The Czech's traditional consumption of roast pork and dumplings (Svickova na smetane) and garlic seasoned potato pancakes (bramborak) washed down with a bottle of Pilsner is on the wane. The country which was responsible for the 'velvet revolution' in the late eighties, is undergoing a culinary revolution in the naughties. The hearty Bohemian tradition of dining on meat and pickled vegetables is being replaced by western-style grazing on savoury snacks, foreign convenience brands and ready meals. This is a cultural change that offers new scope for UK manufacturers with convenience products and ready meal production expertise.
A recent report on the opportunities in central Europe by Food from Britain (FfB) said that one of the key Czech food trends is a shift from price to quality. Its research also suggests that in many categories foreign brands are preferred to domestic ones. Czech women, for example, have a preference for imported hot beverages, breakfast cereals, confectionery and convenience products, offering a real export opportunity for UK manufacturers, says FfB.
In its October 2004 report on the Czech snacks market, Datamonitor said the savoury snacks sector has been growing by 6.6% annually and it predicts that the market will grow by nearly 50% in 2008.
The change in eating habits is, in part, being driven by a combination of the country's active female workforce and some of the longest working hours in European Union (EU) -- Czechs were at the top of the European Commission's working hours list with an average 42h week. What this means is fewer women have time to cook and so convenience foods are definitely on the up.
The country has also seen a proliferation of Italian and Chinese restaurants opening for business, which has broadened its acceptance of foreign cuisine.
Market researcher Euromonitor highlighted in its recent Czech Packaged Food report the country's rising demand for high quality products, new formats and flavours. Typical of this growing market sophistication is the introduction of a new brand of fresh milk in 1 litre Pure Pak Curve cartons by the Czech dairy Mlékárna Olesnice. Fresh milk is seen as a real high quality innovation on the Czech market, and Tetra Pak's new curved-corner screw-top carton is a fittingly cutting-edge pack by any standards.
UK exports low
Despite these promising market trends, UK food products currently account for a rather paltry 3% of food and drink imports to the Czech Republic, says FfB. This meagre showing may have something to do with the fact that, while there is a growing market for foreign products in the Czech Republic, the competition is already out there. Close neighbours, such as the Poles, Germans and Italians, have already got a foot in the door and the usual multinational suspects -- Unilever, Nestlé, Danone and the French group Bongrain -- are also well established.
In addition, the Czechs have their own relatively strong dairy, meat and alcohol producers in the form of the two big dairy companies -- Madeta, and Olma, two large meat suppliers -- MasoKombinat Schneider and Kostelecke Uzeniny, and a large canned and ambient products producer -- Hame.
The country also holds a measure of distinction in the beer sector, being the ancestral home of Pilsner and (recently disputed) Budweiser and Michelob. Not surprising then, that it has a world-beating annual per-capita consumption of beer. It has even started exporting wine.
Organic produce is another strong sector. Czech farmers have converted more than 5% of the agricultural land to organic management, the highest percentage of organic agricultural land in Europe.
Although many Czechs still love their fatty meats and deep fryers, an awareness of health issues is growing and organic food sales are rising. A report from the Green Marketing Agency, a Czech consultancy for organic businesses, said that domestic sales of organic foods were up 17% in 2003.
Industry development
Joining the EU has had a dramatic impact on the Czech food industry. Companies have faced a difficult period of investment and change in adapting to EU standards.
No one has been better placed to observe that change than Miroslav Suska at Czech quality auditor company Qualifood. This company has recently set up a joint-venture with inspection body Efsis to serve the third party audit needs of the food sector in the Czech Republic. Suska says that while some of the larger foreign-owned subsidiaries and the well-run family companies were up to speed, not all companies were able to meet the new standards and many closed down or went bankrupt as a result.
"Czech companies have had to invest a great deal in new plant and infrastructure to meet European hygiene and Hazard Analysis Critical Control Points requirements. As a result, some 15% of current investment is being spent on improving factory layout and design," he says.
In his 15 years in the industry, Suska has seen the Czech retail market change rapidly from one of several independents to one of large hypermarkets and supermarkets belonging to major retail chains such as Metro and Carrefour. This has dramatically increased the amount of own-label product available, he says.
Economic limitations
The combination of its central location, low average wage (around Czk80,000 or £1,799 a year), long working hours and sound infra-structure, has made the Czech market a past target for foreign investors. But more recent economic factors are tempering that zeal.
"Competition is strong in the market and while Czech companies are looking to export more they are also fighting cheaper Polish imports," explains Suska.
Euromonitor also highlights in its Packaged Food report the difficult market conditions for manufacturers and retailers caused by recent price falls.
"Price battles among foreign dominating companies on the market and competing with cheaper domestic produce -- the quality of which has improved significantly over the past years -- means that many sectors have witnessed slower value growth than that of volume," it says.
So while the Czechs may be embracing western consumerism and business standards, providing UK companies with the opportunity to export convenience brands, snacks and ready meals, Czech manufacturers face high investment costs and low margins due to fierce competition from their cheaper rivals, such as Poland.
As many of the big multinationals have discovered, the country may boast a culture of great beer and intellect but making money from food and drink is tough.FM
top five Czech food and beverage companies
Madeta -- No. 1 dairy company with over 200 lines in fresh milk, UHT and powdered milk, butter, cream, yoghurt, soured dairy products, natural and processed cheese, curd cheese and curd desserts.
Olma -- No. 2 dairy company supplying milk, yoghurt, cream, soured milk, butter and dried milk products.
MasoKombinat Schneider -- No.1 meat supplier producing all kinds of meat and meat-based products, including smoked meats.
Kostelecke Uzeniny -- No. 2 meat supplier offering pork, beef, chicken meat, lard, smoked sausages and salamis, hams, canned meats and patés.
Hame -- Supplier of canned meat, patés, sauces, dressings, ready meals, vegetable products and baby food.
Food Manufacturer's Guide to Czech Republic
Population:10m (1m in Prague)
Currency (Koruna): £1 = 44Czk
GDP per capita: £3,041 (euro 4,400)
Principal industries: meat, dairy and alcohol
Percentage of UK imports: 3%
Value of Czech exports to UK: £37.4m
Figures sourced from Food from Britain