Denmark Market Overview

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– Area: 43,090 sq. km –

–Capital City: Copenhagen – National Currency:

Danish Krone (DEK) – Population (2007):

5.45 million

Density 126.48 people/km

– Head of the State:

Queen Margrethe II – Prime Minister:

Anders Fogh Pasmussen – Ruling Party:

The Venstre Party (Liberal)

Source: CIA

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The New Denmark

Denmark is split into five regions: 1. Nordjylland

2. Midtjylland 3. Syddanmark 4. Hovedstaden 5. Sjælland

The regions were created on 1 January 2007 as part of a reform to replace the country’s 13 traditional counties.

Additionally, smaller Danish municipalities (kommuner) were merged into larger units reducing the number from 240 to 98.

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Population Split By Region (2006)

112 7,273 811,511 Sorø Sjælland (Zealand) 97 12,191 1,185,840 Vejle Syddanmark (South Denmark) 8,020 13,053 2,561 Area (Sq. km) 57,802 1,219,741 1,633,565 Population 7 93 637 Population Density (people per sq. km) Alborg Nordjylland (North Jutland) Vlborg Midtjylland (Mid Jutland) Copenhagen Hovedstaden (Capital Region) Capital Region

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The 10 Largest Cities In Denmark

50,983

Horsens

55,045

Kolding

55,909

Randers

71,886

Esbjerg

49,928

Vejle

45,807

Roskilde

121,540

Aalborg

152,060

Odense

228,674

Århus

1,084,885

Copenhagen

Population

Capital

85% of the Danish

population is urbanised.

Approximately a third of the population live in Copenhagen.

Copenhagen has a

population more than four times larger than Århus, the second largest city in Denmark.

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Political Outlook

Prime Minister Anders Fogh Rasmussen was elected in February 2005.

He is the leader of the Venstre (Liberal) party, and the first Danish Liberal leader to win a second consecutive term in office.

The government has made concessions to the populist Danish People’s Party (DF) to pass its legislative programme and will have to continue to pay attention to the DF’s views, particularly on immigration.

Strong budget surpluses will allow the government to maintain a moderately expansionary fiscal policy in 2007-08.

On April 1st 2007, there was a reform of corporate taxation, with a reduction in the rate of tax from 28% to 22%.

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Danish Politics

• Head of state - Queen Margrethe II

• Denmark voted to stay outside the Eurozone

• Government

– Coalition between the conservative party the Venstre and

the Danish People’s party

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• Unemployment 5.8%

• Population Density Denmark 124/Sq.Km

– Versus Ireland 53/SqKm

• % private consumption spent on food, beverages 17.3%

• Main trading partners

– Germany

– Sweden

– UK

– France

– Norway

• Vat rates

– Services 25%

– Food

25%

– Alcohol

25%

Denmark in Figures

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Irish Food & Drink Exports

€9.4 million

Other foods

€68.6 million

Total Irish Food & Drink Exports

€12.1 million

Seafood

€9.3 million

Dairy

€7.2 million

Beverages

€30.6 million

Meat

2007

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Irish Export Performance 2007

• In 2007 total Irish exports of food and drink increased

10%

• Meat exports increased 17% to over €30m

– Beef €17.3m

– Pigmeat €8.5m

• There was a 52% increase in fish exports to €12m

• Dairy products – predominantly cheese and butter

increased to €9.4m

• Alcoholic beverages – mainly non-whiskey spirits,

declined by 11% to €7.2m

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Danish Meat Imports

• Although Self Sufficiency is 94% for beef, imports are

substantial at over 100,000t pa

• Predominantly female (cow hinds) and young beef

• Lamb imports are 7,000t

• Import suppliers of beef are :

– Germany and Holland 70% of total

– Ireland 7-8% share

– Brazil, Argentina, Uruguay

– Poland

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Meat Imports to the Foodservice &

Manufacturing Sectors

• Brazilian beef is returning to hotels and restaurants

• NZ dominates for frozen lamb

• Institutional or cost sector buy full range of meats

from local Danish companies

• Leading companies are Emborg, Dagrofa Catering

Engros, Caterfood, Tulip Catering, Caterfood

• Manufacturing meat is generally imported at lowest

cost

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The Danish Retail Market

• Highly concentrated like Sweden

– Dansk Supermarket, Coop and Dagrofa are market leaders

• Food retail accounts for an estimated €16.8 billion.

• No. of traditional independent stores has halved since 1995

• Centralised purchasing/independent decision making

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Key Retail Players

• Danske Supermarket

– Regarded as the most progressive retailer / Netto, Fotex

chains

– Prestigious and expanding its market share at pace

• Co-op

– The second largest retail group - Irma, Kvickly stores

• Supergros

– Is privately owned and has undergone rapid transformation

across its retail, wholesale distribution & foodservice

divisions

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Retail Market – Structure By Format

517 539 712 704 959 992 869 954 1,024 1,088 1,168 1,215 1,075 1,096 997 1,070 1,089 1,093 98 100 99 98 100 100 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2002 2003 2004 2005 2006 2007e S to r e N u m b e r s

Convenience Hard & Soft Discount Superstore/Supermarket Hypermarket

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The Grocery Retail Market –

Structure By Format

The Danish grocery market is dominated by supermarkets and hard/soft discounters.

Denmark has one of the largest portfolio of discount operators in Europe, and continues to grow at a rate that is faster than any other sector in the market. This has been led by market leader Netto.

Between 2002 and 2006, IGD estimates a 34% increase in the number of hard/soft discount stores operating in Denmark.

Expansion of the hypermarket sector has been fairly static in recent years, as retailers move back into the city centre.

The number of convenience/forecourt stores amongst the major grocery retailers increased dramatically in 2006 following Reitangruppen’s acquisition of the Hydro Texaco chain in Denmark.

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Top Danish Retailers 2006

Source: IGD Datacentre, 2006 estimates

141,710 485 5.41% 864 864 Spar Danmark 169,400 242 3.25% 520 520 Aldi 31,000 4 1.47% 235 235 Metro Group 67,500 45 0.75% 120 120 Lidl & Schwarz

177,343 347 1.81% 289 289 Edeka Danmark 83,600 43 2.43% 388 3,326 Dagrofa 1,261,450 1,157 24.67% 3,942 4,579 Coop Danmark 183,800 466 5.74% 917 917 Reitangruppen 570,100 467 29.85% 4,770 5,185 Dansk Supermarked Sales Area (sqm) No. of Stores Grocery Retail Market Share (%) Grocery Sales (€m) Total Sales (€m) Retailer

Note: Data is for grocery formats only except Total Sales which includes non-grocery if applicable. Total Sales & Grocery Sales are Net. Data includes franchised operations where appropriate.

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500 180,000 360 H/SD 1,310 Netto 300 4,500 15 C/F 35 Døgn Netto 1,825 1,600 Total Sales (€m) 12,500 175,000 14 H Bilka S/S Format 2,700 210,600 78 Føtex Av. Sales Area (sqm) Sales Area (sqm) No. of Stores Banner

Source: IGD Datacentre, 2006 estimates. Data is for grocery formats only. Total sales are Net.

Key:

H = Hypermarket

S/S = Superstore/Supermarket H/SD = Hard/Soft Discount

www.igd.com/analysis/datacentre • Dansk Supermarked is jointly-owned by A.P. Møller (Maersk Group) and F. Salling A/S.

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Source: Retail Analysis photo gallery

Bilka in Hundige and Netto in Frederiksundsvej

• Dansk has successfully overtaken Coop Danmark as the No.1 grocery retailer in Denmark, with the Netto chain of discount stores acting as a 'growth engine' for the group.

• Denmark remains Dansk's only operating market in which it offers more than a discount format.

• It operates the Bilka chain of hypermarkets, Føtex supermarkets, Netto discounters as well as A-Z department stores and Tøj and Sko footwear.

• Dansk has launched Døgn Netto format which are smaller than typical Netto stores, discount /

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500 2,000 4 S/S 6.44 Coop Brugsen 331 15,900 48 S/S 56 Lokal Brugsen 1,100 81,400 74 S/S 269 Irma 9,000 126,000 14 H 231 Kvickly Xtra 3,500 238,000 68 H 867 Kvickly 1,400 372,400 266 S/S 1,068 Super Brugsen 750 252,750 337 H/SD 912 Fakta 500 173,000 346 S/S 532 Dagli Brugsen Total Sales (€m)

Format Av. Sales

Area (sqm) Sales Area (sqm) No. of Stores Banner

Source: IGD Datacentre, 2006 estimates. Data is for grocery formats only. Total sales are Net.

Key: H = Hypermarket S/S = Superstore/Supermarket C/F = Convenience/Forecourt H/SD = Hard/Soft Discount www.igd.com/analysis/datacentre • .

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Fakta and Irma City on Vesterbrogade, Copenhagen

• Coop Danmark operates a multi format portfolio of stores, including convenience, discount,

supermarket and hypermarket stores.

• Coop Danmark's Fakta discount chain is well placed to capitalise on the growing pressure on price and expansion of the discount sector.

• Irma stores have adopted a different pricing and merchandising strategy compared to the large European mainstream discounters in Denmark, offering more upscale locally sourced products. • Coop Danmark plans to open an additional 70

Fakta stores in Denmark by the end of 2008.

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800 124,800 156 H/SD 744 Rema 1000 150 9,000 60 C/F 68 7 Eleven 104 Total Sales (€m) C/F Format 200 50,000 250 YX Av. Sales Area (sqm) Sales Area (sqm) No. of Stores Banner

Source: IGD Datacentre, 2006 estimates. Data is for grocery formats only. Total Sales are Net.

Key:

C/F = Convenience /Forecourt H/SD = Hard/Soft Discount

www.igd.com/analysis/datacentre

Entered the Danish market in 1993.

Sales in Denmark accounted for approximately 22% of group sales in 2006. Reitangruppen holds the 7 Eleven franchise license in Denmark.

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7 Eleven and Rema 1000 in Copenhagen

Rema 1000 accounted for over 80% of Reitan's total turnover in Denmark in 2006.

In July 2006, Reitan acquired the Hydro Texaco chain of forecourt stores in Denmark. The stores were

consolidated into Reitan's accounts in the beginning of the third quarter 2006.

Reitangruppen is set to invest €50 million on refurbishing the forecourt stores into the YX banner in the years

ahead.

Reitangruppen has teamed up with airline SAS to sell flights and package holidays in its stores across

Scandinavia. The new service, which is named "Go“, has been integrated into 7 Eleven stores, Rema 1000 stores and YX forecourt sites.

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292 141,710 485 C/F 864 Spar Total Sales (€m)

Format Av. Sales

Key:

C/F = Convenience/Forecourt

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Spar in Denmark

The Glostrup store in Copenhagen was jointly developed as a new concept store with Spar International. The convenience store focuses specifically on Food to Go and convenience products.

Although there has been a decline in store numbers in recent years, total retailer sales area has increased, with average store size increasing by 10%.

Spar Danmark has focussed on better serving its younger customers through branding activities and developing strong links with the local community.

Denmark is the second largest market in Scandinavia for Spar, behind Norway.

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520 Total Sales (€m) H/SD Format 700 169,400 242 Aldi Av. Sales Area (sqm) Sales Area (sqm) No. of Stores Banner

Key:

H/SD = Hard/Soft Discount

Aldi Nord entered Denmark in 1977, with its entry prompting the domestic operators to launch their own competing discount formats.

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Aldi in Denmark

Denmark is Aldi’s only market in Scandinavia.

Compared to other European countries, Aldi’s new store development programme in Denmark has been fairly static.

Aldi’s Danish business is managed through two regional divisions, at Kolding (West Division) and Karlslunde (East Division).

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1,400 12,600 9 S/S 128 Dreisler 2,000 44,000 22 S/S 99 SuperBest 2,250 27,000 12 S/S 160 ISO Total Sales (€m)

Format Av. Sales

Key:

S/S = Superstore/Supermarket

Dagrofa A/S is a private holding company owned by tobacco company Skandinavisk Tobakskompagni A/S, Aps KFI-Figros, and A/S KFI-Detail.

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150 5,400 36 C/F 12 Complet 400 38,800 97 S/S 81 Merko 800 100,800 126 S/S 73 Activ Super 150 11,700 78 C/F 43 Focus Focus 5 Total Sales (€m) H/SD Format 350 3,500 10 Coma

Av. Sales Area (sqm) Sales Area

(sqm) No. of Stores

Banner

Key:

S/S = Supermarket/Superstore C/F = Convenience/Forecourt H/SD = Hard/Soft Discount