Workshop on Agriculture AgriBusiness and the Retail Sector
Workshop on Agriculture, Agri-Business and the Retail Sector in South-East Europe Nicos Papandreou
EBRD’s agribusiness sector expertise We finance all stages of the food chain Upstream Agricultural inputs & production Downstream Primary & secondary processing Packaging & distribution Retail & Food Service
Agribusiness & EBRD annual investments in Agribusiness (million €) l l l 27 bankers EUR 3. 25 bn invested in 205 projects Growing annual commitments
The Transition Period l l l Before 1990, planned economy, no supply and demand, consumers had no choice and producers no incentives During transition: vertical disintegration, mafia steps in, no market transparency and no competition EBRD response: trying to promote wholesale markets as a way to concentrate supply and demand in a single space and promote fair competition
EBRD’s Wholesale Markets l l l 25 wholesale markets in 11 countries Implemented 7 projects Mixed success rate
Wholesale Market Projects Company Sector EBRD Country Signing Date Yerevan WSM refurbish & new wholesale market USD 15 m Armenia Dec ‘ 95 Minsk WSM refurbishment of former vegetable base USD 6. 5 m Belarus Dec ‘ 93 Bulgaria WSM Wholesale & Assembly Market USD 10 m Bulgaria Aug ‘ 99 Croatia WSM Wholesale Markets USD 16. 5 m Croatia Dec ‘ 97 Budapest WSM Expansion & Modernisation USD 6. 4 m Hungary Mar ‘ 94 Warsaw WSM Wholesale Market & Distribution Park USD 15. 1 m Poland Dec ‘ 94 Bucharest WSM Construction of Wholesale Market USD 25 m Romania
Conclusion: Mixed Response l l Financing is not a bottleneck Government policies have to follow Wholesale markets are only part of the solution Need for technical assistance This led to CEI Wholesale Market Foundation…
Strategic orientation l l Promote modern private distribution, faster and more effective Continue to finance downstream industry to support upstream agriculture
EBRD example retail financing 9
Agribusiness team and EBRD: Projects and Scope 2 6 Intermarché Extensive experience of working with the most demanding agribusiness and food FMCG companies across the Food Chain, multinationals and local leaders - many have more than one project with us (see small circles).
Some Examples – Getro Why Getro l Successful local Entrepreneur with a good track record l Good format for local needs l Location location Structure of Project l € 25 m convertible debt facility l Strengthening equity base of company and giving EBRD potential upside l Fully flexible long term facility tranched
Some Examples – Cora Why Cora l Good regional player with a strategy across a number of countries l Good format for local needs l Lots of experience /established models l Deep Pockets Structure of Project l € 160 m syndicated debt facility l For hypermarket format l Strengthening of Balance sheet of client l Fully flexible Tranched facility
Conclusion on Retail l l Appropriate Format appropriate time Location, location Flexibility to respond to customer needs Long Term tranched facilities required to provide full flexibility to clients
Private sector Response: Investment waves Beer 95 -01: Confectionery Baltika 91 -99: EFES Mars Nestle Cadbury Bolshevik Wrigleys Dirol Chupa Chups 91 92 93 SAB Sun-Interbrew Edible oil 99 -04: Dairy 97 -01: Wimm-Bill-Dann Ehrmann Campina Danone Yug Russi Sloboda Louis Dreyfus Others? Packaging 9907: PLM Huhtamaki Retail 98 -09: Migros Metro Others? 94 95 96 97 98 99 0 01 02 03 04 05 06 07 08 09
Conclusion on Strategy l l l Still a long way to go Need to help suppliers Need to make sure fair competition Government regulations should be adapted Small suppliers might be left out
- Slides: 15