No turning back (Business Days 2008, part one)

In the first of our two reports about this year’s Business Days Conference, you will be able to read about the first day and the plenary meeting held on the second day. On the first day, the 300 guests attending the conference were greeted by Zsuzsanna Herman, editor in chief of our magazine, who also outlined the innovations related to the magazine. László Hovánszky, chairman of Lánchíd Klub pointed out the importance of thorough planning, while Dr. András Köves, a club member warned decision makers of the dangers of using old models, emphasising that there is no turning back. Presentations and roundtable discussions were moderated on the first day by Endre Fazekas Endre, managing director of SIÓ-Eckes Kft. Presenters at the opening session of Business Days 2008 spoke about the business strategies which can be successful even in today’s harsh macroeconomic environment. Antione de Saint Affrique, senior vice president of Unilever CEE emphasised that the economy is far less stable today than ten years ago. The effects of the financial crisis beginning in 2007 will be felt for a long time. Prices are going to rise and production will fluctuate as a result of global warming. Unilever strategy is based on three elements: creating value, ensuring that their products are distinctive, and creating value for shareholders. György Jaksity, managing director of Concorde spoke about the Hungarian economy, focusing on psychological aspects. No major reforms have been implemented in government spending or taxation. There has been no change in people’s mentality, with people expecting the government to take care of them, but unwilling to pay taxes in exchange. As a result of the negative birth rate, the pension system is heading towards collapse. Mrs. Bíró dr. Márta Szegő, from Unicredit outlined the steps which need to be taken in order to be able to introduce the Euro within a few years. High government, corporate and private debts and decreasing savings hinder our accession to the Euro zone, which cannot be expected to take place before 2012 or 2013. During the roundtable discussion following the presentations, the first question dealt with the national debt, which according to László Benedek (Heineken) is a much bigger burden on us than our neighbours. dr. Márta Szegő pointed out that our indebtedness is not too high by western standards. Kornél Saltzer, managing director of SPAR spoke about the responsibility of the political elite and asked if there is any chance of the business sector forcing politicians to operate the country in an acceptable fashion. In the opinion of György Jaksity, real crisis is needed to open the eyes of electors. According to Dr. Judit Firniksz, we not only need good laws, but these also need to be enforced. István Matus (Unilever) said that people are not given enough information by the media. György Jaksity disagreed, saying that Hungarians are aware of the current situation but refuse to face the facts. According to Endre Fazekas, representatives of the business sector should play a more active role in calling attention to the economic reality. In the first presentation of the afternoon, Mrs. Szalóky Judit Tóth, managing director of Nielsen outlined a comprehensive picture of the FMCG sector and the prospects for growth. The consumer confidence index has started to rise after two years and GDP growth has also accelerated in the second quarter. However, food prices have risen almost twice as fast as sales, with domestic chains suffering the biggest loss of market. In order to be able to grow, retailers must provide good value for money not only in terms of products, but in terms of the POS as well. During the roundtable discussion, László Murányi, head of the Co-op chain pointed out that expansion and acquisition played a major role in the 10 % growth achieved last year. SPAR achieved growth of 16 % last year. According to Péter Feiner, managing director customers expect a wide assortment and good quality. As József Tarsoly, managing director of Coca-Cola explained, expanding their assortment has been an important element of their success. Ferenc Kedves, managing director of PET Hungária talked about the advantages of becoming part of an international brand. Bernadett Strasser-Kátai, managing director of MONA is proud of their 80 percent market share in the market of milk substitutes, achieved in two years. Zoltán Pintér, partner in Agárdi Pálinkafőzde revealed that they had introduced many innovations which have been adopted by bigger companies as well. According to József Palásti, owner of Fornetti future strategies will be the same in Hungary as those already tested in developed markets. Presentations on the second day were moderated by dr. Köves András, managing director of Bako Hungária. These dealt with “His/her majesty the consumer”. Ákos Kozák, managing director of GfK talked about the difficulties of reaching consumers who are getting more difficult to influence, owing to the “background noise” in advertising. According to Gyula Román, owner of Kapuvári Hús Zrt., the black market still accounts for 30 percent of total sales. Over 70 percent of meat processing enterprises have been closed in recent years. Fodder prices have risen, with farmers demanding and getting higher prices for livestock, but processing enterprises have not been able to increase their prices. We also heard a success story from Dr. Éva Pénzes, marketing director of Kaiser Food Élelmiszeripari Kft. Product innovation and effective advertising have been the key to their survival. According to José María Cervera, managing director of Metro Kereskedelmi Kft., customers are dynamic and purposeful personalities who want to get things as quickly as possible. Metro Holding has been restructured in recent years in order to adapt to this fast moving group which makes quick decisions. Their target group has been defined as purchasers from the HoReCa sector, retailers and service providers. According to Tibor Kujbus, managing director of the Reál chain, they are growing continuously and the proportion of regular customers doubled last year, although many sceptics had expected the chain to close several years ago. In our next edition, we’ll bring you details of the boxing match between retailers and suppliers held in the afternoon.