POLAND: Polish promise

Emigration brings international opportunities for Polish drinks brands in the UK and Ireland – and for international brands in Poland. Euromonitor International’s Catherine Mars reports

Following Poland’s accession to the EU in May 2004, drastic wage differentials and brighter job prospects abroad have fuelled emigration to countries such as the UK and Ireland. Emigration from Poland creates opportunities for domestic alcoholic drinks producers in countries where Polish nationals settle. Conversely, there are opportunities for international brands catering to aspirant Poles with more westernised tastes who return to their home country after living and working abroad for a period of time.

Migration patterns have the potential to change societies and purchasing habits. Spain, for example, has gone from being an emigrant country in the 1980s to the second largest net positive balance country after the US. Immigrants in Spanish cities are demanding new products and flavours and as a result typical drinks from the country of origin of immigrants are being launched, and sales of some alcoholic drinks are receiving a boost. This is the case with vodka, supported by Eastern Europeans, and rum and Tequila, supported by South Americans.

Poles focus on exports
Similarly, the wave of Polish emigrants to other EU countries is expected to have a lasting impact on drinks sales in the countries where they settle. According to the Polish Labour Ministry, about 800,000 Polish citizens have left the country in search of better work opportunities abroad since the opening of labour markets in 2004, with some analysts speculating that the figure could in fact be closer to two million. The UK and Ireland have seen the largest waves of Polish immigrants since opening their labour markets to new EU members.

Recognising the opportunity presented by migration, Polish manufacturers have focused on foreign sales. Export sales to expatriates offer producers a unique chance to promote domestic brands to the demanding UK market, for example. Manufacturers may also consider the introduction of brands that are dedicated to Polish emigrants. For example, “vodka for emigrants” could win over drinkers.

The US remains the largest importer of Polish vodka, accounting for 36% of vodka exports by volume in 2006, mainly thanks to its large number of Polish immigrants. Since 2004 vodka exports from Poland have soared, partly because exports could enter the EU free from tariffs. In the UK, CEDC’s Absolwent vodka gained a good response from consumers under the Graduate brand and Polmos Bialystok (part of CEDC) also produces own-label vodka for Sainsbury’s.

Recognising the lucrative potential of the new immigrant consumer base in Ireland, Irish Distillers Ltd began distributing two premium Polish vodka brands in the country in late 2006 – Pernod Ricard’s Wyborowa Exquisite and CEDC’s Zubrowka Bison Grass. Furthermore, a multitude of smaller distributors are scrambling to import other brands of vodka that are traditionally popular in Poland. High excise duties on spirits mean that prices of Polish vodka in Ireland are much higher than they are in Poland. However, despite the popularity of private imports (travellers may bring up to 10 litres of vodka into Ireland without incurring extra duty taxes) official imports of Polish vodka into Ireland have grown significantly (up from 2 million litres in 2004 to 136m litres in 2007). Late 2007 saw the introduction of new Polish vodka brands into mainstream outlets such as convenience stores and supermarkets/hypermarkets, although the distribution of many of these brands is very fragmented.

Brewers stand to benefit too
Opportunities also exist for Polish brewers. The UK is the biggest export market for Polish beer with exports to the UK almost tripling in volume terms between 2005 and 2006. The wave of Polish emigrants that reached the UK was the main reason for exploding export sales, with these consumers attracted by beer from home. SABMiller is the leader in export sales of beer manufactured in Poland and enjoyed about 300% growth in export sales to the UK in 2006, mainly on the back of the Tyskie and Lech brands.

In Ireland, supermarkets/hypermarkets have responded to the growth of Polish immigrants by devoting shelf space to Polish beers. In 2007 it became commonplace to see popular Polish beers such as Zwiec, Okocim, Lech and Tyskie in supermarkets and hypermarkets. Furthermore, these brands of beer can also be purchased in most off-trade convenience stores and specialists. As a result, sales of these four brands of beer as a group grew by over 900% in volume terms between 2005 and 2006 in Ireland, albeit from a very small base.

Demand for global brands
According to the results of a survey conducted in 2006 by SMG/KRC, up to 25% of Poles would consider leaving Poland and settling in other countries. Nevertheless, Euromonitor International anticipates real opportunities for international brands in Poland. Not only has economic development and foreign investment contributed to rising affluence, but more income has also poured into the country as Poles working abroad have been eager to support their families back home.

Furthermore, recent studies have shown that more than half of the Polish immigrants registering to work in the UK say they intend to stay for less than three months, a proportion that has climbed since 2005. There are also signs that earlier arrivals are starting to return home, having saved money and learned new skills and languages. Those that decide to return to Poland will likely have new tastes and are predicted to display a more cosmopolitan approach to drinking. Apart from vodka they are likely to opt for drinks such as whisk(e)y and Cognac.

Euromonitor International expects that Poles returning to the country will demand the brands they have developed a taste for abroad, paving the way for international brands in Poland. As a result of the homecoming of Polish emigrants, manufacturers should consider the introduction of brands popular in the UK. For example, InBev could introduce Stella Artois with cooperation from a leading spirits distributor such as CEDC or a soft drinks player such as Pepsi, and Diageo could put more of an emphasis on strengthening the Guinness brand. Wine brands popular in the UK should also engage consumers, such as Diageo’s Blossom Hill, Constellation Brands’ Hardys and Pernod Ricard’s Jacob’s Creek.

Catherine Mars is an alcoholic drinks analyst at Euromonitor International 

db © October 2008