Voluntary Report - public distribution

**Date:** 3/29/2004

**GAIN Report Number:** RO4005

RO4005

**Romania**

**HRI Food Service Sector**

**Report**

**2004**

**Approved by:**

![](media/image1.wmf)Brian Goggin

U.S. Embassy

**Prepared by:**

Monica Dobrescu

Report Highlights:

The value of the food service sector in Romania is estimated at \$2,350
mil. and a growth rate of 6-8% is anticipated for 2004. Restaurants,
including hotels and restaurants in resorts, count for 70% of the food
service sector value, while bars, coffee shops, and institutional
catering sector cover 30%. As incomes increase, there will be better
opportunities for U.S. exporters, especially for frozen fish and
seafood, distilled spirits, dried fruits and nuts.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Sofia \[BU1\]

\[RO\]

Table of Contents

[I. COUNTRY PROFILE 3](#i.-country-profile)

[II. MARKET SUMMARY 3](#ii.-market-summary)

[III. ROAD MAP FOR MARKET ENTRY 4](#iii.-road-map-for-market-entry)

[Entry strategy 4](#entry-strategy)

[Chart 1 Exporter Marketing channels
5](#chart-1-exporter-marketing-channels)

[Market structure 5](#market-structure)

[Sub-sector profiles 6](#sub-sector-profiles)

[Hotels and resorts 6](#hotels-and-resorts)

[Chart 2 Hotels structure by category, Romania
7](#chart-2-hotels-structure-by-category-romania)

[Table 1 Hotels structure by category, Bucharest
7](#table-1-hotels-structure-by-category-bucharest)

[Restaurants 7](#restaurants)

[Table 2 Main suppliers for restaurants, Bucharest
8](#table-2-main-suppliers-for-restaurants-bucharest)

[Table 3 Monthly purchases in restaurants, Bucharest
8](#table-3-monthly-purchases-in-restaurants-bucharest)

[Chart 3 Distribution of restaurants by turnover, Bucharest
9](#chart-3-distribution-of-restaurants-by-turnover-bucharest)

[IV. COMPETITION 9](#iv.-competition)

[Pork meat 11](#pork-meat)

[Beef (tripe included) 11](#beef-tripe-included)

[Poultry meat 11](#poultry-meat)

[Ocean fish & seafood 12](#ocean-fish-seafood)

[Strong alcoholic beverages 12](#strong-alcoholic-beverages)

[Other food products supplied by the United States
12](#other-food-products-supplied-by-the-united-states)

[V. BEST PRODUCT PROSPECTS 13](#v.-best-product-prospects)

[A. Products present in the market which have good sales potential
13](#a.-products-present-in-the-market-which-have-good-sales-potential)

[B. Products not present in significant quantities but which have good
sales potential
13](#b.-products-not-present-in-significant-quantities-but-which-have-good-sales-potential)

[C. Products not present because they face significant barriers
13](#c.-products-not-present-because-they-face-significant-barriers)

[VI. POST CONTACT 14](#vi.-post-contact)

# I. COUNTRY PROFILE 

Romania is the second largest market in east-central Europe after
Poland, with 21.7 million emerging consumers and a strategic position on
the Black Sea. Romania has one of the fastest growing economies in
Europe: GDP growth expanded by an estimated 4.9 percent in 2003 -- the
same as for 2002 -- and is expected to continue to expand in 2004 at a
slightly higher rate.

Tighter fiscal and monetary policies have pushed inflation down to 14.1
percent in 2003, from 17,8 percent a year earlier. Foreign direct
investment inflows continue the ascendant trend, with an anticipated
value of \$1.5 billion for 2004.

In 2002 more than half of the Romanian population was living in cities
55.9%, compared to 54.5% in 2001. In 2002, women workforce was 44.2% of
total occupied population, in dropped from 48% as it was estimated in
2001. Unemployment rate declined from 11% in 2000 to about 8% in 2002.

According with the Romanian Customs Directorate, imports of agri-food
products reached \$1.7 billion in 2003, 40% higher than in 2002. About
33% of total agri-food imports were sourced from the EU. The value of
U.S. exports to Romania was \$93 million (5.5%), to some extent lower
than in 2002. The major imported products were poultry meat, soybeans,
cigarettes, raw tobacco, pork meat, fish, nuts.

Development of retail sector, increasing tourism trade, and growing
number of high class restaurants and hotels indicate increased prospects
for the U.S. food products exports.

# 

# II. MARKET SUMMARY

In 2002, Romanian consumers spent about 49.9% of their total income on
food products and beverages. The percentage is slightly reduced from
52.2% in 2001. The number of meals Romanian consumers have in
restaurants has been on a positive trend and it is likely to continue in
the future by about 3-5% yearly. The Food service sector has been under
the influence of the following factors:

-   food-industry growth projected at 12% for 2004

-   increase in the number of foreign tourists by 24% and Romanian
    tourists by 15% in 2003

-   increase in the demand for meals away from home. This is determined
    on one hand by a slight increase in the number of women in the
    workforce and on the other hand on the change in the food purchasing
    pattern, especially individuals within young families in the middle
    of their career.

####### Advantages and Challenges facing U.S. Products in Romania

  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  U.S. suppliers are able to provide  Long distance between United States
  reliably large amount of product    and Romania makes U.S. products
  and consistent quality to large     more expensive than from the
  chains                              neighboring countries due to
                                      freight costs

  The weak dollar makes the U.S.      Approaching EU integration will
  products less expensive compared to give more preference for food
  other sources                       ingredients originating from the EU
                                      member states rather than other
                                      countries

  High quality of U.S. products is    Consumer price sensitivity
  well known to consumers             influences the food service sector

  Good expectations in retail sector, Consumer preference for fresh
  infrastructure development and      products is increasing
  tourism                             
  ----------------------------------- -----------------------------------

According to official statistical data for 2001, in Romania there were
about 4,113 restaurants and about 6,100 coffee shops, bars, canteens and
other establishments for food preparation. The number has not
significantly changed over the last 3 years, but in terms of quality
many of them have been upgraded. Given the fact there also small units
which do not have their main activity as food service, the estimated
number of total food outlets might be in the vicinity of 15,000. Overall
sales in food service sector are estimated at \$2,350 mil. with a growth
rate of 6-8% expected for 2004.

The major part of the report features the findings of a Survey conducted
by a market research company on the restaurants located in Bucharest
only for a group of products with high interest for the United States.
This group consists of poultry meat, pork meat, beef (beef tripe
included), ocean fish&seafood, alcoholic beverages. Some of these
findings might be extended to the whole HRI sector.

Bucharest has been chosen to be object of a detailed research because of
the higher purchasing power of population, high concentration of
restaurants and food outlets and its rename as a dynamic business
center. In Bucharest, about 1,759 companies are involved in food service
activity.

# III. ROAD MAP FOR MARKET ENTRY

### Entry strategy

Restaurants source their food and beverages products from local
suppliers, they do not import directly. The entry strategy varies
according with the category of products and the facilities necessary to
have in order to operate. Given the fact that most of the restaurants
buy food from Wholesalers, one option for entering the market would be
to work with importers or distributors, which are direct suppliers for
these wholesalers. The wholesalers import directly only a few categories
of products. Some of the importers and distributors deliver directly the
goods to restaurants. Another type of strategy would be that the U.S.
exporter would find a local exclusive representative
importer/distributor, since this would be more familiar with existing
legislation, trading practices and buyers. The U.S. exporters are
recommended to ask for references on the importers prior to any
agreement with them.

##### Chart 1 Exporter Marketing channels

### Market structure

There are only few companies with national distribution and warehouses
covering the whole country. The range of products they work with is not
very wide and they carry both domestic and import food products. Apart
from the direct importers and distributors, there are few Hypermarkets
and supermarkets that directly import food products.

Regarding distribution of food products, in an effort to reduce costs,
there is a tendency among local distributors and food-processors to
eliminate some of the intermediary companies and have direct contact
with the exporter.

The retail sector remains on a strong positive trend and has attracted
investment by multinational chains: sales at hyper and super markets
more than doubled in the last two years. Total sales at hyper and
supermarkets were valued at \$400 million in 2000 and reached over \$1
billion in 2002. According to the trade sources the sales are expected
to reach \$1.5-2 billion in 2004. The total market retail value of all
shops is currently estimated at \$8 billion in 2003. A growth rate of
2.5%-3% is estimated for 2004.

The development of retail sector, especially the hypermarket segment, is
important since it is driving development for the food-service sector as
well. The main hypermarkets also provide a fair range of prepared foods
and salads.

Food courts developed in modern shopping centers and malls, is another
food service type that have increasingly attracted consumers. Given the
fact that the number of such establishments is expected to increase, the
positive trend in food service will continue.

In the total sample used for the report, restaurants represent about
69%, while other types with quite significant shares are restaurant
based in a hotel (11%), restaurant based in a casino or club (6%). Other
types include pub, pizza&restaurant, restaurant & café & beer house, pub
& restaurant, restaurant & bar & pub & café & terrace, snack bar.

###  Sub-sector profiles

#### Hotels and resorts 

The variety of landscape, especially the mountains and the Black Sea,
the great number of historical monuments, the large number of health
resorts, and opportunities for practicing winter sports have triggered
the tourism sector development.

This fact can create opportunities for the U.S. food products. According
to data provided by the Institute for Tourism Development, Romania was
visited in 2003 by 1.5 mil. foreign tourists (with 24% more than in the
previous year) and by 4.5 mil. Romanian tourists (with 15% more than in
the previous year). While the number of foreign tourists in Romania is
growing, this is still low compared to other countries in the region,
such as Bulgaria (4 mil. tourists) and Poland (61 mil. tourists). Given
the efforts of the Romanian Government in promoting the main tourist
attractions, we could expect that the upward trend will continue in
2004.

The hotel market has been under a continuous change, due to
privatizations and tourism development. According to analysts of the
hotels industry, Romania has about 140,000 hotel rooms (all types)
offering 277,00 beds. The rooms number increased by 4%-5% in 2003 and
the trend will continue over the next 5 years, especially in the larger
cities.

There were about 3,266 different tourist establishments in Romania in
2001. This figure does not include statistics for establishments with
less than 5 beds. The range varies from camping sites and agro-tourist
houses to luxury hotels. Out of this number, there were about 850
hotels. As the graph below depicts, the dominant position belonged to
two-stars hotels. Driven by tourism development and investment, the
portion of this hotel category has been decreasing in favor to
three-stars hotels.

##### 

##### 

##### 

##### 

##### Chart 2 Hotels structure by category, Romania

##### 

![](media/image2.wmf)

Source: Statistical Yearbook, National Institute for Statistics, 2003

There are 40 hotels in Bucharest with a total capacity of 5,000 rooms.
The hotel structure by category in Bucharest is consistent with the one
previously described at the country level, with the leading position
taken by the three-stars hotels.

##### Table 1 Hotels structure by category, Bucharest

  -------------------------------- ------------------ -------------------
  **Hotel category**               **No. of hotels**  **No. of rooms**

  5 Stars                          5                  1,326

  4 stars                          8                  923

  3 stars                          20                 1,700

  2 stars                          7                  403
  -------------------------------- ------------------ -------------------

Source: Mediafax, 2004

The hotels that can offer services at international standards on the
Romanian hotel market are: Marriott, Hilton, Best Western Hotel, Howard
Johnson, Crown Plaza, IBIS, Intercontinental. These international chains
are mostly located in Bucharest. Other international hotel chains (Accor
and Hyatt) plan to invest in new hotel capacities in Bucharest,
increasing the total room number with 12%.

#### Restaurants 

The survey revealed that most of the restaurants in Bucharest supply
themselves from wholesalers, specialized markets (meat) or directly from
producers. A smaller percentage use other sources, like open markets,
hypermarkets. This characteristic can easily assumed for restaurants at
country level. The following table describes for each category of
products, the percentages of restaurants using the mentioned sources.

##### Table 2 Main suppliers for restaurants, Bucharest

+-----------------+------+---------+------+------------+-------------+
| **Type**        | **   | *       | *    | **Ocean    | **Strong    |
|                 | Pork | *Beef** | *Pou | fish       | alcoholic   |
|                 | me   |         | ltry | &seafood** | beverages** |
|                 | at** | *       | me   |            |             |
|                 |      | *(incl. | at** |            |             |
|                 |      | t       |      |            |             |
|                 |      | ripe)** |      |            |             |
+-----------------+------+---------+------+------------+-------------+
| Wholesaler      | 58   | 44      | 48   | 37         | 41          |
| (Metro          |      |         |      |            |             |
| Cash&Carry)     |      |         |      |            |             |
+-----------------+------+---------+------+------------+-------------+
| Wholesaler      | 36   | 29      | 26   | 26         | 26          |
| (Selgros        |      |         |      |            |             |
| Cash&Carry)     |      |         |      |            |             |
+-----------------+------+---------+------+------------+-------------+
| Specialized     | 8    | 7       | \-   | \-         | \-          |
| market          |      |         |      |            |             |
+-----------------+------+---------+------+------------+-------------+
| Hypermarket     | 8    | 9       | 9    | 7          | 4           |
+-----------------+------+---------+------+------------+-------------+
| Domestic        | 7    | 5       | \-   | \-         | \-          |
| producers       |      |         |      |            |             |
| (m              |      |         |      |            |             |
| eat-processors) |      |         |      |            |             |
+-----------------+------+---------+------+------------+-------------+
| Impor           | 6    | 5       | 13   | 7          | \-          |
| ter/Distributor |      |         |      |            |             |
+-----------------+------+---------+------+------------+-------------+
| Others          | 5    | \-      | 20   | 21         | 25          |
+-----------------+------+---------+------+------------+-------------+

Source: Mednet Research 2003

About 115,000 persons have their meals daily at restaurants in Bucharest
(5% of the total population in Bucharest). According to this survey the
restaurants in Bucharest allocate monthly about \$300,000 for pork meat,
\$220,000 for beef, \$690,000 for poultry meat, \$130,000 for ocean
fish&seafood and about \$472,000 for strong alcoholic beverages.

Out of the total value of foodstuff bought, these are the monthly
purchase of Romanian vs. U.S. origin products:

##### Table 3 Monthly purchases in restaurants, Bucharest

  --------------------------- --------------------- ---------------------
  **Product**                 **Romanian product    **U.S. origin product
                              (\$/month)**          (\$/month)**

  Pork                        300,000               \-

  Beef                        188,000               5,500

  Poultry                     569,000               105,000

  Ocean fish&seafood          \-                    2,700

  Strong alcoholic beverages  142,000               62,000
  --------------------------- --------------------- ---------------------

Source: Mednet Research 2003

This information reveals the fact that in the food service sector there
is a certain level of black market that should not be overlooked, both
for meat and for alcoholic beverages. Mainly the small and medium-sized
restaurant units buy meat in the absence of legal coverage and we do not
expect these quantities to have been disclosed. Consequently, we
consider that real total value of sales to restaurants for the
investigated foodstuffs (except for ocean fish&seafood) is at least by
20% higher.

The distribution of classes of restaurants according to their turnover
(54% did not disclose their sales) is presented below:

##### Chart 3 Distribution of restaurants by turnover, Bucharest

# 

![](media/image3.wmf)

Source: Mednet Research 2003

In Romania there is a certain number of restaurants serving Romanian
traditional foods, targeting foreign tourists, and also restaurants
serving "ethnic" food, such as Italian, Greek, Hungarian, French etc.

The fast-food sub-sector is prospering at a significant rate due to the
fact that a growing number of people intend to minimize the amount of
time they spend preparing and eating meals. Fast-food outlets, unknown
until 1990 are becoming a fact of life for Romanians. Most of the
fast-foods serve various sandwiches, pizza, French fries, hamburgers,
hot-dogs and a large variety of salads. The international Fast Food
chains like McDonalds, Pizza Hut/KFC, Ruby Tuesday are present in
Romania. The younger generation and middle-income families are the most
common visitors of the food outlets.

Over the last three years a new type of fast food establishments entered
the market, such as Gregory's, and Snack Attack. They mostly sell
sandwiches and salads and they mainly target office workers. Their
expansion and new players entry on this segment are in direct
correlation with the growth of the office buildings in the medium to
large cities. This sub-sector has a huge potential.

# 

# IV. COMPETITION

Below you will find a table with the major categories of food products
and beverages offered by the food service sector in Romania.

+----------------+---------------------+------------------------------+
| **Product      | **Major Supply      | **Strengths of Key Supply    |
| Category /     | Sources in 2003**   | Countries/ Local Suppliers** |
| Total import   |                     |                              |
| 2003**         |                     |                              |
+----------------+---------------------+------------------------------+
| Beef Meat      | Austria (63%)       | Austria offers good quality  |
|                |                     | meat at competitive prices.  |
| Import: 3,447  | Hungary (28%)       |                              |
| MT             |                     |                              |
+----------------+---------------------+------------------------------+
| Pork Meat      | Poland (33%)        | Poland had a substantial     |
|                |                     | support for pork exports.    |
| Import:        | Germany (13)        | Germany and Hungary provide  |
|                |                     | good quality products.       |
| 101,746 MT     | Hungary (11%)       |                              |
|                |                     |                              |
|                | US (2%)             |                              |
+----------------+---------------------+------------------------------+
| Poultry Meat   | The United States   | The United States has        |
|                | (49%)               | competitive prices compared  |
| Import:        |                     | to the local producers,      |
|                | Brasilia (29%)      | especially for chicken leg   |
| 90,526 MT      |                     | quarters that are preferred  |
|                |                     | by the Romanian consumers.   |
+----------------+---------------------+------------------------------+
| Frozen Fish    | Norway (27%)        | The northern countries offer |
| &Seafood       |                     | competitive prices and good  |
|                | Ireland (18%)       | quality. The United States   |
| Import:        |                     | is one of the main suppliers |
|                | The United States   | of Frozen mackerel.          |
| 52,516 MT      | (13%)               |                              |
+----------------+---------------------+------------------------------+
| Fresh          | Turkey (41)         | Turkey is the leading        |
| Vegetables     |                     | supplier for fresh tomatoes, |
|                | Poland (21%)        | carrots, and eggplants at    |
| Import:        |                     | competitive prices. Local    |
|                | The Netherlands     | producers dominate the       |
| 166,128 MT     | (9%)                | market.                      |
+----------------+---------------------+------------------------------+
| Frozen         | Belgium (56%)       | Belgium offers a large       |
| Vegetables     |                     | variety of frozen vegetables |
|                | Hungary (20%)       | mixes at convenient prices   |
| Import:        |                     | and properly packaged.       |
|                | Poland (19%)        |                              |
| 4,843 MT       |                     |                              |
|                | The United States   |                              |
|                | (insignificant)     |                              |
+----------------+---------------------+------------------------------+
| Dried          | China (58%)         | China is the leading         |
| vegetables     |                     | supplier for peas, beans,    |
|                | Poland (14%)        | and lentils.                 |
| Import:        |                     |                              |
|                | Egypt (9%)          |                              |
| 31,450 MT      |                     |                              |
|                | The United States   |                              |
|                | (under 0.5%)        |                              |
+----------------+---------------------+------------------------------+
| Peanuts/Nuts/  | Turkey (33%)        | Turkey is a major supplier   |
|                |                     | for peanuts. Iran leads in   |
| Alm            | Iran (30%)          | pistachio.                   |
| onds/Pistachio |                     |                              |
|                | The United States   | The United States count for  |
| Import         | (6%)                | more than 50% in almonds     |
|                |                     | imports.                     |
| 1,275 MT       |                     |                              |
+----------------+---------------------+------------------------------+
| Mineral water  | France (46%)        | There is a very high         |
|                |                     | competition from the local   |
| Import         | Italy (30%)         | suppliers.                   |
|                |                     |                              |
| 16,000 hl      |                     |                              |
+----------------+---------------------+------------------------------+
| Beer           | Germany (22%)       | Local suppliers benefited    |
|                |                     | from strong foreign          |
| Import         | The Netherlands     | investments and              |
|                | (21%)               | advertisements.              |
| 21,249 hl      |                     |                              |
|                | Czech Republic      |                              |
|                | (19%)               |                              |
|                |                     |                              |
|                | The United States   |                              |
|                | (insignificant)     |                              |
+----------------+---------------------+------------------------------+
| Wines          | France (38%)        | Local wine suppliers         |
|                |                     | benefited from strong        |
| Import         | Italy (17%)         | foreign investments and      |
|                |                     | promotions. France has       |
| 7,539 hl       | The United States   | competitive prices and a     |
|                | (insignificant)     | good image among the         |
|                |                     | Romanian consumers.          |
+----------------+---------------------+------------------------------+
| Spirits        | Great Britain (44%) | The Great Britain is leading |
|                |                     | in Scotch Whiskey. The       |
| Import         | Italy (8%)          | United States is the leading |
|                |                     | supplier in Bourbon Whiskey. |
| 35,364 hl      | The United States   | Well known whiskey brands    |
|                | (8%)                | have been heavily            |
|                |                     | advertised.                  |
+----------------+---------------------+------------------------------+

Source: Romanian Customs Directorate, 2003

All establishments included in the survey have an utilization degree of
the investigated category food products over 50% for each product. In
Bucharest, restaurants that use products such as pork, beef or poultry
meat, mostly source their products from domestic suppliers; the
restaurants serving ocean fish&seafood procure this product only from
import and so do most of the restaurants serving strong alcoholic
beverages.

The findings of the survey conducted in HRI sector in Bucharest are
described below for the investigated food products. The term
"restaurants" will be the generic word used for all food service
establishments included in the sample (hotel with restaurants,
restaurant, bar, pub, canteen, fast-food etc.).

### Pork meat 

Out of the total number of restaurants in Bucharest, about 90% use
domestic pork meat and 6% use frozen pork meat from import. None of the
investigated restaurants that sell pork products uses pork of U.S.
origin. The countries of origin for pork meat are Poland, Hungary and
Germany. When referring to the Romanian pork meat, the attribute
mentioned by more than half of the restaurants (61%) was "fresh, not
frozen". Some of the restaurants consider it as of good quality, cheap,
tasty and easy to procure.

In the case of imported pork meat, 20% of the restaurants mentioned that
this product is frozen (as a negative characteristic), while 10% believe
it has a high price. Some of them consider it is of fine quality at a
good price.

### Beef (tripe included) 

The beef domestic producers are the main suppliers for 76% of the
restaurants, while importers only count for 23%. Beef tripe from United
States is used by 18% of the restaurants and 5% of them use only beef
tripe imported from the United States. Other sources for beef are
Hungary, Austria, France and Ireland.

Good quality at good price and good appearance were the positive
features mentioned by most of the restaurants. Beef products are
considered with an unsatisfactory taste by 10% of restaurants.

The only beef product supplied currently by the United States on the
Romanian market is beef tripe. Therefore the advantages and
disadvantages presented in this case for the U.S. only referred to beef
tripe. Most of the restaurants (67%) consider that the product has a
good aspect (clean), some of them (28%) consider it has a good quality
and taste and the others that it has a good price, it is preferred by
consumers and it is satiating. The high fat content would be the
weakness.

### Poultry meat

Restaurants source poultry meat primarily from the domestic producers in
the detriment of importers (97% compared to 14%). This is questionable,
since there are companies carrying activities, both domestic production
and import, for the same product. Both categories domestic and imports
might be sold under the same Brand name (after packaging and labeling
accordingly). This may mislead the restaurants. In other words, given
the high percentage of imports in total consumption, the percentage of
imported poultry might be higher than as it was reported. The main
foreign suppliers of poultry meat are United States, Brazil and Hungary.
The restaurants supplied with poultry meat from foreign sources
represent about 10% in the total number of restaurants in Bucharest and
the same percentage use poultry meat originating from United States.

Freshness was the positive attribute mentioned by more than half of
subjects for the domestic product (56%). However there are restaurants
that consider that Romanian poultry meat has a high price compared to
imports, especially those from United States. The most frequently used
meat assortments are chicken legs, poultry liver and turkey meat. The
advantages mentioned by most respondents supplied with poultry meat from
import are acceptable price (60%), consistency (30%) and good
price/quality ratio (20%).

### Ocean fish & seafood

Restaurants source ocean fish & seafood solely from imports. The main
fish & seafood suppliers are Norway, Italy, Thailand, Spain, the United
States. It is worth to mention that about 30% of the restaurants are not
aware of the origin of the products they buy on the market.

The positive features prevail for this product, unlike the previous
products coming from outside. The advantages mentioned are related to
the good quality, consumers' preference, as well as to the special
taste.

### Strong alcoholic beverages 

Unlike the other type of products, the strong alcoholic beverages mainly
come from imports; 82% of restaurants source strong alcoholic beverages
from foreign countries, out of which 38% use products of American
origin. The restaurants source strong alcoholic beverages mainly from
Great Britain (74%), Italy (40%), E.U. (18%), and France (15%). Romanian
strong alcoholic beverages are bought by 66% of the restaurants. They
believe the Romanian origin beverages have quite a good price, are
traditional and preferred by consumers, especially by foreign tourists.
A significant percentage of the restaurants (39%) do not use Romanian
products, so they are not aware of the characteristics of such types of
products.

In the case of imported products, the positive features prevail. The
good quality and fine taste are two of the characteristics of these
products mentioned by more than half of restaurants (51%). A significant
percentage of the restaurants (38%) use strong alcoholic beverages from
United States and more than half find no shortcomings. The advantages
mentioned by most respondents (47%) are related to the high quality of
this type of products and consumer preferences (37%). However the
products are expensive for most of the restaurants (66%).

### Other food products supplied by the United States 

Besides the investigated categories of products, the survey identified
about 13% of the restaurants supplied with other types of food products
from the United States, such as sauces and dressings, soft drinks,
frozen vegetables, beer and wines, spices.

As identified by the interviewed restaurants, there are some factors
that would help the U.S. increase its market share. A stronger promotion
for these food products, the existence of constant and reliable partners
providing good quality products at reasonable prices, enhanced knowledge
about U.S. origin products, more flexible payment terms have been
revealed. Nevertheless, the intention to use food products from the
United States in the future was expressed by 63% of the restaurants.

# V. BEST PRODUCT PROSPECTS

The positive trend registered by the HRI sector is expected to continue
in the future. The following is a description of best products prospects
for U.S. exporters.

### A. Products present in the market which have good sales potential

Value of poultry meat imports has insignificantly increased last year
from \$57 mil. in 2002 to \$58 mil. in 2003. Nevertheless, the U.S.
value in total imports increased by more than 50% reaching \$26 million
in 2003. Macroeconomic factors such as weak dollars versus Euro,
competitive price for poultry and some veterinary restrictions imposed
to some of the U.S. competitors create good perspectives for U.S.
exporters. The customs duty is 45% while CEFTA (Central European Free
Trade Agreement) member countries enjoy a preferential duty of 28%.

Total imports of distilled spirits increased in 2003 by 25%. The
significant increase in Bourbon Whiskey import from the U.S. (92%) was
largely due to the reduction in customs duties from 70% to 35%, starting
with May 2003. In Jan. 2004, tariffs for all categories of distilled
spirits were reduced from 90% to 60%. Therefore, an increase in imports
is expected. Nevertheless, differences between the duties applied to
U.S. products or other origin (60%) and alcoholic beverages from the
European Union (30%) continue.

[]{.mark}

Frozen fish and seafood (import duty 20% and 25%), pork meat (import
duty 20%), especially high quality, turkey meat (35% in 2004 reduced
from 45%) have also a good sales potential for HRI sector.

### B. Products not present in significant quantities but which have good sales potential

The United States has long been a supplier of beef tripe (valued at
approximately \$1.5 million annually) to Romania, but beef cuts and
other beef offals have not been imported. An agreement for beef meat
imports between the two veterinary authorities would offer new U.S.
export opportunities for high quality beef, as well as trimmings for
processing and variety meats, estimated at \$1-2 million. The duty level
for beef meat is 20%.

Other products with good potential are grocery products such as sauces,
mayonnaise, ketch-up, soy products and frozen vegetables. Tree nuts and
almonds are definitely a good opportunity for U.S. exporters especially
for the sub-sector Pubs and Bars.

### 

### C. Products not present because they face significant barriers

Mineral water, fresh fruits and vegetables, beer and dairy products are
not recommended due to high competition either from domestic producers
or from EU countries.

# 

# VI. POST CONTACT

# 

If you have any questions regarding this report or need assistance
exporting to Romania, please contact us at:

Foreign Agricultural Service

American Embassy

7-9 Tudor Arghezi Street, Bucharest, Romania

Tel. +40 21 210.40.42/ext. 343 Fax: +40 21 210.59.98

E-mail: AgBucharest@usda.gov