Poland attracts more food investment

Poland is now the top Eastern Europe location for foreign food company investments, according to a new study looking at the relative attractiveness of different European countries for business investment.

However, France remained the most popular destination in Europe for food investments.

Poland's share of food projects doubled to 8% in 2005, according to the Ernst & Young (E&Y) European Investment Monitor 2006, while Russia's share of foreign direct food investment in Europe declined. France accounted for 20% of the projects in 2005, although most of that investment had gone on existing facilities, E&Y said.

Greater economic stability, investment incentives and competitive labour costs had made Poland an increasingly attractive location for new manufacturing facilities, said Ed Hudson, head of E&Y's fast-moving consumer goods division in London. It had overtaken Russia, Hungary and Romania as the leading Central & Eastern Europe location for food projects, he added.

"Poland has had a very sophisticated approach to securing foreign money," he said. "There is good support from the government and several shared service-centres for food now. In Russia, by contrast, the rules are different from region to region, especially on tax, which is putting people off."

There was still a lot of cross-border investment in Western Europe, said Hudson, mainly for expansion and relocation rather than brand new facilities. It was rather counter-intuitive, he said, in view of Western Europe's reputation for high labour costs and an inflexible labour market.

The survey comes in the wake of recent high-profile investments in Poland by companies such as Inter Link Foods, which has pumped more than £500,000 into its Polish subsidiary Cukiernia Mistrza Jana since acquiring it just over 18 months ago.