is presented together with the frozen fish market, therefore the data available reflects the frozen fish and the seafood market, due to the lack of centralized data about sales and production only for the seafood market;

• The information referring to The National Institute of Statistics is based on data reported periodically by local producers. However some companies do not report periodically the requested data therefore not always the statistic information reflects the accurate situation at a certain moment;

• The information regarding the key players presented for the analyzed sector / market segment is general, could be incomplete and it has the sole purpose to offer a general idea of the presented sector / market segment.

These reservations being made, the following disclaimer should be borne in mind. When executing the assignment, Larive Consultants have taken all reasonable efforts to ensure, as far as possible, the veracity and completeness of the gathered information, and to provide, based on crosschecking from several sources, a sound and coherent overview of the subject market.

However, when the investor decides to materialize the investment, Larive Consultants strongly recommend that the investor should make an in - depth investigation of the targeted economic sector / market using professional advice.


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EXECUTIVE SUMMARY

Romania is situated in the South - Eastern part of Central Europe, in the North of Balkan Peninsula, on the lower basin of the Danube River, having a stretch of seacoast along the Black Sea. Romania is ranked 7th as number of inhabitants in the European Union, with a population of 21.5 million people in 2007. The Romanian economy followed in 2008 the same positive trend recorded in the last years in terms of economic growth. The real GDP grew at a rate of 7 - 8% in 2008 as compared to 2007. The increase is mainly determined by the strong activity volume, especially in the services sector, industry and constructions. Yet, probably starting with October 2008, the GDP will decline, due to the international crisis which affected Romania as well.

Economic growth prospects for 2009 continue to deteriorate sharply, as the country is expected to suffer a strong deceleration of both the domestic and the external sectors. Meanwhile, at the end of 2008 international credit rating agencies Standard & Poor’s and Fitch cut the country’s credit rating to BB+, quoting a lack of macroeconomic policies to respond to the arising economic risks. The national budget for 2009 voted by the Romanian Parliament at the end of February 2009 is based on an economic growth of 2.5% and on a deficit of 2 % from the GDP. The annual inflation rate targeted by the Romanian National Bank for 2009 is 3.5%, yet the actual annual rate is estimated to be around 5 - 6%, as predicted also by some important financing institutions such as BCR Erste and Citi Financial. Some institutions and organisations, e.g. Fitch, EBRD, IMF, Standard & Poor’s, BCR Erste, predict an economic growth of only 1% in 2009, while others like Citi Financial and Economist Intelligence Unit estimate an increase of 2.6 - 2.8% for this year.

The food and beverage sector accounted for 13% of the total industrial production, in 2007, reaching EUR 10.82 billions, with almost 20% higher as compared with the previous year. The industry turnover was estimated at EUR 9.7 billions, higher by 23.56% as compared to 2006. In the last four years, this sector experienced a positive evolution with increase rates of over 10% per year. The food industry, which is a major contributor of the Romanian economy having an estimated share of 6% into the GDP in 2007, continued to grow in 2008 as well, with around 5%. Industry experts are relatively pessimistic for 2009, predicting a stagnation of the positive evolution registered over the last years. Some of the most important active players on the food market are: Aldis, Cristim, Nestle Romania, European Food, Bunge Romania, Boromir, Friesland Romania, etc. The beverage industry grew with 14.5% in volume and with 24.6% in value, in 2007 against 2006 and continued its ascending trend in 2008, remaining one of the most dynamic areas of the Romanian economy. The industry experts’ predictions for 2009 are slightly optimistic, small increase rates being expected. Some of the most relevant players on the beverage market are: Heineken Romania, InBev Romania, Coca Cola HBC Romania, European Drinks, Murfatlar, Vincon Vrancea, Scandic Distilleries, etc.

There are several market segments, within the food and beverage sector, which are potential targets for Thai trade and investment in Romania, some of them being briefly presented in the current report.

One of the targeted segments is represented by the canned food market. The long history of the canned food consumption in Romania and the recent changes in the consumption habits, have turned the domestic canned food market in a mature and quality – orientated market, well represented in all of the four categories of products (meat, fruit, vegetables and fish). Sales of canned food declined in retail volume terms (average yearly reduction rate of 4.2% during 2003 – 2007) but has increased in retail value terms (average yearly growth rate of 17.7% during 2003 – 2007) in the last years, reaching a value of EUR 147 million at the end of 2007. The


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market is forecasted to grow to a total value of EUR 163 million by the end of 2012, with 10% more as compared to 2007. The current economic situation (Global Financial Crisis) will determine changes in the consumption behaviour, the price, rationality (good quality / price ratio) and brand awareness being the buying key decisions. Some of the key players involved in canned food market are: Scandia, Orkla, Hame, Contec Tecuci, Lieder International, Les Gastronomes, Pelicanul Distribution and others.

The poultry sector represents an important segment of the Romanian meat industry. The market is estimated at around EUR 700 millions and 400,000 tons of chicken meat. In 2008, the internal producers covered 75% of the demand, while 25% was attributed to importers. For 2009 industry experts claim that the market will remain at the same level as in 2008, while the Romanian producers aim to increase their share up to 90-95% of the market by increasing the production facilities with 15-20%. Some of the most important companies which are active on the market are: Transavia, Agricola International, Agrisol International, Avicola Buzau, etc.

The Romanian seafood market is a young, niche market, with consumption levels per capita that are still under the ones recorded by most of the Central - Western EU countries. These products are considered by most of the Romanian consumers as premium products, consumed occasionally and not necessarily on a day to day basis. The domestic frozen fish and seafood market had a positive evolution over the last five years, increasing over the 2002 – 2007 period by 238% in terms of value and by 67% in terms of volume. Euromonitor data is indicating that the Romanian frozen fish and seafood market will continue to grow in the next years, to an estimated value of EUR 4,576 thou in 2012, equivalent of 537 tons. The estimated average early growth rate in the period 2007 – 2012 is of 6.6% in terms of volume and 13% in terms of value. However, the current economic situation (Global Financial Crisis) will determine a slowdown in the consumption of seafood, the customers area is expected to shrink to the so called “status of seekers consumers”. Some of the key players involved in the seafood market are: Ocean Fish, Macromex, Agrirom, Pescarom, Kaviar House and others.

Romania is a traditional fruit and vegetables producer, the good climate and soil conditions favouring the growth of several categories of fruit (apples, plums, cherries, peaches, grapes, melons and others) and vegetables (potatoes, tomatoes, cabbage, cucumbers and others). The great fragmentation of the local producers, the lack of investments in farming and processing techniques, in green house infrastructure and others, have led to the current situation when the domestic consumption of fresh fruit and vegetables is supplied mostly from import while most of the domestic production is channelled to the local or EU processing industry. The fruit and vegetables market is estimated to reach EUR 1 billion by the end of 2008, with 15 – 20% more as compared to 2007 and 2006 figures. The fresh fruit consumption is estimated to 1,015 - 1,020 thou tons in 2008 (with 1.5% more as compared to 2007) while the vegetables consumption is estimated to 4,075 – 4,080 thou tons in 2008 (almost the same value as in 2007). Despite the current economic situation (Global Financial Crisis) the fruit and vegetables market is expected to continue its positive growth trend, the industry experts estimating that the consumption of fresh fruit will reach 1,090 – 1,100 thou tons by the end of 2012, while the consumption of vegetables will reach 4,180 – 4,200 thou tons by the end of 2012. However, even if the consumption of traditional fruit will not be so much affected by the current GFC, the consumption of sophisticated / exotic fruit and vegetables with high selling prices is expected to stagnate or even to register a decline. Some of the key players involved in the fruit and vegetables market are: Leoser, Berser, Alfredo Trading Company, Agricantus, Distrifruit and others.

Frozen meals is a young market but with a good development potential given the modification habits of consumers especially in urban areas. In our days, people are active, have less time available for preparing meals but are health concerned and pay attention to quality and nutritive aspects. Therefore, frozen meals are an alternative accepted by more and more people as


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“frozen“ is perceived as healthier and less affected by preserved ingredients. The “high income” category of consumers and also part of the “medium income” consumers are target segments for this category of products. Size of the market for frozen meals was estimated to 55 tons in 2007 as per Euromonitor data. The same research company has predicted a level of sales (in value terms) with 42% higher in 2012, as compared to 2007. The key players on local market are local producers such as Agrisol, Transavia or imported products like Frosta. Bonduelle, that is present on the local market with frozen vegetables products expressed recently their intention of entering it with ready meals products in 2009.

In the context of the current economic crises there are some factors that could negatively impact on the demand of ready meals products and consequently on frozen meals. Among them can be mentioned the possible slow down of purchasing power of population, the modification of consumption habits and possible reluctance in trying new products given the budgetary constraints, the price increase of imported products, etc.

The seasoning and spices segment, registered an expansion in the last years, especially on products like mustard, ketchup, etc. For the recently introduced categories of products like exotic spices, dressing and special sauces the consumption levels are relatively low. Industry experts estimate the spices total market is around EUR 70-80 millions. The market is divided between universal condiments, which have an approximate 65% market share and specialized condiments, with around 35% from the total market. Some relevant players are: Fuchs Condimente, Kamis Condimente, etc. The sauces and dressings market is divided in four main segments: the mustard market estimated at around EUR 17 millions, and the ketchup market estimated at about EUR 13-14 millions, which are the most important, the mayonnaise market with a total value of about EUR 5 millions, and the dressings and special sauces market estimated at around EUR 3.5 millions. Regarding the expectations for 2009, industry experts predict that the consumption of products like mustard, ketchup, pepper, which are commonly used by Romanians, will remain at the same level as in 2008, or it will register a small increase, while for products like special dressings, sauces and exotic condiments, a consumption reduction is expected. Some of the most important players active on this segment are: Unilever South Central Europe, Nestle Romania, Orkla Foods Romania, etc.

Regarding the fruit and vegetable juice, this category represents a segment with a significant potential increase. Over the last years, Romanian consumers have started to pay more attention to qualitative and healthy products, therefore premium products like juice and nectars have registered a higher annual growth rate (18 - 23%) as compared to still drinks (15%). The size of the market for natural fruit and vegetable juice was estimated to 29.6 million litters for 2007. If market increase rate for juice and nectars was of 18-23 % over the last years, industry experts predict a continuation of the positive trend but at a slower rate (under 10%) for the next years. Some industry experts predict one digit increase ratio for the next years given also the current unfavourable circumstances. The key players on the market are: Cyrom (Pfanner), Parmalat (Santal), Tymbark (Tymbark and Ciao), Coca Cola HBC (Cappy) and Pepsi America’s (Prigat). In the current context of the economic crises, despite the positive factors such as change of Romanian consumers preferences towards more healthy and qualitative products, some factors could negatively influence the evolution of fruit and vegetable juice demand such as: the stagnation of purchasing power of population, more rationality in the purchasing decision (price factor will increase as importance for many consumers), the increase of the price of imported products due to RON-EUR exchange rates and the possible expected decrease of HoReCa 1segment.

The distribution sector was continuously growing in Romania over the last years. This activity is connected with the retail business, thus together with the investments made by the

1 HoReCa= Hotels, restaurants, cafes


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international retail chains, the distribution companies expended their business in order to fulfill the new increasing demands. Among the main importers and distributors of food and beverages products on the Romanian market the following can be mentioned: Nordic Import Export, Macromex, Elgeka – Ferfelis Romania, Agroalim Distribution, etc. The modern trade

(hypermarkets, supermarkets, discount stores and cash & carry) have gradually replaced the traditional form of commerce made in small shops and agri-food markets. Yet, the ratio between traditional and modern trade is still low in Romania, in contrast with other countries from the European Union, but it is estimated that approximately 50% of the total volume of consumer goods will be sold through modern trade stores in 2010. Some of the most important players on the market are: Kaufland, Carrefour, Real, Metro, Billa, Plus, Penny Market, etc.

Considering the categories of products of interest for a Thai exporter, the best identified potential solutions / alternatives for goods transportation from Thailand to Romania are the sea freight and inter - modal transportation (air and road). Sea freight represents the most cost efficient goods transportation solution (in either FCL or LCL containers). The goods are transported directly from one of Thailand’s harbours to Constanta Harbour in Romania. Inter –

modal transportation air and road is much more expensive than the sea freight transportation service but the transportation time is considerably reduced. Typically, the goods are transported by air to a major freight hub in Europe (Frankfurt, Munich, Vienna, Amsterdam, Budapest and others) and then transported by road to Romania.

Regarding the key financial aspects and arrangements on doing business in Romania, as a general rule, the methods of payment are established from the beginning of the collaboration between the parties, through the provisions of the contract settling the terms and conditions of the delivery of goods / execution of works / provisions of services. On the domestic market, for amounts up to 5,000 RON, payments in cash are also practicable; nevertheless the bank transfer is preferable. In the international trade, the most frequently used payment methods are SWIFT transfers, documentary credits and more rarely promissory notes. The most common and also recommendable way for Thai exporters to guarantee the export at a higher rate of safety is to appeal at an “export credit agency” (e.g. COFACE in France or Euler – Hermes in Germany) or at a bank for export from Thailand (e.g. in Romania – Eximbank offers to Romanian exporters such guarantees). The Romanian commercial banks are offering several products suitable for financing the operational needs of a business (juridical entity registered in Romania for at least 12 month) such as: overdraft facilities, short term loans / lines for working capital, short term loans for commercial contract financing, bridge loans and others.

The maturation of the Romanian economy into a mostly private – sector marketplace, the accession to the EU and the steady economic growth are recommending Romania as a good anchor for future business development opportunities both in terms of commercial relations and direct foreign investments. The conditions and terms of trade with non – member countries is

established by the European Community Commercial Policy. This policy imposes to the member states to have a common position as regards the commercial contacts with countries outside the European Union. Thus, Romania has harmonized its legislation to the European one regarding the custom tariffs (Common Customs Tariffs), sanitary issues (related to import of food products animal and non animal origin) and investment incentives (for foreign investors). The entering into force of these regulations brings stability and trustworthiness to the Romanian economic – legislative environment, making it a more reliable and safer one.

SUBJECT: ACCESS FOR THAI FOOD AND BEVERAGE PRODUCTS TO ROMANIA’S MARKET

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CONTENTS

EXECUTIVE SUMMARY ..................................................................................................................V

1 OVERVIEW OF FOOD AND BEVERAGE SECTOR .................................................................... 6 1.1 Brief presentation of the food and beverage industry ................................................ 6 1.2 Food industry ............................................................................................................. 7

1.2.1 Brief presentation of food industry...................................................................... 7 1.2.2 Size, trends, forecasts of food industry................................................................ 7 1.2.3 Key players in food industry ............................................................................. 11

1.3 Beverage industry..................................................................................................... 12 1.3.1 Brief presentation of beverage industry............................................................. 12 1.3.2 Size, trends and forecasts of beverage industry................................................. 13 1.3.3 Key players in beverage industry ...................................................................... 16

1.4 Key features of food and beverage sector; segments with high potential ................ 17

2 PROFILES OF KEY MARKET SEGMENTS – TARGETS FOR THAI EXPORTERS IN ROMANIA.... 19 2.1 Canned food ............................................................................................................. 19

2.1.1 Brief presentation of canned food segment ....................................................... 19 2.1.2 Size, relevant figures, trends and forecasts........................................................ 20 2.1.3 Imports source of origin; import taxation for Thai products ............................. 24 2.1.4 Consumption level and trends ........................................................................... 26 2.1.5 Competition on the market ................................................................................ 28 2.1.6 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market ................................................................................................................ 30 2.2 Poultry ...................................................................................................................... 32

2.2.1 Brief presentation of poultry segment ............................................................... 32 2.2.2 Size, relevant figures, trends and forecasts........................................................ 33 2.2.3 Imports source of origin; import taxation for Thai products ............................. 36 2.2.4 Consumption level and trends ........................................................................... 37 2.2.5 Competition on the market ................................................................................ 37 2.2.6 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market ................................................................................................................ 39 2.3 Seafood..................................................................................................................... 40

2.3.1 Brief presentation of seafood segment .............................................................. 40 2.3.2 Size, relevant figures, trends and forecasts........................................................ 40 2.3.3 Imports source of origin; import taxation for Thai products ............................. 44 2.3.4 Consumption level and trends ........................................................................... 46 2.3.5 Competition on the market ................................................................................ 47 2.3.6 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market ................................................................................................................ 49 2.4 Fresh fruit and vegetables ........................................................................................ 50

2.4.1 Brief presentation of fresh fruit and vegetables segment .................................. 50 2.4.2 Size, relevant figures, trends and forecasts........................................................ 50 2.4.3 Imports source of origin; import taxation for Thai products ............................. 55 2.4.4 Consumption level and trends ........................................................................... 58 2.4.5 Competition on the market ................................................................................ 59 2.4.6 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market ................................................................................................................ 60 2.5 Frozen meal .............................................................................................................. 62

2.5.1 Brief presentation of frozen meal segment........................................................ 62 2.5.2 Size, relevant figures, trends and forecasts........................................................ 63


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2.5.3 Consumption level and trends ........................................................................... 66 2.5.4 Competition on the market ................................................................................ 67 2.5.5 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market ................................................................................................................ 69 2.6 Seasoning and spices finished products ................................................................... 70

2.6.1 Brief presentation of seasoning and spices segment.......................................... 70 2.6.2 Size, relevant figures, trends and forecasts........................................................ 70 2.6.3 Imports source of origin; import taxation for Thai products ............................. 75 2.6.4 Consumption level and trends ........................................................................... 77 2.6.5 Competition on the market ................................................................................ 77 2.6.6 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market ................................................................................................................ 78 2.7 Fruit and vegetable juice .......................................................................................... 80

2.7.1 Brief presentation of fruit and vegetable juice segment .................................... 80 2.7.2 Size, relevant figures, trends and forecasts........................................................ 80 2.7.3 Imports source of origin; import taxation for Thai products ............................. 81 2.7.4 Consumption level and trends ........................................................................... 85 2.7.5 Competition on the market ................................................................................ 86 2.7.6 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market ................................................................................................................ 87

3 POSSIBLE WAYS OF DISTRIBUTION, PROMOTION AND MARKETING OF THAI PRODUCTS

ON LOCAL MARKET ........................................................................................................... 89 3.1 Main importers of food and beverage products and their distribution networks...... 89

3.1.1 Long list including contact details..................................................................... 89 3.1.2 Profiles of key importers ................................................................................... 91 3.1.2.1 Nordic ................................................................................................................ 91 3.1.2.2 Macromex.......................................................................................................... 92 3.1.2.3 Elgeka – Ferfelis................................................................................................ 93 3.1.2.4 Agroalim............................................................................................................ 94

3.2 Modern trade (hypermarkets, supermarkets, discounters, etc)................................. 95 3.2.1 List of key players ............................................................................................. 96 3.2.2 New entrants expected....................................................................................... 97 3.2.3 Specific features with respect to commercial relation with key accounts ......... 98

3.3 Common promotion and marketing tools for food & beverage ............................... 98

4 LOGISTICS FROM THAILAND AND OTHER RELEVANT COUNTRIES TO ROMANIA AND TO

MAIN CITIES IN ROMANIA – SOME SUITABLE SOLUTIONS / ALTERNATIVES .................... 100

5 KEY FINANCIAL ASPECTS / ARRANGEMENTS ON DOING BUSINESS ................................. 109 5.1 Financial business behaviour (preferred forms of payment; buyer credit lines) .... 109 5.2 Key banks and their co-ordinates ........................................................................... 112 5.3 Manners of bank guarantees (L / C, other forms) .................................................. 115

6 KEY LAWS AND REGULATIONS - RELEVANT TO THAI EXPORTERS OF FOOD &

BEVERAGE PRODUCTS ..................................................................................................... 119 6.1 Regulations regarding sanitary issues; certificates of origin.................................. 119

6.1.1 Regulations regarding sanitary issues.............................................................. 119 6.1.2 Certificates of origin........................................................................................ 123

6.2 Preferences of taxations and quotas ....................................................................... 126 6.3 Barriers or incentives for investing / exporting to Romania in the field of food &

beverage ................................................................................................................. 132


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ANNEX 1 THE LEVELS OF CUSTOM DUTIES FOR POULTRY PRODUCTS IN 2008, BASED ON

TARIC CODES ................................................................................................................. 139

ANNEX 2 FRUIT IMPORTS 2004 - 2007..................................................................................... 143

ANNEX 3 FRUIT EXPORTS 2004 - 2007 .................................................................................... 144

ANNEX 4 VEGETABLES IMPORTS 2004 - 2007......................................................................... 145

ANNEX 5 VEGETABLES EXPORTS 2004 - 2007......................................................................... 147

ANNEX 6 IMPORT TARIFFS APPLIED FOR DIFFERENT CATEGORIES OF FRUIT AND VEGETABLE

JUICES IMPORTED FROM THAILAND IN 2008 ................................................................... 149

ANNEX 7 EXPLANATION FOR TARIC CODES FOR DIFFERENT CATEGORIES OF FRUIT AND

VEGETABLE JUICES (SEE ANNEX 6)................................................................................. 160

ANNEX 8 GENERAL RULES APPLICABLE FOR PRODUCTS OF NON – ANIMAL ORIGIN ............... 164

ANNEX 9 CERTIFICATE OF ORIGIN FORM A............................................................................. 168

ANNEX 10 CATEGORIES OF PRODUCTS OF THAI ORIGIN THAT HAVE BENEFITED OF QUOTA

IN 2008 ............................................................................................................................ 170

ANNEX 11 ACCESS TO STRUCTURAL FUNDS – FINANCING LINES........................................... 174

ANNEX 12 LIST OF INTERVIEWED INSTITUTIONS AND COMPANIES ......................................... 178

ANNEX 13 BUCHAREST – MUNICH (DEUTCHLAND) ROAD MAP .............................................. 179

ANNEX 14 BUCHAREST – FRANKFURT AM MAIN (DEUTSCHLAND) ROAD MAP...................... 180

ANNEX 15 BUCHAREST – TRIESTE (ITALY) ROAD MAP........................................................... 181

ANNEX 16 BUCHAREST – ROTTERDAM (NETHERLANDS) MAP ............................................... 182

ANNEX 17 BUCHAREST – PARIS (FRANCE) ROAD MAP ........................................................... 183

ANNEX 18 BUCHAREST – BUDAPEST (HUNGARY) ROAD MAP ................................................ 184

ANNEX 19 BUCHAREST – VIENNA (AUSTRIA) ROAD MAP ....................................................... 185

ANNEX 20 STRUCTURE OF GOODS TRANSPORTED BY RAILWAYS ........................................... 186

ANNEX 21 MAP OF MARITME ROUTE TANJUNG PELEPAS (MALAYSIA) – CONSTANTA

(ROMANIA) AS PER MAERSK LINE ................................................................................. 187

ANNEX 22 SCHEDULES – TRANSPORT PLAN BANGKOK (TH) – CONSTANTA (RO) AS PER

MAERSK LINE ................................................................................................................. 188


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LIST OF TABLES Table 1 Turnover of food and beverage industry 2004 – 2007 (EUR million) ................................. 6 Table 2 Food and beverage industrial production 2003 – 2007 (EUR million) ................................ 6 Table 3 Food and beverage industrial production forecast 2009 – 2013 (y / y, %) .......................... 6 Table 4 Food industry importance in Romania’s GDP 2004 - 2007 (EUR billion).......................... 7 Table 5 Food manufacturers’ turnover 2004 – 2007 (EUR million)................................................. 8 Table 6 Production of the main industrial goods 2001 - 2006 (thou tones) ...................................... 8 Table 7 Production of the main industrial goods 2002 - 2006 (y/y %) ............................................. 9 Table 8 Food sector industrial production forecast 2009 – 2010 (thou tones) .................................. 9 Table 9 Some key players in food industry......................................................................................11 Table 10 Turnover of the beverage manufacturing companies 2004 – 2007 (EUR million) ...........12 Table 11 Beverage industry importance in Romania’s GDP (EUR billions / %) ............................13 Table 12 Turnover of beverage industry - by main categories – 2004 – 2007 (EUR million)........14 Table 13 Industrial production of main beverage products 2004 – 2007 (EUR million).................14 Table 14 Some key players in the beverage industry .......................................................................16 Table 15 Canned food market size 2003 – 2012 (EUR million)......................................................20 Table 16 Domestic production of canned food 2004 – 2007 (tones) ...............................................21 Table 17 Imports of canned food 2004 – 2007 (EUR thou).............................................................22 Table 18 Some key players in canned food sector ...........................................................................28 Table 19 Poultry industry contribution to Romania’s GDP 2005 – 2007 (EUR billion) ................33 Table 20 Evolution of production for: domestic manufactured goods (EUR thou) and domestic

manufactured goods sold (thou kg) 2004 – 2007 .....................................................................35 Table 21 Exports volumes for main poultry meat products 2004 – 2007 (tones) ............................35 Table 22 Imports volumes for main poultry meat products 2004 - 2007 (tones).............................36 Table 23 Some key players in poultry sector ...................................................................................38 Table 24 Romanian frozen processed fish & seafood sales 2002 – 2007 (tons, EUR thou) ............41 Table 25 Seafood imports 2004 – 2007 (EUR thou, tons) ...............................................................42 Table 26 Fish imports 2004 – 2007 (EUR thou, tons) .....................................................................44 Table 27 Some of the key players in the seafood market.................................................................47 Table 28 Domestic production of fresh fruit 2005 – 2007 (thou tons).............................................51 Table 29 Imports and exports of fresh fruit 2005 – 2007 (EUR thou) .............................................52 Table 30 Domestic production of vegetables 2005 – 2007 (thou tons)............................................53 Table 31 Import and exports of fresh fruit 2004 – 2007 (EUR thou)...............................................54 Table 32 Some key players in fresh fruit and vegetables sector ......................................................59 Table 33 Evolution of frozen processed food including frozen ready meals 2002 – 2007 (tons)....64 Table 34 Ready meals sales forecast 2008 – 2012 (EUR thou) .......................................................64 Table 35 Evolution of frozen processed food including frozen ready meals 2002 – 2006 (tons)....65 Table 36 Some key players on frozen ready meals market ..............................................................67 Table 37 Evolution of production for: domestic manufactured goods (EUR thou) and domestic

manufactured goods sold (thou kg) 2004 – 2007 .....................................................................71 Table 38 Exports of main condiments and sauces 2004 - 2007 (tones) ..........................................74 Table 39 Imports of main condiments and sauces 2004 - 2007 (tones) ...........................................74 Table 40 Main countries of origin for condiments imports in 2007 (tones) ...................................75 Table 41 Main countries of origin for sauces imports in 2007 (tones) ...........................................75 Table 42 Some key players in condiments and sauces sector ..........................................................79 Table 43 Evolution of juice market 2001 – 2007 (million litters)....................................................81 Table 44 Import / export of fruit juice and vegetable juice* 2005 – 2007 (EUR thou) ...................81 Table 45 Some key players on juice market.....................................................................................86 Table 46 Long list of importers of food and beverage products ......................................................90 Table 47 Some key players on modern trade ...................................................................................97 Table 48 Price transportation quotations for road transport services Bucharest – some EU hubs –

Wim Bossman (logistic service provider) ..............................................................................104


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Table 49 Price transportation quotations for road transport services Bucharest – some EU hubs -

Frigoexpres (logistic service provider) ..................................................................................105 Table 50 Price transportation quotations for railroad transportation some EU hubs - Bucharest - as

per ICA Romania SRL ...........................................................................................................106 LIST OF FIGURES

Figure 1 Food industry exports by main categories of products 2005 - 2007 (EUR million) .........10 Figure 2 Food industry imports by main categories of products 2005 – 2007 (EUR million) ........11 Figure 3 Exports of beverage products 2005 - 2007 (EUR million.) ...............................................15 Figure 4 Imports of beverage products 2005 - 2007 (EUR million) ................................................16 Figure 5 Canned food – domestic production structure in 2006 (volume) ......................................22 Figure 6 Canned food – import structure in 2007 (value) ...............................................................23 Figure 7 Source of origin of canned food imports in 2007 (value)..................................................24 Figure 8 Canned food consumption structure 2007 (volume)..........................................................26 Figure 9 Turnover of companies involved in poultry sector 2005 - 2007 (EUR million) ................33 Figure 10 Cost elements share for producing one unit of poultry meat ..........................................34 Figure 11 Source of origin for poultry meat and poultry products imports in 2007 (tones) ...........36 Figure 12 Seafood import structure in 2007 (volume)....................................................................43 Figure 13 Source of origin of seafood imports in 2007 (quantity)..................................................45 Figure 14 Structure of the domestic production of fresh fruit in 2007 ............................................51 Figure 15 Structure of fresh fruit imports in 2007 (value)..............................................................52 Figure 16 Structure of the domestic production of vegetables in 2007 ...........................................54 Figure 17 Structure of vegetables imports in 2007 (value).............................................................55 Figure 18 Source of origin of fruit imports in 2007 (value) ...........................................................56 Figure 19 Source of origin of vegetables imports in 2007 (value)..................................................57 Figure 20 Fresh fruit consumption structure in 2007 ......................................................................58 Figure 21 Vegetables consumption structure in 2007......................................................................59 Figure 22 Imports of juice by origin countries in 2007 (volume) ....................................................82 Figure 23 Structure of imports by flavours ......................................................................................82 Figure 24 Juice consumption preferences - by main juice flavours................................................85 Figure 25 Retail channels shares by value in Romania 2002 - 2007...............................................95 Figure 26 Evolution of outlets number per main categories 2006 - 2008* .....................................96


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Larive Romania – March 2009 page - 6

1 OVERVIEW OF FOOD AND BEVERAGE SECTOR

1.1 Brief presentation of the food and beverage industry

The food and beverage sector is one of the most important sectors of the manufacturing industry in Romania, accounting for 13% of the total industrial production, in 2007. The sector is divided in two main sub-activities: the food industry and the beverage sector, each of them split in several other sub-categories. This activity has old roots in the Romanian economy, due to the important resources, widely available in the country. The production of food and beverages has an important history in Romania, being one of the oldest activities on this territory.

Some of the key features of the Romanian food and beverage industry are the following:

• the important contribution of the domestic raw materials to finished goods, due to the geographical position of Romania and to relatively high importance of the agriculture sector in the Romanian GDP

• the continuous process of consolidation of the internal market, based on the investments made by powerful multinational companies in sectors like: meat, beer, edible oils, milk processing, etc

• a small inertia of the Romanian companies in adapting the goods, the production processes and facilities to the condition imposed by the European market

• a very competitive environment, created by the competition among important Romanian firms, powerful multinationals and small and medium sized companies

• the production increase and diversification of the food and beverage goods, based on the demand expansion, due to population disposable income growth

In 2007, the food and beverage industry turnover was estimated at EUR 9.7 billions, higher by 23.56% as compared to 2006. In the last four years, this sector experienced a positive evolution with increase rates of over 10%.

Table 1 Turnover of food and beverage industry 2004 – 2007 (EUR million)

2004 2005 2006 2007 Turnover (EUR, million) 6,096 7,097 7,870 9,724 Evolution (y/y, %) - 16.42 10.89 23.56 Source: The Chamber of Commerce and Industry of Romania & The National Trade Register Office

The industrial production of the food and beverage sector was of EUR 10.82 billions in 2007, with almost 20% higher as compared with previous year. This sector is on an ascending trend, registering increase rates between 3.41% and 28.16% in the last five years.

Table 2 Food and beverage industrial production 2003 – 2007 (EUR million)

2003 2004 2005 2006 2007 Industrial production (EUR million) 5,482 6,310 8,086 9,027 10,820 Evolution (y/y, %) 3.41 15.10 28.16 11.63 19.86 Source: Romanian Statistical Yearbook, 2008

The evolution of the food and beverage industrial production will remain on a growing trend in the future years. According to The National Prognosis Commission the increase rates will vary between 8.2% and 5.4% in the following six years.

Table 3 Food and beverage industrial production forecast 2009 – 2013 (y / y, %)

2009 2010 2011 2012 2013 Industrial production (y/y, %) 7.0 6.5 6.2 5.4 5.6 Source: The National Prognosis Commission, 2008


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1.2 Food industry

1.2.1 Brief presentation of food industry

The food industry is an important sector of the Romanian economy. The accessibility and diversity of the vegetal and animal raw materials, together with the numerous food production and processing capacities and the relatively cheap and skilled labour force, are the main factors which drove the development of this industry in Romania. The industry includes the following activities:

• Production, processing and preserving of meat and meat products (NACE 151);

• Processing and preserving of fish and fish products (NACE 152);

• Processing and preserving of fruit and vegetables (NACE 153);

• Manufacture of vegetable and animal oils and fats (NACE 154);

• Manufacture of dairy products (NACE 155);

• Manufacture of grain mill products, starches and starch products (NACE 156);

• Manufacture of prepared animal feeds (NACE 157);

• Manufacture of other food products (NACE 158): bread, pastry goods, cakes, biscuits, sugar, cocoa, chocolate, sugar confectionery, macaroni, noodles, couscous, tea, coffee, condiments and seasonings, prepared meals and dishes, homogenized food preparations and dietetic food.

The food industry is a major contributor to the Romanian economy having an estimated share of 6% into the GDP in 2007. Although the sector had a positive evolution in the last years, its share in the GDP slightly decreased, from 6.7% in 2005 to 6% in 2006 and 2007. The food sector turnover grew with over 60% in the last four years, mainly due to the acceleration of the privatization process of the former state owned farms and food processing plants and to the investments made in production capacities enlargement.

Table 4 Food industry importance in Romania’s GDP 2004 - 2007 (EUR billion)

2004 2005 2006 2007 GDP (EUR billion) 71.05 79.54 97.74 121.3 Food manufacturers’ turnover NACE 151-158 (EUR, billion) 4.53 5.33 5.89 7.32 Share in GDP (%) 6.38 6.7 6.03 6.03 Source: The Chamber of Commerce and Industry of Romania, The National Prognosis Commission and The National

Trade Register Office

1.2.2 Size, trends, forecasts of food industry

Size

In 2007, the companies which declared food manufacturing as main activity registered an estimated turnover of around EUR 7.32 billions, an increase of almost 25% as compared to 2006. The most important activity was the manufacture of other food products (NACE 158) accounting for 35.75% from the total turnover of the industry, followed by the meat and meat goods production, process and conservation (NACE 151). The most dynamic activity was the production of vegetal oil and fats (NACE 154), with an increase of 32% in 2007 as compared to 2006.


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Table 5 Food manufacturers’ turnover 2004 – 2007 (EUR million)

2004 2005 2006 2007 Production of other food products (NACE 158) 1,628 1,974 2,156 2,617 Meat and meat product production, process and conservation (NACE 151)

1,113 1,440 1,681 1,933

Production of dairy (NACE 155) 471 618 744 942 Grist and bread manufacture products, starch and starch products (NACE 156)

592 497 527 682

Production of vegetal oil and fats (NACE 154) 410 417 342 451 Fruit and vegetable processing and conservation (NACE 153)

203 269 291 317

Fish and fish product processing and conservation (NACE 152)

38 47 61 59

Source: The Chamber of Commerce and Industry of Romania and The National Institute of Statistics

According to data published by MEMRB (market research company), the food industry market grew in volume with only 4.7% in 2007 as compared with 2006, while in the previous year the increase reached 11.8%. The progress in value terms was also lower (16.9%) in 2007 as compared with 2006, and 21.1% in 2006 versus 2005. Milk and dairy products was the most dynamic sector, with an increase of 13.8% in volume and 23.6% in value, in 2007 as compared with the previous year.

In the first semester of 2008 the food market continued to grow with around 5% in volume, even if the prices of some products, like milk or oil, significantly increased, according to a study made by GfK (market research company). Some categories of products like oil, milk, margarine, cheese registered the same levels of sales in the first six month of 2008 as compared with the same period of 2007. Yet, the sales volumes of other products like kefir, breakfast cereals, cheese creams, increased during this period as compared with 2007.

Structure

The most important goods produced by the food industry are wheat and rye flour (1,871 thou tones in 2006), followed by fresh milk products (3,072 thou hl), consumption milk (1,665 thou hl), and sugar (605 thou tones). Also meat, meat products and edible oils have important shares in the total industrial production.

Table 6 Production of the main industrial goods 2001 - 2006 (thou tones)

2001 2002 2003 2004 2005 2006 Meat 202 167 204 210 265 322 Meat products 168 169 204 254 290 330 Tinned meat 16 17 21 22 27 28 Semi tinned fish 3.3 1.8 3.1 8 7.9 9.9 Tinned fish 1.2 1.3 1.7 0.9 0.9 0.5 Tinned vegetables and fruit 50 54 67 52 73 71 Edible oils 296 228 243 258 264 338 Margarine 46 60 68 61 66 61 Consumption milk* 1,168 1,281 1,442 1,577 1,600 1,665 Fresh milk products*(3.5% fat) 1,306 1,665 1,740 2,708 3,171 3,072 Butter 7 5 6 7 8 8 Cheese products 36 43 49 53 61 67 Wheat and rye flour (equivalent wheat) 1,382 1,297 1,603 1,828 1,742 1,871 Sugar 493 514 481 523 514 605 Confectioneries and pastries 101 109 115 145 166 168 Source: Romanian Statistical Yearbook, 2007; Note: * values in thou hectolitres


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As regarding the trends of the key categories of products, the production of edible oil has the biggest relative increase, 28% as compared with the previous year. Meat production also registered a relatively high grow rate of 22% in 2006. Meat products are another category of goods which experienced a relatively constant increase in the last four years, with rates between 14% and 25%. The production of some goods is fluctuant, in some years decreasing, while in others growing. This is mainly due to the oscillation in the raw material production (the Romanian agriculture being heavily depending on climate) and due to changes of population consumption.

Table 7 Production of the main industrial goods 2002 - 2006 (y/y %)

2002 2003 2004 2005 2006 Meat -17 22 3 26 22 Meat products 0.6 21 25 14 14 Tinned meat 6.3 24 5 23 3.7 Semi tinned fish -55 72 158 -1.25 25 Tinned fish 8 31 -53 100 -44 Tinned vegetables and fruit 8 24 -22 40 -2.3 Edible oils -23 6.5 6 2.3 28 Margarine 30 13 -10 8.2 -7.6 Consumption milk 9.7 12.5 9.4 1.5 4 Fresh milk products(3.5% fat) 27 4.5 56 17 -3 Butter -29 20 17 14 0 Cheese products 19 14 8 15 9.8 Wheat and rye flour (equivalent wheat) 6 24 14 -5 7 Sugar 4.3 -6.4 8.7 -1.7 18 Confectioneries and pastries 7.9 5.5 26 14 1.2 Source: Romanian Statistical Yearbook, 2007

While in 2006 and 2007 the expansion of the sector was of 15.9% and 9.2% respectively, for 2008 preliminary estimation of the food industry production indicates an increase of 5.8%. The forecast for 2009 pointed an expansion of 5.5%, according to the National Prognosis Commission. The growth rates are smaller as compared to 2006 and 2007, when the expansion of the sector was of 15.9% and 9.2% respectively. The prospects are based on the positive evolution of milk and dairy products, on the re-launching of the tinned and semi-tinned fruit and vegetable industry, and on the increase demand for food products based on the increase of the population incomes.

Forecast

The forecast for some of the main products of the food industries is presented in the table below. The information is provided by the National Prognosis Commission based on the growth index estimates. The milk production will increase up to around 1,700 thou hl, while the fresh milk products will continue to grow with relatively small increase rates.

Table 8 Food sector industrial production forecast 2009 – 2010 (thou tones)

2009 2010 Slaughter-house processed meat, out of which: 315 330

• Cattle meat 20 20 • Porcinis meat 125 140 • Chicken meat 165 170

Milk* 1,650 1,700 Fresh milk products* 3,200 3,300 Bread 450 475 Source: The National Prognosis Commission; Note: * values in thou hectolitres


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Industry experts claim that the global financial crisis will not avoid the food industry. After the relatively high increase rates registered by this market in the last years, especially on segments like meat and meat products or dairy products, the market expansion is expected to slow down. The increase rates are estimated at maximum 5% in 2009, but for some sectors contraction could appear.

Exports

The most important products category exported by the food industry is the animal or vegetable fats and oils. In 2007 for this category the export reached EUR 67.7 millions. The export of these goods recovered from the drop registered in 2006, surpassing even the 2005 level. Other categories of products2 which have an important share in Romanian food sector exports are: i) milk and dairy products, eggs, honey, edible animal products preparation, and ii) preparations of cereals, flour, starch, milk and pastry products. Both categories were on ascending trends in the last three years.

Figure 1 Food industry exports by main categories of products 2005 - 2007 (EUR million)

15.8

8.3

27.1

22.1 21.8

62.4

13.0

22.520.9

32.5

27.2

14.9

56.8

21.9

27.7

10.8

34.6

27.1

67.7

23.4

33.1

0

10

20

30

40

50

60

70

Preparation of

meat and f ish

Sugar and

sugar

confectionery

Milk and dairy

products, eggs,

honey, edible

animal products

Preparations of

cereals, f lour,

starch, milk;

pastry products

Preparations of

vegetables,

fruit, nuts or

other parts of

plants

Animal or

vegetable fats

and oils

Miscellaneous

edible

preparations

2005 2006 2007

Source: International Trade Yearbook of Romania, 2007 and Eurostat, 2008

Imports

The imports of food products are dominated by sugar and sugar confectionary. In 2007, these goods reached EUR 160 millions, a decrease of over 16% as compared with 2006. Preparations of vegetables, fruit, nuts or other parts of plants is another products category which has an important share in the total imports, almost doubling in the last two years. All goods, except sugar and sugar confectionary are on an ascending trend due to the increase of the population consumption and the impossibility of the domestic production to meet the internal demand.

2 Based on EU Combined Nomenclature categories of products


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Figure 2 Food industry imports by main categories of products 2005 – 2007 (EUR million)

194.9

52.1

152.0158.6

143.4

224.4

39.960.0

81.9

58.6

128.4

21.2

134.2

52.4

113.7

73.8

159.7

82.6

30.3

135.7

160.1

0

50

100

150

200

250

Preparation of

meat and f ish

Sugar and

sugar

confectionery

Milk and dairy

products, eggs,

honey, edible

animal products

Preparations of

cereals, f lour,

starch, milk;

pastry products

Preparations of

vegetables,

fruit, nuts or

other parts of

plants

Animal or

vegetable fats

and oils

Miscellaneous

edible

preparations

2005 2006 2007


1.2.3 Key players in food industry

Numerous companies are active in the food sector in Romania. Some of them are multinational companies which made green-field investments, acquired former state own companies or companies established and developed by local entrepreneurs. Others are Romanian companies, owned and managed by Romanian entrepreneurs.

Table 9 Some key players in food industry

Name Industry Address Phone Agrana Romania

Sugar 7 Aleea Industriilor St., Buzau, Buzau County

+40 21 2693373

Lemarco Sugar 12 Visarion St., District 1 Bucharest

+40 21 3127723

European Food Confectionary 1-2 Teatrului St., Oradea, Bihor County

+40 259 407209

Nestle Romania Confectionary 9-9A Dimitrie Pompei St., District 2, Bucharest

+40 21 2044000

Aldis Meat product 1 Genaral costica Stefanescu St., Calarasi, Calarasi County

+40 242 316551

Cristim Meat product 140 Bucurestii Noi Blvd., District 1, Bucharest

+40 21 2020200

Bunge Romania

Comestible oil 173 Calea Chisinaului St., Iasi, Iasi County

+40 232 233151

Expur Comestible oil 2 Industriei St., Urziceni, Ialomita County

+40 21 4116133

Unilever South Central Europe

Margarine 2-4 Fabrica de Glucoza St., District 2, Bucharest

+40 21 3034800

Orkla Foods Romania

Margarine 19 Traian Lalescu St., Craiova, Dolj County

+40 251 435655

Friesland Romania

Dairy products 90 Closca Blvd., Satu Mare, Satu Mare County

+40 261 721175


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Danone Romania

Dairy products 96 Nicolae Canea St., District 2, Bucharest

+40 21 2046204

Boromir Bread, pasta and pastry

2 Targului St., Ramnicu Valcea, Valcea County

+40 250 734428

Vel Pitar Bread, pasta and pastry

22 Timis St., Ramnicu Valcea, Valcea County

+40 250 743909

Source: Major Companies in Romania, 2007 & The 200 biggest players in the economy, 2008

1.3 Beverage industry

1.3.1 Brief presentation of beverage industry

The beverage industry is one of the most dynamic sectors of the Romanian industry, having an important contribution to the increase of the FMCG3 market in the last several years. The increase of the population revenues was the main factor which contributes to the consumption growth of beverage products. The beverage market grew with 14.5% in volume and with 24.6% in value, in 2007 against 2006. The year 2007 was a very good for both alcoholic and non-alcoholic beverages, the increases in values being 27.3% and 21.6% respectively. In volume terms the market structure is favourable to non-alcoholic products (58.3% of the market), while in value terms the alcoholic goods dominates the market with a share of 53.8%.

The beverage industry (NACE 159) is divided in several sub-categories according to NACE classification, mainly based on the quantity of pure alcohol found in the products:

• Manufacture of distilled potable alcoholic beverages (NACE 1591) • Production of ethyl alcohol from fermented materials (NACE 1592) • Manufacture of wines (NACE 1593) • Manufacture of cider and other fruit wines (NACE 1594) • Manufacture of other non-distilled fermented beverages (NACE 1595) • Manufacture of beer ( NACE 1596) • Manufacture of malt (NACE 1597) • Production of mineral waters and soft drinks (NACE 1598) In 2007, the total turnover of the companies which declared the beverages production as main activity was of EUR 2.4 billions, an increase of over 21% as compared with 2006. After the constant increase of 12% registered in 2005 and 2006, the beverage industry turnover grew faster in 2007.

Table 10 Turnover of the beverage manufacturing companies 2004 – 2007 (EUR million)

2004 2005 2006 2007 Beverage manufacturers’ turnover (EUR million) 1,570 1,766 1,978 2,402 Evolution (y/y, %) - 12.5 12 21.5 Source: The Chamber of Commerce and Industry of Romania & The National Trade Register Office

Despite of the fact that the beverage industry was very dynamic in the last four years, the share of this industry in the GDP was on a descending trend due to the higher increase rates recorded by GDP and also due to relatively cheap products manufactured by the companies.

3 Fast Moving Consumer Goods


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Although the turnover of the companies which has as main activity the beverages manufacture was increasing in the last four years, the relative importance of this sector in the GDP is on a descending trend.

Table 11 Beverage industry importance in Romania’s GDP (EUR billions / %)

2004 2005 2006 2007 GDP (EUR billions) 71.05 79.54 97.74 121.3 Beverage manufacturers’ turnover NACE 159 (EUR billions) 1.57 1.77 1.98 2.4 Share in GDP (%) 2.21 2.23 2.03 1.98 Source: The Chamber of Commerce and Industry of Romania, The National Prognosis Commission and The National

Trade Register Office

1.3.2 Size, trends and forecasts of beverage industry

The beverage industry was very dynamic in the recent years, most of the goods produced by this sector being on an ascending trend. The consumption increased, based on the population disposable income growth and also based on the hot and long summers registered in Romania in the last years. This factor is crucial for goods like beer, mineral water or soft drinks.

Size and trends

In 2007, the turnover of the companies which declared the manufactures of beverages as main object of activity was estimated at EUR 2,4 billions, a level by 21% higher than in 2006 and 35.5% more than in 2005. The most important beverage categories within the sector, according to their weight in the total beverage industry turnover, are: mineral water and non-alcoholic drinks, beer and wine.

The mineral water and soft drinks manufacturers had an estimated turnover of EUR 1.17 billions in 2007. The biggest producers in the world, Coca-Cola and Pepsi, compete with national companies on an increasing market. In the recent years there is a trend among the domestic mineral water producers to enter the soft drink market. Therefore, several companies have launched new brands, positioned on the low or medium segments of the market. The carbonated drinks segment could be considered already a mature market, holding the biggest share of the sales, while the non-carbonated products registered the most important increase rates.

The beer market increased year after year, the turnover of the companies which declared as main object of activity the manufacture of beer was over EUR 1 billion in 2007, an increase of 38% as compared to 2006. The market is very dynamic, dominated by the multinationals, yet around 20% of the sales are still made by domestic companies. In 2007 the beer market was estimated at EUR 1.2 billion, with a sold volume of 19.4 millions hectolitres, representing an increase of 9.6% as compared to the previous year.

The wine producers’ turnover decreased in 2007 with 8%, reaching the level of EUR 204 millions, after three years of expansion. The market is dominated by the domestic production, Romania being an important producer among EU countries, with an old tradition in this activity. The turnover of the wine manufacturers grew between 2004 and 2006, due to the investment made by the domestic and foreign investors in new wine yards, rejuvenate old vineyards, introducing new technologies, marketing, launching new brands and types of wine.


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Table 12 Turnover of beverage industry4 - by main categories – 2004 – 2007 (EUR million)

2004 2005 2006 2007 NACE 1591 Manufacture of distilled potable alcoholic beverages

212.76 219.90 157.55 295.64

NACE 1592 Production of ethyl alcohol from fermented materials

90.09 75.27 50.26 76.85

NACE 1593 Manufacture of wines 120.18 168.47 222.57 204.25 NACE 1595 Manufacture of other non-distilled fermented beverages

22.46 14.98 12.68 7.38

NACE 1596 Manufacture of beer 510.10 618.99 756.81 1,045.53 NACE 1597 Manufacture of malt 14.90 13.85 17.18 20.34 NACE 1598 Production of mineral waters and soft drinks

599.94 654.89 761.10 1,165.13

Source: The Chamber of Commerce and Industry of Romania and The National Institute of Statistics

In 2008, the beverage market continued to increase, with different rates, depending on sectors. The industry experts’ preliminary estimations for the mineral water and soft drinks market reveals an increase of about 15%, reaching a value of around EUR 3 billions. The most dynamic category of products was represented by the ice tea, with increase rates of 200-300%, followed by mineral water. An important factor which influences this market is the increase of the average annual temperatures. The beer market experienced a smaller growing rate, of only 5% in 2008, due to the fact that this market is already mature and the consumption level per capita are relatively high. The preliminary estimations for the wine market indicate the market had an increase of around 20% in 2008, reaching a level of about EUR 550 millions. The expectations for the wine volume produced in 2008 are of 6.3 millions hectolitres, a 20% increase as compared with the average of the last years, of 5.5 millions hectolitres.

Structure

The most important goods produced by the beverage sector are the beer made from malt and the soft drinks. Both categories are on an ascending trend, yet the growing rhythms are different: the soft drinks production almost doubled between 2004 and 2007, while the beer production expended with only 23% in the same period. These products are followed by mineral and aerated waters, which also doubled their production value in the last four years.

Table 13 Industrial production of main beverage products 2004 – 2007 (EUR million)

PRODCOM Codes* 2004 2005 2006 2007

1591 10 20 3.57 35.10 48.47 55.14 1591 10 63 39.36 43.19 42.66 45.57 1591 10 80 100.33 101.18 94.99 111.01 1592 11 00 28.32 25.98 22.16 21.27 1592 12 00 6.44 10.51 12.33 8.55 1593 12 11 52.93 179.12 97.44 107.62 1593 12 13 8.17 12.36 87.43 15.86 1593 12 17 23.46 38.21 49.65 54.59 1595 10 00 8.47 19.91 19.42 20.22 1596 10 00 519.40 510.04 644.07 640.03 1598 11 30 94.30 162.56 132.11 197.70 1598 12 30 365.71 468.51 586.90 697.54 Source: Eurostat, 2008

Note:* 1591 10 20 - Spirits obtained from distilled grape wine or grape marc; 1591 10 63 - Vodka of an alcoholic

strength by volume of less than 45.4%; 1591 10 80 - Spirits, liqueurs and other spirituous beverages (excluding

4 Correspondence to NACE 159


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spirits distilled from grape wine, grape marc or fruit/whisky, rum, tafia, gin and geneva, spirits distilled from fruit);

1592 11 00 - Undenatured ethyl alcohol of an alcoholic strength by volume => 80; 1592 12 00 - Denatured ethyl

alcohol and other denatured spirits; of any strength; 1593 12 11 - White wine in specified regions (v.q.p.r.d.); 1593

12 13 - White wine (other), not v.q.p.r.d.; 1593 12 17 - Quality wine/grape must with fermentation prevented or

arrested by the addition of alcohol, v.q.p.r.d. of an alcoholic strength of less than 15% excluding white wine and

sparkling wine; 1595 10 00 - Vermouth and other wine of fresh grapes flavoured with plants or aromatic substances;

1596 10 00 - Beer made from malt (excluding non-alcoholic beer, beer containing >= 0.5% by volume of alcohol);

1598 11 30 - Mineral waters and aerated waters, unsweetened; 1598 12 30 - Waters, with added sugar; other

sweetening matter or flavoured, i.e. soft drinks (including mineral and aerated)

Forecast

The growth perspectives are optimistic for most of the good manufactured by the beverage industry. The mineral water and soft drinks producers expect new increases, based on the purchasing power expansion, on the enlargement of the products range and on the relatively small consumption levels as compared to other EU countries. The wine market is promising as well, bearing in mind that Romania has an old tradition in this sector and the consumption levels are relatively low. Yet, for the beer market the prospects are not very good. The consumption level reached the European average, therefore the market will increase very slowly in the future.

Even if the financial crisis will affect the beverage industry, the managers and the industry experts are not pessimistic, but even slightly optimistic. The mineral water and soft drinks market will probably grow or in the worst case will remain at the same level as in 2008, yet with increase rates smaller than in the past. Probably the consumers will orientate towards cheaper products, the acquisition frequency will reduce and the buying decision will be made in the stores. Regarding the beer market, the industry experts expect an increase rate of maximum 3% for 2009. The prospects for the wine market are ranging from a stagnation of the market to increase rates up to 10%, based on a very good year in 2008, both regarding quantity and quality of the grapes.

Exports

The most important category of product exported by the Romanian beverage manufacturers was the wine of fresh grapes, based on the old tradition of this product in Romania. The levels of exports between 2005 and 2007 were between EUR 16 millions and EUR 18 millions. The most important destination markets were Germany and Russian Federation. All other products exported are relatively unimportant as compared with wine.

Figure 3 Exports of beverage products 2005 - 2007 (EUR million.)

2.07

17.79

0.76 0.95

3.01

18.03

0.82 1.041.28

15.99

0.14

2.28

0.00

5.00

10.00

15.00

20.00

Beer made from malt Wine of fresh grapes, incl.

fortif ied w ines; grape must

Undenaturated ethyl alcohol,

of actual alcoholic strength

of >= 80%


of an alcoholic strength by

volume of < 80%

2005 2006 2007



Romania


Imports

The imports of undenaturated ethyl alcohol, of an alcoholic strength by volume of < 80%, which includes most of the spirits (cognac, brandy, whisky, rum, gin, vodka, etc.) is the main category of products imported on the Romanian market. Also wine have an important share, reaching levels of almost EUR 30 millions in 2006 and 2007, almost four times more as compared with 2005 and almost 9 times more than in 2004.

Figure 4 Imports of beverage products 2005 - 2007 (EUR million)

2.15

7.54

0.04

34.90

2.74

29.25

0.53

41.72

8.57

28.87

0.13

42.30

0.00

10.00

20.00

30.00

40.00

Beer made from malt Wine of fresh grapes, incl.

fortif ied w ines; grape must


of actual alcoholic strength

of >= 80%


of an alcoholic strength by

volume of < 80%

2005 2006 2007


1.3.3 Key players in beverage industry

The presence of international players is very important in industries like beer and soft drinks, while on the wine market the Romanian companies have the biggest share of the sales. For instance, in beer industry, 80% of the total sales are made by the first four companies which are all multinationals. In wine sector the most important companies are owned by Romanian entrepreneurs.

Table 14 Some key players in the beverage industry

Name Industry Address Phone Heineken Romania

Beer 18-34 Osiei St., District 6, Bucharest

+40 21 2027700

Ursus Breweries

Beer 26-28 Calea Stirbei Voda St., District 1, Bucharest

+40 21 3140420

InBev Romania Beer 20 Siriului St., District 1, Bucharest

+40 21 2080200

URBB Beer 89 Biruintei St., Pantelimon, Ilfov County

+40 21 2055000

Coca Cola HBC Romania

Soft drinks 10 Preciziei Blvd., District 6, Bucharest

+40 21 2021400

Pepsi Americas Soft drinks 55 Viilor St., District 5, Bucharest +40 21 3378970


Romania


European Drinks

Soft drinks 1-2 Teatrului St., Oradea, Bihor County

+40 259 407200

Murfatlar Wine 1 Murfatlar St., Basarabi, Constanta County

+40 241 706850

Vincon Vrancea

Wine 12 Avantului St., Focsani, Vrancea County

+40 237 239447

Jidvei Wine 9 Unirii St., Jidvei, Alba County +40 258 881881

Scandic Distileries

Spirits 1-2 Teatrului St., Oradea, Bihor County

+40 259 407200

Marex Spirits 7 Buzaului St., Braila, Braila County

+40 239 684688

Prodal 94 Spirits 1 Drumul intre Tarlale St., Cernica, Ilfov County

+40 21 4687215

Source: Major Companies in Romania, 2007 and The 200 biggest players in the economy, 2008

1.4 Key features of food and beverage sector; segments with high potential

The food and beverage industry is one of the most dynamic areas of the Romanian economy. The increases of the turnovers registered by the companies which manufacture or import these goods are based on several factors:

• Increase in consumption for several categories of products, due to the relative low consumption per capita levels as compared to other EU countries. For example the soft drink consumption in Romania was estimated at 110 litters per capita in 2007, far from the levels registered in Czech Republic (272 litters per capita) or in Poland (168 litters per capita);

• The increase of the consumers’ purchasing power has positively influenced the food and beverage sector, which progressed, in the last years, as one of the most dynamic economic sectors in Romania;

• Maturation of the Romanian’s consumption preferences, have determined, both domestic producers and importers, to enlarge and diversify their products portfolio;

• The rapid development of modern trade stores (hypermarkets, supermarkets and cash & carry stores) which were opened in almost all the large and medium size cites in Romania.

Some sectors (e.g. soft drinks, poultry meat products and others) of the Romanian food and beverage industry are very competitive, usually dominated by multinational companies, thus being very hard for a new entrant to successfully penetrate the market. Other sectors have relatively low increase rates, due to consumption level per capita similar to other EU countries, hence the poor growth perspectives and impossibility of new competitors to develop profitable business. For instance, one of the areas where the competition is at very high levels is beer industry. The consumption level reached last year the EU average level of 90 l per capita, thus the possibilities for new companies to develop on this market are very limited.

Yet, other sectors offer opportunity windows. Some industries are still dominated by Romanian companies, owned and developed by local entrepreneurs; therefore the possibility of a potential acquisition is very high. For example, in the meat and meat products sector, a high potential one, the presence of multinationals is relatively low, although companies like Campofrio or Smithfield have branches in Romania. A consolidation process started in the last years, and big names, like Danish Crown or Vivatis, are interested to buy Romanian companies, on a market estimated to reach EUR 1.2 billion in 2009.

Milk and dairy products industry, one of the sectors which registered a fast growth in the last years, is another area with significant potential, due to its high expansion perspectives. Industry


Romania


experts expect that the consolidation process will continue in the next years on a market estimated at EUR 1.3 billion in 2007. The competition between Romanian companies like Albalact or Prodlacta, which are among the top players, and the international players like Friesland, Danone, or Bonifaz Kohler is very intense. Even so, other big names like Lactalis or Sygma Bleyzer made important acquisitions on the market during last year. In 2007, the dairy products market grew with 20% and the industry experts are waiting to see a EUR 2 billion market in 2010-2011.

Another market with high potential is the bread and pasta sector. The consumption level of pasta per capita is only 3.1-3.2 kg, half the average levels registered in developed countries like Belgium, France or England, or even neighbouring Hungary. The growing potential of the market made two foreign companies (Foodco from Italy and Lubella from Poland) to acquire two important Romanian players (Pangram Resita and Arnos Oradea).

The soft drinks experienced relatively important growth rates, the companies active on the market, both Romanian and multinational, betting on higher consumption levels on the medium and long run, thus investing in new production capacities or launching new products. The good prospects are based on the relatively low consumption levels registered in Romanian, of 4.3 liters per capita per month in the case of mineral water and other non-alcoholic drinks in 2007. Hungary consumes twice as much, while in Poland and in Czech Republic the levels reached 168 litres and 272 litres per year respectively.


Romania


2 PROFILES OF KEY MARKET SEGMENTS – TARGETS FOR THAI EXPORTERS IN

ROMANIA

2.1 Canned food

2.1.1 Brief presentation of canned food segment

The Romanian canned food market is a mature and developed market, well represented in all of the four segments: meat, fruit, vegetables and fish canned food. The old habits of home prepared canned food products have been replaced by less time consuming meals. Framing in this pattern, the canned food market has benefited from the replacement of the “traditional home made canned food”, with ready made canned products. The premium products are starting to gain more and more share in all of the four segments of canned food market, as the Romanian consumer is willing to pay more for natural and additive free products.

Some domestic canned food manufacturers, especially those from canned meat sector, have perceived this change in the Romanian’s consumer’s preferences. Accordingly, they have invested in modern production and packaging technologies which allowed them to manufacture a wide range of qualitative products at EU standards. Thus, the locally manufactured products are dominating the canned meat market. Imports cover, mainly, the demand for sophisticated and exotic products. However, even for locally produced canned products, an important part of the raw materials (up to 70 - 80% for some producers) is import originated (the domestic meat suppliers still do not have the capacity to cover the local demand).

As regarding the fruit and vegetables canned food market, the local manufactured products are dominating the market, but the local producers are starting to bear the pressure posed by the Romanian consumer’s preferences for qualitative products as well as by the manufacturing quality standards imposed by the EU regulations. The quality of the raw materials, the traceability of the products and the packaging standards are some of the issues which still have to be solved by the local producers, through investments in modern processing and packaging facilities. Other problems for the local manufactures are the fluctuations in the domestic crops and the underdevelopment of the fruit and vegetables manufacturing sector, impelling them to import part of the raw materials used in the production process. This aspect is seriously affecting the price of the local manufactured products. These problems which are affecting the domestic canned food industry represent an opportunity for the importers, which can supply the market with qualitative and sophisticated (exotic) imported products, commercialized in almost the same price range as the domestic manufactured ones.

The only sector, from the canned food market, dominated by imports is the fish canned food segment. The market is severely influenced by the underdevelopment of the local aquaculture and fisheries industry. The fish domestic production has decreased more than five times in the last 15 years. The reduction in the local fish production and the limited range of local species available, led to a significant reduction in the local fish canned food production. Moreover, some of the local canned food producers import the raw materials and process it locally. In some cases local private labels are produced abroad and imported locally. More recently, the imports are also sustained by the Romanian consumers’ orientation towards exotic canned fish food products and as Romania does not produce exotic fish, the market is entirely supplied with imported products from: Norway, Netherlands, Canada, Sweden, Thailand, Bangladesh, Malaysia and Indonesia.


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2.1.2 Size, relevant figures, trends and forecasts

The long history of canned food consumption in Romania together with the recent changes in Romanian’s consumption preferences, have led to a maturity and even a market saturation for certain categories of products.

Size and trends of the market

The canned food market has declined in retail volume terms (average yearly reduction rate of 4.2% during 2003 – 2007) and has increased in retail value terms (average yearly growth rate of 17.7% during 2003 – 2007) in the last years. As presented in the table below, the Romanian

canned food market is estimated to EUR 147 million by the end of 2007, with 17% more as compared to 2006. The meat canned food products (manly liver pate) are dominating the canned food market sales, accounting for over 46% of the total market value. The next products as importance in the total canned food market value are fish and seafood products and vegetables canned food (vegetables, tomatoes, beans) having each almost the same 21% share from the total market in 2007. The canned fruit consumption is estimated to EUR 11 million at the end of 2007, accounting for 8% of the domestic market value.

Table 15 Canned food market size 2003 – 2012 (EUR million)

Canned food type 2003 2004 2005 2006 2007 2008** 2009* 2010* 2011* 2012*

Meat and meat products 39 42 53 60 68 66 67 68 69 70 Vegetables5 15.2 16.2 22.24 25.27 31.31 32.31 34.31 36.32 37.33 38.33 Fish and seafood 15 17 22 27 31 31 32 33 33 34 Fruit 5 5 7 9 11 11 13 13 14 15 Others6 3 3 4 5 5 5 5 5 6 6 Total 77 84 108 126 147 147 152 157 160 163

Y / Y modification 8% 29% 17% 17% 0% 4% 3% 2% 2% Source: Food industry federations, newspapers, industry experts; * Forecasted figures; **Preliminary data

In retail volume terms, the Romanian canned food market decreased in the last years, from 98,690 tons at the end of 2003 to 82,820 tons at the end of 2007. The main driving factor behind this decrease was caused by the reduction in the consumption of canned meat products and the orientation of the Romanian consumer towards fish, vegetables and fruit canned food products. The canned preserved fruit had the most dynamic growth during the 2003 – 2007 interval, increasing with an average yearly growth rate of 6.2%, to a total consumption of 5,030 tons by the end of 2007. The canned fish & seafood and the canned vegetables have followed also a growth pattern, having the following yearly growth rates during the 2003 – 2007 period: 4.3% and respectively 2.5%.

Forecast of the market

The Romanian canned food market is forecasted to grow in terms of value in the next years influenced on the one hand by the Romanian consumers’ preference for more qualitative but expensive products and on the other hand by the expected increase in the commercialization prices of the products, especially of the domestic manufactured ones. The market is estimated to grow to EUR 163 million by the end of 2012, with 10% more as compared to 2007.

5 This category includes the following products: tomatoes, bean and other vegetables 6 This category includes the following products: Ready Meals and soups


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Subsequent events – Global Financial Crisis (GFC)

The optimistic forecasts made in late 2008 (before the GFC), estimated that the canned food market will have an annual growth rate of 5 – 10% in the next years, but due to the current economic situation the growth forecasts have been reassessed to much lower figures of 1 – 2% yearly growth rate. The reduction in the consumers’ purchasing power correlated with high inflation rates have determined changes in the consumer behaviour, such as:

• Price orientated consumers - The economic category of products are expected to record faster growth rates as compared to the medium and premium products, against the carefulness of the consumer, who is tailoring its budget to the uncertainty of the current economic situation. This situation comes in contradiction with the “normal” / forecasted evolution of the canned food market where the consumer is willing to pay higher prices for more qualitative products. This change in the consumption preferences, will favour some of the local producers (especially in the canned meat sector) which have the ability and resources to very fast adapt their products portfolio to the current market demands.

• Rationality in the buying decision – the products which offer a good quality / price ratio will be preferred by the consumers. This aspect also favours the economic products in the detriment of more expensive medium / premium products.

• Preferences for well known brands – the consumer is going to be more reticent in trying / testing new products, preferring the brands and products that he tested and which proven to be satisfactory to his needs / demands.

However, the fact that Romania has a well developed network of modern commerce stores is diminishing the GFC impact on the canned food market and particularly on premium canned food products. Having large exposure spaces and a well formed clientele, the modern trade stores (hypermarkets, supermarkets and cash & carry stores) remain the main distribution channel for premium canned food products or for newly introduced products. According to industry experts, the canned food consumption preferences (type of canned food) are expected to remain the same as in previous years (see chapter 2.1.4.)

Structure of the domestic production7

The domestic production of canned food products had an oscillatory evolution over 2004 – 2006 interval. Romania produced approximately 99,000 thou tons of canned food in 2006, with 5% less as compared to 2005 and 17% more as compared to 2004.

Table 16 Domestic production of canned food 2004 – 2007 (tones)

Canned food type 2004 2005 2006 2007* Canned meat 24,398 28,891 30,013 7,958 Canned fish 818 654 3518 - Canned vegetables 42,373 54,735 49,375 19,676 Canned fruit 16,545 19,890 19,261 5,343 TOTAL 84,135 104,169 99,000 32,977 Source: The National Institute of Statistics – PRODROM classification; *Incomplete figures

7 Due to recent changes in the Romanian statistics legislation, some of the information related to the domestic manufactured volumes (according to PRODROM codes) has become confidential for the year 2007. For this reason the canned food domestic production will be analyzed, based on the 2004 – 2006 information. 8 This figure excludes the PRODROM code 15201492 (the information was not available for 2006).


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As presented in the chart bellow, the canned vegetables were the most important canned food product manufactured in Romania in 2006, as weight in the total domestic production, accounting for approximately 50% of the domestic canned food products. The main canned vegetables manufactured in Romania are: canned peas (14,587 tons), canned tomatoes purees (14,375 tons), canned mixture of vegetables (14,040 tons) and canned beans (3,213 tons).

The canned meat products accounted in 2006 for approximately 30% in the total domestic production of canned food. The main canned meat products manufactured in Romania are: swine canned meat (including ham preparations) 20,524 tons, canned preparations of animal liver (5,402 tons) and meat with vegetables canned food (1,805 tons). The next products as importance in the total domestic production are the canned fruit, accounting for 19% of the total manufactured volumes. The main canned fruit manufactured in Romania are: pastured and sterilized fruit (apricots, peaches, plums, cherries and apples) 8,318 tons, canned jam fruit (5,177 tons) and canned marmalades (4,718 tons).

The canned fish products holds the last position, as weight in the total domestic production, accounting for 0.35% of the total domestic manufactured canned food products in 2006.

Figure 5 Canned food – domestic production structure in 2006 (volume)

Canned meat 30%

Canned fruits19%

Canned vegetables50%

Canned fish0.35%

Source: The National Institute of Statistics

Foreign trade

As presented in the table bellow the canned food trade balance is turning towards imports, as the exports are accounting for 20% of the imports value.

Table 17 Imports of canned food 2004 – 2007 (EUR thou)

Canned food type 2004 2005 2006 2007 Imports

Canned meat 4,931 4,804 5,245 20,559 Canned fruit & vegetables 46,945 64,444 84,940 110,933 Canned fish 9,765 14,481 22,141 21,190 Total 61,641 83,729 112,326 152,682

Y/ Y modification 36% 34% 36%

Exports

Canned meat 12,008.6 13,932.0 19,127.0 23,489.0 Canned fruit & vegetables 4,248.2 4,086.9 5,469.6 6,238.8 Canned fish 855.0 756.0 170.0 526.0 Total 17,111.8 18,774.9 24,766.6 30,253.8

Y/ Y modification 10% 32% 22% Source: European commission – External Trade Statistics


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The canned food imports increased significantly over the 2004 – 2007 period, driven by the increased demand for canned food products. Romania imported canned food worth of EUR 152,682 thou in 2007, with 36% more as compared to 2006. The canned fruit and vegetables were the main imported products in 2007, accounting for over 73% of the total canned food imports value.

A brief presentation of the canned fruit and vegetable import structure will be further detailed:

• Vegetables prepared or preserved otherwise than by vinegar or acetic acid – total imports value EUR 42 million, comprising the following categories of vegetables: olives, peas, potatoes, sweet corn and asparagus;

• Fruit, nuts and other edible parts of plants, prepared or preserved, whether or not

containing added sugar or other sweetening matter or spirit – total imports value EUR 30.5 million, comprising the following categories: groundnuts, pineapples9, apricots, cherries, peaces and strawberries;

• Tomatoes prepared or preserved otherwise than by vinegar or acetic acid - total imports value EUR 13.2 million.

The canned fish imports were the next category as importance in the total canned food imports, accounting for 14% of the total imports value in 2007. The sardines (imports value EUR 5.4 million), tunas (imports value EUR 4.5 million), mackerel (imports value EUR 1.7 million) and herrings (imports value EUR 1.6 million) were the main species of canned fish imported in 2007. Other categories of fish canned food preferred by the Romanian consumer are salmon and anchovies.

Finally, the meat canned food imports accounted for 13% of the total imports value in 2007. The main category of canned food products within this segment are: beef, chicken, turkey and swine canned food preparations (pates and meat preparations).

Figure 6 Canned food – import structure in 2007 (value)

Canned meat13%

Canned fish14%

Canned fruits

& vegetables

73%

European commission – External Trade Stat istics

Romanian canned food exports have recorded also a positive evolution, driven by the development of the local manufactures production facilities, which facilitated the access of the Romanian products on the external markets. Romania exported canned food worth of EUR 30,253 thou in 2007 with 22% more as compared to 2006. The canned meat products were the main exported products in 2007, accounting for over 77% of the total exports value. The most important destinations were: Netherlands (EUR 10.13 million) and Germany (EUR 7.61 millions), followed by Hungary (EUR 0.79 million) and Austria (EUR 0.71 million). The next products as importance in the exports value were the canned fruit and vegetables which accounted for approximately 20% of the total exports value.

9 Thailand was the main country of origin for these imports (EUR 1,7 million)


Romania


2.1.3 Imports source of origin; import taxation for Thai products

Romania’s entrance in the European Union had a significant impact on the canned food imports structure. The Romanian importers took advantage of the elimination of the custom duties applied for the goods imported from Intra – EU countries, almost doubling the Intra – EU imports value in 2007 as compared to 2006. Thus, if in 2006, approximately 54% of the total imports were made from countries within the EU space, this changed in 2007, as over 68% of the canned food imports were made from Intra – EU countries. The most important Intra – EU countries, as source of origin for the imported products in 2007 were: Hungary (17%), Turkey (12%) and Greece (10%), while the most important Extra – EU countries were: Thailand (7%) and China (7%).

Figure 7 Source of origin of canned food imports in 2007 (value)

Germany7%

China ,People's Republic of

7%

Bulgaria6%

Italy5%

Netherlands3%

Thailand

7%Greece

10%

Turkey12%

Hungary

17%

Others26%

Source: European Commision - External trade

According to the type of canned food categories of products, the main import origin countries are:

• Fruit and vegetables canned food – Hungary (EUR 21 million), Turkey (EUR 19 million), Greece (EUR 16 million), China (EUR 10 million), Bulgaria (EUR 8 million) and Italy (EUR 6.5 million);

• Fish canned food – Thailand (EUR 8.4 million), Poland (3.7 million) and Italy (1.5 million);

• Meat canned food – Hungary (EUR 5.2 million), Brazil (EUR 4.6 million), Austria (EUR 4.3 million) and Germany (EUR 1.4 million)

Romania has relevant trade relations with Thailand in the canned food sector as follows:

• Canned fish – Thailand was the main origin country for canned fish imports in 2007, being the main supplier of: canned sardines (EUR 3.2 million), canned tuna (EUR 2.1 million) and canned mackerel (EUR 815 thou)

• Canned fruit and vegetables – Thailand was the main supplier of canned pineapple in 2007, the imports value being estimated to EUR 1.7 million. Romania imported from Thailand rather small quantities of canned tropical fruit and canned ginger.

• Romania did not import any canned meat products form Thailand in 2007.


Romania


Information regarding import tariffs and requirements

Due to the large number of products which are included in the “canned food” segment and differentiated customs tariffs for each category of product, it is more facile to access the European Commission Export Help Desk for identifying a specific custom tariff and import requirement, rather than selecting them from a list. Thus, in the following paragraph will be presented the steps which have to be made in order to obtain the custom tariffs and import requirements for a specific product.

Information regarding imports tariffs can be found at the following internet web page:

http://exporthelp.europa.eu/thdapp/taric/TaricServlet?languageId=EN

After logging to the above web page, please select as the products country of origin “Thailand”. Then click on the “Browse” button for selecting a TARIC Chapter code. The canned food products can be identified under the following two chapters:

- Chapter 16 - preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates;

- Chapter 20 - preparations of vegetables, fruit, nuts or other parts of plants.

After clicking on one of these TARIC Chapters, there is the option to select a four digit TARIC code, which is briefly described in English. Identify were is the targeted product framed and click on the four digit TARIC code.

The canned food products can be identified in one of the following four digit TARIC codes:

- 1602 - Other prepared or preserved meat, meat offal or blood;

- 1604 - Prepared or preserved fish; caviar and caviar substitutes prepared from fish eggs;

- 2001 - Vegetables, fruit, nuts and other edible parts of plants, prepared or preserved by vinegar or acetic acid;

- 2002 - Tomatoes prepared or preserved otherwise than by vinegar or acetic acid;

- 2003 - Mushrooms and truffles, prepared or preserved otherwise than by vinegar or acetic acid;

- 2004 - Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, frozen, other than products of heading 2006;

- 2006 - Vegetables, fruit, nuts, fruit-peel and other parts of plants, preserved by sugar (drained, glacé or crystallized);

- 2007 - Jams, fruit jellies, marmalades, fruit or nut purée and fruit or nut pastes, obtained by cooking, whether or not containing added sugar or other sweetening matter;

- 2008 - Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. After clicking on one of the four digits TARIC code presented above, the entire list of products (ten digits codes) under each category will be listed. Select the targeted product and click on the “View” button. After clicking the EU custom tariffs for the targeted product will be listed.

Information regarding requirements and taxes for each imported products, can be found

at the following internet web page:

http://exporthelp.europa.eu/thdapp/taxes/MSServlet?languageId=EN

After logging to the above web page, please select as the products country of origin “Thailand” and destination country “Romania”.


Romania


The TARIC code identification procedure / steps are the same as in the case of “import tariffs”, as presented above (there can be used the same TARIC code, previously identified).

After the TARIC code has been identified, click on the “View” button to list all the information necessary to be taken into consideration when exporting a specific product to Romania. Click on the bolded “EU / RO” or “EU” links to find out more about the each specific topic.

2.1.4 Consumption level and trends

In light of the fact that the Romanian canned preserved food market is mature, the consumers have become more sophisticated in taste, more demanding and more selective in choosing their canned food products. It can be noticed a diversification of the products selecting criteria, the price no longer being the main buying decision factor. The consumers are turning towards more qualitative and natural products, with less additives, preservatives and colorants.

According to industry experts estimates the canned food consumption per capita in Romania

was of 3.83 kg in 2007.

Figure 8 Canned food consumption structure 2007 (volume)

Soup0.14%

Ready Meals 2%

Fruits6%

Vegetables

48% Fish and seafood 13%

Meat and meat products

31%

Source: Industry experts

According to industry experts estimates, the canned vegetables are by far the most preferred canned food product of the Romanian consumers, accounting for 48% of the total domestic consumption of canned food (volume). The next canned food products as importance in the domestic consumption (volume) are the canned meat products which accounted for approximately 31% of the domestic consumption in 2007. The next canned food products as importance are the canned fish & seafood products with 13% and respectively canned fruit with 6% of the canned food consumption (volume).

A brief presentation of the Romanian’s consumption habits for each category of the canned food products will be further detailed in the following paragraphs.

Canned fruit and vegetables

Approximately 12 – 15 years ago, the “home made canned vegetables” owned a significant share in the Romanian‘s canned vegetable consumption, but over the recent years the evolution of the market and the maturity in the consumption preferences have turned the Romanian consumers towards “ready made canned vegetables”. The canned vegetables consumption is differentiated in urban and rural areas, the urban people buying more canned vegetables products as compared to the rural inhabitants which, still prefer to prepare and conserve their vegetables by the traditional methods.


Romania


The Romanians prefer the following canned fruit and vegetables: • Canned vegetables

- Preserved vegetables – the most preferred are peas, beans and mushrooms. Less preferred are preserved carrots and spinach;

- Pickles: the most preferred are cucumbers and peppers. Cauliflower, cayenne and beetroot have a lower share in the consumption.

• Canned fruit

- Jams – the most preferred are: peach, sour cherry and rosehip jams; - Sweet preparations – the most preferred are: strawberries and sour cherries; - Stew preserved fruit – the most preferred are: apricots, cherries, plums, pineapples and

sour cherries. Usually, the canned fruit and vegetables are packed in jars or metal boxes, the difference between the two types of packaging being also reflected in the price of the products. The Romanian consumers typically prefer the jar packaging solution, being considered more hygienic. The key buying decision factors for the canned food products are: the concentrations of preservatives and artificial colorants, the fruit concentration, quantity of sugar and the promotional offers. Canned meat products

At the top of the Romanian consumers canned meat preferences remain traditional preparations such as: canned pate products (accounting for approximately 90% of the canned meat consumption) and pressed pork and beef meat. Within the canned pate category of products, the pork pate is mostly preferred by the Romanian consumers, followed by the chicken and beef pate. A separate category is the vegetal pate which is usually consumed during Christian fasting period. Usually the canned meat products are canned in metal packaging but some of the local producers have also introduced aluminium packaging solutions for their premium products. The packaging solutions (e.g. easy opening system) are an important factor in influencing the consumers buying decision. Canned fish and seafood

Romanian’s appetite for canned fish products, has transformed them in a common product on the Romanian FMCG market, being commercialized in both small convince and large modern commerce stores. The fish canned food products, as a segment of the fishery products, are considered today by the Romanian consumers as a healthy product, recommended for maintaining a healthy life stile. Mackerel, tunas and sardines, preserved in various ways (water, natural juice and oil) are among the fish spices mostly preferred by the Romanian consumers. Lately the Romanian’s have started to taste the canned fish salads and canned seafood, which are perceived as a premium, delicacy product. As in the case of the canned meat products, the packaging solution is a key issue, influencing the buying decision of the consumers. Thus, sometimes, the canned fish products are differentiated by the “easy opening system of the product” which can turn the consumer to buy or not a specific product.


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2.1.5 Competition on the market

The canned food competitive landscape will be further analysed according to the main categories of canned food products, as each market segment has a distinct competitive landscape.

The canned fruit and vegetables market segment is rather fragmented, as there are approximately 30 canned fruit and vegetables producers, out of which only seven have an annual processing capacity of over 20,000 tons of fruit and vegetables. The lack of domestic manufactured raw materials, the increases in the energy, packaging and manpower costs, have negatively influenced the local manufactures activity, forcing them to under use their production facilities and increase the commercialization prices of their products, making them less competitive on the market. Some of the main canned fruit and vegetables producers are: Contec Tecuci (market leader with a market share of 36%), Lieder International (25%), Klevek Fetesti, Conserv Buftea, Conservfruct, Travir Ramnicu Valcea, Midu Cluj, Rico Monte Verde, Atifco and some others. There are also an important number of companies which are importing canned fruit and vegetables, such as: Agrirom, Serpico Trading, Omnitron Trading and others.

The canned meat market segment is rather concentrated, as the market is dominated by four large domestic manufactures (Scandia, Orkla, Hame and Glina), which have a cumulated market share of 80 – 90%. In the late years, most of these domestic producers had to enlarge their portfolio of products as a response to a more diversified and quality – orientated demand. Thus, some of these companies have invested in the modernization of their production equipment or even invested in development of new factories (e.g. Scandia which invested EUR 30 million in a new canned meat and meat products factory in Sibiu, due to be completed by 2011).

The canned fish market segment is fragmented, as there are a relatively large number of canned fish importers, among them can be mentioned: Les Gastronomes, Pelicanul Distribution, Pescarom, John west Foods, Omnitron Trading, Hame Romania and others. The domestic canned food manufactures have a very weak presence on the market, being severely affected by the underdevelopment of the domestic fishery and pisciculture industry. As Romania is no longer producing large quantities of fish, most of the domestic canned food manufactures are constrained to process imported fish.

Some of the key players involved in the canned food sector are presented in the table below: Table 18 Some key players in canned food sector

Company name Address / E-mail / Web

Company structure

Products / services

2007 key financial & operational

figures

Top local executive

Others

Scandia Romania

45 Morilor Street, Sibiu Telephone: +40 269 20 86 00 www.scandia.ro

100% Romanian privately owned company

Manufacturer and trader of: pork meat and meat preparations, canned and preserved meat;

Turnover EUR 50 million Employees: 877

Ioan Bozdog (General Manager)

Commercialized brands: Sibiu, Scandia, Poiana, Bucegi, Carpati

Orkla Foods Romania

14-18 Copilului Street, Bucharest Telephone: +40 31 805 75

Orkla Foods Norway -majority

Manufacturer and trader of: pork meat and meat

Turnover EUR 28 million Employees:

Aliz Kosza (CEO

Market share 2007 (canned meat products): 20%


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70 www.orklafoods.ro

shareholder preparations, canned and preserved meat;

396

Hame Romania

81 Vasile Alecsandri Street, Caracal Telephone: +40 249 51 22 60 www.hame.ro

Czech private company

Manufacturer of canned meat, canned vegetables and fruit and mixed canned food

Turnover: EUR 8.25 million Employees: 218

Petr Subrt (General Director)

Brands: Hame HAMÉ is one of the leading Czech food manufacturing companies producing durable and chilled products

Les Gastronomes Import -

Export 100 G Timişoara Boulevard, Bucharest Telephone : +40 21 408 63 16

n.a. Import and distribution of food products


Daniela Sandu (Administrator

Brands: Saupiquet and Officer The company is commercializing premium canned fish products

Omnitron Trading

1 Chişinău Boulevard, Bucharest Telephone : +40 21 255 58 89

n.a. Import and distribution of canned food products

Turnover EUR 4.1 million Employees: 38

Badih Salloum (General Manager)

Brands: Marco Polo (own brand), John West The company is the exclusive importer of John West brand in Romania

Conservfruct

181 Florilor Street, Baltatesti Telephone: +40 233 24.40.85 www.conservfruct.ro

100% Romanian privately owned company

Production of canned fruit and vegetables Wholesale and retail trade of miscellaneous food products.


Vasile Cojocariu (Administrator)

Own brand: “Cegusto”

Ominvest

1B Gârlei Street, Bucharest Telephone : +40 21 222 40 03



Alexandru Dragomir (General Manager

The company is commercializing its own brand OMI. The products have the following origin country: Peru, Thailand, Poland, Tunis

Agrirom 44 General Vasile Milea, Arad Telephone: +40 257 25 08 80 www.agrirom.ro

100% Romanian privately owned

Import-export of food products


Raul Bălănescu (General Manager

The company is distributing Bonduelle, Giana and Hungaro

Source: * The Ministry of Economy and Public Finance ** Kompass – business search engine


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2.1.6 Key conclusions, entry opportunities / barriers for Thai products on Romanian

market

The long history of the canned food consumption in Romania and the recent changes in the consumption habits, have turned the domestic canned food market in a mature and quality – orientated market, well represented in all of the four categories of products (meat, fruit, vegetables and fish). Sales of canned food declined in retail volume terms in the last years but the market value increased as the Romanian consumers become more and more interested of more qualitative, sophisticated and diversified range of products. Canned vegetables are the most consumed canned food products, accounting in 2007 for 48% of the total consumed volume, followed by canned meat products (31%) and canned fish and seafood (13%). The canned fruit & vegetables and canned meat segments are dominated by local manufactured products, while the canned fish & seafood segment is almost entirely dominated by imported products. The demand for canned food products is close to saturation and growth will be stimulated by the development of added value products rather than increase demand. In light of the fact that canned food market is mature, a successful product on the market should differentiate through quality, innovation and packaging solution.

It is difficult to point exactly which Thai products may or may not be successful on the Romanian market, but given the current situation of the domestic canned food market the following categories of products may be preferred by the Romanian consumers in the next period:

• Canned fish – Thailand is traditionally known to the Romanian consumer as an important canned fish exporter (an important part of the canned fish products consumed on the Romanian market is originated from Thailand). This aspect gives Thailand products an important advantage over the canned fish products imported from other countries. This positive perception of the consumer can be used as a useful marketing tool for promoting new products on the market. Tuna, mackerel and herring canned food may continue to be an important export opportunity for a Thai exporter given the fact that these are the most consumed canned fish products in Romania. Also, the canned seafood products (octopus, surimi, squid, scale fish and others) and canned fish salads, a newly category of products on the Romanian market, may be of interest for a Thai exporter.

• Canned fruit - The Romanian canned fruit market offers good possibilities for a Thai exporter and moreover this segment is forecasted to have the highest growth rates among the canned food market in the next years. Thai products are already present on this market segment, as Thailand is the main origin country for canned pineapple imports. Given the fact that Thai canned pineapple products are well perceived on the Romanian market, there is also potential for introducing new and additional canned pineapple products, other tropical fruit and especially canned mixes of tropical fruit. The fact that Thailand has long experience with the production of canned tropical fruit, gives an advantage over other exporting countries, having the ability to offer a wide ranges of canned tropical products, tailored to the more sophisticated and exotic demands of the Romanian canned food market.

• Canned vegetables – As presented in the paragraphs above, Romanians are rather conservative when it comes to vegetables consumption. Romania’s trade structure is indicating that most of the “traditional canned vegetables” imports are made from Intra – EU countries, because of the exempt of the custom duties and reduced transportation costs. Thus, it may not be economical feasible for a Thai exporter to supply the Romanian market with “traditional canned vegetables” (tomatoes, peas, beans and mushrooms) unless this products have added value as compared to the ones already present on the market. An


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opportunity for a Thai exporter may represent the exotic canned vegetables products (e.g. sweet corn and baby corn, ginger, asparagus and others) as this small market segment may grow in the next years, driven by the maturation of the consumption preferences and development of HORECA segment.

• Canned meat – Romania did not import any canned meat products from Thailand in 2007. The concentrated domestic competitive landscape (80 – 90% of the market is retained by four large domestic manufacturers) leaves less room for imported products. This market segment does not particularly represent an attractive segment for the Thai exporters, which have to compete with the well known domestic manufactured products / brands. Following the Romanian canned food consumption patterns, the premium canned pates, premium pressed pork or chicken meat or other meat preparations may be of interest for a Thai exporter, but the market entrance barriers are high. However, the current economic situation with its negative impact over the consumer’s purchasing power may limit their access to expensive premium canned products.

It is compulsory for the Thai exporters to enter the Romanian market with canned food products which comply with EU packaging and sanitary requirements.

Promotions (special offers) and sampling are the most common marketing techniques for the canned food products, usually being made at the commercialization points (especially in supermarkets and hypermarkets). Also the media marketing is widely used on the Romanian canned food market either by TV commercials or through specialized magazines.

Distance, may be seen as the main constrain / barrier which may limit the Thailand canned food exports to Romania. However the recent evolution of the international economic environment (“2008 Global Financial Crisis”) has determined an average ten times reduction in the shipping cost in December 2008 against the same period of 2007. The shipping and packaging costs and the custom duties which have to be paid for Extra – EU imports (which has to be included in the final selling price of the products) are the main constrains which may limit the Thailand canned food exports towards Romania.


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2.2 Poultry

2.2.1 Brief presentation of poultry segment

The poultry sector represents an important segment of the meat industry, Romania having a long tradition both in poultry farming and processing activities. This activity is widely spread all over the country, with large production facilities in different regions of Romania.

There are two main categories of producers:

• Industrial producers – companies which have the farming and processing equipments, having as main purpose the selling to final customers or distributors;

• Small individual farms – private persons, widely present in the rural areas of Romania, which are farming poultry for own consumption. Most of the households in rural areas grow chickens for meeting the consumption need of their family, both for eggs and meat, and in some cases the surplus is sold.

The most widespread form of organization of the large Romanian producers is the vertical integration, from the production of biological material up to marketing and distribution of the finished product. Among the advantages of this form of organization are: a better organization of production, a good management, an easier transfer of technology, etc. The small and medium-sized farms either collaborate under contracts with integrators or work independently, leading to increasing incomes for peasant households.

The poultry industry could be divided based on NACE divisions as follows:

• Farming of poultry (NACE 0124), which includes:

• Raising of poultry: turkeys, ducks, chickens, geese and guinea fowl or guinea hens

• Production of eggs

• Production and preserving of poultry meat (NACE 1512), which includes:

• Slaughtering of poultry

• Preparation of poultry meat

• Production of fresh or frozen poultry meat in individual rations

• Slaughtering of rabbits and the like

• Preparation of rabbit meat and the like

• Production of feathers and down

• Production of meat and poultry meat products (NACE 1513), which includes:

• Production of dried, salted or smoked meat

• Production of meat products: sausages, salami, puddings, ’andouillettes’, saveloys, bolognas, pâtés, galentines, rillettes, boiled ham, meat extracts and juices

• Production of prepared meat dishes

The contribution of the poultry industry in the GDP is on a descending trend. Although the total turnover increased in the last three years, the industry share reduced. NACE 1513 was included in the table although the companies which declared as main activity this code manufacture beside the poultry meat products other meat products. There is no intermediary code for dividing this activity in two or more subgroups.


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Table 19 Poultry industry contribution to Romania’s GDP 2005 – 2007 (EUR billion)

2005 2006 2007 GDP (EUR billion) 79.54 97.74 121.3 Poultry manufacturers’ turnover10 (EUR billion) 1.34 1.50 1.83 Share in GDP (%) 1.68 1.53 1.51 Source: The National Prognosis Commission and The National Institute of Statistics, 2008


Size

In 2007 the total turnover of the companies which declared the production and preserving of poultry meat (NACE 1512) as main activity reached EUR 190 millions, a 19.65% increase as compared to previous year. Farming of poultry has also registered a relatively important expansion of 26% in 2007 as compared to 2006.

Figure 9 Turnover of companies involved in poultry sector 2005 - 2007 (EUR million)

370,7 365,1

481,6

154,7 158,5190,0

817,7

972,7

1.163,1

0

200

400

600

800

1.000

1.200

2005 2006 2007

NACE 0124 Farming of poultry NACE 1512 Production and preserving of poultry meat

NACE 1513 Production of meat and poultry meat products

Source: The National Institute of Statistics, 2008

In 2007, according to the Romanian Association of Birds Breeders11 (UCPR), the poultry market, including meat, meat products and eggs was estimated to EUR 900 millions. The preliminary estimation for 2008 are at around EUR 1 billion, based on the positive trend registered by this sector in the last years, and also on a very good year in agriculture translated in reasonable fodder prices. In the first four month of 2008 the poultry industry grew with 15% as compared to the same period of 2007, from 79,000 tones to 90,000 tones, while the imports contracted with 20%.

For 2008 industry experts estimate that on the Romanian market were sold around 400,000 tons of chicken meat, having a value of EUR 700 millions. The estimations are based also on the

10 The turnover is the sum of NACE 0124, NACE 1512 and NACE 1513 11 A professional body with 100 members, counting for more than 75% of the poultry meat produced in Romania


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chicken meat internal production, which reached almost 220,000 tons in the first eight months of 2008 and on the import, which were of almost 74,000 tons in the same period.

Although the financial crisis is affecting Romania as well, the chicken meat producers estimate that they will manage to increase the production capacities in 2009 with 15-20%, in order to reduce as much as possible the imports. They aim to reach about 95% from the chicken meat demand from a share of 75% registered in 2008.

The investments made in the poultry sector were of around EUR 115 millions, between 2002 and 2005. They were split in two directions: EUR 60 millions in slaughtering houses and EUR 50 millions in farms. In the last two years the investments made were about EUR 170 millions, allocated for slaughtering houses (EUR 90 millions) and for farms (EUR 80 millions). UCPR representatives claim that investments of around EUR 700 millions are needed in the next years for reaching EU standards and for becoming competitive on export markets.

Cost structure

The price of poultry meat in Romania is heavily dependent on the fluctuation of fodders price evolution. The share of this expense in the cost structure is around 60-75%, depending on the producer. Other factor which influenced the price was the increase of the labour cost which rose with 15-22% in 2007, though the impact was moderate due to relatively small share of this cost in the total, only 10%.

Figure 10 Cost elements share for producing one unit of poultry meat

Breeding stock costs,

2%Veterinary expenses,

5%

Energy, 5%

Maintenances, 3%

Labour expenses,

10%

Financial costs, 10%

Fodder, 65%

Source: Piata Magazine

Trends and forecasts

Most of the goods produced by the poultry sector grew year after year, both in volume and value. The category of products with the biggest increase in the last four years was the fresh or chilled cuts of chicken (1512 11 53). The value of this category increased four times between 2004 and 2007, while the volume doubled. Another important category of products was represented by frozen cuts of chicken (1512 12 53), the value has almost doubled in the last four years.


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Table 20 Evolution of production for: domestic manufactured goods (EUR thou) and domestic

manufactured goods sold (thou kg) 2004 – 2007

2004 2005 2006 2007 PRODCOM Codes* Value Volume Value Volume Value Vol. Value Volume

1512 11 53 15,169 13,053 15,858 n/a 32,679 18,940 60,248 29,607 1512 11 70 1,211 860 2,009 1,073 3,831 1,642 5,712 2,535 1512 12 13 52,311 49,106 59,469 44,837 68,701 53,345 62,016 41,853 1512 12 53 47,169 41,205 73,883 49,303 93,237 58,036 130,547 68,422 1512 12 71 5,469 7,159 2,861 2,038 2,755 1,929 3,673 2,649 1512 12 75 3,033 1,988 3,212 1,493 4,406 1,998 5,113 2,121 1513 12 35 11,748 8,787 22,549 11,445 31,014 11,691 53,990 19,316 Source: Eurostat, 2008

Note: *1512 11 53 - Fresh or chilled cuts of chicken; 1512 11 70 - Fresh or chilled poultry offal (excluding fatty

livers of geese and ducks); 1512 12 13 -Frozen whole chickens; 1512 12 53 - Frozen cuts of chicken; 1512 12 71 -

Frozen poultry offal (excluding liver); 1512 12 75 - Frozen poultry livers; 1513 12 35 - Other poultry meat: prepared

or preserved

The perspective of the poultry sector in Romania are optimistic, based on the production increase registered in the last years and on the consumption development of the white meat in stead of red meat. Therefore the industry experts are waiting for an increase of the market in the next years, based also on the per capita consumption level in Romania, which is still lower than in other EU countries.


In the first two month of 2009 the chicken meat market did not register important changes, maintaining the same levels as compared with 2008. Therefore industry experts expect for 2009 the same levels of sales as in the previous year. The optimistic trends which predicted an increase of the market in 2009 were tempered by the effects of the financial crisis, thus the chicken meat market is expected to remain at the same level as in 2008 and not experiencing contractions.

Exports

The exports of poultry sector are relatively small due to the several reasons like: the focusing of the producer on meeting domestic demand, the need of serious partner on foreign markets, the additional costs required for this operations, etc. Yet, some companies are already exporting on the EU market. For example Avicola Buzau is exporting 8% of the meat products to France, UK and Germany.

Table 21 Exports volumes for main poultry meat products 2004 – 2007 (tones)

C.N. Codes* 2004 2005 2006 2007 0207 12 43 19.6 23.3 29.3 0207 13 892.7 342.1 1.1 98.9 0207 14 2,813.3 2,200.2 17.7 1,596.6 1602 32 3,680.3 4,548.8 6,527.3 5,738.7 Source: Eurostat, 2008

Note: 0207 12 - Frozen fowls of the species Gallus domesticus, not cut in pieces; 0207 13 - Fresh or chilled cuts and

edible offal of fowls of the species Gallus domesticus; 0207 14 - Frozen cuts and edible offal of fowls of the species

Gallus domesticus; 1602 32 - Meat or offal of fowls of the species "Gallus domesticus", prepared or preserved

The imports of poultry meat products are on an ascending trend, except for 0207 14 code - Frozen cuts and edible offal of fowls of the species Gallus domesticus, due to the integration of Romania into the EU and the applicability of the Common Customs Tariff. All other three products categories registered high increase rates in 2007.


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Table 22 Imports volumes for main poultry meat products 2004 - 2007 (tones)

C.N. Codes* 2004 2005 2006 2007 0207 12 1,408.7 1,397.4 557.4 2,252.9 0207 13 449 324.9 286.8 2,200.5 0207 14 116,513.8 148,415.9 149,509.5 109,120.9 1602 32 775.5 714.5 677.7 1,788.5 Source: Eurostat, 2008

Note: 0207 12 - Frozen fowls of the species Gallus domesticus, not cut in pieces; 0207 13 - Fresh or chilled cuts and

edible offal of fowls of the species Gallus domesticus; 0207 14 - Frozen cuts and edible offal of fowls of the species

Gallus domesticus; 1602 32 - Meat or offal of fowls of the species "Gallus domesticus", prepared or preserved


In 2007, the main country of origin for poultry meat products12 were: Netherlands (34% from the total), followed by Brazil (24% from the total) and Belgium (7% from the total). The total imports were reaching 126,717 tones. In value terms, the hierarchy remains the same, the total value of imports reaching EUR 146.55 millions.

Figure 11 Source of origin for poultry13

meat and poultry products imports in 2007 (tones)

Others, 34,135

Nederlands, 42,853

Brazil, 33,780

Belgium, 9,014

Hungary, 6,936

Germany, 6,576

Source: Eurostat, 2008

As regarding custom duties the taxation process for poultry products imported from Thailand to other EU states, including Romania is harmonized with the European Union legislation. The EU established the Taxation and Custom Union; therefore any product imported in any country member of the European Union is taxed under the same duty rates. The levels of custom duties in 2008, based on the TARIC codes are presented in Annex 1.

12 As per Combined Nomenclature of the European Union code C.N. 0207 - Edible offal of fowls of the species gallus domesticus

ducks, geese, turkeys and guinea fowls, fresh chilled or frozen 13 This category includes: edible offal of fowls of the species gallus domesticus ducks, geese, turkeys and guinea fowls, fresh chilled or frozen


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In the recent years, the trend on the market is to change consumption habits from red meat, especially pork, to white meat, poultry and fish. Therefore the poultry market expanded three times in the last seven years, based on the consumption level which rose 3.5 times, from 6 kg per capita in 2000 to around 21 kg per capita in 2007. Yet, this level is only half from the levels registered in Western Europe where the consumption is around 40 kg per capita. The biggest increase was registered between 2000 and 2004, afterwards the consumption started to stabilize. A major factor which slowed down the increase was the avian flu, present in Romania during 2006.

The poultry meat is consumed in almost all households in a larger quantity than other types of meat, like pork, fish or beef, information revealed by a study made in August 2008 by ISRA14. The study also indicated that chicken legs, with 59.1% from the total poultry meat, is the most consumed product is, followed by chicken breast with a share of 31.8%. With respect to the acquisition habits the most acquired category of product is represented by the category of whole chicken legs (36.9%), followed by chicken breast (21.9%) and whole chickens (21.2%).

The same study reported that the most important factor influencing the buying decision is the meat aspect and colour (41.4%), followed by the expiration date (18.8%) and the price (16.2%). Usually the consumers prefer to buy chicken meat products from the supermarkets. The second acquisition place is represented by hypermarkets, followed by food stores.

In the last years the consumer habits as regarding the poultry meat has changed. The preference for frozen meat was moving towards fresh or chilled products. For example, several years ago, 70% from the total sales of one of the most important players (Transavia), were represented by frozen meat. In 2006, the share was reversed, 75% from the total sales being fresh. Meanwhile the offer on the market became more diversified and the share of semi-finished products grew, thus the domestic producers started to focus on this segment as well.


The poultry market in Romania is relatively fragmented, with many operators present on the market. Yet, some big producers dominate the market. They are usually vertically integrated to better control the production chain in terms of costs as well as food safety.

Presently 70% from the production of poultry meat in Romania is coming from the first 25% of the companies present on the market. Managing representative of Agricola Buzau, one of the first three players on the market claims that together with Transavia and Agrisol, owns a 32% market share. Other 45% from the market is hold by small and medium sized producers, having a regional importance. Therefore the market is well covered in terms of numbers of producers, product range diversity and quality.

Most of the big producers offer a wide range of products, the difference being made mainly by other factors, such as: the expiration date, packaging methods and brand awareness. In the last years key players have diversified the production, adding to their portfolio, marinated goods and semi-finished products, meanwhile modernising the packaging.

Some of the most important foreign companies which have invested on the Romanian poultry sector, in the last years are Banvit from Turkey and Agricola Holding from Lebanon. In a first phase, Banvit has invested in Romania mainly in developing facilities for producing one day chicks (this business became operational in 2007) and in acquiring a fodder plant (in May 2008), as part of a more complex project that they intended to developed on the Romanian

14 The study was made for “Magazinul Progresiv” by the research company ISRA using the face-to-face questionnaire method on

1,113 persons, residents on urban landscape


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market15. Agricola Holding from Lebanon, which controls several companies active in poultry sector, plans to invest EUR 32 millions in 16 new farms, in the next years.

Table 23 Some key players in poultry sector


Company structure

Products / services /

brands

Key financial &

operational figures in

2007

Top local executive

Others

Transavia

Km 11 Soseaua Alba Iulia - Cluj Napoca, Oiejdea, Alba County www.transavia.ro [email protected]

Main shareholder: Ioan Popa

Chicken breast, legs, thighs, drumsticks, wings, livers, etc.

Turnover: EUR 44.48 mil Net profit: EUR 5.8 mil Employees: 670

Ioan Popa, General Manager Ciprian Oprea, Marketing Manager

Vertically integrated company, from reproduction to distribution and feed factory

Agricola International

94 Calea Moldovei St., Bacau, Bacau County www.agricola.ro

76% private persons 23% legal entities

Chicken meat, pork meat, dry-cured salamis, eggs, etc.

Turnover: EUR 73.7 mil Net profit: EUR 0.44 mil Employees: 2,372

Gheorghe Antoci, President Grigore Horoi, Vice-president

Around 65% from the total turnover is made by the chicken division

Agrisol International

38 Morii St., Boldesti-Scaieni, Prahova County [email protected]

50% Sarels International 25.45% Youssef Laoun 24.55% Charbel Laoun

Day old, breeding poultry Poultry for egg and meat production


Charbel Laoun, General Manager Youssef Laoun, Vice-president Radu Lupu, Financial Manager

Recently bought Toneli Holding (the biggest egg producer), together with Interbrands

Avicola Buzau

DN 2B, KM 9+270-KM 9+527, Buzau, Buzau County [email protected] www.avicolabuzau.ro

33.33% Bogdan Stanca 33.33% Bogdan Gruia 33.33% Viorel Fetinca

Dressed and pre-packed chickens Deep frozen poultry Fodder for birds and other animals

Turnover: EUR 27.7 mil Net loss: EUR 0.6 mil Employees: 789

Carmen Damu General Manager Mihai Iliescu Deputy General Manager

Part of Aaylex Group, together with Avis Lipia, Aviprod Zoresti, etc.

Agroli Group

486 Aleea Combinatului St., Crevedia, Dambovita County www.agroli.ro

Main shareholder: Agricola Holding (Lebanon)

Broiler breeding and processing 1-day chickens Fodder production Table eggs


Rami Ghaziri Administrator Camelia Hoinărescu Head of Marketing

The group owns: Avicola Crevedia, Avicola Tartasesti, Jackmoris and Golden Fingers

Source: Major Companies in Romania, 2007, The 200 biggest players in the economy, 2008 and the Ministry of

Finance and Economy

15 Initial plans of the Turkish investor were to invest EUR 40 million in breeding farms, fodder plant and slaughtering house.


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market

The poultry market in Romania is well covered with a significant number of operators active on this sector. The most important companies are present with their goods in all hypermarkets, cash and carry stores and supermarkets. The investments made by these companies in production capacities enlargements, diversification of brands and goods, in modern packaging technologies, in marketing and promotion of their products, made the market very competitive. Also, the relative big number of players on the market, some with national coverage, other with only a regional or local importance, increased the competition. Thus one of the main entry barriers for a new entrant is the relatively high competitive environment on the poultry market.

In the last years the investment in marketing and promotion made by some companies increased the brand awareness among the consumers. Some relevant examples are Agricola Bacau which invested around EUR 1 million in 2007, to promote its brand Sav’Or, or Transavia which had planed a total advertising budget of about EUR 15 millions in the same period16. Therefore, it is quite difficult for new entrant / product to compete with the local brands, unless high investment in marketing and advertising are made.

One possibility for Thai investors could be to acquire and invest into a Romanian company; such a strategy could confer direct access to the market, for all kind of products: fresh, chilled and frozen. The likelihood to find a potential acquisition target is high, due to the big number of players present on the market and also due to impossibility of small or medium sized companies to invest in modernizing the production facilities.

As regarding imported Thai products there are some limitation with respect to access on the local market. One could be the fact that these products are frozen, in order to be transported by sea. In the recent years the local customers preferred fresh or chilled products instead of frozen ones. Yet, some products, like whole chickens or whole chicken legs, are still acquired frozen by some customers, especially based on lower prices buying decisions. Therefore, if the prices for such goods will be lower than the ones of the Romanian or imported goods already present on the market, important sales could be made.

A niche could be the category of frozen semi-finished products. Although such products were recently launched by several domestic companies on the Romanian market, there is still space on the market for new brands. The market for these goods is at the beginning in Romania, thus the consumers are willing to try new products.

16 Source: Business Standard, August 10th 2007


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2.3 Seafood

2.3.1 Brief presentation of seafood segment

Assumptions

The Romanian seafood market is a young market, with consumption levels per capita still under

the ones recorded by most of the Central - Western EU countries. Because of the small size of

the seafood market and due to the fact that Romania does not produce seafood, there are any

available statistics regarding market size, structure and level of consumption. However,

Euromonitor International (global market research company) issued data regarding the market

size and consumption levels recorded by the frozen processed fish and seafood market, may be

considered relevant in the analysis of the seafood market. Specific information regarding

seafood (frozen and fresh) imports level (value and quantity) are provided in chapter 2.2.2, may

be considered relevant for the seafood consuming preferences.

The Romanian seafood market has the features of a young niche market. The consumption of seafood products is still limited by the high price of the products and lack of awareness regarding their curative and benefic proprieties. These products are considered by most of the Romanian consumers as premium products, consumed occasionally and not necessarily on a day to day basis. Seafood products were first made available, a couple of years ago, to the Romanian consumers by the large retail chains (Metro, Carrefour, Cora and others) which organized separate presentation stalls (especially for the fresh seafood) offering them as an alternative to the traditional fish products. In the last period, the range of products available on the market has diversified, the Romanian consumers having now access to frozen, fresh, ready meal and canned seafood products. As these products are almost entirely distributed in large retail chains, the consumers are urban people, with incomes above the average and which have more sophisticated taste in food manners. Another important consumer of seafood products is HORECA, as a growing number of Mediterranean restaurants have opened lately in Bucharest and other large cities in Romania. Some of the factors which could have a positive influence over the seafood consumption in the next years are the continuous expansion of the modern commerce stores, the expected increase of the consumers’ purchasing power and least but not the last the maturation of the Romanian consumers’ preferences which will slowly turn towards the consumption patterns of the Central – Western EU countries. Considering the Romanian consumers conservatory attitude towards food products and their reticence in paying high prices for an unfamiliar product, the success of the seafood products on the Romanian market will largely depend on sustained publicity informing campaigns (in the media or directly in the retail chains) which will explain the curative and benefic properties of these products.


Market size – frozen processed fish and seafood

The domestic frozen processed fish and seafood market had a positive evolution over the last five years, increasing in the 2002 – 2007 period by 238% in terms of value and by 67% in terms of volume. The market was mainly covered from imports, as Romania does not produce seafood products. However, there are very few seafood processors (e.g. Ocean Fish) which are importing fresh or frozen seafood products and then process it in seafood specialties and salads.

Euromonitor International estimated the Romanian frozen fish and seafood market to EUR 2,532 thou (equivalent of 391 tons) in 2007, with 42% more in terms of value and respectively 12% more in terms of volume as compared to 2006.


Romania


Table 24 Romanian frozen processed fish & seafood sales 2002 – 2007 (tons, EUR thou)

Indicator 2002 2003 2004 2005 2006 2007 2008** 2009* 2010* 2011* 2012*

Retail volume (tons) 196 220 241 256 294 328 360.1 390.7 416.3 440.3 462.8 Retail volume Y / Y - 12% 10% 6% 15% 11% 10% 9% 7% 6% 5% Food Service volume (tons)

27 35 42 49 56 63 67.9 71.5 73.5 74.4 74.7

Food Service

volume Y / Y (%).

- 30% 20% 17% 15% 12% 8% 5% 3% 1% 0%

Total volume (tons) 223 255 283 305 351 391 428.0 462.2 489.8 514.8 537.4

Total volume Y / Y

(%)

- 14% 11% 8% 15% 12% 9% 8% 6% 5% 4%

Retail value RSP17

(thou EUR)

749 801 964 1,374 1,786 2,532 2,936.8 3,362.6 3,799.8 4,217.7 4,576.2

Retail value RSP Y /

Y (%)

- 7% 20% 43% 30% 42% 16% 14% 13% 11% 8%

Retail value MSP18 (thou EUR)

472 505 608 867 1,126 1,596 1,851.9 2,120.5 2,396.1 2,659.7 2,885.77

Retail value MSP Y /

Y (%).

- 75 20% 43% 30% 30% 16% 14% 13% 11% 8%

Source: Euromonitor International, * Estimated figures, **Preliminary data

As presented in the table above, over 83% of the frozen fish and seafood products (328 tones) were commercialized in retail stores (mainly large modern commerce stores) in 2007, the rest, totalling 63 tons, were commercialized through food service outlets19.

Euromonitor data is indicating that the Romanian frozen fish and seafood market will continue to grow in the next years, to an estimated value of EUR 4,576 thou in 2012, equivalent of 537 tons, with 80% more in terms of value and respectively 37% more in terms of volume as compared to 2007. The estimated average early growth rate in the 2007 – 2012 period is of 6.6% in terms of volume and 13% in terms of value.

In the next five years the distribution structure is forecasted to remain almost the same as in 2007, 83% through retail stores and 17% through food service outlets.


Having the features of a young niche market, focused on high earnings consumers, the Romanian seafood market will record a consumption slowdown in the next period, negatively influenced by some of these factors:

• Reduction of the consumer purchasing power (stagnation of the salaries level and high inflation rates);

• Increase of the commercialization prices of the seafood products, as the market is supplied exclusively with imported products (the depreciation of the national currency against USD and EUR);

• HoReCa will record a downturn in the next period, as the consumers will prefer to save some money and eat at home.

The seafood products are perceived by the Romanian consumers as very expensive premium products. During these difficult economic times, when the price and rationality are the key buying decisions, the seafood products consumption is expected to reduce despite the positive

17 Retail value RSP (Retail selling price) 18 Retail value MSP (Market sales price) 19 19 Food service outlets includes –Cafes / Bars, Full service restaurants, Fast food restaurants, Takeaway outlets, Self service

cafeterias and street stall / kiosks


Romania


perception regarding their curative effects. If until the GFC, the seafood products were consumed not only by high incomes consumers but also by medium income consumers (occasionally and just out of curiosity), during this period, the customers area is considerably shrinking only to the so called “status seekers consumers” which do not want to renounce to their old eating habits.

The downturn of the HoReCa segment leaves a market opportunity for the ready made seafood products. Thus, the consumer who tries to optimize / reduce its budget and renounces to the Mediterranean restaurants but still wants to eat seafood products will turn towards ready made seafood which are easy to prepare and can be consumed at home.

External trade

The imports of seafood increased significantly in the 2004 – 2007 period, driven by the increase demand of seafood products. Romania imported seafood worth of EUR 4,680 thou in 2007, equivalent of 996 tons, with 40% more in terms of value and 45% more in terms of volume as compared to 2006. During the 2005 – 2007 interval the imports had an average yearly growth rate of 30% both in terms of value and volume.

Table 25 Seafood imports 2004 – 2007 (EUR thou, tons)

Products Measurement unit 2004 2005 2006 2007 Imports value

Crustaceans20 Thou EUR 719.04 1,473.69 1,536.88 2,400.67 Molluscs21 Thou EUR 509.21 1,290.50 1,795.33 2,279.39 Total Thou EUR 1,228.25 2,764.19 3,332.21 4,680.06

y/y modification - 125% 21% 40%

Imports quantity

Crustaceans Tons 124.60 265.40 262.10 350.10 Molluscs Tons 158.50 337.30 426.00 646.10 Total Tons 283.10 602.70 688.10 996.20

y/y modification 113% 14% 45% Source: European Commission – External Trade

As the consumption is covered mainly from imports, the 2007 imports structure could give a reference of the Romanian’s seafood consumption preferences. Thus, the molluscs were the main imported seafood products in 2007, accounting for approximately 65% of the total seafood imports, the rest of 35% being covered with crustaceans’ imports.

20 TARIC 0306 - Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine; crustaceans, in shell,

cooked by steaming or by boiling in water, whether or not chilled, frozen, dried, salted or in brine; flours, meals and pellets of

crustaceans, fit for human consumption 21 TARIC 0307 - Mollusks, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine; aquatic invertebrates other

than crustaceans and mollusks, live, fresh, chilled, frozen, dried, salted or in brine; flours, meals and pellets of aquatic invertebrates

other than crustaceans, fit for human consumption - less snails


Romania


Figure 12 Seafood import structure in 2007 (volume)

Crustaceans

Romania imported 350 tons of crustaceans, worth of EUR 2,400 thou in 2007, with 34% in terms of volume and 56% in terms of value as compared to 2006. Approximately 67% of the crustaceans imports were frozen (235 tons) the rest being represented by not frozen crustaceans. The main imported crustaceans in 2007 were:

• Shrimps and prawns were the main category of seafood products imported in 2007, accounting for 27% (277 tons, worth of EUR 1.9 million) of the total imported volume. The main origin countries for the imported products in 2007 were: Belgium, Italy, Germany, Greece and Netherlands;

• Lobsters – accounted for 1% (8.10 tons) of the total seafood imports in 2007. The main origin countries for this category of products in 2007 were: United States and Italy;

• Crabs – accounted for less than 1% (5.9 tons) of the total seafood imports in 2007. The main origin countries for the imported products in 2007 were: Lithuania and France.

Molluscs

Romania imported 646 tons of molluscs, worth of EUR 2,279 thou EUR in 2007, with 52% more in terms of volume and with 27% more in terms of value as compared to 2006.

The main imported molluscs in 2007 were:

• Cuttle fish – accounted for 22% (216 tons) of the total seafood imports in 2007. The main origin countries for the imported products in 2007 were: Italy, Greece, Belgium, Thailand (17 tons);

• Mussels – accounted for 14% (139 tons) of the total seafood imports in 2007. The main origin countries for the imported products in 2007 were: Italy, Thailand (38 tons), Netherlands and Greece;

• Octopus – accounted for 10% (99 tons) of the total seafood imports in 2007. The main origin countries for the imported products in 2007 were: Italy, Bulgaria, Netherlands, Germany and Thailand (1 tone);

• Scallops – accounted for 3% (29 tons) of the total seafood imports in 2007. The main origin countries for the imported products in 2007 were: Thailand (8 tons), Germany, Belgium, Italy and Greece;

Molluscs65%

Crustaceans35%

Source: European Commission - External Trade

Rock lobster and other sea

crawfish 0%

Octopus 10%

Other not frozen14%

Oysters2%

Crabs 1%

Other - frozen

6%

Scallops 3%

Mussels 14%

Cuttle fish22%

Lobsters 1%

Shrimps

and prawns

27%


Romania


• Oysters – accounted for 6% (59 tons) of the total seafood imports in 2007. The main origin countries for the imported products in 2007 were: Italy and France.

Romania imports of molluscs from Thailand recorded a positive trend in the last years reaching a total quantity of 64 tons, worth of EUR 154 thou, in 2007, with 77% more in terms of volume and 50% more in terms of value as compared to 2006.

Romania did not import crustaceans from Thailand in 2007.

No specific official data about the category of frozen processed fish are available. This category is included into a wider segment covering imports of fish in general. As regarding imports of fish relevant data are presented in the table below:

Table 26 Fish imports 2004 – 2007 (EUR thou, tons)

Products Measurement unit 2004 2005 2006 2007 Imports value

Frozen fish22 Thou EUR 30,361.05 41,050.51 43,089.01 42,474 Fish fillets23 Thou EUR 3,648.63 7,157.2 10,222.87 14,325.97 Total Thou EUR 34,009.68 48,207.71 53,311.88 56,799.97

y/y modification 42% 11% 6.5%

Imports quantity

Frozen fish Tons 53,136.2 60,176.5 55,761.1 50,170.4 Fish fillets Tons 2,203.7 3,906.8 4,998.6 6,841.8 Total Tons 55,339.9 64,083.3 60,759.7 57,012.2

y/y modification 16% -5.2% -6.2% Source: European Commission – External Trade

Seafood exports

Romania is exporting very small quantities of seafood products. In 2007, Romania exported approximately 16.4 tons crustaceans worth of EUR 60 thou, with 78% more in terms of volume and 107% in terms of value as compared to 2006. Shrimps and prawns were the main exported product in 2007 and the main destination country was India.


Romania's entry into the European Union had a significant impact on the seafood imports structure, in terms of origin country of the products. Thus, if in 2006 approximately 56% (383.9 tons) of the total seafood imports were from countries outside the EU, in 2007 this changed and over 82% (814 tons) of the seafood imports were from countries within EU. Italy was the main supplier of molluscs (oysters, mussels, cuttle fish, octopus) and ranked second as country of origin, after Belgium, at crustaceans imports (rock lobster, shrimps and prawns). Approximately 292 tons of seafood products were imported from Italy in 2007, accounting for over 30% of the total seafood imports. Belgium, ranked second at seafood imports in 2007 (15% of the total imported quantity), being the main supplier of crustaceans. Romania imported from Belgium over 94 tons of frozen shrimps and prawns worth of EUR 619 thou, in 2007. The imports of molluscs (mussels, cuttle fish, scallops and others) and crustaceans (lobsters, shrimps and prawns) placed Netherlands as third country of origin for seafood imports in 2007. Romania imported from Netherlands approximately 104 tons of seafood products, accounting for 11% of the total seafood imports.

22 TARIC 0303 - Fish, frozen, excluding fish fillets and other fish meat of heading 0304 23 TARIC 0304 - Fish fillets and other fish meat (whether or not minced), fresh, chilled or frozen


Romania


Thailand was the main Extra – EU country source of origin for molluscs imports in 2007, accounting for 6% of the total seafood imports in 2007. Romania imported from Thailand approximately 64 tons of molluscs, worth of EUR 154 thou. The main categories of molluscs imported from Thailand in 2007 were: scallops (8 tons), mussels (38 tons), cuttle fish (17 tons) and octopus (1 tone).

Figure 13 Source of origin of seafood imports in 2007 (quantity)

Thailand

6%

India3%

Others4%

Hungary 2%

Spain4%

Indonesia4%

Vietnam3%

Belgium15%

Denmark2%

France3%Germany

6%Greece

7%

Italy

30%

Netherlands11%



Due to the large number of products which are included in the “seafood” segment, it is more facile to access the European Commission Export Help Desk for identifying a specific custom tariff and import requirement, rather than selecting them from a list. Thus, in the following paragraph will be presented the steps which have to be made in order to obtain the custom tariffs and import requirements for a specific product.


• Import tariffs - http://exporthelp.europa.eu/thdapp/taric/TaricServlet?languageId=EN

After logging to the above web page, please select as the products country of origin “Thailand”. Then click on the “Browse” button for selecting a TARIC Chapter code. The seafood products can be identified under the following chapter:

- Chapter 03 - fish and crustaceans, molluscs and other aquatic invertebrates

After clicking on this TARIC Chapter, there is the option to select a four digit TARIC code, which is briefly described in English. Identify were is the targeted product framed and click on the four digit TARIC code.

The seafood products can be identified in one of the following four digit TARIC codes:

- 0306 - Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine; crustaceans, in shell, cooked by steaming or by boiling in water, whether or not chilled, frozen, dried, salted or in brine; flours, meals and pellets of crustaceans, fit for human consumption;

- 0307 - Molluscs, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine; aquatic invertebrates other than crustaceans and molluscs, live, fresh, chilled,


Romania


frozen, dried, salted or in brine; flours, meals and pellets of aquatic invertebrates other than crustaceans, fit for human consumption.

After clicking on one of the four digits TARIC code presented above, the entire list of products (ten digits codes) under each category will be listed. Select the targeted product and click on the “View” button. After clicking the EU custom tariffs for the targeted product will be listed.




After logging to the above web page, please select as the products country of origin “Thailand” and destination country “Romania”. The TARIC code identification procedure / steps are the same as in the case of “import tariffs” (there can be used the same TARIC code, previously identified).



Despite the significant growth recorded by the Romanian seafood market, the consumption per capita still remains at very low levels compared to other EU countries. Due to the fact that there are not any centralized statistical information available regarding the Romanian seafood market, the domestic consumption of seafood products per capita will be analysed based on the information from Euromonitor International about the Romanian frozen fish and seafood market. Thus, in 2007 the domestic average consumption of frozen fish and seafood products was estimated to 0.015 kg / capita in terms of volume, meanwhile in other countries like Germany and Denmark the average early consumption of frozen fish and seafood (in 2006) is estimated to 12 – 15 kg / capita, out of which approximately 6 – 8 kg are represented by frozen seafood products.

A more appropriate and precise estimation, as the one presented above, regarding the seafood consumption is by dividing the seafood imported quantities in 2007 to Romania’s number of inhabitants. Thus, the seafood consumption level per capita can be estimated to 0.046 kg /

capita24, considering that Romania imported in 2007 approximately 996 tons of seafood products (crustaceans and molluscs) and Romania’s population is of 21.6 million inhabitants.

The seafood products, as a segment of the fish specialties, are considered, today, by the Romanian consumers as a delicacy and indirect (as part of the fish category) a category of products recommended for maintaining a healthy life style. The seafood is placed as a premium product, both in terms of quality and price. Moreover, as the consumption tends to maturate and these products are considered a healthy diet, there can be noticed a shift in the consumption preferences for natural / frozen seafood products. The preservatives and potentiated aromas, which usually can be traced in some of the packed / canned seafood salads and mixtures, are starting to become an issue for some of the Romanian consumers, which are willing to pay higher prices for natural products. Lately the Romanians started to taste, beside the frozen and fresh seafood products, a newly introduced category of seafood products: ready made specialties and salads.

24 This is an estimative figure. The exact consumption level may by lower than 0.046kg per capita as a part of the products which

were imported in 2007 may be consumed in 2008, especially the frozen ones which have a longer validity period.


Romania


Important international seafood processors such as Royal Greenland, Frosta or Vici are present on the Romanian market, offering a diversified range of seafood ready made specialties such as: calamari sticks, cooked and peeled shrimps, crabs sticks and others. The demand of seafood salads is also on a rising trend as these products are becoming more and more popular among the Romanian consumers. Some of the seafood salads currently available to the Romanian consumers are: seafood cocktails, mussels in oil and spicy sauce, cuttlefish in oil, shrimps in oil, squids in oil and spicy sauce, octopus in oil and others. According to industry experts, the consumption of ready made specialties and salads will start to gain a more important share in the seafood products consumption, as the urban active persons will allocate less and less time for the cooking activities because of their alert rhythm of life. These products offer the possibility to prepare, at home, an exquisite meal in a very short time.


The sanitary rules, imposed for the transportation, storage and commercialization of the seafood products25 (especially for fresh products) and the very small size of the market are limiting the number of companies which are importing fresh seafood products. The fact that the large retail chains are the main distribution channel for the seafood products is laying pressure on the competitive environment. The seafood importers should have logistic capabilities to import and preserve a sufficient quantity of products (fresh or frozen) for continuously supplying (for the fresh seafood sometimes several times in one weak) the demand of the modern commerce stores26. Considering this, it is common in the domestic seafood market, that some of the important large retail chains (e.g. Metro Cash & Carry) to either directly import the seafood products or to distribute their own private labels packed and manufactured in the country of origin. However, the elimination of the custom duties applied for the goods imported from Intra – EU countries, the forecasted increase in the demand for seafood products and development of several other distribution channels (small specialized stores) are favourable factors for the development of the seafood competitive landscape.

Some of the companies involved in the seafood import / distribution / processing market are presented in the table below:

Table 27 Some of the key players in the seafood market


Company structure

Products / services


figures

Top local executive

Others

Ocean Fish

DN 2 Km, Afumati Village, Ilfov County Telephone: +40 21 350.35.31 www.oceanfish.ro

100% Romanian private owned company

Manufacturer of fish specialties

Turnover: EUR 6.4 million Net Profit: EUR 783 thou Employees: 111

Ilie Busuioc (General Manager)

Producer of seafood salads (with imported raw materials). The company products are present in most of the large retail chains in Romania

25 Common to the fresh and frozen food products 26 In most of the cases the importers and distributors which are selling their products through large retail chains face drastic penalties

if they do not respect the agreed delivery terms. Moreover, the large hypermarkets have a great negotiation power (“power of

buyers”) levying several taxes on the distributors, such as: taxes for listing a new product, shelf taxes, new store opening taxes and

others.


Romania


Macromex

27 Mihai Eminescu Street, Bucharest Telephone: +40 21 206.69.00 www.macromex.ro

n.a. Distributor of frozen food products

Turnover: EUR 93 million Employees: 361

Dan Minulescu (General Manager)

The company is one of the largest importer and distributor of frozen products in Romania. Distributed brands: Royal Artic and Royal Greenland

Agrirom 44 General Vasile Milea, Arad Telephone: +40 257 25 08 80 www.agrirom.ro


Import-export of food products, Food products logistic services

Turnover: EUR 33 million Net Profit: EUR 667 thou Employees: 205


The company is distributing Frosta and Tico fish and seafood brands.

Pescarom

5 Abatorului Entrance, Glina Village www.pescarom.ro


Import of seafood products

Turnover: EUR 526 thou Net Profit: EUR 7 thou

Ciobanu Mario (General Manager)

The company is dedicated to seafood products imports.

Sea-Bell Trading

1 Sagetii Street, Bucharest Telephone: +40 21 315 93 52


Import and distribution of food products

Turnover: 3.7 million Net Profit: EUR 127 thou Employees: 22

Cristiana Alexandru (Economic Director)

The company is specialized in import and distribution of fish and seafood products

Kaviar House

6 Presei Street, Bucharest Telephone: +40 21 667 82 75 www.casacaviar.ro


Production, import and distribution of fish and seafood.

Turnover: 4,2 million Net Profit: EUR 77 thou Employees: 31

Marilena Maereanu (General Manager)

The company has its own fish and seafood specialties brand: Kaviar House

Metro Romania

289 Bucharest-Ploiesti Street, Otopeni Telephone: +40 21 208 11 60 www.metro.ro

Majority shareholder - Metro Holding

Hypermarket Turnover in 2006: EUR 1,532 million

Francois Oliver (General Manager)

Metro has its own seafood private label brands

Negro 2000

136 Metalurgiei Bulevard, Bucharest Telephone: +40 21 460 26 36 www.negro2000.ro


Import, processing and distribution of frozen fish and seafood products


Floricica Vlad (General Manager )

The company offers a wide range of fish and seafood products under private logo-trade


Romania


name "NEGRO 2000".


Other companies involved in the frozen fish and seafood market are: EcoFish, Frosta Rom Srl, Rompescaria SRL, Unilever South Central Europe SRL, Copimex NV SA, Krusta Group SA, Pez Austral-Islamar SA.


market

The seafood market is still not a very popular one among the large masses, being considered as a small niche market, due to the background of the traditional consumption habits of the Romanians. The seafood imports are on a rising trend and on a long term perspective the consumption is expected to grow driven by the refinement of the consumers’ culinary tastes. However, the current economic situation with its negative impact over the consumer’s purchasing power may limit the access of some of the Romanian consumers to expensive seafood products.

Considering the maturation of the Romanian’s consumption preferences the hypermarkets and premium supermarkets stores have allocated more and more space on their shelves to the seafood products, now offering a relatively wide range of products from fresh and frozen seafood to ready made specialties and seafood salads. Moreover a growing number of restaurants, especially in Bucharest, have introduced in their menu seafood dishes.

The incipient state of the Romanian seafood market could represent a good opportunity for the Thai seafood exporters, which could take advantage of the formless seafood consumption habits and rapidly gain market share with well promoted qualitative products. Considering the Romanian’s seafood consumption habits, the Thai exporters may find interesting the following products: shrimps and prawns, cuttlefish, mussels and octopus. Moreover, the appetite for ready made and seafood salads can represent another opportunity for the Thai exporters, considering Thailand long tradition in producing these culinary specialties.

The Thai exporters may have to take into consideration the fact that the seafood products are considered by the Romanian consumers as premium products, both in terms of quality and price. Thus, in most of the cases the seafood consumer is thoroughly reading the product label, with reticence to a great number of preservatives and artificial aromas.

Constrains / Barriers

Distance can be considered as one constrain which may limit the Thailand seafood exports towards Romania. The shipping and packaging costs and the custom duties which have to be paid for Extra – EU imports (which are included in the final selling price) may limit the interest of some of the importers and distributors. They have the option to import seafood products from much closer countries (e.g. Italy) and moreover they do not have to pay custom duties for these products (Intra – EU imports), maximizing their selling margin.

However, the wide diversity of products and the long tradition and experience in seafood manufacturing that Thailand pose, may be considered an advantage of the Thai products over the products manufactured in other countries.

Despite the fact that seafood products are considered premium products and the consumers have incomes above average, Thai exporters should also take into consideration the “price factor” which is very sensitive issue for the Romanian consumers. Thus, the targeted Thai products should be in the same price range with the substitute products already commercialize on the Romanian market. Still, the Romanian consumer will turn towards a more expensive but natural product.


Romania


2.4 Fresh fruit and vegetables

2.4.1 Brief presentation of fresh fruit and vegetables segment

Romania is a traditional fruit and vegetables producer, having over 890 thou hectares of fruit and vegetables crops cultivated in 2007 (355 thou hectares with fruit and 536 thou hectares with vegetables). The good climatic and soil conditions have favoured the cultivation of several categories of fruit (apples, plums, cherries, peaches, grapes, melons and others) and vegetables (potatoes, tomatoes, cabbage, cucumbers and others).

After the fall of the communist regime, the Romanian fruit and vegetables industry has developed rather disorganized, lacking of a medium – long term unitary national development plan in accordance with the EU manufacturing and trade norms. Thus, the great fragmentation of the local producers, the lack of investments in farming and processing techniques, in green house infrastructure and others have led to the current situation when the domestic consumption of fresh fruit and vegetables is supplied mostly from imports while most of the domestic production is channelled to the local or EU processing industry. This situation is a direct consequence of the local producers limitations in providing products at modern trade standards, as requested on market (optimal shelf life of the products, calibration and packaging of the products, regularity in delivery terms and final but not the least the external look of the products). Moreover, local produced fruit have high prices, sometimes even higher than the imported ones, mainly due to the high production costs. This situation is limiting the access of the domestic manufactured fruit and vegetables in large retail stores, where the margins are the key buying decision. It is estimated that until 2010 approximately 50% of the FMCG (including fresh fruit and vegetables) will be sold in modern commerce stores (supermarkets, hypermarkets, discount and cash & carry stores), adding additional pressure on the local industry which has to restructure and modernize according to the EU norms. Despite this issues related to local production of fresh fruit, there is, however, a major advantage of the local manufactured fruit against the imported ones. Some of the local produced fruit are containing a lower level of pesticide and chemicals, as compared to the imported ones, due to the fact that are produced in a more traditional way.

As a conclusion, some of the key issues that have to be solved, for a “healthy” development of the market are:

• As regarding the domestic manufacturers: a joining process of the small local producers in large manufacturing cooperatives, investments in storage and processing facilities, investments in farming techniques, development of green houses;

• As regarding the importers: development of the cold logistics facilities and development of large gross – markets.


The Romanian fresh fruit and vegetables market increased in the last years, driven, among others, by the increase of the consumers’ purchasing power and the development of modern commerce stores.

Size and trends of the fruit and vegetables market

According to the Ministry of Agriculture and Rural Development (MADR) figures, the Romanian fresh fruit and vegetables market is estimated to reach EUR 1 billion by the end of

2008, with 15 – 20% more as compared to 2007 and 2006 figures. The advance of the market


Romania


was based mostly on imports as the domestic production had a more steady growth rate (with severe fluctuations influenced either by the weather conditions or by external factors such as the lack of a consistent national development strategy of the sector). Thus, approximately 15 – 20% of the domestic consumption of fresh fruit is supplied with domestic manufactured products and 40 – 60% (depending on the season) of the domestic consumption of fresh vegetables is supplied with domestic manufactured products, the rest being covered with imported products.

For a more accurate picture of the market, the fruit and vegetables market segments will be distinctly analyzed.

Fresh fruit

The fresh fruit market is estimated, by industry experts, to approximately 1,015 - 1,020 thou tons (preliminary data) in 2008, with 1.5% more as compared to 2007.

The domestic production of fresh fruit recorded decreases for all cultures, in 2007 as compared to the previous years. This decrease was caused by the reduction of cultivated surfaces correlated with unfavourable weather conditions (Romania being one of the most affected countries in this region of Europe by severe weather). Thus, the total production of fresh fruit decreased with almost 22% in 2007 as compared to 2006, from 3,040.6 tons to 2,366.4 tons. The most affected cultures were the plums, cherries (including sour cherries) and melons were the production figures dropped with more than 35% in 2007 as compared to 2006.

Table 28 Domestic production of fresh fruit 2005 – 2007 (thou tons)

Thou tons 2005 y/y 2006 y/y 2007

Grapes 505.8 80% 912.4 -4% 876.6 Apples 638 -7% 590.4 -19% 476.6 Plums 622.4 -4% 598.8 -36% 381.3 Cherries and Sour Cherries 117.9 -11% 104.8 -37% 66.3 Melons 691.8 641.8 -36% 413 Others 268.7 -28% 192.4 -21% 152.6 Total 2,844.6 7% 3,040.6 -22% 2,366.4 Source: The National Institute of Statistics

As presented in the chart below, grapes are the most important fruit crop, accounting for 37% of the total fruit production in 2007. An important part of the grapes represent raw material for the wine manufacturing industry, as Romania is one of the important wine producers in Eastern Europe. The next fruit as importance in the total domestic production are apples (20.1%), melons (17.5%) and plums (16.1%). The lack of investments in green houses is limiting the domestic fruit cultures to five main spices of fruit, the demand for other types of fruit having to be covered with imported products.

Figure 14 Structure of the domestic production of fresh fruit in 2007

Others 6.4%

Melons17.5%

Cherrys and Sour Cherrys 2.8%

Plums16.1%

Apples 20.1%

Grapes37.0%

Source: The National Institute of Statistics


Romania


Forecast of the fresh fruit market

The industry experts are estimating that the consumption of fresh fruit in Romania will reach approximately 1,090 – 1,100 thou tons by the end of 2012, with 7% more as compared to 2008. The exotic fresh fruit segment is forecasted to have one of the most dynamic evolution within the fresh fruit segment.

Foreign trade – fresh fruit

As presented in the chart below Romania fresh fruit trade balance is significantly turning to imports, as exports value accounted for approximately 15% of the imports value in 2007.

Table 29 Imports and exports of fresh fruit 2005 – 2007 (EUR thou)

Thou EUR 2004 2005 2006 2007

Imports 93,691.9 136,385.7 164,765.4 241,833.2 y/y modification 46% 21% 47%

Exports 38,020.1 39,317.4 39,500.9 38,013.8 y/y modification 3.4% 0% -4% Source: European Commission – External Trade

Romania is one of the smallest importers of fresh fruit in the EU, accounting for less than 1% of the total value EU 27 fresh fruit imports in 2007. However, Romania’s fresh fruit imports had a consistent growth trend in the last years, almost tripling its value in 2007 compared to 2004. In 2007, the fresh fruit imports soared to approximately EUR 241,833 thou with 47% more as compared to 2006, driven by the elimination of custom duties applied to goods imported from EU countries and by the increase demand for more qualitative and diversified range of fruit. Despite the significant increase in the imports value recorded in the last years, the fresh fruit import structure remains rather undiversified, indicating a conservative attitude towards the consumption of fresh fruit. Thus, three categories of fruit generated over 71.6% of the total fruit imported value in 2007. The bananas accounted for over 31% of the imports value in 2007, followed by citrus (28.5%) and apples (11.9%). The exotic fresh fruit (dates, figs, pineapples, avocados and others) imports almost doubled in 2007 as compared to 2006, accounting for approximately 2.0% of the imports value. A more detailed presentation of the fresh fruit import structure, during 2004 - 2007 is presented in Annex 2.

Figure 15 Structure of fresh fruit imports in 2007 (value)

Fruit and nuts, provisionally preserved

0.3%

Fruit, dried, 1.1%

Bananas, including plantains, fresh or dired

31.2%

Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or

dired2.0%Citrus fruit, fresh or dried

28.5%Grapes, fresh or dried

7.4%

Melons (including watermelons) and papaws

(papayas) fresh1.6%

Apples, pears and quinces, fresh11.9%

Apricots, cherries, peaches (including nectarines), plums and soles, fresh

8.4%

Other nuts, fresh or dired3.1%

Coconuts, Brazil nuts and cashew nuts, fresh or dried

0.5%

Other fruits, fresh3.8%



Romania


Romania is one of the smallest fresh fruit exporters among EU countries, accounting for 0.2% of the EU 25 fresh fruit export value. The fluctuations recorded in the domestic production, caused by the factors presented above, reflected also in the export value over 2005 – 2007 period. Thus, Romania exported fresh fruit worth of EUR 38,013 thou in 2007, with 4% less as compared to 2006. The nuts were the main exported product in 2007, accounting for 45% of the total exports value, followed by fruit and nuts (uncooked or cooked by steaming or boiling in water) with 25% and apples with 12%. The main Romania’s export partner countries are: Germany, Turkey, Hungary and Italy. A more detailed presentation of the fresh fruit export structure, during 2004 - 2007 is presented in Annex 3.

Vegetables

The vegetables market is estimated, by industry experts, to approximately 4,075 – 4,08027 thou tons in 2008, having almost the same value as in 2007.

The domestic production of vegetables, had an oscillatory evolution in the last three years influenced, as in the case of fresh fruit, by the reduction of the cultivated area and by severe weather conditions. Due to the fact that a large part of the crops are cultivated out – door, the weather factor plays a crucial role in the annual production levels. According to MADR figures, in 2003 there were approximately 1,378 hectares of green house cultivated out of which only 418 hectares were heated. The domestic production of vegetables is estimated to 6,471 thou tons in 2007, with 15% less as compared to 2006. The domestic production of green pea reduced with more than 51% in 2007 as compared to 2006, meanwhile the production of cucumber and tomatoes reduced with approximately 23% in 2007 as compared to 2006.

Table 30 Domestic production of vegetables 2005 – 2007 (thou tons)

Thou tons 2005 y/y 2006 y/y 2007

Green Pea 39.1 -8% 36.1 -51% 17.6

Bean 41.7 -16% 34.9 -48% 18.1

Potatoes 3,738.6 7% 4,015.9 -7% 3,723.0

Tomatoes 627.0 33% 835.0 -23% 644.2

Cabbage 1,009.4 10% 1,106.0 -19% 893.5

Cucumber 142.9 9% 156.4 -23% 119.9

Others 1,153.5 21% 1,399.7 -25% 1,055.3

Total 6,752.2 12% 7,584.0 -15% 6,471.6 Source: The National Institute of Statistics

Due to the lack of investments in green houses and in modern production facilities the domestic production of vegetables is rather undiversified, three vegetables categories are accounting for over 81.3% of the total produced volume in 2007. Thus, the main cultivated vegetables in Romania are potatoes, accounting for over 57.5% of the domestic production. The cabbage cultures are next as importance in the domestic production with 13.8% of the total domestic production, followed by the tomatoes cultures which are accounting for 10.0% in the domestic production.

27 Preliminary data


Romania


Figure 16 Structure of the domestic production of vegetables in 2007

Others16.3%

Green Pea0.3%

Bean0.3%

Cucumber1.9%

Cabbage13.8%

Potatoes57.5%

Tomatoes10.0%

Source: The National Institute of Statist ics

Forecast of the vegetables market

The industry experts are estimating that the consumption of vegetables in Romania will reach approximately 4,180 – 4,200 thou tons by the end of 2012, with 2.5 – 3.0% more as compared to 2008.

Vegetables – foreign trade

As presented in the table below the Romania’s vegetables trade balance is turning to imports as the exports accounted for 29% of the imports value in 2007.

Table 31 Import and exports of fresh fruit 2004 – 2007 (EUR thou)

Thou EUR 2004 2005 2006 2007

Imports 40,992 54,875 75,086 142,413 y/y modification - 34% 37% 90%

Exports 39,165 46,612 35,049 41,951 y/y modification - 19% -25% 20% Source: European Commission – External Trade

Romania is a small vegetable importer among other EU countries, accounting for 0.7% of the total EU 27 vegetables imports (value). Moreover, Romania’s vegetables imports had a significant growth in 2007, almost doubling its value from EUR 75,086 thou in 2006 to EUR 142,413 thou in 2007. This growth was generated, among other factors, by the reduction of the domestic production of some of the most consumed vegetables (tomatoes, cabbages, and cucumbers) and also by the elimination of the customs duties for the goods imported from Intra – EU countries. Thus, the tomatoes imports increased with more than 340%, from EUR 12.8 millions in 2006 to EUR 56.2 millions in 2007, being the main category of products with a positive impact on vegetable imports growth in 2007. Potatoes represent the only category of vegetables that recorded a decrease in the total imports value, in 2007, as compared to the previous year (25% reduction in imports value in 2007 as compared to 2006).

As presented in the chart below, four main categories of vegetables have generated over 57% of the Romania’s vegetable imports and all these are traditional vegetables for the Romanian consumers. Tomatoes were the most imported products in 2007, accounting for 39% of the imports value, followed by potatoes imports which accounted for 9% of the total imports value. The onions, shallots, garlic and lees imports accounted for 7% of the total imports in 2007. Approximately 11% of the total imports were generated in 2007 by frozen vegetables, which are usually sold in modern commerce stores.


Romania


Romania is a small vegetable exporter among other EU countries, accounting for 0.25% of the total EU vegetables exports. Romania exported in 2007 vegetables worth of EUR 41,951 thou with 20% more as compared to 2006.

A more detailed presentation of the vegetables imports and exports structure during 2004 – 2007 is presented in the Annex 4 and 5.

Figure 17 Structure of vegetables imports in 2007 (value)

Vegetables frozen 11%

Vegetables provisionally

preserved 1%

Dried vegetables4%

Cucumbers and gherkins

4%Other vegetables

10%

Lettuce and chicory2%

Carrots, turnips, salad beetroot, salsify, celeriac, radishes

5%

Cabbages, cauliflowers, kohlrabi,

kale 2%

Onions, shallots, garlic, leeks

7%

Dried leguminous vegetables

6%

Potatoes9%

Tomatoes

39%



The fruit and vegetable market will be less affected by the GFC due to the fact that fruit and vegetables are part of the Romanian’s basic daily shopping basket. Certain fruit and vegetables are essential for most of the Romanians (e.g. apples, grapes, potatoes and tomatoes) being consumed fresh or in food preparations. During difficult economic times, the consumers tend to orientate towards cheap and conventional food products and the fruit and vegetables are perceived as an inexpensive and healthy diet. However, there are specific categories of fruit and vegetables where the consumption is expected to stagnate or decrease. The consumption of sophisticated / exotic fruit and vegetables with high selling prices is expected to be affected by the GFC. The consumers will be more reluctant in trying new products, especially if they are expensive, limiting their consumption to the traditional fruit and vegetables (see chapter 2.4.4).

One of the major drawbacks of the fruit and vegetables market is the fact that a significant part of the market is supplied with imported products. The depreciation of the Romanian currency against EUR and USD has determined repetitive price increases for the fruit and vegetables. This is one of the main factors which may limit the fruit and vegetables consumption in the near future.


Fresh fruit

The elimination of the custom duties applied for the goods imported from Intra – EU countries, had a significant impact over Romania’s fresh fruit imports structure, in terms of origin country of the products. Thus, the value of fruit imported from Intra – EU countries almost tripled in 2007 as compared to 2006, increasing its share in the total domestic fruit imports from 27% in 2006 to 47% in 2007. Despite of this Ecuador, is the main fruit import origin country in 2007,


Romania


with an import value of over EUR 60 million. A brief presentation of the main import origin countries in 2007 is presented below:

• Turkey is the main supplier of tangerines, grapefruit and lemons. Also, it ranks second, for the oranges imports. The total imports from Turkey accounted for 17% of the total imports value in 2007;

• Greece – is the main supplier of oranges, apricots, peaches and plums. The total imports from Greece accounted for 16% of the total imports value in 2007;

• Italy – is the main supplier of apples, pears and cherries. The total imports from Italy accounted for 11% of the total imports value in 2007.

Figure 18 Source of origin of fruit imports in 2007 (value)

Ecuador

24%

Turkey17%

Italy11%Greece

16%

Argentina1%

Poland2%

Spain3%

Hungary3%

Netherlands5%

Germany4%

Iran 2%

Austria1%Panama

1%Macedonia1%OTHERS

9%Source: European Commission - External Trade

Romania is importing very small quantities of fruit from Thailand. Thus, the imports value was of EUR 157 thou in 2007, with 55% more as compared to 2006. The main fruit imported from Thailand in 2007 were:

• Desiccated coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled - worth of EUR 42 thou;

• Pineapples – worth of EUR 62 thou;

• Guavas, mangoes and mangosteens – worth of EUR 22 thou

• Grapefruit, including pomelos – worth of EUR 17 thou.

Vegetables

Half of Romania’s vegetables imports are made from Intra – EU countries the rest being made from Extra – EU countries (Turkey is the main Extra – EU country source of origin for vegetables imports). The importance of the Intra – EU imports in the total imports decreased in 2007 as compared to 2006, from 58% to 49%, the main cause being the massive imports of tomatoes from Turkey and Syrian Arab Republic which were made during 2007.

A brief presentation of the main import origin countries in 2007 is presented below:

• Turkey is the main supplier of tomatoes, carrots, turnips and cucumbers. The total imports from Turkey accounted for 32% of the total imports value in 2007;

• Netherlands is the main supplier of onions, shallots, cabbage lettuce, asparagus and others. The imports from Netherlands amounted 9% of the total vegetables imports value in 2007;


Romania


• Italy is the main supplier of cauliflowers and headed broccoli, aubergines, spinach and others. The imports from Italy totalled 8% of the total vegetables imports value in 2007.

• Germany, Greece and Netherlands are the main suppliers of potatoes.

Figure 19 Source of origin of vegetables imports in 2007 (value)

Bulgaria2%

Egypt2%

France1%

Spain3%

Germany4%

Greece4%

China 4%

Hungary5%

Belgium5%

Poland6% Syrian Arab Republic

7%

Others8%

Netherlands9%

Italy8%

Turkey

32%


Romania vegetables imports from Thailand are insignificant. Thus, the imports value decreased from EUR 6.4 thou in 2004 to no imports in 2007.


Due to the large number of products which are included in the “fruit and vegetables” segment, it is more facile to access the European Commission Export Help Desk for identifying a specific custom tariff and import requirement, rather than selecting them from a list. Thus, in the following paragraph will be presented the steps which have to be made in order to obtain the custom tariffs and import requirements for a specific product.


http://exporthelp.europa.eu/thdapp/taric/TaricServlet?languageId=EN

After logging to the above web page, please select as the products country of origin “Thailand”. Then click on the “Browse” button for selecting a TARIC Chapter code. The canned food products can be identified under the following two chapters:

- Chapter 07 - edible vegetables and certain roots and tubers;

- Chapter 08 - edible fruit and nuts; peel of citrus fruit or melons.

After clicking on one of these TARIC Chapters, there is the option to select a four digit TARIC code, which is briefly described in English. Identify were is the targeted product framed and click on the four digit TARIC code. After this, the entire list of products (ten digits codes) under each category will be listed. Select the targeted product and click on the “View” button for listing the custom tariff.




After logging to the above web page, please select as the products country of origin “Thailand” and destination country Romania.



Romania




Fresh fruit

According to industry experts estimates, the fresh fruit consumption per capita in Romania was

of 46 – 47 kg in 2007. Considering the Romanians rather traditional consumption habits, apples and grapes were the main consumed fresh fruit in 2007, accounting for 41.6% and respectively 19% of the total domestic consumption of fresh fruit. The disposable income of Romanians is considerably lower compared to other EU countries and the consumption habits has still not reached the EU maturation level, but the prospects are positive indicating a possible turn, of some of the consumers especially young and middle aged urban people, towards other species of fruit rather than “traditional ones”, such as exotic fruit. The pineapple consumption accounted for approximately 1% of the total domestic consumption, registering a slightly increase as compared to 2006 level.

Figure 20 Fresh fruit consumption structure in 2007

Pineapple1%

Strawberries1%

Plums / soles1%

Peaches / Nectarines3%

Other fruits5%

Oranges, tangerines and mandarins

9%

Lemon and limes2%

Bananas7%

Cherries2%

Grapefruit / Pomelo 1%

Pears / Quinces6%

Cranberries / blueberries

2%

Grapes19%

Apples41%


z

Vegetables

According to industry experts estimates, the vegetables consumption per capita in Romania was

of 187 – 188 kg in 2007. The potatoes were the main consumed vegetables in 2007, accounting for over 34% of the total vegetable consumption. Most of the consumed potatoes are domestically produced, as half of the vegetables domestic production is represented by potatoes. Tomatoes are the next vegetable as importance in the domestic consumption accounting for 10% of the total consumption in 2007. The unfavourable weather conditions affected the domestic tomatoes productions, thus a large part of the tomatoes consumed in 2007 were imported from Turkey or Syrian Republic. Onions, carrots, cauliflowers and cabbage were the next vegetables as importance in the domestic consumption, totalling over 21% of the domestic consumption in 2007.

Most of the vegetables consumed in large modern stores are import originated, same as in the case of fresh fruit. There are few domestic producers which are able to tailor their products and production capacity to the retail chains standards. The domestic manufactured vegetables, produced by a very large number of private producers (which are difficult to frame in a statistical report) are usually sold in agro – foods markets, both in urban and rural areas.


Romania


Figure 21 Vegetables consumption structure in 2007

Tomatoes10%

Potatoes

34%

Others27%

Bean and pea4%

Cauliflower and cabbage

6%

Onions8%

Carrots7%

Green pea 1%

Fibber3%



There are a relatively small number of companies or cooperative associations which are producing vegetables and fruit in Romania. Usually, these companies are small sized and have a small number of employees (there are 49 fruit and vegetable producers authorized by MADR). Besides these companies (cooperatives or associations of producers) there are a very large number of individual producers which are cultivating fruit and vegetables for their own needs but also for commercialization purposes. However, most of the domestic production is distributed through street markets, kiosks and neighbourhood supermarkets, as it does not meet the quality and packaging standards required by the modern trade stores.

This situation favoured the development of the fresh fruit and vegetable import business. A relatively large number of fruit importers took advantage of the modest situation of the domestic industry, importing large quantities of traditional fruit and vegetables and, more recently, a wide range of exotic ones. This importers are either large retail chains which have their own central buying and importing facilities (in Romania or in their country of origin) or strictly import companies which are supplying with fresh fruit and vegetables all the distribution channels from large retail chains to the street market distributors. Usually the second category of importers have developed also packaging and labeling services, to be able to access a wider range of clients. Some of local fresh fruit and vegetables producers and importers are presented in the table below.

Table 32 Some key players in fresh fruit and vegetables sector

Company name Address / E-mail /

Web

Company structure

Products / services /

brands


figures

Top local executive

Others

Fruit and vegetables producers

Leoser

No. 2 Unirii embankment Popeşti-Leordeni, Ilfov County www.leoser.ro Telephone : +40 21 332.12.85


Fresh vegetables producer (green house)


Critian Rusu (General Manager) Valeria Trica (Financial Director)

The main green house vegetables producer in Romania (approximately 20,000 tons) of tomatoes, cucumbers, lettuce, etc.


Romania


Berser

No 6 Drumul Binelui Street, Bucharest, Sector 4 Telephone : +40 21 461.02.88

n.a. Fresh vegetables producer


eng. Victor Niţu (General Manager) Doru Ristea (Director Marketing)

The company exports vegetables to Czech Republic, Slovakia, Moldova, Hungary

Cooperativa Agricola

- Pomicultorul

Dambovitean

Dragaiesti – Ungheni Village, Dambovita County


Fresh fruit producer

Turnover: EUR 150 thou Net loss: EUR 26 thou

Anton Nicolae (General Manager)

-

Fruit and vegetables importers Alfredo Trading

Company

64 Bucharest - Urziceni Road, Afumati Telephone: +40 31 405 61 05 www.alfredo.ro


Import and distribution of fresh fruit and vegetables

Turnover: EUR 42 million Employees: 192

Cristian Dărmănescu (General Manager)

The company is commercializing booth fresh and frozen products

Agricantus

55 Mihai Eminescu Street, Buftea Telephone: +40 31 710 20 24 www.agricantus.ro

n.a. Import and distribution of fresh fruit and vegetables

Turnover: EUR 38 million Net Profit: EUR 17.5 thou Employees: 165

Denis Deletioglou (General Manager)

- One of the biggest bananas importer in Romania - The company imports from Greece, Turkey and Italy

Distrifrut

3-5 Şcoala Ciocanul Street, Bucharest Telephone: +40 21 327 70 80


Turnover: EUR 31.9 million Net loss: EUR 3 million Employees: 208

Mariana Petre (General Manager)

The company imports the following brands: Dole and Le Fruit D'or



market

The Romanian exotic fruit and vegetables market, relevant for Thai exporters, is still at an early development stage, with consumption still limited due to the relatively high prices of the products and lack of consumer awareness regarding these products. However, if a couple of years ago the Romanians were buying exotic fruit, just out of curiosity or for special events, now there is a well defined segment of consumers which have included the exotic fruit in their regular “consumption basket”. The potential of the exotic fruit and vegetable market is significant in the next years, as Romania has the 7th largest population in the EU and the consumption preferences will tent to maturate and become more and more sophisticated. However, the current economic situation with its negative impact over the consumer’s purchasing power may limit the consumers’ access to expensive exotic fruit and vegetables.

The success of this market depends on a large part, on the ability of the key distributors (modern commerce stores) to promote (inform) and educate the Romanian consumers, which generally have a preference for traditional food. Approaching the lack of awareness of the consumers regarding the exotic fruit and vegetables, most of the large retail chains have organized separate exotic fruit and vegetables stalls, promoting the products with flyers, explicative panels


Romania


(indicating the qualities and properties of each product) and free samples. The brief profile of the Romanian exotic fruit and vegetable consumer is young or middle aged urban people with average income levels which have the practice to buy its food in large retail chains.

Opportunities

The exotic fruit have a more success to the Romanian consumer than the exotic vegetables. Considering the Romanian fruit consumption preferences and Thailand fruit export structure, Thai pineapple exporters can find Romania an interesting sales market, as pineapple is one of the most popular exotic fruit in Romania. Other exotic fruit popular in Romania and which are also produced in Thailand are: coconuts, avocados, pomelos, mangosteens, pomegrantes and figs.

Romanians are traditional consumers when it comes to vegetables, preferring vegetables such as tomatoes, onions, potatoes, cucumbers, cabbage, carrots and others, which are consumed fresh or in several types of dishes. However, more recently, some exotic vegetables have started to be commercialized especially in the large retail chains, targeting the Romanian consumer which is opened to new culinary experiences, expatriates (foreigners which are working in Romania) and HORECA. Some of the most popular exotic vegetables which are commercialized in Romania and which may be of interest for the Thai vegetables exporters are: green asparagus, long bean, baby corn, ginger, vegetable mixes and others.

Constrains / Barriers

Distance can be seen as one of the main constraints in the development of exotic vegetables and fruit export from Thailand to Romania, posing problems regarding shipping costs, long transportation time and packaging costs (the quality of the products does not have to deteriorate during transportation). Moreover, it may be important to trade in certain volumes before it is financially viable, as it relatively costly to handle small amounts. The relatively small consumption of exotic fruit and vegetables does not make feasible the export of large quantities as the demand is not yet sized to the level of the developed EU countries.

Despite the fact that the exotic fruit and vegetables market, is a niche market and the consumers have incomes above the average value, the price of the products can be seen also as a constraint limiting the consumption.

Due to the fact that the Romanian exotic fruit and vegetables market is young and the consumers are not generally familiar with some categories of these products and their positive (curative) effects, there may be a reticence in acquiring an expensive product with little information regarding its qualities.

Due to the fact that the market is relatively small, the consumers are not yet very well familiar with the products and the consumption is manly limited to large retail chains and premium agro – markets, the country origin of the products may not be a consumption constraint. Thus, as long as the Thai products are meeting the price quality ratios of other goods currently traded on the market there may not be any others disadvantages which could limit the consumption of Thai products compared to products imported from other countries.

Thai fruit and vegetables are not very popular on the Romanian market making quite difficult to map their advantages and disadvantages compared to other products currently commercialized on the market. But, as the Thai products will meet some of the following criteria’s they may have success on the Romanian market: curative effects and the consumers are informed about their qualities; the prices will not exceed the one of the substitute products, pleasant external look of the products and others.


Romania


2.5 Frozen meal

2.5.1 Brief presentation of frozen meal segment

Assumptions

The Romanian frozen ready meals market is a very young market, with consumption levels still

modest. The current research focused on the category of frozen ready meal products - defined

as meals already prepared based on specific technologies (frying / baking / etc) and afterwards

frozen, products that do not inquire further preparations for being consumed, they can be de-

frozen and heated. Thus, this category does not comprise frozen semi-prepared food or frozen

processed products (frozen vegetables, frozen processed meat etc). Official statistics on such a

small category of products is not available. Moreover, no data are officially available, as

regards foreign trade on such a specific category of products. However, Euromonitor

International (global research company) issued statistics regarding market size, evolution and

forecasts for this category of products, as one category of a bigger group frozen processed food

products. These data as well as information gathered from industry experts may be considered

relevant in analyzing this very specific segment of the market.

The Romanian market of frozen meals is not mature yet, the range of products available on the market is quite limited as compared to other EU countries. However, potential of development is significant due to the modification of consumers habits in sense that they are favourable to ready meals due to time constraints and frozen products are in many cases considered as being healthier than canned ready meals, as first category do not include preservatives

Frozen ready meals represent one category of products from a larger group of food products, the frozen processed food products including also the following categories:

• Frozen processed vegetables

• Frozen processed red meat

• Frozen processed poultry

• Frozen processed fish and seafood products

• Frozen ready meals

• Frozen processed bakery

• Other frozen processed food

Meanwhile, frozen meals can be considered as one sub-segment of the whole ready meals category of products. Thus, ready meals category that can be split, based on type of preservation method as well as package used, into: ready meals in metallic cans, ready meals in thermoformed sealed trays and frozen ready meals packed in special PET bags.

According to the Romanian food industry experts estimates, the ready meals market (including frozen ready meals category) could grow both in terms of volume and value in the next years.


Romania


Some of the main factors that can contribute to the development of the Romanian ready meals market could be:

• Free circulation of goods within EU space / territory (after entering the European Union). Accordingly the importers of ready –meals, no longer have to pay import customs duties for the products imported from EU countries. This will generate a reduction of the current ready meals commercialization prices, making them accessible to a larger Romanian consumers segment.

• Domestic production of ready meals products – some of major Romanian vegetable and meat processors made investment in the development of ready meals production facilities. One relevant local producer for the researched category (frozen meals) - Agricola International has invested in 2003-2006 approximately EUR 4.3 million in the development of ready meals production facilities). This could generate a reduction in the commercialization price of the ready meals products on the Romanian market and an increase of the notoriety and awareness of the Romanian consumers for this type of products. The implication of notorious Romanian vegetable and meat processors in the ready meals market will generate also a positive publicity for the ready meals products in general with positive impact on consumption.

• Modification of the consumption habits of the urban active persons which will allocate less and less time for the cooking activities because of their alert rhythm of life. This segment of consumers could prefer a “2 minutes ready meal” for the office lunch break or dinner time, instead of the conventional way of cooking and eating.

• Increase of the Romanian consumer purchasing power; this will generate an increase in consumption level of ready meals products and a diversification of the ready meals types / dishes offered on the market.

As regards the frozen ready meals present on the Romanian market can be mentioned presence of different flavours such as international dishes (f.i chicken with vegetables and garlic sauce , fish fillet with vegetables and gorgonzola sauce, Gordon bleu, chicken schnitzel etc ), exotic dishes (paella, Mexican chicken, Indian chicken, etc) and traditional dishes (chicken and pork meat with vegetables, the traditional dish “parjoale” –meat rolls etc).


The frozen processed food, including frozen meals market is still modest in Romania but is expected to grow in the next 5 years as a result of an expected increase in disposable incomes of Romanians as well as due to “time factor”- that becomes an important criteria in purchasing decision of Romanians (mainly from big urban centres).

Size of the market

The total size of frozen processed food in Romania is modest, estimated to around 3,591 tons in 2006, as per data provided by Euromonitor data Research Company.

Size of the market for frozen ready meal (one of the categories within frozen processed food) is also much reduced in Romania, estimated to around 52 tons in 2006 as per data provided by Euromonitor and to about 55 tons in 2007 as per industry experts rough estimations. Industry experts have mentioned a slight increase of 5-7 % in 2007 as compared to 2006. Frozen processed ready meals represent a small percent (around 1.5% -2%) out of the larger category of frozen processed food products. Unfortunately no data are available for 2008.

Trends of the market

The frozen processed food market had a positive evolution between 2002 -2006 with a CAGR28 of 6 % over this period. Meanwhile, the category of frozen ready meals had also a positive

28 CAGR =cumulated average growth rate


Romania


evolution with a CAGR of 6 %. It can be noticed however that the increase in the frozen ready meals category was very slight over 2004-2006, becoming a little more dynamic in 2007. This evolution could be explained by the fact that: in the past years this category was not very well known among the population (it is a category of products relatively new on the Romanian market); the offer of this type of products was modest on the local market; price for this category of products was another barrier. Besides these factors with negative impact on market trends, could be also reminded that many people were reticent, wondering if frozen ready meal are healthy and if it was not preferable for them to eat home made food. Slowly things are changing. Thus, industry experts consider that there are many reasons for which it is expected that consumption of ready meals (including frozen ready meals) will increase in the next years. People are more and more busy (especially in big urban centres), therefore their consumption habits change towards semi-prepared and /or ready meals that can be prepared in few minutes. Moreover, gradually, prices will become more accessible for these categories of products. Nevertheless, gradually based on publications, articles, people become more educated and aware that frozen meals are healthy; they do not comprise preservatives, the technology used for preparing them maintaining the food qualities, hygiene and the tastes.

Table 33 Evolution of frozen processed food including frozen ready meals 2002 – 2007 (tons)

Product categories 2002 % 2003 % 2004 % 2005 % 2006 % 2007 Frozen processed food

(TOTAL) 2,667 10 2,936 10 3,220 4 3,359 7 3,591

n.a n.a

Frozen ready meals 38 18 45 14 51 0 51 2 52 7 55 Source: Euromonitor International & industry experts for 2007

Forecasts

As mentioned before industry experts predict a positive trend for the frozen processed food category, including the frozen ready meals, reasons explaining this positive trend being presented above.

Moreover, according to Euromonitor International sales forecast, the Romanian frozen processed food market sales could reach EUR 20,524 thou in 2012, with 50 % higher as compared to 2007. As regards the frozen ready meals the same research company predict a level of sales of EUR 547 thou in 2012 with 42% higher as compared to 2007. Forecasts for the next 5 years can be followed in the table bellow.

Table 34 Ready meals sales forecast 2008 – 2012 (EUR thou)

Products

(EUR thou)

2007

(base

year)

Y/Y

(%) 2008

Y/Y

(%) 2009

Y/Y

(%) 2010

Y/Y

(%) 2011

Y/Y

(%). 2012

Total Frozen processed food

13,645 14 15,521 11 17,263 8 18,726 6 19,818 4 20,524

Frozen ready meals

383 11 427 9 467 8 504 6 531 3 547

Source: Euromonitor International

Structure of the frozen processed food group market (including frozen ready meals)

The structure of the Frozen processed food group of products as well as the size and the trend for each category is presented below. Data per each category are available only until 2006, therefore the analyzes is made for 2002- 2006 period.

• The total quantity of frozen processed food products consumed in Romania in 2006 was estimated to 3,591 tons, by 7% higher as compared to 2005. The targeted frozen processed food products had the following consumption levels in 2006


Romania


• Frozen processed vegetables – The consumption level for this type of products was estimated at 706 tons in 2006, by 15% higher as compared to 2005

• Frozen processed poultry – The consumption level for this type of products was estimated at 512 tons in 2006, by 24% less than in 2005.

• Frozen processed fish and seafood products – The consumption levels for this types of products was estimated at 351 tons in 2006, by 15% higher as compared to 2005

• Frozen ready meals – The consumption level for this type of products was estimated at 52 tons in 2006, by 2% higher as compared to 2005. The trend was also positive for 2007, industry experts estimating a 5% increase as compared to previous year.

• Other frozen processed food – The consumption level for these types of products was estimated at 1,970 tons in 2006, by 15% higher as compared to 2005

Table 35 Evolution of frozen processed food including frozen ready meals 2002 – 2006 (tons)

Product categories 2002 2003 2004 2005 2006 Frozen processed vegetables 380 18 447 17 523 17 614 15 706

Frozen processed poultry 764 3 787 5 828 -

19 671 -

24 512 Frozen processed fish/seafood 223 14 255 11 283 8 305 15 351 Frozen ready meals 38 18 45 14 51 0 51 2 52

Other frozen processed food 1,262 11 1,402 9 1,535 12 1,718 15 1,970 Frozen processed food

(TOTAL) 2,667 10 2,936 10 3,220 4 3,359 7 3,591 Source: Euromonitor International


Given the recent economic turnaround of the market situation, due to the actual economic and financial crises, industry experts estimate a slow down of the ready meals (including frozen meals) market evolution.

The demand for this category of products is directly linked to the purchasing power of the population. While high income consumers are not so much expected to change their consumption habits, the category of “medium income” consumers are expected to modify their consumption habits and to pay more attention to what and how frequently they will purchase this category of products. Consumers will pay more attention to what they buy, will focus more on well known brands and they will be more reticent in trying new products, given the budgetary constraints.

Moreover, another factor with negative impact on level of sales, could be the significant increase of the price for imported products due to the RON /EUR exchange rate.

Other factors that could negatively impact the consumption are the possible modification of consumers frequency of eating to restaurants, thus sales of this category of products towards HoReCa could be also affected

Romanian frozen processed food - 2006 market structure

(volume)

55%

1%

20%

10%

14%Frozen processed poultry

Frozen processed fish/seafood

Frozen processed vegetables

Frozen ready meals

Other frozen processed foodSource: Euromonitor International


Romania


Despite to the unfavourable market conditions, local producers try to come with new and diversified offers of products, that are better adapted to the current circumstances, for instance Transavia offers frozen prepared meals under “PAPANE” brand. These products are available at more accessible prices and are targeting also people with lower incomes.

Some foreign companies such as Bonduelle, present so far on local market with frozen vegetables have recently announced their intention of entering on local market with ready meals products also.


The ready meals products entered the Romanian market few years ago, almost at the same time with the development of the hypermarket retail stores, first in Bucharest and then in other Romanian major cities. The Romanian consumption of ready meals products maintained at low levels in the last years (9.54 kg / capita of the dried processed food products in 2006 and 0.166 kg / capita of the frozen processed food products in 2006) compared with the consumption levels recorder in other EU countries. The low awareness of the Romanian consumers regarding the ready meals products, the relative high price of the ready meals products compared to the Romanian consumer purchasing power and the consumers’ concerning issues regarding the quality of these products (health concerning issues) are some of the factors that had negative impact on the consumption level of ready meals products.

Taking into consideration the Romanian’s food consumption preferences, according to industry experts opinion, the success of ready meals products on the Romanian market is significantly influenced by the types and ranges of product chosen to be commercialized. The ready meals producers and importers have to precisely identify the targeted consumer and determine its consumption preferences. According to a recent market study, the Romanian ready meals consumer could have the following profile:

• Age ranging between 26 and 40 years, with an alert rhythm of life

• Lives or works in urban areas

• Medium “+” incomes

• The ready meals consumer is taking into consideration the product labels and is interested in the nutritional value of the products. Also is interested of health issues regarding the purchased products

• Has access to an microwave or electrical oven

There is also a small segment of ready meals consumers represented by expatriates (foreigners which are working in Romania) and the Romanians which have worked or lived abroad (especially in EU territory) who are already aware of these types of products and includes them in their habitual meal preferences.

Another important consumer of ready meals products is the HoReCa segment. For instance, the local producer of frozen meals (Agricola International) deliver for its HoReCa clients frozen pre-cooked, that are packed in specific bags of different sizes /wages depending on specific requests of the clients.

Presently, the supermarkets and hypermarkets represent the main distribution channels of ready meals products, because of the large available exposure shaft spaces and due to the high visibility of the products. The small retailers are reticent in including the ready meals in their shelves, because these products are considered new on the Romanian food market, with no formed consumer demand and with a high sales risk (lack of consumer awareness for these products).

The main challenge for the Romanian ready meals producers and importers in the near future is to market the ready meals food concept (“2 minutes ready meal”) and increase the consumer’s


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awareness for these types of products. Also another challenge is to persuade the Romanian consumers that the ready meals products are as good as the traditional food meals both in terms of health issues and freshness of the products (the ready meals products are maintaining their nutritive qualities for a long period of time with no concern regarding the conservations and preservatives used in the conservation process).


There are very few key players active on the frozen ready meals market. Among the local companies can be mentioned Agricola International with Sav’or –brand. The company is using a technology for preparing ready meals consisting in a rapid frying of the products (20 sec), followed by a process of baking in hot air, and finally a process of rapid frozen of the products. The packages are specific plastic bags adapted for frozen products. The range of products comprises the following main categories of frozen ready meals: ready meals based on meat (f.i Gordon bleu, chicken schnitzel, pork or chicken with vegetables) ready meals based on vegetables (f.i vegetal hamburger, vegetal rolls, vegetal nuggets etc), ready products for salads (f.i small chicken fillet ) and gastro ready meals (special for HORECA).

As regards imported products, Frosta AG is the company with the best presence on the local market (market leader). Products are imported from Poland and distributed via Agroalim company. The range of products present include exotic flavours such as: Paella, Mexican chicken, Indian chicken, Steak house, Gyros to mixtures of chicken and / or international flavours including: fish with vegetables such as tilapia hall file with vegetables and gorgonzola sauce and chicken with vegetables and garlic sauce etc. The products are packed in special plastic bags adapted for frozen products.

There are also some private labels present on the local market but share covered by this brands are small.

Besides the ready meals category of products, frozen pizza’s are also present on the local market, the brands having a significant market share are Dr Oekter (market leader), followed by Angst (Mertzgerei Angst AG company) and Evca (Evca 2000SRL).

Some of the key players present with products on the frozen ready meals market are presented in the table below:

Table 36 Some key players on frozen ready meals market

Company name Address/ E-mail /www

Company structure

Activities/ Products 29 / brands

Key financial & operational figures30 in2007

Top local executive**

Others

SC Agroalim

Distribution SRL

242 Vitan Street, Building C17, sector 3, Bucureşti, România,

Telephone: +4021 200 63 00 www.agroalim.ro

Key shareholders: - Smithfield

(50% of shares)

- Lebanese private person

Importer and distributor of food products (including among others categories frozen meals products)

Turnover : EUR 59.9 million Net profit: EUR 1.9 million

Bogdan Grama - General Director

Leader in distribution of frozen & refrigerated products Brands of

frozen

ready

meals:

FROSTA

29 Will be presented only products from portfolio which are relevant for the research 30 Figures are available for 2007


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Agrirom SRL

44 General Vasile Milea, Arad Telephone: +40 257 25 08 80 www.agrirom.ro


Importer and distributor of food products (including among others categories frozen meals products)

Turnover: EUR 33 million Net Profit: EUR 667 thou Employees: 205


One of the important distributors of frozen products Brands of

frozen

ready

meals:

FROSTA Agricola International

SA

600352 Bacau, Calea Moldovei, Nr. 94 Telefon: 0040 0234 577600 Fax : 0040 0234 516573

97 % Romanian private shareholders

Producer and distributor of meat and meat products (including frozen ready meals )

Turnover in 2007: EUR 73.7 million Net profit in 2007: EUR 0.43 million

Gheorghe Antochi –president Grigore Horoi –vicepresident

Brands of

frozen

ready

meals:

SAV’OR

Metro Romania Srl

289 Bucharest-Ploiesti Street, Otopeni, Ilfov County Telephone: +40 21 208 11 60 www.metro.ro

Majority shareholder Metro Holding

Hypermarket

Turnover in 2007: EUR 1,590 million

Francois Oliver (General Manager)

Private

labels

Dr Oetker SRL

50 Albesti Street, Curtea de Arges Village, Arges County Telephone: +40 248 50 70 01 www.oetker.ro

Majority shareholder Oetker International GmbH

Manufacturer of food products (frozen pizza, ready deserts, patisseries additives and other products)

Turnover in 2007: EUR 32.2 million Net Profit: EUR 5.8 million

Ioan Cozma (General Manager)

Macromex SRL

8 Inginerilor Tei Street, Bucharest Telephone: +40 21 206 69 00 www.macromex.com

International owned company

Import and distribution of food products (including frozen pizza, frozen semi-prepared food)

Turnover in 2007: EUR 84.8 million Net Profit: EUR 4.8 million

Dan Minulescu (General Manager)



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market

As a conclusion, the category of frozen meals is expected to grow in the following period. The potential of the market is significant as level of consumption is very small as compared to other EU countries, competition is not strong yet, leaving place for new entrants. As main opportunities could be mentioned the following:

• Romanian consumers’ habits have changed lately in favour of ready meals products (especially frozen) due to the constraints of time they face as regarding the preparation of food. Moreover they perceive frozen food as being healthier than the canned food, as it does not contain preservatives and other additives.

• Romanian consumers are more open lately to taste new flavours and new products as lately they have the chance to travel abroad and became familiar with this new categories of products but also because local producers started to promote this kind of products

• Offers of ready meals products is still limited on local market, leaving a lot of “free space” for new entrants

• Imports remain still an important source for this kind of products, local production is not well developed yet, due mainly to the large investments requested in production equipment and adequate logistics (freezing warehouses / etc)

• The development of HoReCa segment, including specific Asiatic restaurants, that could represent a niche for “exotic meals” of Asiatic origin

• The development of modern trade (supermarkets / hypermarkets) that are key distribution channels for this category of products

However should be mentioned also some possible barriers / threats for a new entrant (espec non EU origin) • Distance can be considered as a major constraint for Thai origin products, especially given

the fact that this category of products impose very strict shipment conditions (freezing transport), with impact on costs. Moreover should be added the custom duties that should be paid given the fact that country of origin is non –EU.

• Sanitary veterinary legislation, aligned with EU standards and norms is very strict and rigorous in this area of activity.


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2.6 Seasoning and spices finished products

2.6.1 Brief presentation of seasoning and spices segment

The Romanian seasonings and spice market followed a positive growth pattern in the last years, well represented by some categories of products (e.g. mustard, ketchup, etc.), yet with limited consumption levels for recently introduced categories of products like: exotic spices, dressing and special sauces.

The first category of products - spices segment is divided in two main categories. Universal condiments, which could be used in almost every type of food, like black pepper, thyme, paprika, etc. and specialized products, which are used only for specific types of food like, fried potatoes, pork meat, chicken meat, etc. The second category of products - sauces segment, includes regular products like ketchup, mayonnaise, mustard, etc. as well as dressings.

Although there are different categories of products, only one NACE code 1587 - Manufacture of condiments and seasonings, covers all the manufacturers of these products. This code includes:

• manufacture of spices, sauces and condiments:

• mayonnaise

• mustard flour and meal

• prepared mustard, etc

• manufacture of vinegar

The Romanian market of condiments and sauces was relatively undeveloped several years ago, due to the very traditional style of cooking of the Romanians. Therefore only four, five products were used (black pepper, herbs like parsley and dill) and common sauces like ketchup and mustard. In the recent years the market developed, the consumers started to try and consume different types of products, especially due to the international cuisine products which started to be prepared more often by Romanians. Thus, goods like oregano, ginger, and dressing are consumed besides the traditional products.

The condiments and seasoning manufacturers’ turnover (NACE 1587) is relatively small, due to the fact that on the Romanian market imports are very high. There are few Romanian producers, mainly manufacturing sauces. The turnover increased in the last years reaching EUR 91.66 millions in 2007, from EUR 66.03 millions in 2005. The turnover of the companies which declared as the manufacture of condiments and seasonings as main activity was of EUR 80.34 millions, in 2006.


Size and trends

The spices total market was estimated at around EUR 70 millions, in 2007, by the industry experts. A study published by AC Nielsen confirms this number and split the market in universal condiments, which count for 65% market share and specialized condiments, with a 35% from the total market. Can be noticed the higher importance of the traditional products,


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based on the eating habits of the consumers, which are changing slowly towards using more special condiments.

However, this segment was relatively dynamic, with yearly increase rates of about 30% p.a., in the last years. The development of the market was based on several factors like: the expansion of the special condiments segment, which grew with about 120% in 2007, the willing of customers to try new type of products, the advertising made by the most important players for promoting their goods, replacing the habit of cooking home by using semi-finished products.

A research31 made by Nielsen market research company, on the spices market, between Dec/Jan and Apr/May 2008 revealed that a quantity of 538 tons of pepper was sold, with a value of EUR 5.3 millions, representing an increase of 20.3% in volume and of 27.6% in value as compared with the same period of 2007. The same research pointed out that a quantity of 1,461 tons of spices and condiments (excl. pepper) was sold on the Romanian market between Dec/Jan and Apr/May 2008, with a total value of EUR 19 millions, representing an increase of 38.2% in volume and of 39.1% in values as compared with the same period of 2007. The shares of the different types of spices in the total value sold between Dec/Jan and Apr/May 2008 were: 48.5% condiments mixtures, 2.6% hot paprika, 10.2% sweet paprika, 3.4% cinnamon, 7.3% bay leaves and 28% other type of spices.

The evolution of the industrial production32 of spices grew three times in value terms in the last years, from EUR 9.5 millions in 2004 to EUR 29.7 millions in 2007. The same ascending trend is noticed for the manufacture goods sold33. Yet, the increase was smaller, from 4.7 tones in 2004 to 7.8 tones in 2007.

The industrial production34 of prepared mustard grew between 2004 and 2006 with 22.5%, reaching the level of EUR 7.35 millions. Yet, in 2007 a 14% drop was registered. The volume of the manufacture goods sold had a different evolution. Since 2004 it was on a descending trend. Between 2004 and 2007 a shrink of 30% was recorded, from 10,800 tones to 7,465 tones.

The industrial production35 of mayonnaise and other emulsifying sauces increased between 2004 and 2006 with almost 80%, from almost EUR 1.9 millions to EUR 3.35 millions. In 2007 a small decline of 3% was registered. The volume of the manufacture goods sold was an ascending trend as well. An increase of 32% was registered between 2004 and 2007.

Table 37 Evolution of production for: domestic manufactured goods (EUR thou) and domestic

manufactured goods sold (thou kg) 2004 – 2007

2004 2005 2006 2007 PRODROM

Codes Value (EUR thou)

Volume (tons)

Value (EUR thou)

Volume (tons)

Value (EUR thou)

Volume (tons)

Value (EUR thou)

Volume (tons)

1587 12 30 13,311 21,697 17,775 25,135 17,091 20,043 n/a n/a 1587 12 55 6,005 10,796 6,855 10,780 7,358 7,984 6,401 7,465 1587 12 701 1,881 2,018 2,967 2,468 3,354 2,427 3,268 2,663 1587 12 703 9,539 4,685 14,235 5,987 20,750 5,421 29,653 7,764

31 Officially available in PIATA magazine, no 48 from October 2008 32 As per PRODROM code 1587 12 703 – Spices (incl. pepper, paprika, cinnamon, cloves and others) 33 idem 34 As per PRODROM code 1587 12 55 – Prepared mustard 35 As per PRODROM code 1587 12 701 – Mayonnaise and other emulsifying sauces


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Source: The National Institute of Statistics and Eurostat

Note: 1587 12 30 - Tomato ketchup and other tomato sauces; 1587 12 55 - Prepared mustard; 1587 12 701 –

Mayonnaise and other emulsifying sauces; 1587 12 703 – Spices (incl. pepper, paprika, cinnamon, cloves and others;

Structure

The sauces and dressings market is split into four main segments: ketchup, mustard, mayonnaise and other prepared sauces and dressings. Industry experts pointed the different evolution registered by each market components in the last years and the discrepancy in consumptions habits, packaging and competition between brand and companies.

Thus, the mustard was and it will always be a product present in every household. It has and old tradition among the Romanian customers. The market is highly fragmented, over twenty companies and brands being present on the supermarkets shelves. Key players are some of the domestic producers, with superior quality products, national distribution and powerful brands, are importers, with well-known brands, yet with high prices, and manufacturers with a regional distribution and medium quality goods.

In a recent study36, made by Nielsen market research company, it is stated that between December 2007 and September 2008 the total sold volume of mustard was of almost 8,700 tons, reaching a value of about EUR 14.5 millions. The estimations regarding the total value of the mustard market in 2008 are around EUR 17 millions.

The classical mustard is the most consumed product, holding more than 47% from the volume of the market and around 50% from the total value. It is followed by the sweet mustard, with 24% market share in value terms and 23% in volume. Yet, in the recent years the consumer evolved and became more sophisticated, therefore new varieties started to be purchased: mustard with horseradish, with sour cream, with tarragon, etc. The most common packaging style is in glass jars, around 54% from the sales volumes, followed by small cups, with 23% and plastic bottles, about 17%.

The ketchup market is divided in two main types of products: sweet ketchup, with around 53% from the market and hot ketchup with a market share of about 45%. The other products are sold only occasional. Yet, in the last years, the pizza sauce started being consumed more often. The market is relatively concentrated, the first six producers accounting for around 90% of the market, while the first five brands hold about 80% from the total sales.

The same study32, realized by Nielsen market research company, indicated that the total volume of ketchup sold between December 2007 and September 2008, was around 6,800 tons, with a total value of EUR 11.5 millions. For 2008 it is expected to be reached a total value of EUR 13.5 millions.

The ketchup consumption is not necessarily seasonal. However, starting from September up to Eastern the sales are higher as compared to the other period of the year. The plastics bottles are the most common packaging method used by the ketchup producers, with weights between 350g and 500g. The main acquisition places for these products are the food stores, followed by supermarkets.

On the mayonnaise market the domestic brands successfully compete with the international ones. Romanian companies like Sima, European Food, Whiteland (a distribution company that has also a production division for different goods) made important investments and stand side by side with the international producers like Hamker, Pauwels, Unilever, etc.

The mayonnaise market is much smaller than the mustard or ketchup market, less than half. In the study32 conducted by Nielsen market research company, between December 2007 and September 2008, were sold 1,360 tons of mayonnaise on the market, with a value of EUR 4.1 millions. The total value estimated for 2008 is around EUR 5 millions.

36 Officially available in PIATA magazine , no.52 from February 2009


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The egg mayonnaise is the most consumed product, with over 90% from the total sales in volume as well as in value terms. The vegetal mayonnaise is a niche product, which is consumed especially during lent periods, or by vegetarian customers. The market share of this product is around 7%. Most of the mayonnaise is sold in glass jars, more than half of the sales being made using this package system. The plastics recipients are also widely used accounting for about 35% of the sales.

The dressings and special sauces market is relatively undeveloped in Romania, yet the increase potential is important. These products started to be consumed only recently, several years ago being prepared almost exclusively at home. The changing in lifestyle of the Romanians, especially on urban landscapes, favoured the consumption of dressings and special sauces as a form of improving the dishes taste. The most successful products were white sauces, for instance the ones with garlic flavour, the sauces for pastas, and the salad sauces. Currently, the supermarkets and hypermarkets shelves display a relatively large variety of products.

The special sauces market is relatively small. In the same study32, made by Nielsen, the total volume sold, between December 2007 and September 2008, was of only 842 tons, with a total value of EUR 2.8 millions. The market is estimated to around EUR 3.5 millions. The shares of the different sauces in the total value sold between December 2007 and September 2008 are: 28.1% for pizza sauces, 24.7% for soya based 11.8% for garlic flavour items, 10.7% for tartar sauces, 5.7% for remuolade and 19.1% for other types of sauces.

On the Romanian market there are different special dressing and sauces with Asian origins, like: chilli sauce for seafood, light chilli sauce, soy sauce, hot chilli sauces, sweet chilli sauces, sesame oil, etc. These goods are either produced by international companies like Heinz, Uncle Ben’s, Develey, and sold on the Romanian market by the official importers of these brands, or are directly imported by distribution companies from countries like, Malaysia, Thailand (e.g. chilli sauce for seafood, light soy sauce, etc).

Forecast

Industry experts predict an expansion of the spices market in the following years, especially on the segment of condiments mixture. The expectations are based on the relatively low consumption levels of these products and on the willing of the consumers to test new flavours and international dishes.

As regarding the sauces market Romanian consumer will probably be more attentive at quality aspects of the products, especially in urban areas. They also realized that the some specific dishes taste better when are combined with dedicated sauces. Therefore industry experts predict an increase of the special sauces and dressings segment in the following years. Yet, this market is still very small in Romania, thus the expansion in volume terms will not be significant.


Recently, given the unfavourable economic context due to the financial crisis, the expectations regarding the seasoning and spices market turned from optimistic to moderate. Industry experts are afraid to make predictions, yet it is expected that products like mustard, ketchup pepper, which are commonly used by Romanians, will remain at the same level as in 2008 or will register a small increase. For products like special dressings, sauces and exotic condiments, which are usually associated with non-traditional dishes, it is expected to see a deterioration of the consumption, based on the fact that even though the Romanian will not reduce the budget allocated to food procurement, at least they will direct it towards non-sophisticated, traditional dishes.

Exports

The exports of condiments are small, excepting the C.N. group 0909 - Seeds of anis, badian, fennel, coriander, cumin or caraway; juniper berries, which accounted for relative important quantities. The low export condiments volume is due to Romania’s geographic position, which


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is not favourable for growing these plants. The sauces exports are very small in case of products which use imported raw materials (e.g. soya sauces) and relatively high in case of goods which use domestic ingredients (e.g. tomato ketchup and other tomato sauces).

Table 38 Exports of main condiments and sauces 2004 - 2007 (tones)

C.N. Codes* 2004 2005 2006 2007 0904 11 14.6 1.1 1.3 0.9 0904 12 0.6 1.9 3.1 2.3 0904 20 32.3 1.8 2.8 1 0906 0.1 0.2 0.4 0.2 0907 5.3 - 1.2 - 0908 - 0.3 0.8 - 0909 2,876.1 2,910.8 6,830.6 2,708.4 0910 91 0.8 4.5 3.6 5 0910 99 3.7 0.2 1.4 12.7 2103 10 3.4 1.8 0.1 0.3 2103 20 116.5 109.8 188.2 169.9 2103 30 96 79.2 111.7 92.8 2103 90 62.7 100.8 160.4 332.7 Source: Eurostat, 2008

Note: 0904 11 - Pepper of the genus Piper, neither crushed nor ground; 0904 12 - Pepper of the genus Piper,

crushed or ground; 0904 20 - Fruit of the genus Capsicum or of the genus Pimenta, dried or crushed or ground;

0906 - Cinnamon and cinnamon-tree flowers; 0907 - Cloves, whole fruit, cloves and stems; 0908 - Nutmeg, mace and

cardamoms; 0909 - Seeds of anis, badian, fennel, coriander, cumin or caraway; juniper berries; 0910 91 - Mixtures

of different types of spices; 0910 99 - Other spices; 2103 10 - Soya sauce; 2103 20 - Tomato ketchup and other

tomato sauces; 2103 30 - Mustard flour and meal, whether or not prepared, and mustard; 2103 90 – Other;

Imports

The imports of condiments are much higher than the exports. In 2007, the most imported category of products was the mixtures of different types of spices (C.N. group 0910 91) and it was followed by the category of products fruit of the genus Capsicum or of the genus Pimenta, dried or crushed or ground (C.N. group 0904 20). The sauces category was dominated by preparations for sauces and prepared sauce (C.N. group 2103 90), products which have a constant increase in the last four years, from 5,210 tones in 2004 to 11,171 tones in 2007.

Table 39 Imports of main condiments and sauces 2004 - 2007 (tones)

C.N. Codes* 2004 2005 2006 2007 0904 11 1,427.9 1,321.7 1,480 851.4 0904 12 368.8 398.8 380.2 280.2 0904 20 1,187.7 1,249.7 1,585.9 906.2 0906 162.9 182.7 161.3 157.7 0907 11.6 3.1 12.1 9.3 0908 20.2 23.7 35.5 16.9 0909 146.6 184.3 238.6 144.3 0910 10 77.1 56.1 40.3 37.5 0910 20 1 1.7 2.2 3 0910 30 7.9 9.8 11.9 13.2 0910 91 1,529 1,827.9 1,969 1,516.8 0910 99 344.2 431.5 594.4 741.2 2103 10 73.5 81.4 122 125.4 2103 20 1,110.4 772.9 904.7 1,655


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2103 30 127.4 114.2 182.6 718.6 2103 90 5,209.6 6,297 8,205.7 11,171 Source: Eurostat, 2008

Note: 0904 11 - Pepper of the genus Piper, neither crushed nor ground; 0904 12 - Pepper of the genus Piper,

crushed or ground; 0904 20 - Fruit of the genus Capsicum or of the genus Pimenta, dried or crushed or ground;

0906 - Cinnamon and cinnamon-tree flowers; 0907 - Cloves, whole fruit, cloves and stems; 0908 - Nutmeg, mace and

cardamoms; 0909 - Seeds of anis, badian, fennel, coriander, cumin or caraway; juniper berries; 0910 4 10 – Ginger;

0910 20 – Saffron; 0910 30 – Turmeric (curcuma); 0910 91 - Mixtures of different types of spices; 0910 99 - Other

spices; 2103 10 - Soya sauce; 2103 20 - Tomato ketchup and other tomato sauces; 2103 30 - Mustard flour and meal,

whether or not prepared, and mustard; 2103 90 - Other


As per international trade statistics provided by Eurostat, the main country of origin for condiments is Germany, due to the presence on the Romanian market of Fuchs, the second biggest condiments producers in the world. Other important EU countries are: Austria, Czech Republic and Nederland. Condiments are coming also, from other non-EU countries like Vietnam, Indonesia, Turkey, etc. A structure of imports per main categories of condiments is presented in the table below.

Table 40 Main countries of origin for condiments imports in 2007 (tones)

C.N. Codes* Main countries of origin

0904 Germany (357 tones), Vietnam (284.6), Nederland (236.9) 0906 Indonesia (61 tones), Germany (35.2 tones), Vietnam (28 tones) 0907 Nederland (4.2 tones), Turkey (3 tones), Poland (1.1 tones) 0908 Nederland (6 tones), Switzerland (4.5 tones), Germany (2.5 tones) 0909 Germany (34 tones), Turkey (26.5 tones), Egypt (23.3 tones) 0910 Germany (954.3 tones), Austria (338.7 tones), Czech Republic (280.4 tones) Source: Eurostat, 2008

Note: 0904 - Pepper of the genus Piper; dried or crushed or ground fruit of the genus Capsicum or of the genus

Pimenta; 0906 - Cinnamon and cinnamon-tree flowers; 0907 - Cloves, whole fruit, cloves and stems; 0908 - Nutmeg,

mace and cardamoms; 0909 - Seeds of anis, badian, fennel, coriander, cumin or caraway; juniper berries; 0910 -

Ginger, saffron, turmeric (curcuma), thyme, bay leaves, curry and other spices

The sauces are coming on Romanian market mainly from other EU countries. The only exception is the soy sauce, for which the main source of origin is China. For the product category tomato ketchup and other tomato sauces, Italy is the main exporter to Romania with almost 400 tones in 2007, followed by Germany (274 tones) and Czech Republic (229 tones).

Table 41 Main countries of origin for sauces imports in 2007 (tones)

C.N. Codes* Main countries of origin

2103 10 China (73.3 tones), Czech Republic (19.6), Nederland (12.4) 2103 20 Italy (395.7 tones), Germany (273.6 tones), Czech Republic (229.1 tones) 2103 30 Czech Republic (328.2 tones), Poland (124.1 tones), Germany (112.2 tones) 2103 90 Slovakia (3,348.1 tones), Germany (2,079.4 tones), Poland (1,990.3 tones) Source: Eurostat, 2008

Note: 2103 10 - Soya sauce; 2103 20 - Tomato ketchup and other tomato sauces; 2103 30 - Mustard flour and meal,

whether or not prepared, and mustard; 2103 90 – Other

As regarding import tariffs and requirements with respect to “seasonings and spices” segment and information about differentiated customs tariffs for each category of product, it is more


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facile to access the European Commission Export Help Desk37 for identifying a specific custom tariff and import requirement, rather than selecting them from a list, due to the large number of products which are included in this category. Thus, in the following paragraph will be presented the steps which have to be made in order to obtain the custom tariffs and import requirements for a specific product.

Information regarding imports tariffs can be found at the following internet web page: http://exporthelp.europa.eu/thdapp/taric/TaricServlet?languageId=EN

After logging to the above mentioned web page, please select as the products country of origin “Thailand”. Then click on the “Browse” button for selecting a TARIC Chapter code. The seasoning and spices products can be identified under the following two chapters:

- Chapter 09 – Coffee, tea, maté and spices;

- Chapter 21 - Miscellaneous edible preparations

After clicking on one of these TARIC Chapters, there is the option to select a four digit TARIC code, which is briefly described in English. Identify were is the targeted product framed and click on the four digit TARIC code.

The spices products can be identified in one of the following four digit TARIC codes:

- 0904 - Pepper of the genus Piper; dried or crushed or ground fruit of the genus Capsicum or of the genus Pimenta;

- 0905 - Vanilla;

- 0906 - Cinnamon and cinnamon-tree flowers;

- 0907 - Cloves (whole fruit, cloves and stems);

- 0908 - Nutmeg, mace and cardamoms;

- 0909 - Seeds of anise, badian, fennel, coriander, cumin or caraway; juniper berries;

- 0910 - Ginger, saffron, turmeric (curcuma), thyme, bay leaves, curry and other spices.

The spices products can be identified in one of the following four digit TARIC codes:

- 2103 - Sauces and preparations there of; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard.

After clicking on one of the four digits TARIC code presented above, the entire list of products (ten digits codes) under each category will be listed. Select the targeted product and click on the “View” button. After clicking the EU custom tariffs for the targeted product will be listed.

Information regarding requirements and taxes for each imported products, can be found at the following internet web page:


After logging to the above web page, please select as the products country of origin “Thailand” and destination country “Romania”.



37 Free on – line available


Romania



The condiments market was relatively unsophisticated several years ago, only few spices were used by the Romanian customers due to the very traditional cooking style. The main ingredients used were black pepper and herbs (parsley, dill, etc). In the recent years the customers started to discover new flavours and to consume products which were almost inexistent on the market in the past. This behaviour is based on several causes like: the changing cooking patterns from traditional, time-consuming meals to faster and lighter dishes, influenced by the international cuisine, the advertising made by the companies for educating the consumers and convinced them to used different types of condiments, the production of some specific mixtures, used manly in Easter Europe region (e.g. boiled wine, boiled plum brandy, Christmas and Eastern specific meals, etc.).

The condiments are bought by the Romanian consumers from small neighbourhood food-stores (61%) and from hypermarkets and supermarkets (37%), as is mentioned in a recent AC Nielsen study38. The profile of the Romanian customer is the married person, with children, with an income on and above average, active, which cook 2-3 times per week from scratch. The products present on the supermarkets shelves are displayed in small mills or bottles for the premium product. The specially designed and textures envelops of small dimensions (25 - 50 g) are characteristic for the medium price range. For the most used spices packages of 75-100 g are often used.

The consumption levels have two picks, one in December, when a 20-30% increase is registered, even 100% for some goods, due to the preparations for Christmas and New Year. The Romanians cook more than usual during this period and use a large quantity of condiments, and 1-2 weeks before Eastern, when some special condiments are used mainly for lamb meat.

The sauces and dressings are appreciated by the Romanian consumers, since they meet the new trends in alimentation, especially in urban areas. The trend among consumer is to cook light, quality, various and effortless products. Therefore the market is increasing, the biggest quantities of these items, around 75%, being bought from hypermarkets, supermarkets, etc.

Most of the customers acquire a single product at one buying session. Usually the good which will be purchased is known before arriving to the store, only 12-15% from the products being picked spontaneously. The brand loyalty is at medium levels, around 40% of the clients buying another product, if they do not find the preferred one.


The condiments market is relatively fragmented, on the market being present 8-9 important players, and other 20-30 small companies. The international companies play an important role on the local market, while domestic players have a limited role. Some of the foreign entities prefer to import products from their home factories, while other like Unilever or Fuchs, which invested EUR 10 millions in a brand new production facility, produce in Romania a large share of their goods, for domestic market as well as for export.

The sauces and dressings market is competitive, giants like Orkla Foods, Heinz, Unilever, being present on the market next to the medium sized domestic producers (Whiteland, Spring, Regal). Some of the international players (Unilever) developed production facilities in Romania; others (Orkla Foods) bought Romanian companies while others like Heinz are just importing their products via a distributor, not having a branch locally.

Some of the most important players on sauces and condiments market are presented in the Table 42.

38 Data being public available on “www.dailybusiness.ro” website.


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market

An important entry barrier on the condiments market is represented by the powerful competition among the existent companies, thus it will be very difficult for a new player to enter the market. The supermarket shelves are already very crowded and the retailers are not willing to negotiate with a large number of suppliers on this particular segment. Basically there is no more space for novelty, the only innovation that could be made is regarding brands or packaging.

Another possible entry barrier on the exotic spices market is represented by the condiments culture in Romania, which has relatively low dimensions, due to the specificity of the Romanian cooking style and also due to the limited offer of such products for a long period of time in the past. In the present the orientation for new variety of spices means also the creation of new cooking habits. Yet, an opportunity could come from the fact that, in contradiction with the Western European countries, where an important part of the meals consist of semi-finished or ready-to-cook products, in Romania people are still cooking a lot and use important quantities of condiments. An entry opportunity for Thai products could be the niche of the mixtures of spices segment, an area with big increase potential both for consumers as well as for HoReCa segment. The industry experts’ optimistic expectations are based on a comparative study regarding the consumption of condiments in other European countries. The study revealed an important gap regarding the consumption of condiments mixtures both by the final consumers and HORECA. Therefore the diminution of this discrepancy creates a huge potential for these goods on the Romanian market. Another niche, with significant increase potential is represented by “the industrial condiments

segment”. This category of products is used mainly by the meat products (salami, sausages, etc.) manufacturers. Another niche with high income potential (that could be of interest for Thai exporters also) is represented by the “industrial condiments segment”. Industrial condiments are used especially by meat products manufacturers (salami, sausages, etc.). The profit margins are larger than in the case of regular condiments. Also the market size is bigger, being estimated at around EUR 100 millions by industry experts. However, a small disadvantage comes from the reluctance to new products, an issue present on every developing and heavily traditional market. The internationalization of the Romanian cuisine is a slowly process which had its debut several years ago. The entrance of Thai products on the ketchup and mustard market will be very difficult due to the powerful competition between the international and domestic brands and companies. Yet, the dressings and other prepared sauces market is still relatively undeveloped, therefore the competition is still at low levels. The good developing prospects are based on the increased consumption due to preference of buying these products instead of preparing them at home.


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Table 42 Some key players in condiments and sauces sector

Company name Address/ E-mail / Web

Company structure

Products / services / brands

2007 key financial & operational figures*

Top local executive Others

Unilever South Central Europe

42-44 Sos. Bucuresti-Ploiesti St., Bucharest [email protected] www.unilever.ro

Main shareholder: Unilever N.V.

Condiments, sauces Brands: Hellmann’s, Knorr, Delikat


Alexandra Gâtej President Dan Paşcă (Marketing Director)

Active in food and beverage sector, detergents, personal care products, etc.

Nestle Romania

9-9A Dimitrie Pompei, Bucharest www.nestle.ro

Main shareholder: Nestle (Swiss)

Condiments Brands: Maggi


Paul Nuber, General Manager

Active in coffee and tea, chocolate, pet foods markets.

Mars Romania

319C Splaiul Independentei St., Bucharest

Main shareholder: Mars (USA)

Sauces Brands: Uncle Ben’s, Dolmio

Turnover: EUR 41 mil Net profit: EUR 3.65 mil Employees: 74

Tomasz Pawlowski General Manager

The company is also active on snack food and pet care.

Orkla Foods Romania 14-18 Copilului St., Bucharest www.orkla.com

Main shareholder: Orkla Foods (Norway)

Sauces Brands: Bunica


Manuela Banu, General Manager

Active also on margarine and food goods market.

Fuchs Condimente RO S.R.L.

15-17 Al. I. Cuza St., Domnesti, Arges County [email protected] www.fuchs-condimente.ro

Main shareholder: Fuchs (Germany)

Spices and herbs Condiments for food industry


Jens Bachmeier, General Manager Simona Rosca, Marketing Manager

New production plant in Curtea de Arges, for domestic as well as for export market

Kamis Condimente S.R.L.

319 Splaiul Unirii St., Bucharest [email protected] www.kamis.ro

Main shareholder: Kamis-Przyprawy (Poland)

Spices and herbs Brands: Kamis and Galeo

Turnover: EUR 4.58 mil Net loss: EUR 0.15 mil Employees: 87

Giani Bunea, General Manager

Entered Romanian market in 1999, present in Russia, Ukraine, Slovakia.

Orlando Import Export 2001

5 Sos de Centura St., Ilfov County www.orlandos.ro

n/a Spices, dehydrated vegetables, etc.


Eliza Güngör, General Manager

Wholesale and retail distribution of any kind of spices.

Source: Major Companies in Romania, 2007, The 200 biggest players in the economy, 2008 and the Ministry of Finance and Economy

Note: for Unilever the financial and operational key figures are for 200


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2.7 Fruit and vegetable juice

2.7.1 Brief presentation of fruit and vegetable juice segment

The category of non carbonated drinks (NC), including among others fruit non carbonated drinks (JNSD39), ice tea and squash syrups represents one of the most dynamic category of FMCG market and more particularly of the soft drinks market. The JNSD segment comprises three main categories, as it follows:

• Still drinks with less than 25% fruit - vegetable concentration

• Nectars with a percentage of 25-99% fruit - vegetable concentration

• Juice with 100 % fruit - vegetable concentration.

Among the fruit juice ranges, the orange is the most popular flavour, followed by grapefruit and apple. As regards the preference for vegetable juice, the most popular is the tomato juice. There are also different “purchasing behaviours” depending on seasons such as: during the winter time it was noticed the preference for bigger packages as “people spent more time with the family”, thus it is preferred the “take home package” offering a better price - quantity ratio, while over the summer season it was notices a preference for smaller packages – “take away package –easy to carry”. Other flavours such as carrot flavour or carrot in combination with other fruit flavours are also present on the market, but are less popular among Romanian consumers.

In conclusion, the offer of juice products is much diversified both in terms of flavours and in terms of type of packages present on the local market.


The Romanian soft drink market followed a positive evolution over the last years, size being estimated at about 2.232 billion litters in 2006 and at about 2,37 2 billion litters in 2007, out of which the carbonated and non carbonated drinks represented about 60%40. This means that, this segment of market was roughly estimated to about 1.4 billion litters last year.

Trends

Over the last years, Romanian consumers have started to pay more attention to qualitative and healthy products, therefore premium products like juice and nectars have registered, over the past year a higher annual growth rate (18-23%) as compared to still drinks (15%). However, despite the significant annual growth, the consumption per capita of natural non-carbonated drinks with higher percentage of fruit (nectars and juices) and of ice –tea, which is of only 4 litters / capita / year, is still modest in our country as compared to other countries were consumption is about 34 / litters / capita / year. Therefore, potential of market increase on this segment is important and is directly linked to the population purchasing power.

As regards the juice segment, the evolution of consumption was positive in the last years (as can be noticed in the table below), with a CAGR of 14% over the period 2005 - 2007. The same positive evolution of the fruit and vegetable juice market (size of consumption) is estimated also

39 Juice, nectars and still drinks 40 As per Euromonitor data base


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for the next years. Industry experts predict a 7% growth of the juice market, for 2008 vs. 2007 following the health and wellness trends in the consumer’s attitude.

Table 43 Evolution of juice market 2001 – 2007 (million litters)

Volume million litters (consumption)

2001 2002 2003 2004 2005 2006 2007

Juice 100% 12.2 12.5 13.8 19.85 22.85 25.4 29.6 Y / y (%) 2 10 44 15 11 16 Source: Official statistics of National Association of Refreshing Drinks; Industry Experts; Trade press

Forecasts

On long term the noncarbonated drinks market is expected to double until 2010, and the consumption of juice (100 % fruit concentration) is expected to increase at a higher pace as compared to consumption of still drinks (up to 25% fruit concentration).

Foreign trade

The positive evolution of the fruit and vegetable juice segment is reflected also by the evolution of some representative indicators of trade that are presented in the tables bellow:

Table 44 Import / export of fruit juice and vegetable juice41

* 2005 – 2007 (EUR thou)

Imports / Exports value 2005 2006 2007 Total imports : 11,754.8 17,301.13 27,255.67

Non EU countries 2,467.50 2,888.560 2,339.200 EU countries 9,287.300 14,412.570 24,916.470 Total exports: 17,659.67 9,380.37 20,144.46

Non EU countries 279.280 84.440 326.410 EU countries 17,380.390 9,295.930 19,818.050 Note: the category is defined as per code 2009 “Fruit juices (including grape must) and vegetable juices,

unfermented, not containing added spirit …...” from TARIC code

Source : External Trade, European Commission


In 2007, according with official EU trade statistics42, the main countries of origin for imports of products defined by 2009 code

43 were: Austria (14%), Netherlands (14%), Ireland (12%), Italy (11%), Germany (10%) and France (9%) as can be noticed in the chart below:

41 Note: the category is defined as per code 2009 “Fruit juices (including grape must) and vegetable juices, unfermented, not containing added spirit …...” from TARIC code

42 The information is provided by External Trade Department of European Commission 43 2009 code product description is “Fruit juices (including grape must) and vegetable juices, unfermented and not containing added

spirit, whether or not containing added sugar or other sweetening matter”


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Figure 22 Imports of juice by origin countries in 2007 (volume)

11%

9% 10%

12%

14%

14%9%6%

7%

8%

Austria

Netherlands

Ireland

Germany

France

Italy

Hungary

Poland

Others EU

others non EUSource:European Commision - External Trade Statistics

As regards the structure of fruit and vegetable juice imports per categories of flavours, it can be noticed that the orange juice remains the most imported category of products, followed by mixture of juices, apple juice and grape juice.

Figure 23 Structure of imports by flavours

any other single fruit or

vegetable 7%

mixtures of juices 18%

pinneaple 2%

tomato juice 1%

grape juice 12%

any other single citrus

fruit3%

grapefruit5%

orange39%

apple juice13%

Source:European Commision - External Trade Statistics

Orange juice imports

The size of imports of orange juice (under code 2009.11 / 2009.12 / 2009.19) in 2007 was about EUR44 9 million. Should be noticed that under this code three main categories of products are imported: frozen, non-frozen with a Brix value of max 20 and others. Austria, Germany and France are the main origin countries for imports.

Mixture of juices

The size of imports of mixture of juices (code 2009.90) in 2007 was about EUR45 4.4 million. Italy, Germany, France and Hungary are the main origin countries for imports.

44 External Trade European Commission statistics 45 External Trade European Commission statistics


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Apple juice

The size of imports of apple juice (under code 2009.71 / 2009.79) was about EUR46 3.1 million, in 2007. Should be noticed that under this code two main categories of products are imported: juice with a Brix value of maximum 20 and others. Austria, Poland, France and Germany are among the main origin countries for imports.

Grape juice

The size of imports of grape juice (code 2009.61 / 2009.69) was about EUR47 2.9 million, in 2007. Should be noticed that under this code two main categories of products are imported: juice with a Brix value of maximum 30 and others. Italy and Spain are among the most important origin countries for imports.

Any other single fruit or vegetable juice

The size of imports of orange juice (code 2009.80) was about EUR48 1.7 million, in 2007. Germany and France are among the most important origin countries for imports.

Grape fruit juice

The size of imports of grapefruit juice (code 2009.21 /2009.29) was about EUR49 1.3 million, in 2007. Should be noticed that under this code two main categories of products are imported: juice with a Brix value of maximum 20 and others. Ireland, Netherlands, Poland and Austria are among the main origin countries for imports.

Any other citrus fruit juice

The size of imports of any other citrus fruit juice (code 2009.31 / 2009.39) was about EUR50 0.752 million, in 2007. Should be noticed that under this code two main categories of products are imported: juice with a Brix value of maximum 20 and others. Germany, Italy and Austria are among the main origin countries for imports.

Pineapple juice

The size of imports of pineapple juice (code 2009.41 / 2009.49) in 2007 was about EUR51 0.381 million. Should be noticed that under this code two main categories of products are imported: juice with a Brix value of maximum 20 and others. Austria, Greece and Spain are among the main origin countries for imports.

Tomato juice

The size of imports of tomato juice (code 2009.50) in 2007 was about EUR52 0.310 million. Poland, Italy and Austria are among the main origin countries for imports.

Thai products on Romanian market

According to EU trade statistics, the imports from Thailand to Romania of fruit and vegetable juice are very small amounting 6600 EUR in 2007. Among the products imported from Thailand the following types can be mentioned: mixture of juices, juice of any other single fruit or vegetable and pineapple. So far, due to small quantities imported Thailand fruit and vegetable juice from Thailand has small visibility on the Romanian market.

46 External Trade European Commission statistics 47 External Trade European Commission statistics 48 External Trade European Commission statistics 49 External Trade European Commission statistics 50 External Trade European Commission statistics 51 External Trade European Commission statistics 52 External Trade European Commission statistics


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Import taxation

As regarding import taxation, while imports from EU member states are free of any taxes, in case of imports coming from Thailand import taxes are requested. However, Thailand benefits of the Generalized System of Preferences (GSP) in relation with EU countries, thus in relation with Romania this system is also applied. Therefore, if importers fulfil the conditions requested (in terms of providing relevant documentations and the certificates of origin requested), then, they can benefit of some preferential taxes as compared with other non – EU third countries. Details on level of import tariffs applied for different categories of fruit and vegetable juices imported from Thailand, as per 2008, are available in Annex 6 and Annex 7. One could check the updated level of import taxes and / or other facilities available (quotas) by accessing the “www.ec.europa.eu/taxation_customs/dds” site, and by introducing the TARIC code of products (see list of codes for juices in Annex 7) and the country of origin / destination. The specific TARIC code for fruit and vegetable juice is code 2009 “Fruit juices (including grape must) and

vegetable juices, unfermented and not containing added spirit, whether or not containing added

sugar or other sweetening matter”” split by subdivisions (2009.11; 2009.12; …..2009.90)53 covering a wide range of flavours and /or different types of juices.


Given the recent economic turnaround of the market situation due to the actual economic and financial crises, some industry experts estimate that the soft drinks market will rise by 7 % in terms of volume in 2009 as compared to 2008. This is a significant slowdown given the 20-30% rises that the soft drinks market used to record before 2008. As regards the consumption of natural juice, the market will continue to be on a positive trend but, for sure rates of increase will be significantly lower as compared to last years. Industry experts opinion is that food products category, including drinks will be less affected than other categories as Romanian people are used to renounce to other type of expenses, but not so much to food expenses. However, the market is expected to slow down for this category of products as consumption is influenced by several factors among which the following can be mentioned:

• Price increase especially for imported brands, due to the RON /EUR exchange rate significant modification (RON de-valorisation)

• Slow down of population purchasing power as result of increase of unemployment rate as well as of restructuration programs. Consequently, the medium income segment of population that represents an important target for natural fruit juice producers, will be affected.

• In the actual context consumers will pay more attention to “price factor” , thus some consumers could migrate from premium products (with high fruit content) to nectars and or still drinks which are categories more accessible from price point of view. Still, the attention for quality and health will remain an important factor to balance the consumer behaviours.

• Certainly, the HoReCa segment will be affected by the current crises as people will reduce the frequency of going to restaurants, it is expected a migration from “HoReCa consumption” towards “home consumption”.

• Consumers will pay more attention to what they buy, will focus on well known brands that are known and they will be more reticent in trying new products, given the budgetary constraints.

53 2009.11 represents frozen orange juice;


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The consumption per capita of natural non-carbonated drinks with higher percentage of fruit (nectars and juices) and of ice – tea, of only 4 litters / capita / year, is still modest in our country as compared to other countries were consumption is about 34 / litters /capita / year.

As can be followed in the graph, half of the juice market is Orange. Tomato, apple and grapefruit are the next flavours, however they are distant followers.

Figure 24 Juice consumption preferences - by main juice flavours

Pineapple3%

Exotic fruit1%

Mixed fruit1%

Pink pineapple0.4%

Others6%

Spanish oranges and tagerines

3%

Grapefruit5%

Apples13%

Tomatoes18%

Oranges

50%

Source: Capital Magazine

In the last years the improvement in purchasing power of the population, as well as the easier access of population to information and to education campaigns on topics such as “natural and healthy food”, led to significant lifestyle changes. As a result, the consumers started to see the value behind natural products and healthier food products in general. In this context, the natural juice consumption has increased, as people are more health and wellness consciousness being interested on higher concentration of fruit and vitamins.

As regards the habits of consumption, the natural juice is consumed mainly in the morning, the orange and /or the multi-fruit with vitamins juice being the most preferred flavours. In case of “on premise” consumption, the juice is consumed either simple and /or as a “long drink type” (juice in different combinations with other drinks). There are also different “purchasing behaviours” depending on seasons such as: during the winter time it was noticed the preference for bigger packages as “people spent more time with the family”, thus it is preferred the “take home package” offering a better price / quantity ratio. Over summer season it was noticed a preference for smaller packages – “take away package –easy to carry”. The 100% fruit juice drinks sales are higher in big cities while in small cities and rural areas carbonates and still drinks remain the preferred options for consumers in these areas.

Most of the fruit & vegetable juices purchased by Romanian consumers are made “from fruit / vegetable concentrates “, while frozen 100% juice purchases are negligible. This kind of “fruit squeezed juice” has started to be present in some of the Romanian modern retail outlets of large cities, kept in refrigerated units, and they are targeting mainly the higher income consumers. So far sales are insignificant mainly due: high prices / unit , short shelf life, etc. Most of the people prefer to consume “fresh squeezed juice” home made, as they perceive it as healthier / fresher / and cheaper.

As regards the vegetable 100% juice, the category is mainly represented by tomato juice perceived as healthy and used both for drinking and cooking. Most of the sales of vegetable juice are made in urban areas, while in rural areas they are insignificant. Home production of tomato juice, is still high in the country side, therefore volumes and values of sales of vegetable


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juice in rural areas are negligible, as people living in countryside are traditional households producers of tomato juice.

With respect to consumer preferences for different type of packages, as it was mentioned by industry experts while on retail segment the juice is sold better in packages with higher size, in Horeca, the smaller packages / bottles are preferred. For kids products, smaller packages (250 g) are the most requested.


The juice market is relatively fragmented with about 8 key players dominating the market, but also with some other “small” companies covering about 20 % of the market. Cyrom (Pfanner), Parmalat (Santal) and Tymbark (Tymbark and Ciao) are ranking among the first three in the echelon of the key players. The multinationals such as Coca Cola HBC (Cappy) and Pepsi America’s (Prigat) are also among the important players on the market. Other companies such as European Drinks (Frutia) and Rauch (Happy Day) still have an important position on the market although according to industry experts they have recorded a decrease of sales in 2007 compared to 2006. Other players present on the market are: Ivi, Frutti, Raureni, DOB etc.

Florina Bulgarian producer entered Romanian market in the 2007, their products are imported and distributed via Apemin Tusnad.

The most important key players from the Romanian juice market are presented in the table below.

Table 45 Some key players on juice market

Company name Address/ E-mail /www

Company structure

Activities/ Products 54

2007 Key financial & operational figures

Top local executive

Others

Cyrom Romania55

Importer of food including non-carbonating drinks 107 Ferdinand Avenue, Bucuresti Teleph: +40 21 2531967 www.cyrom.com

100 % private own Part of Cyrom Group

Food importer including non-carbonating drinks

Turnover: 11,766, 583 EUR Profit: 83,011 EUR

Catalin Tapi Director General

In 2007, ranked first position on the juice market Juice brands: Pfanner

Parmalat

12 Soseaua de Centura St., Tunari, Ilfov Teleph: +40 21 2665152 www.parmalat.ro

100% private own (Parmalat Spa Italy)

Milk and natural juice producer

Turnover: 14,364,672 EUR Profit: 1,728,552 EUR

Giampaolo Manzonetto (General Manager)

In 2007, ranked second position on the juice market Juice brands: Santal

Tymbark Maspex

Romania

38-40 St.cel Mare St., Valenii de Munte, Prahova

100% private own (Maspex Group Poland)

Soft drinks producer

Turnover: 57,081,295 EUR Profit: 1,001,917

Krzysztof Grabowski (General Manager)

Juice brands: Tymbark, Ciao

54 Will be presented only products from portfolio which are relevant for the research 55 Importer and distributor of the natural Austrian juices of Hermann Pfanner Getränke Ges.m.b.H. The company is importing

also other products such as Olive oil (Monini), mineral water (Volshauer) and other


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Telephone: +40 244 28 33 44 www.tymbark.ro

EUR

European Drinks

1-2 Teatrului St., Oradea, Bihor Telephone: +40 259 40 73 79 www.europeandrinks.ro

100% private own Local investment

Mineral water and soft drinks producer

Juice brands: Fruttia

Turnover56: 133,400,000 EUR Profit5: 1,700,000 EUR

Adrian Rotar Executive Manager

Profit and turnover in 2007 were down by 10% against previous year

Coca Cola HBC

10 Preciziei St., Bucuresti Telephone: +40 212 02 14 00 www.cocacolahbc.com

100% private own (Coca-Cola Hellenic Bottling Company - Greece

Mineral water and soft drink producer

Turnover: EUR 515,791,784 Profit: n.a.

Calin Dragan (General Manager)

Juice brands: Cappy

Rauch Romania SRL

69 Nicolae Caramfil St., Bucuresti Telephone: +40 21 203 89 60 www.rauch.cc

100% private own

Soft drinks producer

Turnover: 6,500,931 EUR Loss: 278,924 EUR

Adrian Staniloiu (General Manager)

Juice brands: Happy Day

Carslrom Beverages

89 Biruintei Avenue, Pantelimon, Ilfov Telephone: +40 21 203 89 60

100 % private

Beverage producer and distributor (holds the license for producing Granini and Orangine)

Turnover: n.a Profit: n.a

Sachar Shaine President

Juice brands: Granini

Pepsi Americas/ QAB

55 Viilor St., Bucuresti Telephone: +40 21 336 89 70 www.pepsiamericas.com

100% private own (Pepsi Americas)

Mineral water and soft drinks producer

Turnover: 195,087,770 EUR Profit: 33,727,751 EUR

Mikel Holmes President

Juice brands: Prigat

Source : Book of List, Major Companies, Trade press, Ministry of Finance and Economy, Industry Experts


market

The fruit and vegetable juice segment is on an ascending trend. Potential of increase of the market is significant but, meanwhile the competition on the market is strong. Therefore a new entrant will benefit of market opportunities but should be aware also on barriers / threats of the market, both aspects being listed below.

56 As per data communicated by company representatives within Ziarul Financiarul from 28.05.2008


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Opportunities

• The market for natural juice has a significant potential of growth (room for growth), indicated by still low per capita / consumption in Romania as compared to other EU countries;

• Consumption of natural juice is expected to increase as consumers are changing habits, towards more healthier and natural products, they follow EU trends;

• The development of modern retail that are promoting higher quality products is also a positive factor for the development of juice market;

• Increasing out of home consumption (HoReCa and On –the –Go) has a positive impact on juice consumption increase, however in the context of current crises the out of home consumption growth rate is expected to slow down.

• Consumers are open to consume new “Flavours”, f.i exotic flavours, this could represent a potential opportunity for Thai origin products.

Barriers

• The premium segment (100% juice) is strongly developed, with a large range of brands / products available on market, making quite difficult the entrance of new products / brands “without a considerable marketing and promotion effort”;

• Thai juices are not known by Romanian consumers, so far it is a low visibility of these products on the Romanian market;

• Imports of Thai products are subject of taxation while imports from EU countries are free for any taxes;

• Distance is a major constraint with impact on level of prices and in some cases on quality of products as it can appear the risks of products deterioration due to long transport time;

• Marketing and advertising costs are relatively high, therefore a new entrant should consider a significant budget allocated in this respect.

• The current situation (economic crises) could generate migration of some consumers from juice segment towards nectars and/or still drinks category as they are more accessible from price point of view.

So far, Thai imports of fruit and vegetable juice are insignificant on the local market. Practically these products have a very low visibility on the Romanian market, so industry experts could not point any advantage or disadvantage of Juice originated from Thailand as compared to similar products present on the local market.


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3 POSSIBLE WAYS OF DISTRIBUTION, PROMOTION AND MARKETING OF THAI

PRODUCTS ON LOCAL MARKET

3.1 Main importers of food and beverage products and their distribution networks

The distribution industry had a growing evolution in Romania over the last years. This sector is in close relation with the retail business, therefore once the international retail chains started to invest and expand the outlet networks all over the Romanian territory, the distribution companies were constrained to grow in order to fulfil the new demands.

Another factor which contributed to the positive evolution of the industry was represented by the production facilities opened in Romanian by important FMCG companies. Thus a large number of products needed to be transported from the manufacturing plants towards the outlets locations, domestically or even abroad.

Due to the increase of the disposable income, the population was willing to consume a larger quantity of products, therefore the importers started to diversify the products portfolio, introducing new goods on the supermarkets shelves, developing their business.

3.1.1 Long list including contact details

The most important international FMCG manufacturers established production facilities in Romania, meanwhile settling distribution contracts with local companies. Therefore the most important players are the ones which market the products of companies like: P&G, Unilever, Kraft Foods, etc, producers which externalized the distribution process.


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Table 46 Long list of importers of food and beverage products

Company name Address Phone Web E-mail Interbrands 14 Viilor St., District 5, Bucharest +40 21 3361915 www.sarkisgroup.com [email protected] Top Brands Distribution 8 Drumul Garii St., Otopeni, Ilfov County +40 21 3527880 www.tbd.ro [email protected] Aquila Part Prod Com 105 A Malul Rosu St., Ploiesti, Prahova County +40 244 594793 www.aquila.ro [email protected] Elgeka – Ferfelis Romania 150, Drum intre Tarlale St., District 3, Bucharest +40 21 2046600 www.elgeka-ferfelis.ro [email protected] Astral Impex 1 Calea Zimandului St., Arad, Arad County +40 257 289255 www.astralimpex.ro [email protected] Macromex 27 Mihai Eminescu St., District 1, Bucharest +40 21 2066900 www.macromex.com [email protected] Whiteland Import Export 132 Metalurgiei St., District 4, Bucharest +40 21 4610054 www.whiteland.ro [email protected] Lekkerland Romania DJ 601, Chiajna, Ilfov County +40 21 4076701 www.lekkerland.ro [email protected] Agroalim Distribution 242 Calea Vitan St., District 3, Bucharest +40 21 2006300 www.agroalim.ro [email protected] FM Logistics 1-7 Italia St., Chiajna, Ilfov County +40 21 5294600 www.fmlogistic.com n/a Nordic Import Export 240 A Calea Vitan St., District 3, Bucharest +40 21 3444725 www.nordicimpex.ro [email protected] Agrirom 44 General Vasile Milea, Arad, Arad County +40 257 250880 www.agrirom.ro [email protected] BDG Import 184-186 Traian St., District 3, Bucharest +40 21 3238670 www.bdg.ro [email protected] Carmistin 30C Nicolae Balcescu St., Mizil, Prahova County +40 244 252832 www.carmistin.ro [email protected] Group Queen Monaco 1 Baiculesti St., District 1, Bucharest +40 21 6677881 www.queenmonaco.ro [email protected] Optimeat 36 Fantanica St., District 2, Bucharest +40 21 3186056 www.optimeat.ro [email protected] Rocon Distribution 2000 141-149 Atomistilor St., Magurele, Ilfov County +40 21 4575146 www.rocon.ro [email protected] Transmim 3 Soseaua Brailei St., Slobozia, Ialomita County +40 243 213390 www.transmim.ro [email protected] Alimrom Trading 1 Detunata St., Cluj-Napoca, Cluj County +40 264 414112 n/a n/a Consumer Product Network 266-268 Calea Rahovei St., District 5, Bucharest +40 21 4080880 www.cpn.ro [email protected] Inter Distribution Company 93-101 Odai St., District 1, Bucharest +40 21 3519474 n/a n/a BDM 9 Margenaului St., Baia Mare, Maramures County +40 241 682289 www.bdm.ro [email protected] Cyrom Romania 107 Ferdinand I Blvd., District 2, Bucharest +40 21 2531967 www.cyromromania.ro [email protected] Vlase Impex 1 Amara St., Slobozia, Ialomita County +40 243 236289 www.vlase.ro [email protected] De Silva Intermed 44-48 Nuferilor St., District 1, Bucharest +40 21 2029929 n/a [email protected] Romdis 35-45 Intrarea Straulesti, District 1, Bucharest +40 21 6686652 n/a n/a Source: Major Companies in Romania, 2008; The biggest players in the economy, 2008; Book of lists, 2007


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Larive Romania - March 2009 page - 91

3.1.2 Profiles of key importers

The companies presented below are among the main importers and distributors of food and beverages on the Romanian market. They have extended experience on this field, and a relatively vast portfolio of imported products.

3.1.2.1 Nordic

General company information

Name Nordic Import Export Co S.R.L.

Address 240 A Calea Vitan St., District 3, Bucharest

Phone +40 21 344 47 25

Fax +40 21 346 45 56

Web page www.nordicimpex.ro

E-mail [email protected]

Management and organization

Executives Valentin Moldoveanu – General Manager

Liliana Dobre – Marketing Manager

Florin Muclea – Financial Manager

Products / brands

• Grand Cucina - vegetal sour crème

• Hulala - crème fraiche

• Arla, Galbani, Bongrain, Soignon, Riches Monts - cheese, butter

• Renna - pickled products

• Fini, Paf - fresh pasta

• Costa d’Oro - olive oil

• Rio Mare - fish cans

• Cirio - tomato cans

• Kimbo - coffee

• Asti Piedmont, Bardolino Doc, Bardolino Classico Veneto, etc. - wines

• Bonta Divina - deserts

• Jean Caby, La Risa, Bresaola, Coppa Parma, etc. - meat products

Distribution network / geographical coverage

• Nordic distributes products in all the international chains of shops and networks as well as in smaller stores or individual stores

• Gastro division offer specific products for hotels, restaurants, cafes, industrial customers, etc.

Financial & operational figures (2007, EUR)

• Turnover: 28.63 mil

• Net profit: 3.34 mil

• Number of staff : 166


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Others comments

• Specialised mainly in Mediterranean ingredients

• Two new area stores were opened in 2006 to shorten the delivery time of fresh products from producer to consumer

3.1.2.2 Macromex


Name Macromex S.R.L.

Address 27 Mihai Eminescu St., District 1, Bucharest

Phone +40 21 206 69 00

Fax +40 21 206 69 99

Web page www.macromex.com



Executives Dan Minulescu – General Manager

Monica Otelea – Marketing Manager

Narcis Sava – Imports Manager

Products / brands

• Dujardin, Gastromania - frozen vegetables

• Farm Frites, Fantasy - frozen French frites

• President, Locatelli - cheese, butter

• Royal Greenland, Royal Arctic - frozen fish, see fruit, etc.

• Sadia - frozen chicken, turkey, beef, meat

• Philadelphia (Kraft) - cheese

• Linco - bakery products


• Three main distribution centres with two temperature sectors, covering the entire country (Bucharest, Cluj, Timisoara)

• Two big frozen storing warehouses in Oradea (for EU transports) and Constanta (for containers), where goods are preserved before being delivered to the distribution centre

• Over 20.000 pallets storage capacity, increasing every year

• Over 70 new generation trucks and vans of various sizes, most of them equipped with two-temperature refrigerating rooms

• 24/7 delivery service in most areas

• Dynamic truck scheduling and route optimization, using digital maps incorporated in the ERP system

• Real-time command processing; selecting and applying filters on data bases for monitoring payments in each location



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Others comments

In December 2005, Macromex inaugurated one of the most important innovations on this market segment - Macromex Distribution Centre. The warehouse is located near the belt road of Bucharest, making the goods flow more efficient, without transiting the central area of the city. The distribution centre is placed next to the rail road and near a possible location for MAERSK to build a container terminal in Bucharest.

3.1.2.3 Elgeka – Ferfelis


Name Elgeka – Ferfelis Romania S.R.L.

Address 150-158, Drum intre Tarlale St., District 3, Bucharest

Phone +40 21 204 66 00

Fax +40 21 204 66 27

Web page www.elgeka-ferfelis.ro



Executives Ioannis Ferfelis – President and CEO

Maria Stanigut – Financial Manager

Ana Maria Popa – Marketing Manager

Products / brands

• Vegeta (Podravka) - condiments

• Anatoli - non-toxic egg-dye

• Minerva - olive oil

• Olympic Hermes - sugar confectionery

• Papadimitriou - balsamic vinegar

• Viotros - cheese

• Palirria - Greek and Mediterranean canned ready-meals

• Bip - toys combined with candy

• Sonda - carrot and carrot with oranges, bananas, peaches, etc., juices

• Garden - syrups (black-currant, orange, raspberry and cranberry, etc.)


• 12 branches strategically placed all over the country: Bucharest, Brasov, Cluj, Constanta, Craiova, Galati, Iasi, Oradea, Sibiu, Suceava, Timisoara, Targu Mures

• central warehouse in Bucharest: total capacity - 9,627 sq m, refrigerated total capacity - 294 pallets, pallets capacity - 5,111, loading ramps - 20

• auto park: trucks - 6, trailers - 5 (2 refrigerated), auto-utilitarian - 55 (7 refrigerated),


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cars 142 (Toyota, Skoda Fabia, Skoda Octavia, Solenza, Matiz, Tico, Cielo)


• Turnover: 58 mil



Others comments

Elgeka – Ferfelis offers to its collaborators an integrated system of commercial services: sales, marketing, trade marketing, merchandising, logistics, and customer service.

3.1.2.4 Agroalim


Name Agroalim Distribution S.R.L.

Address 242 Calea Vitan St., District 3, Bucharest

Phone +40 21 200 63 00

Fax +40 21 200 63 01

Web page www.agroalim.ro



Executives Bogdan Grama – General Manager

Valentina Dumitrescu – Financial Manager

Ana Popa Dumitrescu – Marketing Manager

Products / brands

• Smithfield - pork meat

• Minerva - beef meat

• Del Mare - frozen fish

• Siblou - shrimps, mussels and seafood

• Greens, Hortex, Hana - frozen vegetables

• Aviko - frozen potatoes

• Ema - frozen bakery

• Ristorante - frozen pizza

• Friendship - dairy products


• Agroalim has a distribution network all over Romanian territory, with branches, in the main cities: Bucharest, Targoviste, Constanta, Tulcea, Brasov, Pitesti, Bacau, Braila, Iasi, Timisoara, Cluj, Baia Mare

• Logistical infrastructure

• Logistical platforms: Buftea 2,000 tones, Targovise 1,000 tones, Tulcea 16,000 tones;


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• Regional distribution centers: Bucharest 2,000 tons, Timisoara 1,200 tons, Cluj 350 tons, Bacău 400 tons

• Distribution centres: Baia Mare 200 tons, Braşov 400 tons, Braila 200 tons, Constanta 300 tons, Iasi 300 tones, Pitesti 450 tons

• Car fleet - over 300 vehicles: vans of 1.5 tons capacity for distribution inside the towns, vans of 3.5 tons capacity for distribution in towns up to 200 km radius area distribution, lorries of 11 tones capacity for key account distribution, trucks of 21 tones capacity for transfers between logistic platforms and branches, and cars for presale agents



• Net loss: 1.89 mil


Others comments

In 2005, the USA Group of Companies Smithfield Foods Inc., world leader in pork meat production and export, acquired 50% of Agroalim Group.

3.2 Modern trade (hypermarkets, supermarkets, discounters, etc)

The development of consumer preferences and the increase of the purchasing power have generated a gradual replacement of the traditional form of trade (in small shops and agri-food markets) towards modern trade performed in outlets such as: hypermarkets, supermarkets, discount stores and cash & carry. In 2007, approximately 39% of consumer goods sales were made through modern trade chains, an increase by 5 percentage points as compared to 2006. However the ration between traditional and modern trade is still low in Romania, in contrast with countries from the European Union, where the proportion is of 80% - 90% in favour of modern trade. Due to rapid expansion of outlets number and increase of shopping areas in the last period, it is estimated that approximately 50% of the total volume of consumer goods sold will be carried out through modern trade stores in 2010.

Figure 25 Retail channels shares by value in Romania 2002 - 2007

10 9 8 5 6 8

97 6

5 44

66

6

5 44

4443

4343

41 35

13

1212

11

10

10

7

77

7

6

5

1

45

1

814

8 11 13 16 16 15

112

23

3

12

2

4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007

Supermarkets

Hypermarkets

Discounters

Cash & Carry

Agro-food markets

Boutiques

Kiosks

General stores

Street sellers

Others

`

Source: GFK official data published in business press

The consumer interest in new modern trade stores is reflected in the outlets’ number dynamics over the recent years. Thus, in 2007 there were approximately 950 stores of modern trade, more


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with 37% as compared to 2006, while by the end of September 2008, the number of stores grew at 1,061, with 11% more than the previous year.

Figure 26 Evolution of outlets number per main categories 2006 - 2008*

4878

115

521

687732

88

146

234

36 39 41

0

200

400

600

800

2006 2007 2008*

Hypermarkets

Supermarkets

Discounters

Cash and Carry

Source: “Piata” Magazine - 2008; Note:*estimation

In 2007 the most dynamic evolution was registered by discounters, which are mainly orientated to the consumer segment sensitive to price, and focused on average and below average products. About 5% of total sales value in 2007 was made through this type of outlets. The number of discounters increased to 146, an expansion of 66% as compared to 2006. For 2008 the expectations of the industry experts were also optimistic. Thus they have predicted a 60% increase, meaning that the number of discount stores will reach the level of 234 units.

The hypermarkets were booming in Romania in the last year, reaching a number of 78 by the end of 2007, an increase with more than 63% as compared with 2006. This has generated an increase of about 6 percentage points of the market share, reaching 14% of the total value of goods sold in 2007 by modern retail. The same ascending trend was also followed during 2008, when the number of hypermarkets was expected to grow with about 40 stores.

The supermarkets are one of the main distribution channels of the modern trade. The number increased every year, adding new and modern shops, in almost every Romanian city. The rapid development of large chains as well as the increase of the small and medium sized players resulted in total number of 687 at the end of 2007, with 32% more as compared to 2006. For 2008 about 50 new outlets were expected to be opened. Key players usually have outlets in more than one city (see table below). Others, f.i. Nic Supermarket, are present only in Bucharest (3 locations), yet Thai products can be found in this stores as well.

The cash & carry outlets, represents another form of modern trade. The importance of this category into the modern trade channels has diminished as compared with previous years. Part of their clients was attracted by the policy of discount prices practiced by the large commercial chains. The cash & carry stores serve mainly targeted groups of clients like HORECA, resellers and authorized individuals.

3.2.1 List of key players

Most of the retail chains have been developed in the last years in order to meet the domestic consumers’ preferences of buying products from modern commercial areas. Therefore, lately new outlets were opened in small and medium sized towns, beside the big cities, where the investments were made already several years ago. Some of the companies have big plans for the future, also intending to develop their networks in other cities, reaching a national coverage.


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Table 47 Some key players on modern trade Category /

Company name

No. of outlets

Geographical coverage

Others

Hypermarkets

Kaufland 37 National Present in 26 counties, invested about EUR 400 millions since 2005, when the first outlet was open.

Carrefour 20 National Present in 13 counties, the 20th location will be opened on 20th of November 2008.

Real 16 National Present in 14 counties, especially in the western part of Romania. Auchan 6 Local Owns two outlets in Bucharest, one in Cluj, one in Pitesti and one

in Targu Mures. Next opening in Suceava. Pic 6 Local Location in Oradea, Craiova, Pitesti, Ploiesti, Braila and Calarasi. Cora 3 Local Owns two hypermarkets in Bucharest and one in Cluj-Napoca. Cash and Carry

Metro 24 National Present in 17 counties, with a total sale surface of 158,000 sq m and commercializing around 17,500 products.

Selgros 17 National Present in 14 counties, is the second biggest cash and carry retailer in Romania, present since 2001.

Supermarkets

Billa 33 National Present in Romania since 1999, owning stores with sales areas between 1,000 sq m and 2,500 sq m.

Mega Image 26 Local Present in Bucharest (23 locations), Constanta (2) and Ploiesti (1). Angst 26 Local Swiss chain, owns 19 stores in Bucahrest, 3 in Ilfov County, 2 in

Oradea, 1 in Cluj and 1 in Sinaia. Ethos 20 Regional Romanian chain, owns 12 outlets in Bucharest and other 8 mainly

in small cities in southern part of Romania. Carrefour Express 18 Regional Present in the western part of Romania, is the former Artima

supermarket chain, bought by Carrefour. Spar 17 Regional Present in Romanian since 2005, in the western and central part of

the country. Interex 11 National Present in Romania since 2002, the stores have an average surface

of 2,500 sq m. Primavara 10 Regional Romanian chain present in Bucharest (4), Pitesti, Craiova and

Ploiesti. Cris-Tim 7 Local The company owns 6 stores in Bucharest and 1 in Ploiesti, being

also a meat product producer. G’market 6 Local Owns 3 outlets in Bucharest, 2 in Iasi and 1 in Focsani, present in

Romania since 1998. Discounters Plus 65 National Member of Tengelmann Group, active in Romania since 2005,

selling around 1,500 different goods. Penny Market 61 National Member of Rewe Group, the stores have an average surface of

750 sq m, selling 1,400 about products. Profi 26 National Part of Delhaize Group owns 26 stores especially in the western

and central part of Romania. Minimax Discount 16 Regional Present in the south part of Romania, in cities with less than

200,000 inhabitants. Source: companies web sites

3.2.2 New entrants expected

Most of the important international retail chains are already present in Romania, with one or more brands. Yet, there still are companies like Aldi, Lidl, Tesco, which are making plans for the Romanian market, and will soon open outlets here.

Lidl, part of German group Lidl & Schwarz, which owns in Romanian Kaufland stores chain, will open the first outlet in Bistrita in 2009. The plans for local market are to invest about EUR


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150 millions, in around 100 locations by the end of 2011. A central deposit is planed to be built very close to Bucharest.

Aldi from Germany, the tenth world retailer, set up a company in Romania, although it has not opened a store yet. The expansion on the Romanian market follows the development of its network in the region, in Hungary and in Poland. The first location is expected to be opened in 2009.

Tesco, the second retailer in Europe, also studied the opportunity to enter the Romanian market. The company wanted to buy Pic hypermarkets chain from the Romanian entrepreneurs which own and operate this business, but the initiative was unsuccessful. Therefore Tesco is still analyzing the opportunity to enter the Romanian market, having also plans to invest in Russia.

3.2.3 Specific features with respect to commercial relation with key accounts

The relation between the distributors / producers and retail chains is regulated by a contract, with clauses that establish the payment procedures, the prices, the payment terms, the discounts, the taxes, and other terms regarding the supply chain, stocks, etc.

Usually the invoices are paid between 30 and 60 days, depending on the contract and the retail chain. In most of the cases there are no delays, the payments being made on time. The selling price of the product should be similar in all retail chains, no important differences should appear among the outlets, for the same good. If a supplier makes a promotion, this should be made in all chains; otherwise competitive advantages will appear among retailers.

The price negotiations are made with respect to the selling price toward final consumer (shelf price). Usually the retailers keep the same margin for same category products (e.g. yogurts, butter, etc.) manufactured by different producers, therefore the price differences are coming only from the acquisition price. Price discounts could be made based on volume sold.

Another important aspect is represented by the taxes which have to be paid by the producer / importer towards retail chains. The quantum and the number of the fees are different from a retailer to another and also depend on the products sold. However, in general there are two types of taxes. The variable taxes, which are computed based on a percentage applied to the turnover made by the item. Some examples of variable taxes are: the shelf fee, fee related to number of products on the shelf, fee related to shelf end, etc. The second type of taxes is represented by fix

taxes paid for opening of a new store, for sampling activities, for appearances in magazines, etc.

A commune practice among the important producers / distributors is to hire merchandisers, which will arrange the products in the shelves, will supervise the way in which the products are displayed, etc. This behaviour is widely accepted by the retail chains.

3.3 Common promotion and marketing tools for food & beverage

Among some tools used for promotion of food and beverage products the following can be mentioned:

• One of the most common promotion and marketing tool for food products is represented by campaigns of “sampling” / “tasting the product”, campaigns that usually take place in the shops (supermarkets, hypermarkets etc). It is common for categories of products such as: coffee, cheese, meat products, yoghurts, canned product, exotic fruit, ready meals, meat processed products.

• Other common promotion tools used are the media campaigns in press, on TV, radio etc (instruments that are frequently used for part of the categories of products targeted by this research namely, meat products, canned products, fruit juice). This type of advertising involves high budgets making access for new entrants quite difficult in case their financial capabilities are limited.


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• There are some specific magazines addressed mainly to key players (decision factors from retails chain, FMCG and / or HoReCa), where most of the relevant food brands are promoted. Among different specific magazines we mention “Magazinul Progresiv” , “Piata” and or “HRB57 expert”, the last targeting mainly the HoReCa segment.

• Trade marketing is a promotion instrument used lately on a large scale for promoting food and beverage products, given the fact that promoting in media is not enough for ensuring the success if products are not well placed, visible on shelves, the customer do not see it and the seller do not know to provide information about it.

• Promotion campaigns including special prices, such as “Buy two and receive one for free”, or benefit of price reduction for a certain period of time are also common tools for most of the food products categories.

• New forms of promoting products such as : organizing different competitions, including sport competitions is another form of promoting products (f.i used for fruit juice brands)

For the new categories of products, activities such as informing, educating the consumers, making them trying the products, represent very important tools for promoting this category of products:

• For exotic products, the big modern trade chains offer additional information about (description of products, how they can be used, pictures) either on boards that are placed at the stand where these products are sold (f.i Real, Metro) or in the outlet’s brochures that are distributed to the clients.

• For ready meals, the key promotion tools are sampling combined with “promotions –special prices” for the products. Some unconventional campaigns such as “organizing sampling “ inside different companies –offering these products to the employees for the lunch time, together with additional information- was also a promotion tool used with success for this category of products.

• For sauces, dressing the promotion at the selling point remains one of the key instrument including special prices, visibility into shelves, promotional packages and the sampling. "

As can be noticed promoting at selling point, informing the clients and educating them at the selling points, making them tasting the products, are among the most efficient promotion tools for food and beverage products, especially for the new categories of products that have the Romanian market, especially over the last years. As it was observed most of the purchasing decisions for these categories of products (f.i on what brands to be acquired) is taken in shops, therefore information received at the selling points and visibility of products are playing an important role in this decision.

57 Hotels, Restaurants, Bars


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4 LOGISTICS FROM THAILAND AND OTHER RELEVANT COUNTRIES TO ROMANIA AND

TO MAIN CITIES IN ROMANIA – SOME SUITABLE SOLUTIONS / ALTERNATIVES

The long distance between Romania and Thailand is raising complex logistical aspects which have to be taken into consideration by the Thailand exporters interested to transport and distribute Thai goods in Romania. Speaking in general terms there are two means of directly transporting goods from Thailand towards Romania: by sea and by air. Besides the direct connections there are also the inter - modal transportation means (by air and road or by sea and road) which is applicable for the goods which are transported in Romania via other EU countries (e.g. Germany, Austria, France, Netherlands, Hungary or others). The optimal transportation solution varies depending on several factors such as: type of goods transported (perishable goods or nonperishable), transported quantities and on how fast is desirable the goods to arrive in Romania. Due to the relatively complicated logistics issues which have to be considered when transporting goods from Thailand towards Romania and the custom formalities which have to be operated it is advisable for the Thai exporter to appeal to a specialized logistic / forwarding company, which has the ability to professionally handle these matters. Most of the logistic companies are offering the following transportation and custom services from Thailand towards Romania: • Air freight services – “Door to door”; “Door to Airport”; “Airport to Airport” and “Airport

to Door” services;

• Sea freight services – “Door to Door”; “Door to Port”; “Port to Port”; “Port to Door” services.

• Customs clearance and assistance in preparing the documentation

Considering the type of goods of interest for the Thai exporters (fruit and vegetables, fresh and frozen sea food, canned food and juices), some of the transportation solutions (by means of transportation) are further presented58.

Sea freight

Sea freight may represent an option for transporting goods from Thailand towards Romania, given the fact that Romania has the largest Black Sea port (Constanta Harbour - has a CFS59 able to receive and process high-tonnage ships) and Thailand has five major ports to the Gulf of Thailand. One of the possible / shortest sea routes from Thailand towards Romania is: Gulf of Thailand - Pacific Ocean – Indian Ocean – Suez Canal – Mediterranean Sea - Dardanelles Straits – Marmora Sea – Black Sea (Constanta Harbour). According to logistic companies representatives the average transportation time from Thailand towards Romania varies, according to the loading CFS location, between 25 – 33 days (for FCL - Full Container Loads60) and 35 – 37 days for (LCL – Less Container Load61).

58 The information is general and is based on interviews with logistic / forwarding companies involved (e.g. Damco and DSV) 59 CFS – Container Freight Station 60 FCL - Standard (twenty or forty-foot) container that is stuffed (loaded) and un-stuffed (stripped) under the risk and account of the

shipper or consignee.


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Given the transportation time, sea freight may be suitable for both perishable and non perishable goods. It is advisable for the perishable goods shipments to be sized to a standard (twenty or forty foot container) controlled temperature FCL container, as the LCL containers do not have a controlled temperature option. The FCL containers are also recommended for the goods which are requiring careful handling, as there are avoided the grouping and ungrouping procedures which may damage the merchandise. Despite the fact that transports in FCL containers are more expensive than the LCL containers, the reduction in the transportation time and the avoidance in damaging the goods makes the FCL containers more suitable for long distance transports.

Depending on the transportation / logistic company and transportation container option (FCL or LCL) the goods may have the following route from Thailand (Bangkok) to Romania (Bucharest): • FCL container – the goods are presented FOB to the freight transporter in Bangkok – the

goods are loaded into the ship and transported to Constanta Harbour (25 – 35 days transportation time) – the goods are unloaded from the ship in Constanta CFS Station – the customs / veterinary procedures are performed and the goods will gain the status of EU Community Goods (1 – 3 days) – then, if requested, the goods are transported by road (in controlled temperature lorries if necessary) to Bucharest (2 – 3 hours from Constanta) or to other major cities in Romania. Total transportation time from Bangkok to Bucharest: 28 – 38 days.

• LCL container – the goods are presented FOB to the freight transporter in Bangkok – then are transported either to Malaysia (Tanjung Pelepas), Singapore or other destination within this area (this operation usually takes from 4 – 7 days) – the goods are grouped in LCL containers and loaded into the ship – the goods are then transported by sea to Constanta Harbour – the custom and veterinary procedures are performed and the goods gain the EU Community Goods status (the customs procedures can take longer than in the case of FCL containers, because if there is a “custom problem” with one of the other goods transported in the same container with the subject ones, the container is blocked in the free zone area). Then, usually, (depending on the logistic company) the goods are transported to the logistic company warehousing facility were are ungrouped from the LCL containers and distributed by road to Bucharest or other major cities in Romania. Total transportation time from Bangkok to Bucharest: 41 – 43 days. See Annex 21 for a general map presenting the maritime route between Tanjung Pelepas (Malaysia) to Constanta Harbour and additional information regarding the transportation timing62. In Annex 22 please find a detailed route summary for inter- modal transportation services Bangkok – Constanta as per Maersk Line’s online schedules (transport plan available at www.maerskline.com), estimated transit time 32 days.

The Global Financial and Economic crisis which moved from United States to Europe and Asia in late 2008, severely affected the sea transportation prices. Thus, according to industry experts, the sea freight transportation prices reduced almost 10 times in December 2008 as compared to the same period in 2007. Some rough / average price quotations for transportation services from Bangkok to Bucharest, obtained from large international forwarding companies present in Romania, will be further detailed:

• LCL container – USD 150 / sq.m (without custom duties services)

• LCL container – USD 124 / tone

• FCL 20’ container – USD 1,750 / container

61 LCL - Shipping term for cargo that is insufficient either in quantity or in weight to qualify for the freight rates applied to a

standard shipping container 62 Source: Maersk Line – on line information data


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According to the indications pointed by the interviewed industry experts63, transportation in FCL containers is with 30 – 40% higher as compared to LCL containers, but there are some limits which can optimize the cost / efficiency ratio, according to the transported volumes:

• For goods which have a total volume less than 7 sq.m it is more efficient to use an LCL container

• For goods which have a total volume exceeding 7 sq.m. it is more efficient to use a FCL container.

The transportation price may be discounted if the Thai exporter will establish a medium – long term contract with the forwarding companies, repeatedly transporting goods according to an agreed time schedule.

Air freight and air – road freight

Air freight represents the most rapid but in the same time the most expensive transportation solution from Thailand to Romania. There are 18 national and international airports in Romania, but only five of them have cargo terminals. Bucharest is the centre of the domestic air logistics, having three air freight terminals which are receiving over 85% of the total annual domestic air freight. Globe Ground Romania (member of Lufthansa Group) and BICC (Bucharest International Cargo Centre) located in Henri Coanda International Airport Bucharest, are the most developed air terminals in Romania, having the capacity to receive, process and store both general but also special cargo (controlled temperature goods). Other air freight terminals are located in Arad and Timisoara, but they have very little storage and processing capacity as compared to the terminals in Bucharest.

The air freight transportation services in Romania are still at an early development stage, as there are very few companies which are operating with freighters airplanes (e.g. DHL) on a regular basis schedule. Tarom, the largest Romanian air operator, does not have air freighters and it does not fly directly to Thailand (either passengers or freight). Tarom has a transportation agreement with Emirates Airlines, which is flying Tarom passengers and freights from Bangkok to Dubai, where the passengers and freights are loaded in one of Tarom’s airplanes and then transported to Bucharest. This situation is atypical for an air liner, as usually, the large European air operators, such as Lufthansa, Austrian Air Lines, KLM, Air France and others have direct connections with a large number of Asian airports, including Bangkok. Typically each company, from the one mentioned above, has as home base the large airports from the company’s origin country (e.g. Lufthansa – Frankfurt, Austrian Air Lines – Vienna, KLM – Amsterdam and so on) operating directly from Asian airports to their home base airports. This influenced the way that goods are transported from Asia to Romania. There have been identified two main types of air transport solutions from Bangkok (Thailand) to Bucharest (Romania):

• Solution I – Air – Air– the goods are loaded in Bangkok in either air freighters or conventional passengers planes – then the goods are transported to one of the large European international air hubs (e.g. Vienna, Frankfurt, Munich, Paris, Amsterdam and others) where there are unloaded and transferred to the terminal warehousing facility – the goods are then loaded, in most of the cases, in conventional passengers airplanes cargo bays and then transported by air to Bucharest. Total transportation time is estimated from 2 – 4

63 This information is general and may vary from one forwarding company to another. This information is presented with an

informative purpose and does not represent an exact indication of value for the transportation services.


Romania


days. This is the fastest but the most expensive transport solution from Thailand to Romania. There is also an Air Express Service, offered by most of the companies, which is with 20 – 40% more expensive than the regular air – air solution, but is reducing the travel time to a maximum 2 days. Due to the high transportation costs, this transport solution is not common for food products, being mostly used for transporting high added value products (such as electrical equipments and automotive parts).

• Solution II – Air – Road – due to the fact that Bucharest is not yet an important air hub in Europe’s transportation system, Tarom does not have freighters airplanes and does not operates directly in Thailand, the most common way to transport the goods from Thailand to Romania by air is actually an inter – modal way (air and road). The freight transports from Thailand to Romania are usually having the following run: in Bangkok, the goods are loaded in cargo or passenger airplanes (Lufthansa, KLM, Austrian Air Lines and others). Depending on the airline company the goods are then transported to one of the Europe’s large airports (Frankfurt, Munich, Vienna, Amsterdam and others). Then, the goods are unloaded from the plane and stored in the terminal cargo facility or in the warehouse of the logistic company (typically this operation is taking about 12 – 18 hours). Afterwards the goods are loaded in trucks (with controlled temperature if needed) and transported by road to Bucharest or many other Romanian large cities. Usually this transportation route is taking from 6 – 9 days, depending on the airport from where the merchandise is initially transported. Some of the large airlines companies which are present in Romania (e.g. Lufthansa) are offering also road transportation services with their own trucks. The forwarding companies recommend this solution as the loading / unloading and processing time is reduced considerably if is made by the same transporter. There are also the specialized cargo transportation airlines, such as Cargolux (Luxemburg), which represents an interesting inter – modal transport option for a Thai exporter. For instance, this company is operating regular freight flights from Bangkok to Hong Kong and then to Budapest (Hungary). This is a transport opportunity that must be taken into consideration as Budapest Airport is much closer to Bucharest than Frankfurt, Vienna or Amsterdam.

According to the indications pointed by the interviewed industry experts, air transportation can be optimized according to the transported quantity, as follows:

• For quantities less than 300 kg is preferably to choose the Solution I – Air – Air

• For quantities more than 300 kg is preferably to choose the solution II – Air – Road Some rough / average price quotations64 for air transportation services from Bangkok to Bucharest, obtained from large international forwarding companies present in Romania, are further presented:

• Quantities exceeding 100 kg – EUR 4.5 / kg

• Quantities exceeding 300 kg – EUR 4 / kg

• Quantities between 500 – 1000 kg – EUR 3.7 – 3.9 / kg

• Quantities exceeding 1,000 kg – less than 3.7 EUR / kg and the prices can be negotiated.

Road transportation – from Europe’s major airports and harbours towards Romania

Road transport is the best way to transport goods from the major European freight hubs (airports and harbours) towards Romania. The Central and Western European countries have a very well developed highway system, making the road transportation an efficient and fast transportation mean. Romania has a reasonable good road transportation system (but still suffering from the lack of a modern highway system) connected to the European road transportation system. Major Pan European Road Corridors like Corridor IV and IX are crossing Romania, offering road

64 Data have been provided by industry experts in December 2008


Romania


connection between Constanta Harbour to Berlin (Germany), Helsinki (Finland), Thessalonica (Greece) and Istanbul (Turkey). Currently, in Romania, there are a large number of road transportation companies offering conventional and controlled temperature transportation services and some logistic companies offering professional 3PL + logistical services (transportation, warehousing and other added value services). Some of the large transportation companies active on the Romanian market are: Alin Trans Impex (www.edyspedition.ro), Aquila (www.aquila.ro), Dunca Expeditii (www.duncaexpeditii.ro), Frigoexpres (www.frigoexpres.ro), Romtrans (www.romtrans.ro) and others. Some of the main logistic service providers are: Wim Bosman (www.wimbosman.ro), Interbrands Marketing and Distribution, AgroAlim Distribution (www.agroalim.ro), Agrirom (www.agrirom.ro) and others. Romania is positioned within reasonable driving distance from most of the EU freight hubs, making the road transport a more efficient and less expensive alternative to air freight. A brief presentation of some of the road connections between Bucharest (Romania) and major freight hubs in Europe will be further detailed: • Bucharest – Munich (Germany) – driving distance 1,475 km, approximately 16 hours of

effective driving time. The route passes through Hungary (Budapest) and Austria (Vienna). Please see Annex 13 for a detailed road map;

• Bucharest – Frankfurt am Main (Germany) – driving distance 1,790 km, approximately 18 hours of effective driving time. The route passes through Hungary (Budapest) and Austria (Vienna). Please see Annex 14 for a detailed road map;

• Bucharest – Trieste (Italy) – driving distance 1,350 km, approximately 14.5 hours of effective driving time. The route passes through Serbia (Belgrade) and Bosnia and Herzegovina (Zagreb). Please see Annex 15 for a detailed road map;

• Bucharest – Rotterdam (Netherlands) – driving distance 2,234 km, approximately 23 hours of driving time. The route passes through Hungary (Budapest), Austria (Vienna) and Deutschland (Frankfurt am Main). Please see Annex 16 for a detailed road map;

• Bucharest – Paris (France) – driving distance 2,308 km, approximately 24 hours of effective driving time. The route passes through Hungary (Budapest), Austria (Vienna) and Deutschland (Stuttgart). Please see Annex 17 for a detailed road map;

• Bucharest – Budapest (Hungary) – driving distance 826 km, approximately 10 hours of effective driving time. Please see Annex 18 for a detailed road map;

• Bucharest – Vienna (Austria) – driving distance 1,063 km, approximately 12 hours of effective driving time. The route passes through Hungary (Budapest). Please see Annex 19 for a detailed road map.

Some guide price quotations, from two local logistic service providers, for road transport services are presented in the tables below:

Table 48 Price transportation quotations65

for road transport services Bucharest – some EU

hubs – Wim Bossman (logistic service provider)

Route / EUR (VAT free) Rotterdam - Bucharest

Munich – Bucharest

Vienna – Bucharest

Special goods66 - controlled temperature transportation

2,800 2,400 2,000

General goods67 2,300 1,750 1,400 Source: Wim Bossman (www.wimbossman.ro)

65 This information is general and does not constitute a firm commitment from Wim Bossman. 66 Fresh fruits, canned fish, frozen seafood and fruit juice. For all of these products Wim Bossman representatives have indicated

that controlled temperature transportation is required (- 5C up to +8C). 67 This category of goods does not need special transportation conditions.


Romania


The price quotations are for a full truck load (20.5 tons), one way trip and are not including restriction areas entrance fee. For larger transports, over 10 trucks, Wim Bossman is offering a 4% discount / truck. The transportation is made with 13.6 meters high platforms.

Table 49 Price transportation quotations68

for road transport services Bucharest – some EU

hubs - Frigoexpres (logistic service provider)

Route / EUR (VAT free) Rotterdam - Bucharest Munich – Bucharest Vienna – Bucharest Refrigeration cargo69 2,800 – 3,000 2,100 – 2,200 1,900 – 1,950 Isotherm cargo70 2,700 2,000 1,750 Source: Frigoexpres (www.frigoexpres.ro)

The price quotations are for a full truck load (20.5 tons), one way trip and are not including restriction areas entrance fee. For larger transports, over 10 trucks, and repetitive transports Frigoexpres is offering a certain (to be negotiated with the client) discount / truck.

Railroad transportation

Romania has a reasonable good railroad transporting network connected to the European Transport System. Pan European Corridor IV is crossing Romania offering connection between the Black Sea Harbour Constanta to Berlin (Germany), Helsinki (Finland), Thessalonica (Greece) and Istanbul (Turkey).

The Pan European Corridor IV has a total length of 3,258 km connecting by railroad Berlin (Germany) to Istanbul (Turkey) and Thessalonica (Greece), passing through the following cities and countries: Prague / Brno (Czech Republic), Vienna (Austria), Bratislava (Slovak Republic), Budapest (Hungary). After entering the Romanian territory the corridor is dividing in two branches. The North branch runs from Arad via Bucharest to Constanta Harbour at the Black Sea and the Southern branch runs from Arad via Craiova to Sofia (Bulgaria) and divides again. One branch is running further to Thessalonica (Greece) and the other one to Istanbul (Turkey).

68 This information is general and does not constitute a firm commitment from Frigoexpres 69E.g.: fresh fruits and frozen seafood 70E.g.: fruit juice and canned food


Romania


CFR Marfa (www.cfrmarfa.cfr.ro), the national railroad freight operator, offers the following price quotations71 (VAT and other taxes free) for goods transport:

• Bucharest – Vienna – EUR 95 / tone of freight

• Constanta – Vienna – EUR 105 / tone of freight

These price quotations are for general un – containerized freight. In average, the railroad transportation time between Constanta and Vienna is of 3 – 4 days.

Should be mentioned that CFR does not perform any direct transports to major cities from Europe. However, there are Romanian transporting companies that could organise international transport by rail. Such a company is ICA Romania SRL. According to ICA representative the company could operate (in partnership with other international operators) containerised72 transport by rail, on the following destinations: Bucharest – Nuremberg (closest terminal to Munich); Bucharest – Frankfurt; Bucharest – Rotterdam and others. Some transport quotations from ICA in partnership with ICF Basel are presented in the table below:

Table 50 Price transportation quotations for railroad transportation some EU hubs -

Bucharest73

- as per ICA Romania SRL

Quantity / Price 0 – 8 tons 8.01 – 16.5 tons 16.51 – 22 tons 22 – 31 tons

Nuremberg (Germany) - Bucharest

20’ – container EUR 610 EUR 717 EUR 854 EUR 1,126 40’ – container EUR 1,060 EUR 1,126 EUR 1,466 EUR 1,466

Rotterdam (Netherlands) – Bucharest

20’ – container EUR 850 EUR 969 EUR 1,110 EUR 1,570 40’ – container EUR 1,456 EUR 1,535 EUR 1,910 EUR 1,910

Note: The price quotations are valid for round trip and are not including the goods loading / unloading /

manipulation costs.

Fluvial transportation

Due to its geographic position Romania has access to two important navigable transport connections, the Danube River and the Black Sea. Approximately 47% of the navigable waterway of the Danube River passes through Romania as part of the Pan European Waterway Transport Corridor VII offering connection from the Black Sea (Constanta Harbour) to the North Sea (Port of Rotterdam) via the Rhine River and Main River. Constanta Harbour is the largest port to the Black Sea situated at the crossroad of the commercial routes making the connection between the countries from the Central and Eastern Europe which do not have sea exit with the Trans-Caucasian Area, Central Asia and the Far East. Constanta Harbour has a major logistic importance offering connection to two important Pan-European Transport Corridors: Corridor VII- the Danube River and Corridor IV (road and railroad).

The Pan European Corridor VII – The Danube River is offering connection from Regensburg (Germany) to Constanta Harbour (Black Sea Harbour). The Corridor VII is passing through the following main cities: Linz / Vienna (Austria), Bratislava (Slovakia), Budapest (Hungary), Beograd (Former Yugoslavia), Giurgiu / Constanta / Sulina / Galati (Romania).

71 This information is general and does not constitute a firm commitment from CFR Marfa 72 ICA Romania can organize the containerized transport but it can not provide containers , so the client should provide the

containers for the transport of goods 73 The price quotations are per ICA Romania SRL


Romania


The Pan European Corridor VII

NAVROM (www.navrom.ro), the National River Navigation Company, offers fluvial (via Danube River) freight transportation services from Constanta Harbor up to Vienna (Austria). According to NAVROM representative (Commercial Director) the transportation services are either for bulk freight (e.g. minerals, charcoal, cement, limestone, cereals, fertilizers, rolled goods) or for containerized general goods (no special temperature conditions needed). In case the goods are transported in refrigeration containers, NAVROM does not have specialized personnel for operating the chillers aggregates and there may be some problems in supplying a constant power supply for the containers aggregates during the transportation.

Considering the above issues, NAVROM presented a transportation offer for containerized general goods from Constanta Harbor to Vienna:

• Transportation cost EUR 18,000 / barge (VAT and other taxes free) – fixed sum with no regard to the barge loading level.

• The barge can carry up to eighteen 40 feet containers (approximately 360 – 380 tons of goods)

• The loading and unloading are ensured by harbor operators and does not consist an commitment of NAVROM

• Estimated transportation time 14 – 15 days (from the moment the goods are loaded on the barge in Constanta Harbor to Vienna Danube Harbor)

Conclusions

As a conclusion, the best identified potential solutions / alternatives for goods transportation from Thailand towards Romania are: • Sea freight – represents the most cost efficient goods transportation solution (in either FCL

or LCL containers). The goods are transported directly from one of Thailand’s harbours to Constanta Harbour in Romania.

• Inter – modal transportation air and road - is much more expensive than the Sea freight transportation service but the transportation time is considerably reduced. As presented


Romania


above, the goods are transported by air to a major freight hub in Europe (Frankfurt, Munich, Vienna, Amsterdam, Budapest and others) and then transported by road to Romania.

For the Thai goods which are already imported in other EU countries, the road transportation remains the best transportation solution considering the costs and transportation time. It is advisable for the Thai exporters to appeal to a forwarding company which has the ability to professionally handle all the aspects raised by the Thailand – Romania complex logistics matters, including the customs procedures. In case the Thai exporters do not want to use a forwarding company (which is not recommended) and directly appeal to the transportation companies, it is advisable to contact the Thailand transportation company branch because the price quotations for the services are lower than, if they are contracted in the origin country of the products. The fluvial (via Danube River) and the railroad transportation means (see Annex 20 - Structure of the main groups of goods carried on the railways) are not so common for food transportation in Romania. The food products logistics is complex and request specialized transportation means, terminals (loading / unloading docks) and an optimized, fast transportation network. Both fluvial and railroad transportation systems are suffering from lack of investments regarding food logistics. However, these two means of transportation are suitable / efficient for transporting very large quantities of goods (hundred of tons – e.g. coal, grains, steel), but this products are not subject of this report, thus are not of interest for a Thai food exporter.


Romania


5 KEY FINANCIAL ASPECTS / ARRANGEMENTS ON DOING BUSINESS

5.1 Financial business behaviour (preferred forms of payment; buyer credit lines)

Preferred forms of payment

According to the Law on the exchange operations, payments between Romanian entities, with certain exceptions, are made in RON. Payments between residents and non - residents, as well as payments between non - resident entities can be made in foreign currency via a bank account and by filling – in a specific form.

All conventional payment methods are available in Romania. Any transaction over EUR 10,000 shall be declared to the Central Bank, in compliance with the anti - money laundering rules.

As a general rule, the methods of payment are established from the beginning of the collaboration between the parties, through the provisions of the contract settling the terms and conditions of the delivery of goods / execution of works / provision of services.

On the domestic market, for amounts up to RON 5,000, payments in cash are also practicable, nevertheless the bank transfer is preferable. There are also efficient electronic banking tools the e-banking system developing fast over the recent years.

Promissory notes and payments by cheque are also used.

In the international trade, the most frequently used method is SWIFT transfer (computerized technique of the Society for Worldwide Interbank Financial Transfer), followed by documentary credits, which also represents a payment guarantee. Promissory notes are rarely used.

In order to eliminate the risks related with payments in international affairs, the bills of exchange and the promissory notes are frequently associated with various payment techniques, such as the documentary letter of credit and the payment bond, with value of guarantee. For example, the documentary letter of credit is especially used in contracts with very great value or in the case that the solvability of the partner is questionable.

There are situations in which the exporters have to accept a delay in payment. In order to be covered against all risks and to materialize the debt in the form of a secured debt the exporter will request the opening of a documentary credit usable by acceptance and negotiation of bills of exchange.

The documentary letter of credit offers the seller an irrevocable payment commitment from the bank and, at the same time, it offers the buyer the safety of payment only against presenting the documents attesting the delivery of goods / execution of works / provision of services, which are strictly in accordance with the terms and conditions of the letter of credit. Please see more on

documentary letter of credit and payment bond in chapter 5.3.

Buyer credit line

The buyer credit line offers the exporter the possibility to cash a debt immediately after the delivery of the goods, usually with low financing costs for the importer.

As it resulted from the analysis of the credit lines offered by the 15 Romanian banks presented below in chapter 5.2, as well as from the interviews held with representatives of some banks, Romanian banks do offer buyer credit lines in favour of Romanian importers, but there is no banking product called as such “buyer credit line”.


Romania


In relation with the use of this specific banking product, only EximBank offers an insurance policy of buyer credit, having as end – users commercial banks granting export credits, by covering the reimbursement default risk related to buyer credit applied by foreign partners to the payment of export products delivered by Romanian companies.

However, industry representatives as well as representatives of the banking system mentioned that the most common and also most recommendable way for Thai exporters to guarantee the export at a higher rate of safety, is to look for an “export credit agency”74 (e.g. COFACE in France, Euler - Hermes in Germany) or for a bank for export from their country (e.g. EximBank from Romania offers to Romanian exporters such guarantees). Such a bank / institution provide specialized services to the exporters75.

Thus, even if on the market, there are banking products designed to guarantee the execution of an obligation, as presented in chapter 5.3., in practice it rests mainly in the responsibility of the exporter to cover the export risks.

In the case of international transactions, in Romanian financial business system, the documentary letter of credit is most commonly used as a mean of payment guarantee, as explained below in chapter 5.3.a.

Together with the payment guarantee instruments described in Chapter 5.3., there are nevertheless other products offered by the Romanian commercial banks to importers, suitable for financing the operational needs of a business and covering the payment risks, such as:

• overdraft facilities

• short term advances (1 to 12 months) based on commercial documents

• short term loans for working capital (without automated renewal - not - revolving)

• short term lines for working capital (with automated renewal – revolving)

• short term loans for commercial contract financing

• discounting of bills of exchange, invoices and promissory notes

• bridge loans

These products offer financing of the day-to-day activity of the importer (working capital destination - wages and salaries, energy supply, raw materials, operational expenses), cover the importer’s temporary liquidity gaps, help the importer acquire an even cash flow and the capacity to pay due debts efficiently. They also can be used for financing fixed assets of the companies (computers, furniture, electric and electronic equipments) and also other special financing needs.

74 Export credit agencies, known in trade finance as ECAs, are private or quasi-governmental institutions that act as intermediaries

between national governments and exporters to issue export financing. The financing can take the form of credits (financial support)

or credit insurance and guarantees (pure cover) or both, depending on the mandate the ECA has been given by its government.

ECAs can also offer credit or cover on their own account. This does not differ from normal banking activities. Credits may be short

term (up to two years), medium term (two to five years) or long term (five to ten years). They are usually supplier's credits, extended

to the exporter, but they may be buyer's credits, extended to the importer. The risk on these credits, as well as on guarantees and

insurance, is borne by the sponsoring government. ECAs limit this risk by being "closed" on risky countries, meaning that they do

not accept any risk on these countries. In addition, a committee of government and ECA officials will review large and otherwise

riskier than normal transactions. Source: http://en.wikipedia.org 75 In case of Romanian exporters, EximBank covers payment default risk associated with enforcement of short term export contracts

for goods and services; offers higher access to advanced financing methods relevant for international trade, by means of the

assignment to the financing bank of indemnifying rights resulting from the insurance policy; offers commercial information reports

on prospective business partners in order to mitigate related business risks; insures the investments implemented by Romanian

companies abroad etc.).


Romania


In order to access these credit lines (as well as in order to request the issuance of a letter of guarantee) you should be a company registered in Romania for at least 12 months.

The granted amount depends on the company’s (importer’s) financial performance. A turnover of over EUR 500,000 (as the case is in Bancpost) offers a company preferential treatment, its case being assessed by specialized business centres from banks. The loans can be used by either one or more companies that belong to the same group (umbrella facilities). Additionally, the banks offer fixed or variable interest rate for these facilities.

These facilities are granted on short terms - usually up to one year with the option of extension, denominated in RON or foreign currency, with flexible collaterals: mortgages, real estate guarantee, collateral cash, debt cession, bank guarantees, and guarantees from guarantee funds accepted by the bank.

Nowadays, taking into account the world crisis, the Romanian banks develop a more prudent policy with regard to granting of loans. In this respect the interviewed representative of Bancpost declared that the collaterals are not so flexible anymore76, their bank asking for real estate guarantees no matter how small or big the client’s turnover is. Other banks still behave as usual, asking for other guarantees from the range presented above.

In the case of discounting of bills of exchange, invoices and promissory notes, in order to cover gaps between the moment of the delivery and the payment / cashing - up o a debt, the documentation is simplified. With this product you can finance in advance the invoices or / and the payment instruments issued by your partners, usually traditional partners (e.g. Unicredit asks for at least 3 transactions with the same partner, taking place over at least 3 months).

The credit line can be issued in RON, EUR or USD, granted on an extended period of 120 days and used for 12 months with the possibility of renewal at tenor. It doesn’t imply real estate guarantees, but only guarantees such as promissory note endorsed by the company’s main shareholder, mortgage on the current accounts opened at the respective bank, cheque, promissory note endorsed in favour of the bank and remitted together with the afferent invoices.

When you opt for a working capital line, depending on the company’s financial situation, the guarantees may be either one from the above – mentioned, but in any case there are no documents required as a proof for general expenses, therefore you do not have to go to the bank for every payment that you wish to withdraw from the credit line.

As for the overdraft facility, compared with the credit line it is a credit product which is destined for punctual needs, it is a necessary reserve, but one to which you go to, only if there is no other solution in hand (e.g. because of higher interest rates).

It is very important to provide the bank with all the necessary documents required for opening a credit line. Based on this accurate information on your company the bank can offer you the best tailored solutions taking into account all the particularities of a client.

76 Information provided in December 2008, and considering the financial and economic context at that moment

SUBJECT: ACCESS FOR THAI FOOD AND BEVERAGE PRODUCTS TO ROMANIA’S MARKET Romania


5.2 Key banks and their co-ordinates

Main Banks

(in alphabetical order)

Address Phone / Fax / E-mail / Website address Products / Services

Alpha Bank Bucharest, 237B Dorobantilor Ave., Neocity Tower, District 1, postal code 010566

Phone: +40 21 209.21.00; +40 21 209.21.99; Fax: +40 21 231.65.70; +40 21 231.71.98 E-mail: [email protected] http://www.alphabank.ro

All types of financial operations and services for both corporate and private customers through the entire branches network - cash deposits directly at counters or cash payments, cash pick-up, incomings with payment orders, checks and promissory notes collection etc.

Banca Comerciala

Romana

Bucharest, 5 Regina Elisabeta Blvd., District 3

Phone: +40 21 312.61.85; +40 21 314.91.90 Fax: +40 21 311.18.19; +40 21 310.02.46 E-mail: [email protected]; [email protected] http://www.bcr.ro

Full range of financial products and services (including internet banking and e-commerce services) dedicated to both retail and corporate customers

Bancpost SA Bucharest, 6-6A Calea Vitan Ave. District 3, postal code 031296

Phone: +40 21 308.09.01; +40 21 308.09.01 Fax: +40 21 326.85.20 E-mail: [email protected] http://www.bancpost.ro

Full range of banking products and services for individuals and companies, internet banking

Banca Millenium S.A.

(Millenium Bank)

Bucharest, 87 Dr. Iacob Felix St., District 1, postal code 011034

Phone: +40 21 308.13.00 Fax: +40 21 529.55.16 http://www.milleniumbank.ro

Targets both corporate and retail sectors through dedicated channels, loans, refinancing loans, internet banking operations

BRD – Groupe Societe

Generale

Bucharest, 1-7 Ion Mihalache Blvd., District 1

Phone: +40 21 301.61.00; Fax: +40 21 301.61.22; +40 21 301.61.08 E-mail: [email protected] http://www.brd.ro

Full range of banking services for physical persons & legal entities in retail, corporate and investment banking

CEC Bank S.A. Bucharest, 11 - 13, Calea Victoriei Ave., District 3, postal code 030022

Phone: +40 21 311.11.19; +40 21 202.50.00 Fax: +40 21 312.54.25 E-mail: [email protected] http://www.cec-sa.ro

Wide range of banking products and services for individuals and for legal entities

City Bank Romania Bucharest, 8 Iancu de Hunedoara Blvd., District 1, postal code 011742

Phone: +40 21 203.55.50 Fax: +40 21 203.55.65 http://www.citibank.com/romania/

Products and services for both domestic and international corporate clients, global transaction services, treasury services,



corporate finance, financial solutions for small and medium businesses

Eximbank S.A.

(Romanian Export-

Import Bank)

Bucharest, 15 Splaiul Independentei, District 5, postal code 050092

General Info

Phone: +40 21 405.31.33 Fax: +40 21 405.34.16 E-mail: [email protected] Products and Services Info Phone: +40 21 405.31.58 Fax: +40 21 405 34 16 Email: [email protected] http://www.eximbank.ro

Specialized financing, guarantee and investment products addressing Romanian exporters, SME-s, and companies running projects in the priority domains of Romanian economy, Internet banking, commercial information on business partners

ING Bank Romania Bucharest, 11 - 13, Kiseleff Ave., District 1

Phone: +40 21 222.16.00; Fax: +40 21 222.14.01 E-mail: [email protected] http://www.ingromania.ro

Complex range of products and services, for a complete range of clients: corporate, institutional and individual clients, innovative products at international standards: electronic banking, vocal interactive service, the unique Self’Bank concept

Piraeus Bank

Romania S.A.

Bucharest, 34 - 36 Carol Blvd., International Business Centre, District 2

Phone: +40 21 303.69.00 Fax: +40 21 317.31.16 E-mail: [email protected] http://www.piraeusbank.ro

Particular know-how in the areas of retail banking, small and medium-sized enterprises (SMEs), capital markets and investment banking, leasing and financing of the shipping sector

Raiffeisen Bank SA Bucharest, 15 Charles de Gaulle Square, District 1, postal code 011857

Phone: +40 21 306.11.01; +40 21 230.07.00 E-mail: [email protected] http://www.raiffeisen.ro

Complete range of high quality products and services to private individuals, SME’s and large companies via multiple distribution channels: banking outlets, ATM & EPOS networks, phone banking (Raiffeisen Direct) mobile banking (myBanking) & Internet banking (Raiffeisen Online)

RBS Romania (former

ABN AMRO BANK)

Bucharest, 10 Montreal Square, WTCB-E 2nd floor, District 1

Business Banking Phone: +40 21 20 20 RBS (727) E-mail: [email protected]

RBS’s business divisions provide a range of retail and corporate banking, financial markets, insurance and wealth management



postal code 011469 Corporate and Institutional Banking Phone: +40 21 20 20 544 (any networks) Phone: +40 21 10 22 622 (only from Romtelecom network) E-mail: [email protected] http://www.rbsbank.ro

services

Banca Transilvania Cluj Headquarters: Cluj-Napoca, 8 George Baritiu St., Cluj County Bucuresti Regional Center: Bucharest, 10 Promoroaca Street, District 1

Cluj Headquarters Phone: +40 264-40715(0)/(1)/(2) Bucuresti Regional Center Phone: +40 21 2081000; +40 21 3277680 http://www.bancatransilvania.ro

Wide range of products: deposits, mortgage and housing loans, car loans, current needs loans, tourist loans, study loans, share purchasing loans, long use consumer goods loans (based on agreements between the bank and respective shops)

UniCredit Tiriac Bank Bucharest, 23-25, Ghetarilor St., District 1, postal code 014106

Phone: +40 21 200.20.00; Fax: +40 21 200.20.02 E-mail: [email protected] http://www.unicredittiriac.ro

Full range of banking services for individuals, small and middle size companies, as well as for large corporations

Volksbank Romania Bucharest, 171 Mihai Bravu Ave., District 2

Phone: +40 21 209.44.00; +40 21 209.44.90 E-mail: [email protected] http://www.volksbankromania.ro

Banking services and products for physical persons and SME’s, electronic banking, international cards in RON and foreign currencies with overdraft facility



5.3 Manners of bank guarantees (L / C, other forms)

In international commerce, a bank guarantee is a method of guarantee by the bank of a payment or of a performance (e.g. payment guarantees, guarantees for taking part in auctions, good execution guarantees, guarantees for the payment of fees / taxes to authorities etc.). By using a guarantee method, an exporter / importer can eliminate the risk of not paying the obligations assumed through a commercial contract, the distrust between the partners disappears and their image from the financial trustworthiness point of view is improved.

The bank guarantee may be offered either in RON or in foreign currency, on a short, middle or long term. The bank guarantee helps improving the daily cash flow, prevent lock – ups of funds and speed – up inflow.

The main types of guarantees offered by Romanian banks are the following:

a. Documentary letter of credit

b. Letter of guarantee

c. Letter of comfort

d. Commercial papers endorsement

e. Payment bond

The fact that some of these instruments are issued and executed under strict, uniform international regulations (e.g. the documentary letter of credit is subject to Publication 500 or Publication 600 effective from 01.07.2007 of the International Chamber of Commerce (ICC), Paris; the payment bond is subject to the uniform regulations for payment bonds, Publication 522 effective from 01.01.1996, of the ICC, Paris) grants a certain protection and unitary interpretation, especially of problems related to their execution.

a. Documentary letter of credit

It is recommended by the banks as the safest payment and guarantee method to protect against different types of risks (e.g. commercial, financial, and political) that may occur during import – export transactions.

The issuing bank takes a payment commitment, at the express order and according to the instructions of the buyer (accountant). The bank analyses the conditions under which the documentary credit is opened, from the buyer’s instructions, register the opening of the documentary credit and may request collateral guarantees from the buyer. The collateral guarantee may be a newly opened collateral deposit with the purpose of covering the documentary credit, by debiting the buyer’s current account. Afterwards, the issuing bank notifies the bank of the beneficiary that a documentary credit has been opened in the beneficiary’s favour.

The documentary letter of credit protects the exporter and the importer, as well as the bank (which is absolved from any liability regarding the form, the authenticity or the legality of the documents presented within the documentary credit).

From the importer’s point of view, the documentary letter of credit guarantees that the goods and services received comply with the terms and conditions of the documentary credit.

From an exporter’s standing point, this bank instrument offers a bank commitment that the exporter will be paid (in case the importer fails to make the payment) for the delivered goods / executed services, provided they submit documents in compliance with the documentary credit rules.

It minimizes both the importer’s country risk and the issuing bank’s commercial credit risk.



In the ideal case that the two banks of the trading partners are branches of the same group, having branches correspondent banks around the world (e.g. CitiGroup, ING Bank, RBS etc) confirmations can be arranged efficiently and quickly, usually within two business days.

The documentary letter of credit ensures confidentiality and promptitude in the execution of the operations stipulated in the letter of credit, as well as permanent adaptability to various forms of international exchange.

From the multitude of forms and types of documentary letters of credit some of the most appealing offered are:

• Irrevocable documentary letter of credit - cannot be modified or annulled without the agreement of all parties involved: importer, exporter and the banks, thus offering protection against commercial risks.

• Confirmed irrevocable documentary credit – to the irrevocable commitment of the issuing bank is added a firm commitment, equal in value and conditions, of a third bank, the confirming bank. This bank is usually located in the country of the beneficiary of the documentary letter of credit, but it may also be located in another country. It may be a bank well known to the beneficiary of the letter of credit, this aspect maximizing degree of trust that the exporter grants this bank. The confirming bank accepts the same conditions as regards the beneficiary, as the ones undertaken by the issuing bank, thus offering protection against commercial risks and against insolvency of the issuing bank.

• Transferable documentary letter of credit – the beneficiary (first beneficiary) can ask the authorized bank to take one of the following actions: pay, assume a differed payment commitment, accept and negotiate. In the case of a free negotiable letter of credit, the transferring bank makes the letter of credit totally or partially usable by one or several beneficiaries (secondary beneficiaries).

The source for opening a documentary letter of credit can be personal funds, a credit or an external financing.

It can be issued in lei and / or in foreign currency.

b. Letter of guarantee

By issuing a letter of guarantee the bank guarantees a payment / provision / service. It removes distrust between partners in a transaction as regards payment obligations, as well as the risks connected to non – compliance with the undertaken payment obligations.

It can be issued on a short, medium or long term in lei or foreign currency.

There are different types:

• letter of guarantee

• bank counter – guarantee

• stand – by letter of credit

issued for different purposes:

• payment guarantees

• guarantees for participating to tenders

• guarantees for good execution

• guarantees for the payment of fees and taxes to various authorities

• guarantees for reimbursement of advance payments



• guarantees on the basis of a counter – guarantee received by the bank’s client

• guarantee of a loan granted for a client of the respective bank

• guarantees in favour of a client / non – client

c. Letter of comfort

It represents the acknowledgement from the bank of the capacity of payment of the bank’s client, respectively the certification of the existence of the availability of the necessary funds for closing a transaction.

The beneficiary of a letter of comfort is the commercial partner or the financing party of the client of that bank.

The letter of comfort is issued before the closing of a commercial or financial transaction, thus letting the beneficiary acquire an accurate perspective over the financial situation of the bank’s client and facilitating the conclusion of the respective transaction.

The letter of comfort can be issued on the basis of the client’s personal funds, ingoing loans or future funds.

It is valid until the transaction for which it was requested is concluded or up to one year from the date of issuing.

It can be issued in lei and / or in foreign currency, and the release commission is smaller than the one for issuing of a letter of guarantee.

d. Commercial papers endorsement

The bank, as guarantor, grants a personal guarantee on a commercial paper (promissory note, bill of exchange) for guaranteeing the guarantee’s (accepting drawn / issuer) payment obligation.

The bank guarantees only for a part or for the total amount mentioned on the title, only for one of the obliged (drawn / issuer) appearing on the title.

The drawn / issuer must be a client of the bank and the title must be legally accepted (endorsed) for payment.

The guarantees are granted based on contracts of guarantee and their volume must respect the terms and conditions provisioned in the concluded agreements, according to the approval.

It can be granted in lei or foreign currency on a short, medium or long term. The guarantee expires at the expiration date of the bills of exchange / guaranteed promissory notes.

e. Payment bond

The payment bond represents treating by the bank of commercial documents (invoices, transport documents) and / or of financial documents (bills of exchange, promissory notes) according to the instructions received from the exporter with the purpose of: obtaining the payment and / or acceptance, remitting the documents for payment and / or acceptance, remitting the documents under certain conditions.

After the delivery of the goods according to the contractual conditions, the seller (drawer) being in the possession of the documents attesting the delivery (invoice, transport documents, quality certificates etc.) submits them to his bank with the collection instructions. This bank, called remitting bank, sends the documents to the collecting bank, according to the client’s instructions. The collecting bank informs the buyer (drawn) on the conditions under which these



documents can be released and issues the documents to the buyer only after the fulfillment of the conditions regarding the acceptance / payment / other conditions. Only after these operations, the buyer takes over the goods, in the meanwhile the bank transferring the amounts specified in the documents to the remitting bank, which credits the seller’s account but for various commissions.

The payment bond operation is always initiated by the exporter and is based on the buyer’s payment obligation, as it has been undertaken in a commercial contract, therefore not involving any payment commitment from the bank. The scope of the operation is the remittance of the commercial and / or financial documents from the payment beneficiary to the payer against payment or acceptance or under other conditions. In the case of payment bonds, the payment obligation resides with the drawn, the bank taking over the payment obligation only in the case of the guaranteed payment bond.

The use of payment bonds is more secure than the use of simple payment orders, offering a certain certainty to the partners as regards the honouring of the undertaken commercial obligations.

Relatively to the documentary letter of credit, the payment bond involves smaller costs, but it is also less safe.

For payment bonds which stipulate the issuing of document against accepting, the drawn has the possibility to sell the merchandise and obtain the funds before payment.

It does not imply the blocking of the client’s funds, as buyer, from the moment of endorsing the payment order, the blockage being performed at the moment of initiating the payment.

In order to benefit from the advantages offered by this instrument, the parties (seller and buyer) should have accepted the payment bond as a method of payment through the stipulations of the commercial contract / proforma invoice / order acknowledgement.



6 KEY LAWS AND REGULATIONS - RELEVANT TO THAI EXPORTERS OF FOOD & BEVERAGE

PRODUCTS

6.1 Regulations regarding sanitary issues; certificates of origin

6.1.1 Regulations regarding sanitary issues

Romania became a member state of the European Union on 1st of January 2007, thus the national legislation regarding the sanitary issues related to imports of food products of non animal or animal origin, from third countries was compulsory aligned to the EU legislation, through harmonization process between the Romanian laws and CE directives.

Regulations regarding sanitary issues for products of animal origin

Imports of products of animal origin intended for human consumption must comply with general health requirements related to:

1 Country health approval

2 Approved establishments

3 Health certificates

4 Health control

Hence, these products can only be imported into the European Union (EU) if they come from an approved establishment of a third country included in a positive list of eligible countries for the relevant product, if they are accompanied by the proper health certificates, and have succeeded the mandatory control at the pertinent Member State's border inspection post (BIP).

However, the European authorities might suspend imports from all or part of the third country concerned or take interim protective measures when products may present any risk for public or animal health as in the case of dangerous diseases outbreaks.

Health requirements check compliance with conditions of public and animal health designed to avoid transmission of diseases to either the public or the livestock. These conditions mainly include:

• General principles and requirements of Food Law established in Regulation (CE) No. 178/2002 (OJ L-31 01/02/2002);

• General foodstuffs hygiene rules and hygiene specifications for food of animal origin according to Regulation (EC) No. 852/2004 and 853/2004 (OJ L-226 25/06/2004) respectively;

• Animal Health conditions laid down in Council Directive 2002/99/EC (OJ L-18 23/01/2003);

• Measures to monitor the presence of residues of pesticides, veterinary medicines and contaminants in and on food of animal origin;

• Animal welfare requirements, such as the specific provisions for slaughtering animals of Council Directive 93/119/EC (OJ L-340 31/12/1993);

• Special provisions on genetically modified (GM) food and novel food according to Regulation (EC) No. 1829/2003 (OJ L-268 18/10/2003) and Regulation (EC) No.258/97 (OJ L-43 14/02/1997);



• Specific conditions of preparation of foodstuffs;

• General conditions regarding materials and articles in contact with food products in accordance with Regulation (EC) No. 1935/2004 (OJ L-338 13/11/2004).

1. Country Health Approval

The European Commission's Health and Consumer Protection Directorate-General (DG SANCO) applies a procedure to assess the candidate's third country compliance with EU Public and Animal Health conditions in which one of the steps is an on-site review by a team of experts of the Food and Veterinary Office (FVO). Once approved, the third country and/or part of third country is added to the list of authorized countries for that particular category of product. These lists are published in EU legislation.

2. Approved establishments

In addition to country approval, most products of animal origin may only be imported into the EU if they have been dispatched from, and obtained or prepared in, establishments (slaughterhouse, cutting plant, process plant, etc) that appear on a list approved by the Health and Consumer Protection Directorate General (DG SANCO).

Lists of third countries' establishments approved for each category of products as well as more detailed information can be found in the European Commission Health and Consumer Protection Directorate-General (DG SANCO) official website:

http://ec.europa.eu/food/food/biosafety/establishments/third_country/index_en.htm

In general for all meat, meat products from all species, fishery products, etc., third countries of origin must be on a positive list of eligible countries. The eligibility criteria are:

• The exporting countries must have a competent veterinary authority which is responsible throughout the food chain. The authorities must be empowered, structured and resourced to implement effective inspection and guarantee credible certification of the relevant veterinary and general hygiene conditions;

• The country or region of origin must fulfil the relevant animal health standards. This implies that the country should be a member of the World Organization for Animal Health (OIE) and should meet that organization’s standards and reporting obligations. Adequate veterinary services must ensure effective enforcement of all necessary health controls;

• Imports are only authorized from approved establishments (e.g. slaughterhouses, cutting plants, game handling establishments, cold stores, meat processing plants), which have been inspected by the competent authority of the exporting country and found to meet EU requirements. The authority provides the necessary guarantees and is obliged to carry out regular inspections;

• The veterinary authorities must have at its disposal one or more laboratories that comply with certain minimum requirements, ensuring sufficient capability for disease diagnosis;

• The national authorities must also guarantee that the relevant hygiene and public health requirements are met. The hygiene legislation contains specific requirements on the structure of establishments, equipment and operational processes for slaughter, cutting, storage and handling of meat. These provisions are aimed at ensuring high standards and at preventing any contamination of the product during processing;

• A monitoring system must be in place to verify compliance with EU requirements on residues of veterinary medicines, pesticides and contaminants.



3. Health certificates

Imports of products of animal origin into the EU must be accompanied by a health certificate signed by the representative of the competent authority in the exporting third country certifying that the products in question are suitable to be exported to the EU.

There are different models of certificate set forth in EU legislation which vary according to each category of products, animal species concerned and/or special health conditions that may be laid down for those particular products.

4. Health control

Upon arrival, the products and the accompanying certificates must be verified and checked by the veterinarian officials in accordance with the provisions laid down in Council Directive 97/78/EC (OJ L-24 (OJ L-24 30/01/1998). Applying the procedures laid down by Commission Regulation (EC) 136/2004 (OJ L-021 28/01/2004), the result of the inspection shall be reflected in the Common Veterinary Entry Document (CVED).

Although the procedural aspects of the entry of consignments are mainly the responsibility of the importer or as it is often the case, shared between importer, exporter and transporters including perhaps other agents, it must be mentioned that live animal consignments need to be pre-notified to the BIP 24 hours before arrival and product consignments before arrival in the BIP with the first part of the so-called common veterinary entry documents (CVED) filled in as appropriate. Due to a recently developed veterinary computer application (TRADE Control and Expert System, TRACES) this could also be done by electronic transmission. There is extensive EU legislation concerning many other aspects of the entry procedure.

Consignments which are found not to be compliant with Community legislation will either be destroyed or, under certain conditions, re-dispatched within 60 days. If any one of the checks however indicates that a consignment of animals or products is likely to constitute a danger to animal or human health, the consignment in question will be seized and destroyed by the competent authorities immediately.

In general and in accordance with the animal health rules laid down in the different sectorial legislation, consignments of live animals and animal products transiting or in the case of products, being temporarily stored in the EU must comply with the EU animal health requirements. This compliance is checked during the BIPs of entry and specific certification is required. This applies only to the animal health requirements as there are no requirements for transit and / or storage for public health.

5. Additional information for Romania

Health controls are carried out at designated control points at Border Inspection Posts (BIPs). The importer, or his representative, must request the health inspection in advance by submitting part 1 of the EU harmonized Common Veterinary Entry Document (CVED), together with all the necessary certificates related to the consignment.

After documentary check the product may go through identity check and physical inspection which may lead to sample taking for analysis.

The result of the inspection is reflected in part 2 of the CVED. The product can only be released for consumption after a favourable result.

The Romanian authorities who are directly involved in animal and animal product sanitary issues and regulate this activity are:

• “Autoritatea Naţională Sanitar-Veterinară şi pentru Siguranta Alimentelor” (National Sanitary Veterinary and Food Safety Authority);

• “Direcţia Generală de Inspecţie şi Coordonare PIF” (General Directorate for Inspection and BIP Coordination);



• “Direcţia Import, Export, Tranzit şi Inspecţie la Fronteră” (Directorate for Import, Export, Transit and Frontier Inspection).

Some of the most important national laws, harmonized with the EC directives and regulation, which govern the animal and animal products safety are:

• Law No. 215 of 27/05/2004 on the approval of the Governmental Ordinance No. 42/2004 relating to the organization of the veterinary activity (MO No. 531 of 14/06/2004);

• The Order No. 206 of 25/08/2006 of the President of the National Sanitary Veterinary and Food Safety Authority on the approval of the sanitary veterinary rules on the organization of the veterinary checks on products entering the European Community from third countries (MO No. 752 of 04/09/2006);

• The Romanian government regulation No. 955 of 18/08/2005 on the approval of the specific rules on the organization of the official control of products of animal origin intended for human consumption (MO No. 806 of 05/09/2005);

• The Romanian government regulation No. 925 of 11/08/2005 on the approval of the rules on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules (MO No. 804 of 05/09/2005);

• The Order No. 234 of 13/07/2001 of the Ministry of Agriculture, Food and Forests on the approval the sanitary veterinary rule concerning the admission of imports of products of animal origin (MO No. 456 of 10/08/2001);

• The Order No. 70 of 11/08/1998 of the Ministry of Agriculture and Food on the approval of the sanitary veterinary rule establishing conditions and the information procedure for the import, export and transit with animals, products of animal origin, animal by-products, foodstuffs and other products that may present any risk for public or animal health (MO No. 96 of 04/02/2002).

Regulations regarding sanitary issues for products of non-animal origin

Imports of foodstuffs of non-animal origin into the European Union (EU) must comply with general conditions and specific provisions designed to prevent risk to public health and protect consumers' interests.

Hence, the general rules applicable to these products are as follows:

1. General principles and requirements of Food Law established in Regulation (CE) No. 178/2002 (OJ L-31 01/02/2002);

2. General foodstuffs hygiene rules according to Regulation (EC) No. 852/2004 (OJ L-226 25/06/2004);

3. General conditions concerning contaminants in food;

4. Special provisions on Genetically Modified (GM) food and Novel food of Regulation (EC) No. 1829/2003 (OJ L-268 18/10/2003) and Regulation (EC) No.258/97 (OJ L-43 14/02/1997);

5. General conditions of preparation of foodstuffs;

6. Official control of foodstuffs.

When a hygiene problem likely to pose a serious risk to human health arises or spreads in the territory of a third country, the European authorities may suspend imports from all or part of the third country concerned or take interim protective measures regarding the foodstuffs concerned, depending on the seriousness of the situation.

Details on general rules applicable for products of non-animal origin are presented in Annex 8.



Additional information for Romania

Health controls are carried out at designated control points at Border Inspection Posts (BIPs). The importer, or his representative, must request a health inspection by submitting part A of the Entry Document for products of non-animal origin (“Document intrare produse de origine non-animala”), together with the documents related to the consignment.

A documentary check is carried out in order to verify if the product has been subject to previous refusals or alerts. Depending on the cases, the product may also go through an identity check and/or a physical inspection, which may lead to sample taking for analysis.

The result of the inspection is reflected in part B of the health control document. The product can only be released for consumption after favourable result.

The Romanian authorities who are directly involved in animal and animal product sanitary issues and regulate this activity are:

• “Autoritatea Naţională Sanitar-Veterinară şi pentru Siguranta Alimentelor” (National Sanitary Veterinary and Food Safety Authority);

• “Direcţia Generală de Inspecţie şi Coordonare PIF” (General Directorate for Inspection and BIP Coordination);

• “Direcţia Import, Export, Tranzit şi Inspecţie la Fronteră” (Directorate for Import, Export, Transit and Frontier Inspection).

Some of the most important national laws, harmonized with the EC directives and regulation, which govern the animal and animal products safety are:

• Law No. 150 of 14/05/2004 on food safety (MO No. 462 of 24/05/2004);

• The Order No. 145 of 26/06/2007 of the President of the National Sanitary Veterinary and Food Safety Authority establishing the conditions of the procedures to import and export and intra-communitarian transactions of products of non-animal origin to be monitored and checked for food safety purposes (MO No. 440 of 29/06/2007);

• The Romanian government regulation No. 925 of 11/08/2005 on the approval of the rules on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules (MO No. 804 of 05/09/2005).

6.1.2 Certificates of origin

When goods are claimed to have a particular preferential origin, the customs authorities of the importing country must be satisfied that the claim is correct and thus a proof of that origin is required. The different preferential arrangements require specific proofs of origin relevant to specific arrangements. Thailand is a beneficiary country of the EU’s Generalised System of Preferences (GSP)77, thus it benefits from preferential duty rates granted upon submission of either a certificate of origin Form A, or, in specific cases, of an invoice declaration given by the exporter or his authorized representative. Commission Regulation78 (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, as amended, sets the rules governing the issuance, use and verification of these documents.

77 For more information on GSP, please see chapter 6.2. 78 The Commission services are currently working on a revised proposal on GSP rules of origin. This should be ready shortly and

published on the Commissions web page, therefore it is possible to have new GSP rules of origin in place for 1 January 2009, or in

the course of that year.



Certificate of origin, Form A79

This document confirming the preferential origin of the goods is issued by the competent governmental authorities (custom’s office or the Chamber of Commerce) of the beneficiary country, on exporter’s or his authorized representative’s written application. A certificate of origin Form A may be issued only where it can serve as the documentary evidence required for the purposes of the tariff preferences mentioned above. See an example of certificate of origin form in Annex 9.

The governmental authorities have the right to call for any documentary evidence or to carry out any check which they consider appropriate to see that the products to be exported qualify for the issue of a certificate of origin Form A. It is the responsibility of the competent governmental authorities of the beneficiary country to ensure that certificates and applications are duly completed.

Proofs of origin shall be submitted to the customs authorities (for Romania, customs offices) of the Member States of importation. The said authorities may require a translation of the proof of origin and may also require the import declaration to be accompanied by a statement from the importer to the effect that the products meet the conditions required for the application of preferences.

Certificate of origin issued after exports of goods

A certificate of origin Form A may exceptionally be issued after exportation of the products to which it relates, if:

(a) It was not issued at the time of exportation because of errors or involuntary omissions or special circumstances; or

(b) It is demonstrated to the satisfaction of the competent governmental authorities that a certificate of origin Form A was issued but was not accepted at importation for technical reasons.

The competent governmental authorities may issue a certificate retrospectively only after verifying that the information supplied in the exporter's application agrees with that in the corresponding export file and that a certificate of origin Form A, completed according to the legal provisions, was not issued when the products in question were exported.

In the event of the theft, loss or destruction of a certificate of origin Form A, the exporter may apply, to the competent governmental authorities which issued it, for a duplicate to be made out on the basis of the export documents in their possession. The duplicate shall take effect from the date of the original.

When originating products are placed under the control of a customs office in the Community, it shall be possible to replace the original proof of origin by one or more certificates of origin Form A for the purpose of sending all or some of these products elsewhere within the Community or to Switzerland or Norway. The replacement certificate(s) of origin Form A shall be issued by the customs office under whose control the products are placed. The replacement certificate issued shall be regarded as the definitive certificate of origin for the products to which it refers. The replacement certificate shall be made out on the basis of a written request by the re – exporter. The replacement certificate shall indicate the name of the intermediary country where it is issued. The name of the re - exporter, as well as the name of the final consignee shall also be given.

The issuing customs office shall keep the original certificate for at least three years.

A photocopy of the original certificate may be annexed to the replacement certificate.

79 A specimen of Form A appears in Annex 17 of Commission Regulation (EEC) No 2454/93, see Annex 9 of the report



Invoice declaration

Except for derogations, an invoice declaration which describes the products concerned in sufficient detail to enable them to be identified may be used for goods whose total value does not exceed Euro 6,000.

The exporter who makes out an invoice declaration must also submit, at the request of the Thai competent governmental authorities, all appropriate documents in order to prove the originating status of the products concerned

The invoice declaration must be made out by the exporter either English or in French, by typing, stamping or printing on the invoice, the delivery note or any other commercial document the text which appears in Annex 18 of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, as amended. If the declaration is handwritten, it must be written in ink in printed characters.

The invoice declaration must bear the original signature of the exporter in manuscript.

Period of validity

A proof of origin shall be valid for 10 months from the date of issue in the exporting country, and shall be submitted within the said period to the customs authorities of the importing country.

Proofs of origin which are submitted to the customs authorities of the importing country after the final date for presentation may be accepted for the purpose of applying the tariff preferences referred, where the failure to submit these documents by the final date set is due to exceptional circumstances.

In other cases of belated presentation, the customs authorities of the importing country may accept the proofs of origin where the products have been submitted before the said final date.

At the request of the importer and considering the conditions laid down by the customs authorities of the importing Member State, a single proof of origin may be submitted to the customs authorities at the importation of the first consignment when the goods:

(a) are imported within the framework of frequent and continuous trade flows of a significant commercial value;

(b) are the subject of the same contract of sale, the parties of this contract established in the exporting country or in the Community;

(c) are classified in the same code (eight digits) of the Combined Nomenclature;

(d) come exclusively from the same exporter, are destined for the same importer, and are made the subject of entry formalities at the same customs office in the Community.

This procedure is applicable for the quantities and a period determined by the competent customs authorities. This period cannot, in any circumstances, exceed three months.

The discovery of slight discrepancies between the statements made in the certificate of origin Form A or in an invoice declaration, and those made in the documents submitted to the customs office for the purpose of carrying out the formalities for importing the products shall not ipso

facto render the certificate or declaration null and void if it is duly established that the document does correspond to the products submitted. Obvious formal errors such as typing errors on a certificate of origin Form A or an invoice declaration should not cause this document to be rejected if these errors are not such as to create doubts concerning the correctness of the statements made in that document.



Exemptions from the requirement to present proof of origin

The maximum value limit of the exemption from the requirement to present a proof of origin for small packages sent from one private person to another is Euro 500 and for goods contained in travellers’ personal luggage, it is Euro 1,200, always provided that such products are not imported by way of trade.

6.2 Preferences of taxations and quotas

Generalised System of Preferences (GSP) 2006-2015

In 1968, The United Nations Conference on Trade and Development (UNCTAD) recommended the creation of a “Generalised System of Tariff Preferences” under which industrialized countries (“donor countries”) would grant trade preferences to all developing countries (“beneficiary countries”). It is a unilateral arrangement, not reciprocal and the developed countries have the right to establish individual GSP schemes.

In practice, the GSP is implemented by means of Council regulations during the ten – year cycle.

European Council Regulation (EC) No. 732 / 2008 of 22 July 2008 applying a scheme of preferential tariff preferences sets out the Generalised System of Preferences for the period from 1 January 2009 to 31 December 2011. Tariff preferences provide an incentive to traders to import products from developing countries, and help them to compete on international markets. The GSP sets out preferential arrangements for duties (either duty – free access or tariff reduction, depending on which of GSP arrangements a country enjoys) on Community imports of goods originating in the beneficiary countries.

The GSP sets out three arrangements, but Thailand is beneficiary only of the general

arrangement, which provides preferential arrangements for all 176 beneficiary countries and territories, among them being Thailand, as well.

The beneficiary countries presented in Annex I to the Regulation No. No. 732 / 2008 and the products affected by the GSP are set out in Annex II to the Regulation No. No. 732 / 2008.

Key aspects about specific preferential tariffs

As regards preferential taxes there is a differentiation between products which are divided into two categories: sensitive (S) and non – sensitive (NS) products.

• The principle for non – sensitive products is the complete suspension of the Common Customs Tariff duties applicable to such products, except for agricultural components;

• Sensitive products, benefit of a reduction of tariff duties. As far as the ad valorem duties are concerned, the general reduction should be a flat rate of 3.5% from the most favoured nation duty rate. The reduction is 20% for textiles and clothing. Specific duties should be reduced by 30%;

• Where the preferential duty rates calculated in accordance with EC 980/2005, provide for a higher tariff reduction, such rates should continue to apply;

• The duties should be entirely suspended where the preferential treatment for individual import declarations results in an ad valorem duty of 1% or less or a specific duty of EUR 2 or less;



• Agricultural products are subject to a special monitoring mechanism in order to avoid disturbances in the EU market, being subject to safeguard clauses applied under the Common Agricultural Policy80;

• The safeguard clause stipulates that wherever a product originating in a beneficiary country is imported on terms which cause, or threaten to cause, serious difficulties to a Community producer of like or directly competing products, normal Common Customs Tariff duties on that product may be reintroduced at any time at the request of a Member State or on the Commission's initiative, after a proper investigation;

• The preferential arrangements provided for in this Regulation may be temporarily withdrawn, in respect of all or of certain products, originating in a beneficiary country, in cases of fraud, irregularities or systematic failure to comply or to ensure compliance with the rules of origin of products and the procedures related thereto, and to provide the administrative cooperation as required for the implementation and the control of the respect of the arrangements.

According to the Regulation, a beneficiary country is removed from the scheme when it has been classified by the World Bank as a high-income country during three consecutive years, and when the value of imports for the five largest sections of its GSP-covered imports to the Community represent less than 75 % of the total GSP covered imports of the beneficiary country to the Community. When a beneficiary country benefits from a preferential commercial agreement81 with the Community which covers at least all the preferences provided by the present scheme for that country, it shall be removed from the list of beneficiary countries in Annex I, on prior notification from the Commission.

Quotas

A tariff quota is a volume of goods expressed quantitatively or by value that can be put into free circulation with the reduction or exemption of customs duties.

Some key aspects related to request for quota

The request for allocation represents a request for the application of the reduction or exemption of customs duties within a tariff quota and consists of submitting the customs declaration duly completed and accepted by the customs office.

Most of the tariff quotas are administered by the Directorate General for Taxation and Customs Union (based in Brussels) called DG TAXUD, in cooperation with customs administrations of Member States, through the customs integrated informatics system. However, a number of

quotas are managed by the Directorate General for Agriculture called DG AGRI through the system of import licenses. They are not subject to administration by the Romanian customs authority.

At the Romanian customs level, the administration of requests for tariff quotas under DG TAXUD is made by the Tariff Quotas Office of the National Customs Authority and by the customs offices. The imports may be made by any customs office in Romania.

In Romania, the quotas administered by DG AGRI, are under the supervision of the Ministry of

Agriculture and Rural Development through its Agency for Payments and Interventions in

80 Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, announced that customs duties on cereals imports will be reintroduced as a reaction to the price decrease on the cereals market. A draft Regulation was put to the Management Committee for the Common Organisation of Agricultural Markets on 16 October 2008. It has now to be formally adopted by the Commission and will enter into force on the third day following publication in the Official Journal of the European Union. There are no export refunds on cereals exports. 81 Other than GSP



Agriculture (APIA), which is responsible for the administration of import – export licenses. An economic operator will need a license when importing or exporting agricultural products in or from a third country.

Import licenses

Import licenses are required for monitoring by the European Commission of the volume of agricultural products imported or exported to or from the European Union. The Commission can control the issuing of licenses and suspend the issue if the market balance in the Community is endangered. When an operator applies for a license, he has to establish a guarantee either in the form of a deposit by bank transfer, either in the form of a letter of bank guarantee. The security requested differs depending on the product. The security will be returned to the economic operator at the time when he provides evidence that he has fulfilled the obligation to import or export.

In order to benefit from tariff quotas under DG TAXUD administration, certain documents are required at the customs office, like the certificate of origin of goods, and implicitly other documents necessary for the free movement of goods (e.g. invoice, transport documents etc.) as stipulated by art. 218 of Commission Regulation (EEC) no. 2454/1993 of 2 July 1993 on provisions for the implementation of the Council Regulation (EEC) no. 2913/92 on Community Customs Code.

How quota are allocated

Tariff quotas are managed by the principle “first come - first served” which implies that no economic agent or Member State can make a reservation. They are allocated in chronological order of acceptance of the declaration of free circulation until they are exhausted.

The Communitarian "first come, first served" principle is based on the provisions of article 20 of the Community Customs Code and of article 308 (a) - (c) of the Romanian Customs Code. At the national level, the transposition of Community rules was made by Order of the National Customs Authority, no. 9.923/27.12.2006 (similar to the DG TAXUD Agreement no. 3439/2006).

The details of tariff quotas (expressed by a serial number, called “order number”) can be viewed on the main page of the Directorate General Taxation and Customs Union European Commission website at the following address: http://ec.europa.eu/taxation_customs/dds/home_en.htm

In order to find out if the merchandise you intend to export may receive favourable tariff treatment through tariff quotas you should follow the next steps:

• visit the TARIC website at http://ec.europa.eu/taxation_customs/dds/tarhome_en.htm;

• enter CN (Combined Nomenclature) code of the merchandise as well as the codification of the country of origin of the goods;

• press the button "Customs duties";

• if the goods benefit from facilities the order number of the tariff quota will be displayed (e.g.: 091719);

The order numbers have different meanings in the clauses of regulations, but they are also to be found as mentioned above in TARIC in relation with particular rates of duties. The order number beginning with 09… means “tariff quotas”82.

82 The serial numbers 09.0001, 09.0003, 09.3002 – 09.3999, 094.000 – 09.4999 refer to quotas other then tariff quotas) under the administration of DG AGRI, therefore whenever you access an order number beginning with one of these series you may find out that certain restrictions are imposed, as for example the request to provide an import license from APIA.



The tariff quotas preferences are granted for the same order numbers each year, only their volume differs. The final granted quantity is established at the middle of December, taking into account the level of the imports through the year.

Tariff quotas are valid for a certain period of time. Beyond that range goods can no longer benefit from the reduction or exemption of customs duties. If during this period of time the initial volume is exhausted, the goods may be imported only under the normal customs duty.

In case you want to find out whether the merchandise you plan to import is in the period of validity of the tariff quota and if there still is any available quantity out of the initial quantity, you should pass through the following steps:

• access the database from the main page of the Customs and Taxation at the following address: http://ec.europa.eu/taxation_customs/dds/home_en.htm;

• press QUOTA;

• the page "autonomous tariff quotas’ will open. Within this page click the link to point 1 on the page, after which in the new opening page, click OK;

• the page "Quota Consultation” will open, where at “Origin” you enter the country of origin of the goods that you plan to export / import, and at ‘Order number’ the order number of the tariff quota as from TARIC. Press the button "Quota / Ceiling”.

• will open the page: "List of quotas and ceilings" where appears: the period of validity of the quota, the start date, the end date and the balance. The balance is the amount of the tariff quota which currently remains available for use at the moment you consult the website.

If you made exports of goods for which you have not sought reductions or exemptions from customs duties under the Community tariff quotas managed by DG TAXUD, you may benefit from the grant of retroactive tariff preferences under the respective quotas corresponding to the imported goods.

Nevertheless, the following conditions must be accomplished cumulatively:

• on the day of the request for granting retroactive tariff preferences, there must still exist a rest from the initial quantity for the year previous to the submission of the request

• on the date the merchandise was released for free circulation, the conditions for granting tariff quotas must have been accomplished (depending on the provisions which stay at the base of the grant).

In Romania’s case, granting retroactive tariff preferences under the system of tariff quotas offered through DG TAXUD can be done only since 2007, the year of Romania's accession to the European Union. The application for the grant shall be submitted only at the customs office through which the import has been made.

Quota for products of Thai origin

For Thailand, the order numbers for which tariff quotas have been provisioned for the years 2008 and 2009 are the following:

• 090704

• 090706

• 090708

• 092005 (only for 2008 not available for 2009)



• Order number 090704

Associated TARIC code 1604207000

1604 Prepared or preserved fish; caviar and caviar substitutes prepared from fish eggs

1604 11 Fish, whole or in pieces, but not minced

1604 20 Other prepared or preserved fish

1604 20 05 Preparations of surimi

1604 20 10 Other

1604 20 10 Of salmon

1604 20 30 Of salmonidae, other than salmon

1604 20 40 Of anchovies

1604 20 50 Of sardines, bonito, mackerel of the species Scomber scombrus and Scomber japonicus, fish of the species Orcynopsis unicolor

1604 20 70 Of tunas, skipjack or other fish of the genus Euthynnus

1604 20 90 Of other fish

1604 30 Caviar and caviar substitutes

For 2008

Start date 01/01/2008

End date 31/12/2008

Initial amount 1816000 kilogram

Balance 0 kilogram

For 2009


End date 31/12/2009


Balance 1816000 kilogram


Associated TARIC code 1604205000







1604 20 10 Other

1604 20 10 Of salmon

1604 20 30 Of salmonidae, other than salmon

1604 20 40 Of anchovies

1604 20 50 Of sardines, bonito, mackerel of the species Scomber scombrus and Scomber

japonicus, fish of the species Orcynopsis unicolor


1604 20 90 Of other fish


For 2008


End date 31/12/2008



For 2009


End date 31/12/2009




Associated TARIC Code 0714100000

0714

Manioc, arrowroot, salep, Jerusalem artichokes, sweet potatoes and similar roots

and tubers with high starch or inulin content, fresh, chilled, frozen or dried, whether

or not sliced or in the form of pellets; sago pith

0714 10 Manioc (cassava)

0714 20 Sweet potatoes

0714 90 Other

For 2008


End date 31/12/2008





For 2009


End date 31/12/2009



As for order number 092005, tariff quota have been applied in 2008 but are not available in 2009 the category of products that have benefited of quota as well as the quota quantity are presented in the Annex 10.

6.3 Barriers or incentives for investing / exporting to Romania in the field of food &

beverage

Harmonization with European Union legislation

Foreign trade regulations have been gradually liberalized since 1990 and since 1 January 2007, Romania’s accession date to the European Union, they have followed the guidelines set by the EU. The conditions and terms under which the trade with non-member countries is developing are established by the Community Commercial Policy. This policy imposes to the member states to have a common position as regards the commercial contacts with other countries. Therefore, the Common Customs Tariff (adopted on yearly basis by the EU Commission) is common to all member states, including Romania. What differs is its level, the customs duties varying from one product to another.

This EU trade policy instrument (TARIC - the EU online customs tariff database can be accessed online at the following address: ec.europa.eu/taxation_customs/dds/tarhome_ro.htm) has two components: customs duties and the nomenclature of goods.

After Romania’s accession to the EU, the level of customs duties, as a whole, decreased as compared with the level of the customs duties applicable in Romania before the accession.

Legal framework regulating the stimulation of investments in Romania

a) Emergency Government Ordinance 85 / 2008 on stimulation of investments

In order to boost the business climate in Romania and attract foreign capital to the economy, the Romanian Government set - up new regulations aimed to support investments. In this context, authorities issued the Emergency Government Ordinance 85 / 2008 on stimulation of investments.

The Emergency Ordinance is the result of the business climate prompt need of regulations to settle a framework for investments, in accordance with both EU’s and national legislation on state aids. It supports investments in the development of certain economic areas, taking into account Romania’s development priorities, focusing particularly on those regions that attracted fewer investments in the past, in order to assure a balanced territorial development.

From the moment the new rules came into force, Law 332 / 2001 on the Promotion of Direct Investments with Major Economic Impact (Investment Law) as further amended and supplemented, has been declared null and void, but for one single article stating that the investments have to last for at least 10 years. In case of voluntary dissolution during this term, the company which benefited from the facilities offered by the Law will be obligated to pay not only the taxes imposed by the legislation for the whole period during which it functioned, but penalties for overdue payments owned in the absence of facilities, as well.



Emergency Government Ordinance 85 / 2008 sets the basic principles as regards granting and application of facilities for investments, such as equal treatment for the investors, transparency of procedures, efficiency in the usage of facilities, confidentiality as regards the investors’ property rights, and eligibility - depending on the source of the financing funds), the types of facilities to be granted (state aid type), the eligibility conditions for both investment and investor and other general provisions.

The Ordinance eliminates the discriminatory treatment between Romanian and foreign investors, an investor being any legal person who invests in Romania, under the provisions of this Ordinance. It also redefines the concept of “investment”, the term being applicable to all investment, not only to the ones greater than USD 1 million, as Law 332 / 2001 stipulated. Nevertheless, the capital used for investments must abide certain criteria, such as to be used for:

• acquiring tangible and intangible assets related to the establishment of a new undertaking, the extension of an existing undertaking diversification of the production by making new products, fundamental change of the global production of an existent undertaking, as well as in the acquisition of fixed assets directly linked to an undertaking, in the case the undertaking have been or would have been shut - down without the respective acquisition and the assets are bought by an independent investor;

• the initiation of research - development and innovation projects;

• the creation of new jobs and / or professional training of the employees;

• the initiation of projects related to revaluation of renewable energy resources, environmental protection and sustainable development.

The incentives are granted for different areas of activities with major economical and social impact, including among others the sector targeted by this research, namely the agro - industrial

processing activities;

The incentives, of state – aid type, perfectly in line with the EU legislation, may be granted in

the form of:

• non – refundable amounts granted in case of acquiring tangible and intangible assets;

• financial contributions from the state budget granted in case of new jobs creation;

• interest bonuses (lower rates) granted when contracting loans, as well as other types of facilities provision by the legislation in force.

Conditions to be met:

• by the investments:

- to be located in an area with low economic development or in areas with higher unemployment rates;

- to contribute to the building or the modernization of infrastructure, to include investments based on research, development and innovation or which require hi-tech, to use renewable energy, assure the protection of the environment or which are meant to provide better professional training for their employees or generate new jobs.

• by the investor. The investor does not have any debts to the state budget, have not benefited from any state guaranteed loans in the past, did not ask the Ministry of Economy and Finance to perform neither falling due payments for state guaranteed foreign or domestic loans; nor payments to the risk fund, did not contracted any state guaranteed loans, is not under insolvency or enforcement procedures, or subject to dissolution or insolvency procedures etc.



Based on these provisions, the responsible authorities initiate laws / administrative norms which institute support measures in the form of state aid schemes or individual aid for each priority area. Such programs take into account the provisions of Government Decision no. 651 / 2006 regarding the endorsement of the policy on state aids for 2006 – 2013.

If an investor wants to make an investment in Romania with the help of certain facilities under Emergency Government Ordinance 85 / 2008, he must submit his investment project together with the request for incentives to the competent central or local authority, and to receive the agreement – in – principle approval from the authority prior to the implementation of the investment. The competent authority must analyze the documentation, assess whether the conditions are met and issues an agreement – in – principle within 30 working days from the date of the submission of the request comprising the complete documentation.

In case that the investor is considering investments that fall under the scope of the previously published and approved state incentives schemes, the authority simply verifies whether the investor fulfils the criteria for receiving the incentive and approves or denies his application.

In the case the investor is requesting incentives that fall outside the scope of an already approved state – aid scheme, as the case is with individual incentives, the competent authority receives the investor’s application and than issues a letter of intent addressed to the investor regarding the granting of the aid, which is conditioned by the approval of the European Commission, prior to the implementation of the projects.

With this piece of regulation, a new Government agency is established instead of the Romanian Agency for Foreign Investment (ARIS). The new Romanian Agency for Investment (ARI) plays the same role of intermediary between investors and central and local authorities. It also offers technical assistance / guidance as regards the available schemes by means of which investors can apply for financing from the responsible authority. ARI is continuously informed by the responsible authority on the new investment projects and will publish on its web site a list of state aid / individual aid schemes, which will be updated permanently.

b) Law no. 231 / 2005 on stimulation of investments in agriculture, food industry,

forestry, fisheries as well as in other non – agricultural activities

In order to stimulate investments in the above mentioned sectors, a fund to credit investments is made available at the disposal of the Romanian Ministry of Agriculture and Rural Development, who administers the fund. The fund is financed from approved allotments from the state budget, having this specific destination, and re - financed from reimbursed amounts83 and interests paid by credit institutions, under the conditions of the law. The fund can be accessed and used according to the Ministry’s methodology, by banks and other credit institutions, as well as financial institutions developing similar activities with a bank.

The Ministry also establishes on an annual basis the types of investments benefiting from loans under the present law, as well as the maximum level of the loans to be granted.

The fund can be used for activities such as: granting loans or funding, covering costs with the technical – economical documentation prepared in order to obtain loans or so as to complete the amounts used to co – finance investment projects financed through non – refundable European and national funds or the loans granted by credit institutions from their own sources.

The access to the fund’s resources is made by tender and the selected institutions grant loans from the fund to the loans beneficiaries according to the provisions of Law no. 231 / 2005 as well as with their intern credit norms.

83 The level of the reduction applied to the amount to be reimbursed may be of up to 50% of the volume of the granted loan,

differentiated by type of investment. Reductions are granted also from the fund’s resources.



The amounts accessed by the credit institutions, but not used until the end of the year, are carried forward to the next year and are used to cover the obligations resulting from the loan contracts concluded between banks / credit institutions and beneficiaries.

The beneficiaries of the loans for investments in agriculture, food industry, forestry, fisheries as well as in other non – agricultural activities are:

• individual producers of agricultural products, registered in the Register of Agricultural Exploitations

• associations of producers, family associations groups or cooperatives, established according to the law

• private companies from the agricultural sector, established according to the law

• authorized physical persons

• forest holders and their associations

• local councils

c) Government Decision no. 1165 / 2007 on stimulating economic growth by

supporting investments

This Decision has as objective the regional development by stimulating investments and the creation of new jobs. The decision sets out the rules, criteria and procedures applicable for granting a particular type of state aids consisting of funds allocation. The Ministry of Economy and Finance is the authority competent to implement this state - aid regulatory framework. The method of granting is by allocation of non – refundable funds from the sate budget through the budget of The Ministry of Economy and Finance. The maximum aid scheme budget is EUR 500 million, in the limit of the annual budget ceilings over a 5 – year period, 2007 – 2011, with the possibility of prolongation.

The eligibility criteria must be met cumulatively, when applying.

Conditions regarding the investors:

• are enterprisers registered under the provisions of Law no. 31 / 1990 on commercial companies

• their headquarters are established and their activity is carried on in Romania

• do not belong to the category of companies in difficulty as provided for in the European guidelines on state aid for rescuing and restructuring companies in difficulty

• there are no sate – aid recouping decisions issued against them or, in case such decisions had been issued, they are executed, according to the law in force

• they are not newly – created small - size enterprises, excepting the case when they apply for the investment support or investment related consultancy

• there have been no state – aid overlapping involving regional schemes of other state- aid providers for the same eligible costs of the initial investment

The state –aid offered under the provisions of the present Decision is for establishing an initial

investment.

The initial investment means an investment in material and immaterial assets relating to: the setting – up of a new establishment; the extension of an existing establishment; diversification of the output of an establishment into new, additional products; a fundamental change in the overall production process of an existing establishment. An investment in fixed capital by



acquisition of the assets linked to an establishment may also be regarded as initial investment provided the establishment ha closed or would have closed had it not been purchased, excepting the case the establishment belongs to a company in difficulty.

Conditions regarding the investment:

• the value of the investment is higher than RON equivalent of EUR 30 million

• the investment creates at least 300 new jobs

• works necessary to investment should start not prior to obtaining the agreement – on – principle84; if this condition is not complied with, the entire project will no longer be considered eligible for obtaining the aid

• the investment should be maintained for a minimum 5 – year period for large companies and 3 - year period for medium and small – sized companies (SMEs), calculated from the date of the completion of the investment project. This condition does not impede replacing the equipment morally worn out within the 5 – year or 3 – year period for SMEs, due to soft technological change

• the new jobs must be created within 3 years from the completion of the works and maintained for at least 5 years from the date the position was first filled in for large companies and 3 years respectively in case of SMEs

• may be carried out in all sectors of activity, excepting those provided for in the Government Decision.

The aid:

• does not favour the use of domestic products to the detriment of imported ones

• is not an operating aid

• is granted to enterprises within the limit of the maximum allowable aid intensity

• consists of granting non – refundable funds from the state budget, through the budget of the Ministry of Finance – General Actions

The maximum grant size an economic operator can benefit of according to the present Government Decision is RON equivalent of EUR 28.125 million, for investments and new jobs created as a result of an initial investment in whatever region of Romania

For investments and jobs created in the development region no. 8, Bucharest – Ilfov, the maximum state - aid level an economic operator can benefit of is RON equivalent of EUR 22.5 million.

Regional investment aid is calculated in reference to either material or immaterial investment costs resulting from the initial investment project or estimated wage costs for jobs directly created by the investment project, taking into account the highest value of the eligible costs.

84 General Directions of Public Finances (GDPF), county GDPF’s and the General Direction of Public Finances Bucharest, together

with the general Direction for the Administration of Big Taxpayers (DGAMC), through departments specialized in sate – aid

matters, provide companies on – request assistance for drawing – up and filling in the financing agreement – in - principle

application form.



Access to structural funds

Companies established in Romania can benefit under certain condition (fulfilling eligibility conditions) by non reimbursable financing, including for projects (investment) in the field of food and beverage business. More details on some financing lines available are presented in the Annex number 11.

General view on taxation incentives for foreign investors in Romania

Since January 1, 2004 when the Fiscal Code came into effect, it has been substantially amended, most recently by Emergency Government Ordinance no. 91 / 2008, which brings the latest changes in respect of investment incentives, following the provisions and trends set by the EU legislation. The code integrates key tax legislation and provides the basis for a more stable framework of tax legislation.

The above – mentioned document amended old regulations bringing forward new tax incentives for investors, such as:

● carrying forward the fiscal loss during the following 7 years for the annual fiscal loss accomplished starting 2009 (5 years, until 2009);

● for income from dividends earned in Romania, non – residents will be imposed a 10% (diminished from 16%) tax rate, starting January 1, 2009. Therefore, resident and non - resident legal persons will pay the same tax rate on dividends, benefiting from equal fiscal treatment. Following Romania’s accession to the EU, dividends paid by a company, Romanian legal person, to another legal entity resident of a EU or EFTA (European Free Trade Association) member state or a permanent establishment of a company from a EU or EFTA member state, located in another state, member of one of these two communities are exempt from tax, if the beneficiary of dividends holds at least 15% (10% starting January 1, 2009) of the Romanian legal entity’s shares for an uninterrupted period of minimum two years ending at the date of dividend payment;

● also a 10% tax rate will be paid for income from interests and royalties, if the final beneficiary of these incomes is a legal person resident of a EU or EFTA member state or a permanent establishment of a company from a EU or EFTA member state, located in another state, member of one of these two communities. This 10% quota applies during a transition period from the date when Romania joined the EU to December 31, 2010. The only condition is for the final beneficiary of the interests or of the royalties to own a minimum of 25% of the value / number of the participation titles of the Romanian legal person, for an uninterrupted period of at least 2 years that ends on the date of the payment of the interest / royalties. Starting January 1, 2011, these incomes from interests and royalties will be exempt from tax, if the final beneficiary owns a minimum of 25% of the value / number of the participation titles of the Romanian legal person, for an uninterrupted period of at least 2 years that ends on the date of the payment of the interest / royalties.

Although the legislation is changing continuously, all these recent incentives are meant to establish a competitive and appealing fiscal regime, in accordance with the fiscal policy regulated by the EU.

This fiscal reform was coupled with a softening of the taxation principles on which all fiscal procedures will be based: transparency, simplicity, partnership with taxpayers, and prudence.

Besides the above – mentioned, the other most significant legal incentive offered to direct investment in Romania is the single tax reform, introduced by the Government at the beginning of 2005. This modification brought Romania among the most competitive investment destinations in the region. Starting 2005, following a successful model already introduced by



other countries in the region, corporate and individual incomes are levied with a single tax rate of 16%.

Nevertheless, companies have the possibility of choosing to pay tax on incomes of micro - enterprises, if they qualify as such an entity (annual turnover up to EUR 100,000, number of employees 1 - 9 and should derive more than 50% of its income from activities other than consultancy and management). Under this regime, a 2.5% in 2008 and 3% in 2009 income tax is applied to revenues of the company.

In spite of the advantages of the new single tax system, its downside appeared already six months later. In order to counter the lower taxes collected on corporate and individual income, the Government was forced to raise quotas for other taxes, such as: tax on dividends (from 5 to 10% for individuals, and subsequently to 16%), tax on capital gains (from 1 to 10%, and then 16%).



ANNEX 1 THE LEVELS OF CUSTOM DUTIES FOR POULTRY PRODUCTS IN 2008, BASED

ON TARIC CODES

• 0105 - Live poultry, that is to say, fowls of the species Gallus domesticus, ducks, geese,

turkeys and guinea fowls

• 0105 11 - Fowls of the species Gallus domesticus

• 0105 11 10 00 - Grandparent and parent female chicks - Laying stocks

• EUR 52.00 / 1000 p/st85 (Third country duty)

• 0105 11 19 00 - Grandparent and parent female chicks - Other

• EUR 52.00 / 1000 p/st (Third country duty)

• 0105 11 91 00 - Other - Laying stocks


• 0105 11 99 00 - Other


• 0207 - Meat and edible offal, of the poultry of heading 0105, fresh, chilled or frozen

• 0207 11 - Of fowls of the species Gallus domesticus - Not cut in pieces, fresh or chilled

• 0207 11 10 00 - Plucked and gutted, with heads and feet, known as '83 % chickens'

• EUR 26.20 / 100 kg (Third country duty)

• EUR 131.00 / 1000 kg Non preferential tariff quota (ALLTC)

• 0207 11 30 00 - Plucked and drawn, without heads and feet but with necks, hearts, livers and gizzards, known as '70 % chickens'



• 0207 11 90 00 - Plucked and drawn, without heads and feet and without necks, hearts, livers and gizzards, known as '65 % chickens', or otherwise presented



• 0207 12 - Of fowls of the species Gallus domesticus - Not cut in pieces, frozen

• 0207 12 10 00 - Plucked and drawn, without heads and feet but with necks, hearts, livers and gizzards, known as '70 % chickens'



• 0207 12 90 00 - Plucked and drawn, without heads and feet and without necks, hearts, livers and gizzards, known as '65 % chickens', or otherwise presented

85 Heads as per representatives of National Custom Authority





• 0207 13 - Of fowls of the species Gallus domesticus - Cuts and offal, fresh or chilled

• 0207 13 10 00 - Cuts - Boneless



• 0207 13 20 00 - Cuts - With bone in - Halves or quarters



• 0207 13 30 00 - Whole wings, with or without tips



• 0207 13 40 00 - Backs, necks, backs with necks attached, rumps and wing-tips



• 0207 13 50 00 - Breasts and cuts thereof



• 0207 13 60 00 - Legs and cuts thereof



• 0207 13 70 - Other



• 0207 13 91 00 - Other - Livers

• 6.4% (Third country duty)

• 0207 13 99 00 - Other


• 0207 14 - Cuts and offal, frozen

• 0207 14 10 00 - Cuts – Boneless


• 0% Non preferential tariff quota (TH) – Conditions: Presentation of the certificate / license / document (L 001 - Import license AGRIM) and presentation of the endorsed certificate / licence (Y 100 - Special entries on the import license AGRIM)




• 0207 14 20 00 - With bone in - Halves or quarters



• 0207 14 30 00 - Whole wings, with or without tips



• 0207 14 40 00 - Backs, necks, backs with necks attached, rumps and wing-tips


• 93.00 EUR / 1000 kg Non preferential tariff quota (ALLTC)

• 0207 14 50 00 - Breasts and cuts thereof


• 0% Non preferential tariff quota (ALLTC)

• 0207 14 60 00 - Legs and cuts thereof



• 0207 14 70 00 - Other



• 0207 14 91 00 - Offal - Liver


• 2.90 % Tariff preference (SPGL)

• 0207 14 99 00 – Other


• 0210 - Meat and edible meat offal, salted, in brine, dried or smoked; edible flours and meals of meat or meat offal

• 0210 99 - Other

• 0210 99 39 10 - Other – Poultry meat, salted or in brine, of heading 0207

• EUR 1,300 / 1000 kg (Third country duty)

• 15.4% Non preferential tariff quota (ALLTC)

• 1602 - Other prepared or preserved meat, meat offal or blood

• 1602 32 - Of fowls of the species Gallus domesticus

• 1602 32 11 00 - Containing 57 % or more by weight of poultry meat or offal - Uncooked




• 1602 32 19 00 - Other

• EUR 1024 / 1000 kg (Third country duty)


• 1602 32 30 10 - Containing 25 % or more but less than 57 % by weight of poultry meat or offal - Uncooked


• 1602 32 30 90 - Other


• 1602 32 90 10 - Other - Uncooked


• 1602 32 90 90 – Other




ANNEX 2 FRUIT IMPORTS 2004 - 2007

2004 2005 2006 2007

TARIC

Imports (Thou EUR) Extra - EU 27

Intra - EU 27

Total (Extra +

Intra) Extra - EU 27

Intra - EU 27

Total (Extra +

Intra) Extra - EU

27 Intra - EU

27

Total (Extra +

Intra) Extra - EU

27 Intra - EU

27

Total (Extra +

Intra)

0801 Coconuts, Brazil nuts and cashew nuts, fresh or dried 684.69 0.96 685.65 976.85 7.45 984.30 1,245.41 4.07 1,249.48 521.33 581.81 1,103.14

0802 Other nuts, fresh or dried 3,589.51 221.79 3,811.30 4,379.08 350.07 4,729.15 5,673.56 269.03 5,942.59 4,396.56 3,131.81 7,528.37

0803 Bananas, including plantains, fresh or dried 37,985.87 - 37,985.87 52,661.25 4.77 52,666.02 59,638.97 2.49 59,641.46 67,748.29 7,636.68 75,384.97

0804

Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried 847.55 19.71 867.26 1,195.74 96.90 1,292.64 2,389.39 184.85 2,574.24 1,352.91 3,430.36 4,783.27

0805 Citrus fruit, fresh or dried 21,431.99 13,342.55 34,774.54 26,895.90 14,924.86 41,820.76 37,597.81 17,354.00 54,951.81 39,265.78 29,606.80 68,872.58 0806 Grapes, fresh or dried 2,758.35 703.08 3,461.43 4,227.48 2,117.66 6,345.14 5,347.29 3,707.71 9,055.00 4,708.39 13,108.89 17,817.28

0807 Melons (including watermelons) and papaws (papayas) fresh 633.14 192.46 825.60 885.90 214.56 1,100.46 771.76 538.87 1,310.63 1,244.65 2,640.75 3,885.40

0808 Apples, pears and quinces, fresh 1,287.39 3,406.12 4,693.51 3,242.83 9,688.42 12,931.25 3,455.52 11,633.59 15,089.11 3,907.05 24,925.69 28,832.74

0809 Apricots, cherries, peaches (including nectarines), plums and soles, fresh 456.21 2,644.11 3,100.32 1,833.62 6,390.23 8,223.85 1,839.24 5,672.77 7,512.01 2,375.72 17,881.37 20,257.09

0810 Other fruit, fresh 348.7 970.13 1,318.79 1,186.3 2324.96 3,511.27 1,253.0 3363.5 4,616.47 1,971.7 7184.19 9,155.91

0811

Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter 58.96 165.55 224.51 95.71 262.76 358.47 51.81 418.35 470.16 35.26 791.81 827.07

0812

Fruit and nuts, provisionally preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions) 103.06 474.88 577.94 226.82 481.10 707.92 116.22 558.19 674.41 29.39 763.77 793.16

0813

Fruit, dried, other than that of headings 0801 to 0806; mixtures of nuts or dried fruit of this chapter 206.71 1,145.80 1,352.51 406.94 1,303.58 1,710.52 364.98 1,294.70 1,659.68 732.17 1,846.06 2,578.23

0814

Peel of citrus fruit or melons (including watermelons), fresh, frozen, dried or provisionally preserved in brine, in sulphur water or in other preservative solutions 12.25 0.42 12.67 1.13 2.77 3.90 3.88 14.43 18.31 14.01 - 14.01

Total imports 70,404.34 23,287.56 93,691.90 98,215.56 38,170.09 136,385.65 119,748.81 45,016.55 164,765.36 128,303.23 113,529.99 241,833.22

Source: EU Commission – External Trade



ANNEX 3 FRUIT EXPORTS 2004 - 2007

2004 2005 2006 2007

TARIC Exports (Thou EUR)

Extra - EU 27

Intra - EU 27

Total (Extra +


Intra - EU 27

Total (Extra +


Intra - EU 27

Total (Extra +


Intra - EU 27

Total (Extra +

Intra)

0801 Coconuts, Brazil nuts and cashew nuts, fresh or dried 13.9 0 13.93 22.6 0 22.64 76.8 2.63 79.39 22.7 0 22.65

0802 Other nuts, fresh or dried 16,725.2 8228.25 24,953.46 12,877.6 12667.59 25,545.18 9,122.1 9877.56 18,999.70 8,981.2 7948.65 16,929.85

0803 Bananas, including plantains, fresh or dried 0.9 0.97 1.82 40.9 0.67 41.55 16.3 0.26 16.58 2.0 26.44 28.43

0804 Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dired 26.8 2.54 29.29 40.9 8.51 49.38 18.7 0 18.67 65.3 42.8 108.06

0805 Citrus fruit, fresh or dried 99.6 10.13 109.69 101.7 12.63 114.30 89.2 40.5 129.73 156.7 127.76 284.42 0806 Grapes, fresh or dried 767.9 27.06 794.91 34.2 4.3 38.50 66.3 10.62 76.96 110.4 963.13 1,073.54

0807 Melons (including watermelons) and papaws (papayas) fresh 8.4 30.27 38.69 13.8 2.39 16.21 19.4 128.91 148.33 9.6 2.51 12.14

0808 Apples, pears and quinces, fresh 32.2 59.53 91.69 17.3 40.88 58.19 56.2 112.44 168.59 80.3 4567.05 4,647.31

0809 Apricots, cherries, peaches (including nectarines), plums and soles, fresh 1,354.5 1586.03 2,940.55 1,437.2 1009.86 2,447.05 2,664.2 733.98 3,398.13 1,599.6 121.92 1,721.51

0810 Other fruit, fresh 63.94 2010.83 2,074.77 239.22 2565.11 2,804.33 44.9 2486.91 2,531.79 54.1 1630.22 1,684.36

0811

Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter 46.6 3612.92 3,659.48 43.3 5119.95 5,163.27 8.4 10511.06 10,519.48 0.6 9486.17 9,486.76

0812

Fruit and nuts, provisionally preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions) 1,005.7 2187.95 3,193.64 579.3 2241.63 2,820.91 1,168.2 2065.8 3,234.01 700.1 973.98 1,674.11

0813

Fruit, dried, other than that of headings 0801 to 0806; mixtures of nuts or dried fruit of this chapter 16.5 101.68 118.14 36.3 159.58 195.89 7.6 171.96 179.54 23.7 316.97 340.65

0814

Peel of citrus fruit or melons (including watermelons), fresh, frozen, dried or provisionally preserved in brine, in sulphur water or in other preservative solutions 0 0 - 0 0 - 0 0 - 0 0 -

Total imports 20,161.9 17,858.2 38,020.06 15,484.3 23,833.1 39,317.40 13,358.3 26,142.6 39,500.90 11,806.2 26,207.6 38,013.79




ANNEX 4 VEGETABLES IMPORTS 2004 - 2007

2004 2005 2006 2007

TARIC

Imports (Thou EUR) Extra - EU 27

Intra - EU 27

Total (Extra +


Intra - EU 27

Total (Extra +

Intra) Extra - EU

27 Intra - EU

27

Total (Extra +

Intra) Extra - EU

27 Intra - EU

27

Total (Extra +

Intra)

0701 Potatoes, fresh or chiled

1,749.90

5,532.13

7,282.03

3,106.71

6,209.09

9,315.80

3,021.89

13,482.48 16,504.37

1,959.79

10,274.99

12,234.78

0702 Tomatoes fresh or chilled

4,855.65

144.73

5,000.38

10,071.17

875.03

10,946.20

12,210.32

632.10 12,842.42

47,599.45

8,585.06

56,184.51

0703

Onions, shallots, garlic, leeks fresh or

chilled

5,215.69

5,545.86

10,761.55

3,346.59

4,192.81

7,539.40

4,817.07

5,118.25 9,935.32

4,318.93

5,381.45

9,700.38

0704

Cabbages, cauliflowers, kohlrabi, kale

fresh or chilled

337.50

178.99

516.49

507.42

806.76

1,314.18 369.61

1,440.66 1,810.27

900.12

2,435.67

3,335.79

0705 Lettuce and chicory, fresh or chilled

7.81

221.57

229.38

3.46

393.47 396.93 9.07

1,012.92 1,021.99

39.22

2,878.61

2,917.83

0706

Carrots, turnips, salad beetroot,

salsify, celeriac, radishes

1,231.89

775.40

2,007.29

2,371.99

1,294.59

3,666.58

3,159.04

1,921.59 5,080.63

2,870.40

4,227.07

7,097.47

0707

Cucumbers and gherkins, fresh or

chilled

388.87

7.89

396.76

454.89

134.93 589.82 704.53

239.43 943.96

2,699.12

2,851.70

5,550.82

0708

Leguminous vegetables, shelled or

unshelled, fresh or chilled

6.40

22.24

28.64

12.55

22.25 34.80 18.33

23.33 41.66

16.43

392.79

409.22

0709 Other vegetables, fresh or chilled

895.46

1,149.47

2,044.93

2,486.40

1,816.05

4,302.45

2,798.85

3,819.20 6,618.05

4,164.80

10,365.42

14,530.22

0710

Vegetables (uncooked or cooked by

steaming or boiling in water), frozen

268.10

4,244.94

4,513.04

602.04

6,442.55

7,044.59 716.03

9,861.24 10,577.27

920.94

14,097.90

15,018.84

0711

Vegetables provisionally preserved

(for example, by sulphur dioxide gas,

in brine, in sulphur water or in other

preservative solutions), but unsuitable

in that state for immediate

consumption

2.70

502.64

505.34

271.87

1,048.59

1,320.46 41.56

1,761.62 1,803.18

105.23

1,531.52

1,636.75



0712

Dried vegetables, whole, cut, sliced,

broken or in powder, but not further

prepared

1,375.96

1,918.17

3,294.13

1,583.53

2,055.27

3,638.80

1,517.23

2,423.53 3,940.76

1,643.72

3,349.30

4,993.02

0713

Dried leguminous vegetables, shelled,

whether or not skinned or split

2,697.19

1,702.20

4,399.39

3,443.82

1,277.25

4,721.07

2,277.47

1,611.46 3,888.93

5,967.25

2,785.96

8,753.21

0714

Manioc, arrowroot, salep, Jerusalem

artichokes, sweet potatoes and similar

roots and tubers with high starch or

inulin content, fresh, chilled, frozen or

dried, whether or not sliced or in the

form of pellets; sago pith

12.95 -

12.95

44.00 - 44.00 78.01

0.07 78.08 -

50.53

50.53

TOTAL

19,046.07

21,946.23

40,992.30

28,306.44

26,568.64

54,875.08

31,739.01

43,347.88 75,086.89

73,205.40

69,207.97

142,413.37




ANNEX 5 VEGETABLES EXPORTS 2004 - 2007

2004 2005 2006 2007

TARIC

Exports (Thou EUR) Extra - EU 27

Intra - EU 27

Total (Extra +


Intra - EU 27

Total (Extra +

Intra) Extra - EU

27 Intra - EU

27

Total (Extra +

Intra) Extra - EU

27 Intra - EU

27

Total (Extra +

Intra)

0701 Potatoes, fresh or chilled

47.20

2.52

49.72

93.53

6.36 99.89 239.37

24.34 263.71

548.42

301.28

849.70

0702 Tomatoes fresh or chilled

73.76

198.07

271.83

151.18

47.34 198.52 51.42

35.02 86.44

160.13

255.91

416.04

0703

Onions, shallots, garlic, leeks fresh or

chilled

10.20 0.46

10.66

10.74

4.83 15.57 10.32

2.27 12.59

27.69

114.07

141.76

0704

Cabbages, cauliflowers, kohlrabi, kale

fresh or chilled

10.37

56.00

66.37

8.87

2.35 11.22 3.87

302.74 306.61

30.23

6.12

36.35

0705 Lettuce and chicory, fresh or chilled

33.03

15.56

48.59

30.05

2.71 32.76 30.26

94.48 124.74

34.96

0.30

35.26

0706

Carrots, turnips, salad beetroot,

celeriac, radishes

5.29

3.43

8.72

11.42

7.93 19.35 11.63

8.10 19.73

12.28

0.84

13.12

0707

Cucumbers and gherkins, fresh or

chilled

678.57

1,441.68

2,120.25

614.58

1,607.73

2,222.31 974.12

2,495.33 3,469.45

397.62

2,975.26

3,372.88

0708

Leguminous vegetables, shelled or

unshelled, fresh or chilled

9.56

3.38

12.94

7.40

470.53 477.93 -

550.38 550.38 -

283.68

283.68

0709 Other vegetables, fresh or chilled

143.33

17,503.02

17,646.35

102.20

20,431.20

20,533.40 217.28

18,342.90 18,560.18

119.80

24,672.21

24,792.01

0710

Vegetables (uncooked or cooked by

steaming or boiling in water), frozen

351.7 10231.2

10,582.86

228.8 13789.27

14,018.10 24.6 6308.73 6,333.36

86.9 7219.03

7,305.88

0711

Vegetables provisionally preserved

(for example, by sulphur dioxide gas,

in brine, in sulphur water or in other

preservative solutions), but unsuitable

in that state for immediate

consumption

9.88

1,035.14

1,045.02

3.90

919.06 922.96 1.76

655.76 657.52 -

1,342.51

1,342.51



0712

Dried vegetables, whole, cut, sliced,

broken or in powder, but not further

prepared

20.81

7,045.56

7,066.37

46.85

6,783.27

6,830.12 155.50

3,878.34 4,033.84

190.41

3,159.07

3,349.48

0713

Dried leguminous vegetables, shelled,

whether or not skinned or split

50.57

184.29

234.86

80.44

1,148.12

1,228.56 -

619.24 619.24

11.10

0.40

11.50

0714

Manioc, arrowroot, salep, Jerusalem

artichokes, sweet potatoes and similar

roots and tubers with high starch or

inulin content, fresh, chilled, frozen or

dried, whether or not sliced or in the

form of pellets; sago pith

1.14 -

1.14

1.02

0.50 1.52 0.77

11.39 12.16 -

1.62

1.62

TOTAL

1,445.37

37,720.31

39,165.68

1,391.01

45,221.20

46,612.21

1,720.93

33,329.02 35,049.95

1,619.49

40,332.30

41,951.79




ANNEX 6 IMPORT TARIFFS APPLIED FOR DIFFERENT CATEGORIES OF FRUIT AND VEGETABLE JUICES IMPORTED FROM THAILAND IN

2008

Product ERGA OMNES - CEE ERGA OMNES - CEE SPGL

TARIC code86 Third country tax

Non-preferential tariff quota

Tariff preferences Comments

0 1 2 3 4

1. Orange juice

2009 11 11 10 33.6 % + 20.6 EUR/100

kg 20% 30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 11 11 90 33.6 % + 20.6 EUR/100

kg 20% 30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 11 19 10 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 11 19 90 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31 2009 11 91 10 15.2 % + 20.6 EUR/100 kg - 11.7 % + 20.6 EUR/100 kg - 2009 11 91 90 15.2 % + 20.6 EUR/100 kg - 11.7 % + 20.6 EUR/100 kg -

2009 11 99 11 15.2 % 13% 11.7 % Col. 2: n.o. 090033, e.d.

2008/12/31

2009 11 99 19 15.2 % 13% 11.7 % Col. 2: n.o. 090033, e.d.

2008/12/31 2009 11 99 92 15.2 % - 11.7 % - 2009 11 99 94 15.2 % - 11.7 % - 2009 11 99 96 15.2 % - 11.7 % - 2009 11 99 98 15.2 % - 11.7 % - 2009 12 00 10 12.2 % - 8.5% - 2009 12 00 90 12.2 % - 8.5% -

86 See explanations of category of products per each TARIC code in Annex 7



2009 19 11 11 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 19 11 19 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 19 11 91 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 19 11 99 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 19 19 11 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 19 19 19 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 19 19 91 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 19 19 99 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 19 91 11 15.2 % + 20.6 EUR/100

kg -

11.7 % + 20.6 EUR/100 kg

-

2009 19 91 19 15.2 % + 20.6 EUR/100

kg -

11.7 % + 20.6 EUR/100 kg

-

2009 19 91 91 15.2 % + 20.6 EUR/100

kg -

11.7 % + 20.6 EUR/100 kg

-

2009 19 91 99 15.2 % + 20.6 EUR/100

kg -

11.7 % + 20.6 EUR/100 kg

-

2009 19 98 11 12.2 % - 8.5 % - 2009 19 98 19 12.2 % - 8.5 % - 2009 19 98 91 12.2 % - 8.5 % - 2009 19 98 99 12.2 % - 8.5 % -

2. Grapefruit juice

2009 21 00 10 12% - 8.5 % - 2009 21 00 90 12% - 8.5 % -



2009 29 11 10 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 29 11 90 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 29 19 10 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 29 19 90 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31 2009 29 91 10 12 % + 20.6 EUR/100 kg - 8.5 % + 20.6 EUR/100 kg - 2009 29 91 90 12 % + 20.6 EUR/100 kg - 8.5 % + 20.6 EUR/100 kg - 2009 29 99 10 12% - 8.5 % - 2009 29 99 90 12% - 8.5 % -

3. Juice of any other single citrus

2009 31 11 11 14.4 % - 10.9 % - 2009 31 11 19 14.4 % - 10.9 % - 2009 31 11 91 14.4 % - 10.9 % - 2009 31 11 99 14.4 % - 10.9 % - 2009 31 19 11 15.2 % - 11.7 % - 2009 31 19 19 15.2 % - 11.7 % - 2009 31 19 91 15.2 % - 11.7 % - 2009 31 19 99 15.2 % - 11.7 % - 2009 31 51 10 14.4 % - 10.9 % - 2009 31 51 90 14.4 % - 10.9 % - 2009 31 59 10 15.2 % - 11.7 % - 2009 31 59 90 15.2 % - 11.7 % - 2009 31 91 10 14.4 % - 10.9 % - 2009 31 91 90 14.4 % - 10.9 % - 2009 31 99 10 15.2 % - 11.7 % - 2009 31 99 90 15.2 % - 11.7 % -

2009 39 11 10 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31



2009 39 11 90 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 39 19 10 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 39 19 90 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31 2009 39 31 11 14.4 % - 10.9 % - 2009 39 31 19 14.4 % - 10.9 % - 2009 39 31 91 14.4 % - 10.9 % - 2009 39 31 99 14.4 % - 10.9 % - 2009 39 39 11 15.2 % - 11.7 % - 2009 39 39 19 15.2 % - 11.7 % - 2009 39 39 91 15.2 % - 11.7 % - 2009 39 39 99 15.2 % - 11.7 % -

2009 39 51 10 14.4 % + 20.6 EUR/100

kg -

10.9 % + 20.6 EUR/100 kg

-

2009 39 51 90 14.4 % + 20.6 EUR/100

kg -

10.9 % + 20.6 EUR/100 kg

-

2009 39 55 10 14.4 % - 10.9 % - 2009 39 55 90 14.4 % - 10.9 % - 2009 39 59 10 15.2 % - 11.7 % - 2009 39 59 90 15.2 % - 11.7 % -

2009 39 91 10 14.4 % + 20.6 EUR/100

kg -

10.9 % + 20.6 EUR/100 kg

-

2009 39 91 90 14.4 % + 20.6 EUR/100

kg -

10.9 % + 20.6 EUR/100 kg

-

2009 39 95 10 14.4 % - 10.9 % - 2009 39 95 90 14.4 % - 10.9 % - 2009 39 99 10 15.2 % - 11.7 % - 2009 39 99 90 15.2 % - 11.7 % -

4. Pineapple juice



2009 41 10 10 15.2 % - 11.7 % - 2009 41 10 90 15.2 % - 11.7 % - 2009 41 91 10 15.2 % - 11.7 % - 2009 41 91 90 15.2 % - 11.7 % - 2009 41 99 10 16 % - 12.5 % - 2009 41 99 90 16 % - 12.5 % -

2009 49 11 10 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 49 11 90 33.6 % + 20.6 EUR/100

kg 20%

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 49 19 10 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 49 19 90 33.6 % 20% 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31 2009 49 30 10 15.2 % - 11.7 % - 2009 49 30 90 15.2 % - 11.7 % -

2009 49 91 10 15.2 % + 20.6 EUR/100

kg -

11.7 % + 20.6 EUR/100 kg

-

2009 49 91 90 15.2 % + 20.6 EUR/100

kg -

11.7 % + 20.6 EUR/100 kg

-

2009 49 93 10 15.2 % - 11.7 % - 2009 49 93 90 15.2 % - 11.7 % - 2009 49 99 10 16 % - 12.5 % - 2009 49 99 90 16 % - 12.5 % -

5. Tomato juice

2009 50 10 00 16 % - 12.5 % - 2009 50 90 00 16.8 % - 13.3 % -

6. Grape juice

2009 61 10 00 Particular conditions - Particular conditions Col. 1 & 3 - to be checked



2009 61 90 10 22.4 % + 27 EUR/hl Non – preferential quota for

final destination: 22.4 % 18.9 % + 27 EUR/hl

Col. 2: n.o. 090067, e.d. 2009/08/31

2009 61 90 90 22.4 % + 27 EUR/hl - 18.9 % + 27 EUR/hl -

2009 69 11 10 40 % + 121 EUR/hl +

20.6 EUR/100 kg

Non – preferential quota for final destination: 40 % +

20.6 EUR/100 kg

36.5 % + 121 EUR/hl + 20.6 EUR/100 kg

Col. 2: n.o. 090067, e.d. 2009/08/31

2009 69 11 90 40 % + 121 EUR/hl +

20.6 EUR/100 kg -

6.5 % + 121 EUR/hl + 20.6 EUR/100 kg

-

2009 69 19 10 Particular conditions Non – preferential quota for

final destination: 40 % Particular conditions

Col. 1 & 3 - to be checked Col. 2: n.o. 090067, e.d.

2009/08/31 2009 69 19 90 Particular conditions - Particular conditions Col. 1 & 3 - to be checked

2009 69 51 10 Particular conditions Non – preferential quota for

final destination: 22.4 % Particular conditions

Col. 1 & 3 - to be checked Col. 2: n.o. 090067, e.d.

2009/08/31 2009 69 51 90 Particular conditions - Particular conditions Col. 1 & 3 - to be checked 2009 69 59 00 Particular conditions - Particular conditions Col. 1 & 3 - to be checked

2009 69 71 00 22.4 % + 131 EUR/hl +

20.6 EUR/100 kg -

18.9 % + 131 EUR/hl + 20.6 EUR/100 kg

-

2009 69 79 00 22.4 % + 27 EUR/hl +

20.6 EUR/100 kg -

18.9 % + 27 EUR/hl + 20.6 EUR/100 kg

-

2009 69 90 20 22.4 % + 27 EUR/hl Non – preferential quota for

final destination: 22.4 % 18.9 % + 27 EUR/hl

Col. 2: n.o. 090067, e.d. 2009/08/31

2009 69 90 80 22.4 % + 27 EUR/hl - 18.9 % + 27 EUR/hl - 7. Apple juice

2009 71 20 11 18% - 14.5 % - 2009 71 20 19 18% - 14.5 % - 2009 71 20 91 18% - 14.5 % - 2009 71 20 99 18% - 14.5 % - 2009 71 99 10 18% - 14.5 % -



2009 71 99 90 18% - 14.5 % -

2009 79 11 10 30 % + 18.4 EUR/100 kg 20% 26.5 % + 18.4 EUR/100

kg Col. 2: n.o. 090093, e.d.

2008/12/31

2009 79 11 90 30 % + 18.4 EUR/100 kg 20% 26.5 % + 18.4 EUR/100

kg Col. 2: n.o. 090093, e.d.

2008/12/31

2009 79 19 10 30% 20 % 25.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 79 19 90 30% 20 % 25.5 % Col. 2: n.o. 090093, e.d.

2008/12/31 2009 79 30 10 18% - 14.5 % - 2009 79 30 90 18% - 14.5 % -

2009 79 91 10 18 % + 19.3 EUR/100 kg - 14.5 % + 19.3 EUR/100

kg -

2009 79 91 90 18 % + 19.3 EUR/100 kg - 14.5 % + 19.3 EUR/100

kg -

2009 79 93 10 18% - 14.5 % - 2009 79 93 90 18% - 14.5 % - 2009 79 99 10 18% - 14.5 % - 2009 79 99 90 18% - 14.5 % -

8. Juice of any other single fruit or vegetable

2009 80 11 10 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 80 11 90 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 80 19 10 33.6 % 20 % 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 19 90 33.6 % 20 % 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 34 11 21 % + 12.9 EUR/100 kg 20 % 17.5 % + 12.9 EUR/100

kg Col. 2: n.o. 090093, e.d.

2008/12/31 2009 80 34 19 21 % + 12.9 EUR/100 kg 20 % 17.5 % + 12.9 EUR/100 Col. 2: n.o. 090093, e.d.



kg 2008/12/31

2009 80 34 21 21 % + 12.9 EUR/100 kg 20 % 17.5 % + 12.9 EUR/100

kg Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 34 29 21 % + 12.9 EUR/100 kg 20 % 17.5 % + 12.9 EUR/100

kg Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 35 40 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 80 35 50 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 80 35 91 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 80 35 99 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 80 36 10 21 % 20 % 7.3 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 36 90 21 % 20 % 7.3 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 38 93 33.6 % 20 % 11.7 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 38 95 33.6 % 20 % 11.7 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 38 97 33.6 % 20 % 11.7 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 80 38 98 33.6 % 20 % 11.7 % Col. 2: n.o. 090093, e.d.

2008/12/31 2009 80 50 10 19.2 % - 15.7 % - 2009 80 50 90 19.2 % - 15.7 % -

2009 80 61 10 19.2 % + 20.6 EUR/100

kg -

15.7 % + 20.6 EUR/100 kg

-

2009 80 61 90 19.2 % + 20.6 EUR/100

kg -

15.7 % + 20.6 EUR/100 kg

-



2009 80 63 10 19.2 % - 15.7 % - 2009 80 63 90 19.2 % - 15.7 % - 2009 80 69 10 20 % - 16.5 % - 2009 80 69 90 20 % - 16.5 % - 2009 80 71 10 16.8 % - 5.8 % - 2009 80 71 90 16.8 % - 5.8 % - 2009 80 73 10 10.5 % - 7% - 2009 80 73 90 10.5 % - 7% - 2009 80 79 40 16.8 % - 13.3 % - 2009 80 79 60 16.8 % - 13.3 % - 2009 80 79 80 16.8 % - 13.3 % -

2009 80 79 87 16.8 % - 13.3 % Col 1: Suspendare tarifară

autonomă: 0% 2009 80 79 89 16.8 % - 13.3 % -

2009 80 85 11 10.5 % + 12.9 EUR/100

kg - 7 % + 12.9 EUR/100 kg -

2009 80 85 19 10.5 % + 12.9 EUR/100

kg - 7 % + 12.9 EUR/100 kg -

2009 80 85 21 10.5 % + 12.9 EUR/100

kg - 7 % + 12.9 EUR/100 kg -

2009 80 85 29 10.5 % + 12.9 EUR/100

kg - 7 % + 12.9 EUR/100 kg -

2009 80 86 50 16.8 % + 20.6 EUR/100

kg -

13.3 % + 20.6 EUR/100 kg

-

2009 80 86 70 16.8 % + 20.6 EUR/100

kg -

13.3 % + 20.6 EUR/100 kg

-

2009 80 86 80 16.8 % + 20.6 EUR/100

kg -

13.3 % + 20.6 EUR/100 kg

-

2009 80 86 89 16.8 % + 20.6 EUR/100

kg -

13.3 % + 20.6 EUR/100 kg

-

2009 80 88 10 10.5 % - 3.6 % -



2009 80 88 90 10.5 % - 3.6 % - 2009 80 89 50 16.8 % - 5.8 % - 2009 80 89 70 16.8 % - 5.8 % - 2009 80 89 80 16.8 % - 5.8 % - 2009 80 89 89 16.8 % - 5.8 % - 2009 80 95 10 14 % - 9.8 % - 2009 80 95 90 14 % - 9.8 % - 2009 80 96 10 17.6 % - 6.1 % - 2009 80 96 90 17.6 % - 6.1 % - 2009 80 97 11 11 % - 7.5 % - 2009 80 97 19 11 % - 7.5 % - 2009 80 97 91 11 % - 7.5 % - 2009 80 97 99 11 % - 7.5 % - 2009 80 99 11 17.6 % - 14.1 % - 2009 80 99 15 17.6 % - 14.1 % - 2009 80 99 19 17.6 % - 14.1 % - 2009 80 99 91 17.6 % - 14.1 % - 2009 80 99 92 17.6 % - 14.1 % -

2009 80 99 93 17.6 % - 14.1 % Col 1: Suspendare tarifară

autonomă: 0% 2009 80 99 99 17.6 % - 14.1 % -

2009 90 11 00 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 90 19 00 33.6 % 20 % 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31

2009 90 21 10 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 90 21 90 33.6 % + 20.6 EUR/100

kg 20 %

30.1 % + 20.6 EUR/100 kg

Col. 2: n.o. 090093, e.d. 2008/12/31

2009 90 29 00 33.6 % 20 % 28.5 % Col. 2: n.o. 090093, e.d.

2008/12/31



2009 90 31 00 20 % + 20.6 EUR/100 kg - 16.5 % + 20.6 EUR/100

kg -

2009 90 39 00 20 % - 16.5 % - 2009 90 41 00 15.2 % - 11.7 % - 2009 90 49 00 16 % - 12.5 % - 2009 90 51 00 16.8 % - 13.3 % - 2009 90 59 30 17.6 % - 14.1 % - 2009 90 59 90 17.6 % - 14.1 % -

2009 90 71 00 15.2 % + 20.6 EUR/100

kg -

11.7 % + 20.6 EUR/100 kg

-

2009 90 73 00 15.2 % - 11.7 % - 2009 90 79 00 16 % - 12.5 % -

2009 90 92 10 10.5 % + 12.9 EUR/100

kg - 7 % + 12.9 EUR/100 kg -

2009 90 92 90 10.5 % + 12.9 EUR/100

kg - 7 % + 12.9 EUR/100 kg -

2009 90 94 10 16.8 % + 20.6 EUR/100

kg -

13.3 % + 20.6 EUR/100 kg

-

2009 90 94 90 16.8 % + 20.6 EUR/100

kg -

13.3 % + 20.6 EUR/100 kg

-

2009 90 95 00 10.5 % - 7 % - 2009 90 96 00 16.8 % 13.3 % - 2009 90 97 00 11 % - 7.5 % - 2009 90 98 00 17.6 % - 14.1 % -




ANNEX 7 EXPLANATION FOR TARIC CODES FOR DIFFERENT CATEGORIES OF FRUIT

AND VEGETABLE JUICES (SEE ANNEX 6)

Legend for Taric codes Used for fruit and vegetable juice

2009 11 - Orange juice 2009 11 - - Frozen 2009 11 11 - - - Of a Brix value exceeding 67 - 2009 11 11 - - - - Of a value not exceeding € 30 per 100 kg net weight - 2009 11 11 10 - - - - - In containers of two litres or less 2009 11 11 90 - - - - - Other 2009 11 19 - - - - Other - - 2009 11 19 10 - - - - - In containers of two litres or less 2009 11 19 90 - - - - - Other 2009 11 91 - - - Of a Brix value not exceeding 67 2009 11 91 - - - - Of a value not exceeding € 30 per 100 kg net weight and with an

added sugar content exceeding 30 % by weight 2009 11 91 10 - - - - - In containers of two litres or less 2009 11 91 90 - - - - - Other 2009 11 99 - - - - Other - 2009 11 99 11 - - - - - Having a degree of concentration of up to 50° Brix, in

containers of two litres or less, excluding blood orange juice 2009 11 99 11 - - - - - - with a degree of concentration higher than 20° brix 2009 11 99 19 - - - - - - Other 2009 11 99 92 - - - - - Other - - 2009 11 99 92 - - - - - - In containers of two litres or less - - - 2009 11 99 92 - - - - - - - with a degree of concentration higher than 20° brix 2009 11 99 94 - - - - - - - Other 2009 11 99 96 - - - - - - - with a degree of concentration higher than 20° brix 2009 11 99 98 - - - - - - - Other 2009 12 - - Not frozen, of a Brix value not exceeding 20 - 2009 12 00 10 - - - In containers of two litres or less 2009 12 00 90 - - - Other 2009 19 - - Other 2009 19 11 - - - Of a Brix value exceeding 67 2009 19 11 - - - - Of a value not exceeding € 30 per 100 kg net weight 2009 19 11 11 - - - - - In containers of two litres or less - - 2009 19 11 11 - - - - - - powdered 2009 19 11 19 - - - - - - Other - - 2009 19 11 91 - - - - - - powdered 2009 19 11 99 - - - - - - Other 2009 19 19 - - - - Other 2009 19 19 11 - - - - - In containers of two litres or less 2009 19 19 11 - - - - - - powdered - 2009 19 19 91 - - - - - - Other - - 2009 19 19 91 - - - - - - powdered - - 2009 19 19 99 - - - - - - Other - - 2009 19 91 - - - Of a Brix value exceeding 20 but not exceeding 67 2009 19 91 - - - - Of a value not exceeding € 30 per 100 kg net weight and with an

added sugar content exceeding 30 % by weight



2009 19 91 11 - - - - - In containers of two litres or less 2009 19 91 11 - - - - - - powdered 2009 19 91 19 - - - - - - Other - - 2009 19 91 91 - - - - - - powdered 2009 19 91 99 - - - - - - Other - 2009 19 98 - - - - Other - 2009 19 98 11 - - - - - In containers of two litres or less 2009 19 98 11 - - - - - - powdered - - - 2009 19 98 19 - - - - - - Other 2009 19 98 91 - - - - - Other - - - 2009 19 98 91 - - - - - - powdered 2009 19 98 99 - - - - - - Other 2009 21 - Grapefruit (including pomelo) juice 2009 21 - - Of a Brix value not exceeding 20 2009 21 00 10 - - - powdered 2009 21 00 90 - - - Other 2009 29 - - Other 2009 31 - Juice of any other single citrus fruit 2009 31 - - Of a Brix value not exceeding 20 2009 31 11 - - - Of a value exceeding € 30 per 100 kg net weight 2009 31 11 - - - - Containing added sugar - 2009 31 11 11 - - - - - Lemon juice 2009 31 11 11 - - - - - - powdered 2009 31 11 19 - - - - - - Other 2009 31 11 91 - - - - - Other - 2009 31 11 91 - - - - - - powdered - - 2009 31 11 99 - - - - - - Other 2009 31 19 - - - - Not containing added sugar 2009 31 19 11 - - - - - Lemon juice 2009 31 19 11 - - - - - - powdered - 2009 31 19 19 - - - - - - Other 2009 31 19 91 - - - - - Other 2009 31 19 91 - - - - - - powdered 2009 31 19 99 - - - - - - Other - - - 2009 31 51 - - - Of a value not exceeding € 30 per 100 kg net weight 2009 31 51 - - - - Lemon juice 2009 31 51 - - - - - Containing added sugar 2009 31 51 10 - - - - - - powdered - 2009 31 51 10 - - - - - - powdered - - 2009 31 51 90 - - - - - - Other - - 2009 31 59 - - - - - Not containing added sugar - - - 2009 31 59 10 - - - - - - powdered 2009 31 59 90 - - - - - - Other - 2009 31 91 - - - - Other citrus fruit juices 2009 31 91 - - - - - Containing added sugar - 2009 31 91 10 - - - - - - powdered 2009 31 99 - - - - - Not containing added sugar - - 2009 31 99 10 - - - - - - powdered - 2009 31 99 90 - - - - - - Other 2009 41 - Pineapple juice 2009 41 - - Of a Brix value not exceeding 20



2009 41 10 - - - Of a value exceeding € 30 per 100 kg net weight, containing added sugar

2009 41 10 10 - - - - powdered 2009 41 10 90 - - - - Other 2009 41 91 - - - Other 2009 41 91 - - - - Containing added sugar 2009 41 91 10 - - - - - powdered 2009 41 91 90 - - - - - Other 2009 41 99 - - - - Not containing added sugar 2009 41 99 10 - - - - - powdered - 2009 41 99 90 - - - - - Other 2009 50 - Tomato juice 2009 50 10 - - Containing added sugar 2009 50 90 - - Other 2009 61 - Grape juice (including grape must) 2009 61 - - Of a Brix value not exceeding 30 2009 61 10 - - - Of a value exceeding € 18 per 100 kg net weight 2009 61 90 - - - Of a value not exceeding € 18 per 100 kg net weight - 2009 61 90 10 - - - - for the production of grape juice and/or non-wine sector

products such as non-alcoholic drinks, jams and sauces 2009 61 90 90 - - - - Other 2009 71 - Apple juice 2009 71 - - Of a Brix value not exceeding 20 2009 71 20 - - - Containing added sugar 2009 71 20 11 - - - - Of a value exceeding EUR 18 per 100 kg net weight - - - - - 2009 71 20 11 - - - - - powdered 2009 71 20 19 - - - - - Other 2009 71 20 91 - - - - Other 2009 71 20 91 - - - - - powdered - - 2009 71 20 99 - - - - - Other 2009 71 99 - - - Not containing added sugar 2009 71 99 10 - - - - powdered 2009 71 99 90 - - - - Other 2009 80 - Juice of any other single fruit or vegetable 2009 80 11 - - Of a Brix value exceeding 67 2009 80 11 - - - Pear juice 2009 80 11 - - - - Of a value not exceeding € 22 per 100 kg net weight 2009 80 11 10 - - - - - powdered 2009 80 11 90 - - - - - Other 2009 80 19 - - - - Other 2009 80 19 10 - - - - - powdered 2009 80 19 90 - - - - - Other 2009 80 34 - - - Other 2009 80 34 - - - - Of a value not exceeding € 30 per 100 kg net weight 2009 80 34 - - - - - Juices of tropical fruit 2009 80 34 11 - - - - - - Juices of passionfruit and guavas - - 2009 80 34 11 - - - - - - - powdered - - 2009 80 34 19 - - - - - - - Other - 2009 80 34 21 - - - - - - Juices of mangoes, mangosteens, papaws (papayas),

tamarinds, cashews apples, lychees, jackfruit, sapodillo plums, carambola and pitahaya



2009 80 34 21 - - - - - - - powdered 2009 80 34 29 - - - - - - - Other 2009 80 35 - - - - - Other - 2009 80 35 40 - - - - - - powdered 2009 80 35 40 - - - - - - - Apricot juice 2009 80 35 50 - - - - - - - Other 2009 80 35 91 - - - - - - - Apricot juice 2009 80 35 91 - - - - - - -

Apricot juice

- - - - - - - 2009 80 35 99 - - - - - - - Other

2009 80 36 - - - - - Juices of tropical fruit - - 2009 80 36 10 - - - - - - powdered - 2009 80 36 90 - - - - - - Other 2009 80 38 - - - - - Other - 2009 80 50 - - Of a Brix value not exceeding 67 2009 80 50 - - - Pear juice 2009 80 50 - - - - Of a value exceeding € 18 per 100 kg net weight,

containing added sugar 2009 80 50 10 - - - - - powdered 2009 80 50 90 - - - - - Other - - - - 2009 80 61 - - - - - With an added sugar content exceeding 30 % by weight 2009 80 61 10 - - - - - - powdered - 2009 80 61 90 - - - - - - Other - 2009 80 63 - - - - - With an added sugar content not exceeding 30 % by

weight 2009 80 63 10 - - - - - - powdered 2009 80 63 90 - - - - - - Other 2009 80 69 - - - - - Not containing added sugar 2009 80 69 10 - - - - - - powdered - - 2009 80 69 90 - - - - - - Other 2009 80 71 - - - Other 2009 80 71 - - - - Of a value exceeding € 30 per 100 kg net weight,

containing added sugar - 2009 80 71 - - - - - Cherry juice - - 2009 80 71 10 - - - - - - powdered 2009 80 71 90 - - - - - - Other - 2009 80 73 - - - - - Juices of tropical fruit 2009 80 73 10 - - - - - - powdered 2009 80 73 90 - - - - - - Other 2009 80 79 - - - - - Other 2009 80 79 40 - - - - - - powdered 2009 80 79 40 - - - - - - - Apricot juice - - 2009 80 79 60 - - - - - - - Other 2009 80 79 80 - - - - - - - Apricot juice - - - - 2009 80 79 87 - - - - - - - Frozen boysenberry juice concentrate with a Brix

value of 61 or more, but not more than 65 2009 80 79 89 - - - - - - - Other 2009 80 85 - - - - Other - - - - 2009 80 85 - - - - - - Juices of tropical fruit - 2009 80 85 11 - - - - - - - Juices of passionfruit and guavas



ANNEX 8 GENERAL RULES APPLICABLE FOR PRODUCTS OF NON – ANIMAL ORIGIN

1. General principles and requirements of Food Law

Basic food law requirements applying to all food imported into the European Union (EU) are laid down in Regulation (EC) No. 178/2002 (OJ L-31 01/02/2002), which among other topics covers.

• Compliance or equivalence: Imported food must comply with the relevant requirements of food law or conditions recognized by the EU to be at least equivalent thereto;

• Traceability: The Regulation defines traceability as the ability to trace and follow food and ingredients through all stages of production, processing and distribution it also contains general provisions for traceability which cover all food business operators, without prejudice to existing legislation on specific sectors such as beef, fish, Genetically Modified (GM) food, etc. Importers are similarly affected as they will be required to identify from whom the product was exported in the country of origin. Unless specific provisions for further traceability exist, the requirement for traceability is limited to ensuring that businesses are at least able to identify the immediate supplier of the product in question and the immediate subsequent recipient, with the exemption of retailers to final consumers (one step back-one step forward);

• Responsibilities of food importers: Food business operators at all stages of production, processing and distribution within the businesses under their control shall ensure that foods satisfy the requirements of food law which are relevant to their activities and shall verify that such requirements are met. If a food business operator has reason to believe that imported food is not in compliance with the food safety requirements, it shall immediately initiate procedures to withdraw the food in question and inform the competent authorities thereof.

2. General foodstuffs hygiene rules

The relevant hygiene rules of food which need to be respected by food business operators in third countries are contained in Regulation (EC) No. 852/2004 (OJ L-226 25/06/2004):

• General obligation on the operator to monitor the food safety of products and processes under his responsibility;

• General hygiene provisions for primary production and detailed requirements for all stages of production, processing and distribution of food;

• Microbiological criteria for certain products which are established in Commission Regulation (EC) No. 2073/2005 (OJ L-338 22/12/2005);

• Procedures based on Hazard Analysis and Critical Control Point (HACCP) principles;

• Approval and registration of establishments;

The following guidance documents may be found in the European Commission’s Health and Consumer Protection Directorate General (DG SANCO) website:

• Key questions related to import requirements and the new rules on food hygiene and official food controls: http://ec.europa.eu/food/international/trade/interpretation_imports.pdf



• Guidance document on the implementation of certain provisions of Regulation (EC) No 852/2004 on the hygiene of foodstuffs: http://ec.europa.eu/food/food/biosafety/hygienelegislation/guidance_doc_852-2004_en.pdf

• Guidance document on the implementation of procedures based on the HACCP principles, and on the facilitation of the implementation of the HACCP principles in certain food businesses: http://ec.europa.eu/food/food/biosafety/hygienelegislation/guidance_doc_haccp_en.pdf

3. General conditions concerning contaminants in food

Contaminant substances may be present in food as a result of the various stages of its production and marketing or due to environmental pollution. Since they represent a real risk for food safety, the EU has taken measures to minimize the risk by setting maximum levels for certain contaminants in foodstuffs.

a) Maximum levels of certain contaminants in foodstuffs

Certain foodstuffs (i.e. fruit, vegetables, nuts, cereals, fruit juices, etc…) must not, when placed on the market, contain higher contaminant levels than those specified in Regulation (EC) 1881/2006 (OJ L-364 20/12/2006).

This Regulation covers four different categories of contaminants: nitrates, alpha toxins, heavy metals (lead, cadmium, mercury) and 3-monochloropropane-1,2diol (3-MCPD), etc.

The maximum contaminant levels relate to the edible part of the foodstuffs but apply also to the ingredients used for the production of compound foodstuffs.

b) Maximum levels of pesticide residues in and on food

Member States may restrict the putting on the market within their territories of certain products containing pesticide residues if the quantity of these residues exceeds the maximum levels permitted presenting an unacceptable risk to humans. These limits depend on the toxicity of the substance in question.

Regulation (EC) No 396/2005 (OJ L-70 16/03/2005) sets up harmonized maximum levels of pesticide residues for agricultural products or parts thereof intended for food to be used as fresh, processed and/or composite food in so far as they may contain pesticide residues.

c) Maximum levels of radioactive contamination of foodstuffs

Regulations (EC) 3954/1987 (OJ L-371 30/12/1987) and 944/1989 (OJ L-101 13/04/1989) lay down the maximum permitted levels of radioactive contamination of foodstuffs (either immediately or after processing) which may be placed on the market following a nuclear accident or any other case of radiological emergency.

There is a list of minor foodstuffs (i.e. those which are consumed least) for which the maximum permitted levels are considerably higher (ten times higher)

d) Materials intended to come into contact with foodstuffs

Materials and articles intended to come into contact with foodstuffs must be manufactured so that they do not transfer their constituents to food in quantities which could endanger human health, change the composition of the food in an unacceptable way or deteriorate the taste and odour of foodstuffs.



The Regulation (EC) No. 1935/2004 (OJ L-338 13/11/2004) establishes a list of groups of materials and articles (such us plastics, ceramics, rubbers, paper, glass, etc.) which may be covered by specific measures that include a list of the authorized substances, special conditions of use, purity standards, etc. Specific measures exist for ceramics, regenerated cellulose and plastics.

4. Special provisions on Genetically Modified (GM) food and Novel food

In order to ensure the highest level of protection of human health, EU legislation provides for a single authorization procedure for the placing on the market of food containing, consisting of or derived from Genetically Modified Organisms.

An application must be sent to the competent authority of a Member State and then referred to the European Food Safety Authority (EFSA) which carries out a risk assessment.

On the basis of the opinion of EFSA, the Commission drafts a proposal for granting or refusing the authorization, which must be approved by the Standing Committee on the Food Chain and Animal Health. The authorized food and feed are entered in the Community Register of GMO food and feed.

Novel foods (i.e. foods and food ingredients that have not been used for human consumption to a significant degree within the EU before 15 May 1997) must also undergo a safety assessment before being placed on the EU market.

Companies that want to place a novel food on the EU market must submit their application to the competent body of a Member State for risk assessment purposes. As a result of this assessment, an authorization decision may be taken. The authorization decision defines the scope of the authorization, the conditions of use, the designation of the food or food ingredient, its specification and the specific labeling requirements.

Novel foods or novel food ingredients considered by a national food assessment body as substantially equivalent to existing foods or food ingredients may follow a simplified procedure, only requiring notifications from the company.

5. General conditions of preparation of foodstuffs

EU legislation lays down the rules relating to treatment of foodstuffs, food ingredients and their conditions of use in order to protect the health of consumers and guarantee the free circulation of foodstuffs in the European Union market.

Moreover, specific provisions for groups of foods are laid down in specific Directives. These include compositional requirements, hygiene requirements, list of additives, purity criteria, specific labeling requirements , etc

a) Authorized food additives and flavourings

The scope of the Directives covers food additives and flavourings used as ingredients during the manufacture or preparation of food and which are part of the finished product.

The only substances which may be used as food additives are those included in the approved common lists and then only under the conditions of use mentioned in those lists (e.g. colorants, sweeteners, preservatives, emulsifiers, stabilizers, raising agents, etc…).

b) Preparation and treatments of certain foodstuffs



There are also rules in relation with the manufacture, marketing and importation of foods and food ingredients that are subject to specific treatments such as Council Directive 89/108/EEC (OJ L-40 11/02/1989) on quick-freezing or Directive 1999/2/EC (OJ L-66 13/03/1999) on ionizing radiation.

c) Specific provisions for certain groups of products and for foodstuffs for particular nutritional purposes

Specific provisions are applied to certain groups of products (such as cocoa, sugar, etc.) and to foodstuffs intended for particular nutritional uses (baby foods, dietary foods, gluten-free foods...). These may include specific requirements on composition, hygiene, labeling (e.g. declaration of the energy value, carbohydrate, protein and fat content), list of additives, purity criteria, etc.

Summaries and lists of legislation Foodstuffs for particular nutritional purposes may be found in Health and Consumer Protection Directorate General (DG SANCO) website: http://ec.europa.eu/food/food/labellingnutrition/nutritional/index_en.htm

6. Control of foodstuffs

The competent authorities in Member States will carry out regular controls on imported food of non-animal origin to ensure they comply with the EU general health rules designed to protect health and interests of consumers.

The control may apply to import into the EU and/or to any other stage of the food chain (manufacture, processing, storage, transport, distribution and trade) and may include a systematic documentary check, a random identity check and, as appropriate, a physical check.

Further information may be found in the Health and Consumer Protection Directorate General (DG SANCO) website:

Key questions related to import requirements and the new rules on food hygiene and official food controls: http://ec.europa.eu/food/international/trade/interpretation_imports.pdf



ANNEX 9 CERTIFICATE OF ORIGIN FORM A

1. Certificates of origin Form A must conform to the specimen shown in this annex. The use of English or French for the notes on the reverse of the certificate shall not be obligatory. Certificates shall be made out in English or French. If completed by hand, entries must be in ink and in capital letters.

2. Each certificate shall measure 210 × 297 mm; a tolerance of up to plus 5 mm or minus 8 mm in the length may be allowed. The paper used shall be white writing paper, sized, not containing mechanical pulp and weighing not less than 25 g/m2. It shall have a printed green guilloche-pattern background making any falsification by mechanical or chemical means apparent to the eye. If the certificates have several copies, only the top copy which is the original shall be printed with a printed green guilloche-pattern background.

3. Each certificate shall bear a serial number, printed or otherwise, by which it can be identified.

4. A specimen of Certificate is shown in this annex (see next page)



ANNEX 10 CATEGORIES OF PRODUCTS OF THAI ORIGIN THAT HAVE BENEFITED OF

QUOTA IN 2008

Order number 092005

Associated TARIC Code 1604141120



1604 14 Tunas, skipjack and bonito (Sarda spp.)

1604 14 11 Tunas and skipjack

1604 14 11 In vegetable oil

1604 14 11 20 Bluefin tunas (Thunnus thynnus)

1604 14 11 20 Preserved

1604 14 11 25 Other

Associated TARIC Code 1604 14 11 30






1604 14 11 30 Atlantic bigeye tuna (Thunnus obesus)

1604 14 11 30 Preserved

1604 14 11 35 Other











1604 14 11 95 Other

1604 14 11 95 Preserved

1604 14 11 99 Other







1604 14 16 Other

1604 14 16 Fillets known as 'loins'

1604 14 18 Other


1604 14 18 20 Preserved

1604 14 18 25 Other







1604 14 16 Other


1604 14 18 Other


1604 14 18 30 Preserved

1604 14 18 35 Other









1604 14 16 Other


1604 14 18 Other



1604 14 18 95 Other

1604 14 18 95 Preserved

1604 14 18 99 Other






1604 20 10 Other


1604 20 70 30 of Bluefin tunas (thunnus thynnus)

1604 20 70 30 Preserved

1604 20 70 35 Other







1604 20 10 Other




1604 20 70 40 Of Atlantic bigeye tuna (Thunnus obesus)

1604 20 70 40 Preserved

1604 20 70 45 Other







1604 20 10 Other


1604 20 70 30 of Bluefin tunas (thunnus thynnus)

1604 20 70 40 Of Atlantic bigeye tuna (Thunnus obesus)

1604 20 70 95 Other

1604 20 70 95 Preserved

1604 20 70 99 Other


For 2008


End date 30/06/2008


Balance 0 kilogram



ANNEX 11 ACCESS TO STRUCTURAL FUNDS – FINANCING LINES

Programme/

Financing

institution

Eligible activities Size of subsidy Own contribution Eligible

applicants

1. FEADR -

measure 121

1. Construction and/ or modernization of buildings used for agricultural production within farms;

Agriculture and rural development programme

2. Construction and/ or modernization of internal roads infrastructure or of the access from agricultural area;

3. Construction and/ or modernization of taurine farms for milk production which are enclosed in the milk quota European system only as regards the capacity that equals the production level of the beneficiary;

- agricultural

exploitations - 4. Construction and/ or modernization of green-houses, including heating stations and irrigation installations, insurance of utilities for compliance with the environmental conditions;

A.P.D.R.P. (www.apdrp.ro)

5. Purchase or buying by leasing of new tractors, harvester-threshers, machines, tools, installations, equipments and accessories, equipments and specialized software identified as necessary by the feasibility study and the justificatory memorandum;

6. Purchasing or buying by leasing of new specialized transportation means necessary in the production activity and identified as necessary by the feasibility study and the justificatory memorandum

* maximum EUR

1 million

* additional amounts above EUR1 million are possible in case projects fulfil some conditions (so could reach EUR 2 million EUR) * subsidy represents in general 50% from the eligible value of project; but could be higher in some situations

50% from eligible value of project (could be lower in case of some specific projects)

Romanian

companies founded on the law 31/1990, with Romanian and/or foreign shareholders



7. Replacement of noble varieties of grape-vine plantations at the end of their biological production cycle (minimum 25 years) and which were not included in the reorganization system for grape-vine plantations supported by FEGA in OCP wine and establishment of table grapes plantations

8. Establishment of fruit trees and bushes/ shrubs, strawberry plantations;

9. Establishment of nurseries for grape-vine, fruit trees and bushes/ shrubs, other trees;

10. Investments for the durable/ enduring production and usage inside a farm of energy from renewable sources;

11. Investment for the establishment of crops of forestry species with short production cycle and vegetative rejuvenation, with the purpose to produce renewable energy;

12. Investments in apiculture/ beekeeping, with the exception of the ones accomplished through the National Apiarian Program;

13. Investments for processing agriculture products at farm level, including equipments for their selling, storage, cooling etc.;

14. General costs of the project;

15. Investments necessary for the accommodation of the ecological agriculture activities;

16. Investments necessary for achievement of conformity with the European standards.

2. FEADR -

measure 123

1. New constructions or modernization of buildings used for the production process, including internal roads infrastructure

Agriculture and rural development

2. New constructions or modernization for storage of products, including refrigerating/cooling plants;

* maximum

EUR* 2 million

additional amounts above EUR 2 million are

- 50% from eligible value of project for small and medium sized enterprises; - 25%

Romanian

companies founded on the law 31/1990, with Romanian and/or



programme

3. Purchase or acquisition by financial leasing of new machines, installations, equipments and apparatus;

- food processing

- 4. Investments for improvement of raw material quality internal control, semi-fabricated products, of products and subproducts obtained in processing and marketing units (constructions and/or equipments);

5. Purchase or acquisition by financial leasing of new specialized means of transportation;


6. Organizing and implementing food-safety and quality management systems;

7. Purchase of know-how, acquisition of patents and licenses for project implementation;

8. General costs of the project;

9. Software acquisition.

possible in case projects fulfill some conditions (so could reach EUR 2 million)

from eligible value of project for large companies under 750 employees;

foreign shareholders

3. FEADR - XS13

scheme

1. New constructions or modernization of buildings used for the production process, including internal roads infrastructure

Agriculture and rural development programme

2. New constructions or modernization for storage of products, including refrigerating/cooling plants;

- food processing

- (products

included in

Annex 1 of Act of

accession to UE)

3. Purchase or acquisition by financial leasing of new machines, installations, equipments and apparatus;

4. Purchase or acquisition by financial leasing of new specialized means of transportation;

* maximum EUR

3 million

- 50% from eligible value of project (40% for Bucharest - Ilfov Region)

Small and

medium sized

enterprises founded on the law 31/1990, with Romanian and/or foreign shareholders



5. Investments for improvement of raw material quality internal control, semi-fabricated products, of products and sub products obtained in processing and marketing units (constructions and/or equipments);


6. Investments for production and use of energy from renewable sources (construction and/or equipments)



4. FEADR - XS 28

scheme

1. Construction and/ or modernization of buildings used for production;

agriculture and rural development programme

2. Purchase of new machines, installations and equipments;

- first processing

of forest products

-




* maximum EUR

2 million

- 50% from eligible value of project (40% for Bucharest - Ilfov Region)

Micro-enterprises founded on the law 31/1990, with Romanian and/or foreign shareholders



ANNEX 12 LIST OF INTERVIEWED INSTITUTIONS AND COMPANIES

No. Companies / Institutions Field of activity Food and beverage companies

1 Rompescaria Importer and distributor of fish and seafood 2 Macromex Larger importer and distributor of frozen products

in Romania 3 Campina Dairy products manufacturer 4 Avi-Top

Poultry meat and meat products manufacturer

5 Nordic Group

Food products importer and distributor Key canned food distributor

6 Margarom Margarine producer

7 Heineken Beer producer 8 Whiteland

Food products importer and distributor / sauces manufacturer

Forwarding / Logistics / Transportation companies 9 Damco Global freight forwarder 10 DSV Global freight forwarder 11 Air – Sea Forwarders Global freight forwarder 12 Tarom Air transporter - passengers & freight

13 Frigoexpres Domestic and international road transpiration – specialized in perishable freight under controlled temperature

14 NAVROM Fluvial operator 15 CFR Marfa National Railway Freight Company Financial institutions

16 UniCredit Tiriac Banking services 17 Bancpost Banking services 18 BCR Banking services 19 Fortis Bank Banking services Public authorities / institutions 20 National Custom Authority Organization submitted to the Ministry of

Economy and Finance, which ensures that the policy on custom and excise duties is levied according to the laws

21 Ministry of Agriculture and Rural Development – General Direction of Policy Implementation

Ministry that regulates the agriculture, forestry and rural development activities in Romania

22 The National Institute of Statistics Specialized organization of the public administration system, issuer of official statistics in Romania

23 Romanian Trade Promotion Centre Trade promotion governmental organization Consulting / research companies 24

IBBL Associates SRL Consulting company – interview with market expert on fruit juice market

25 Euromonitor International Global Market research company



ANNEX 13 BUCHAREST – MUNICH (DEUTCHLAND) ROAD MAP



ANNEX 14 BUCHAREST – FRANKFURT AM MAIN (DEUTSCHLAND) ROAD MAP



ANNEX 15 BUCHAREST – TRIESTE (ITALY) ROAD MAP



ANNEX 16 BUCHAREST – ROTTERDAM (NETHERLANDS) MAP



ANNEX 17 BUCHAREST – PARIS (FRANCE) ROAD MAP



ANNEX 18 BUCHAREST – BUDAPEST (HUNGARY) ROAD MAP



ANNEX 19 BUCHAREST – VIENNA (AUSTRIA) ROAD MAP



ANNEX 20 STRUCTURE OF GOODS TRANSPORTED BY RAILWAYS

Ore4%

Cement3%

Agricultural products

4%

Chemicals4%

Other17%

Quarry and ballast products

4%

Common metals and common metal articles

10% Oil products13%

Coal

41%

Source: CFR Railways statistics



ANNEX 21 MAP OF MARITME ROUTE TANJUNG PELEPAS (MALAYSIA) – CONSTANTA (ROMANIA) AS PER MAERSK LINE



ANNEX 22 SCHEDULES – TRANSPORT PLAN BANGKOK (TH) – CONSTANTA (RO) AS PER MAERSK LINE

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