Bulgaria: Report Reveals Up to 91% Markup on Cheese and 135% on Mineral Water

The Commission for Protection of Competition (CPC) has released a sectoral review of Bulgaria’s food market, concluding that the supply chain shows significant structural problems, most notably in milk and dairy production. The study covers every stage from farms to retail shelves and is intended to guide public consultations before any regulatory or administrative steps are proposed. According to CPC Chairman Rosen Karadimov, the goal is not to cast particular businesses in a negative light, but to create a basis for dialogue and address long-standing imbalances in the sector.

The team leading the analysis stresses that vertically linked markets - production, processing, wholesale and cross-border trade - directly shape how competition works at the retail level. Zhelyo Boychev, who headed the project, points out that distortions are most visible in dairy products. Between 2020 and 2024, Bulgaria registered notable declines across several categories: raw cow’s milk output fell by 25 percent, fresh milk by 8 percent, cheese by 9 percent, yellow cheese by 14 percent, and egg production by 17 percent. Meanwhile, imports of milk and dairy goods rose by 43 percent. The sector is heavily concentrated, prompting a review of mergers and acquisitions approved in recent years. The report also underlines the lack of national quality standards, limited institutional oversight, rising production costs and persistent labor shortages - all factors that worsen conditions for producers and processors.

The analysis includes an overview of the geographic spread and pricing policies of major retail chains. Bulgaria ranks among the EU countries with the fewest regulatory barriers for opening or operating stores. In contrast, Austria and Germany maintain stricter rules related to working hours, store locations and other requirements. For the first time, the CPC has presented a regional “competitive map” showing that Sofia, Plovdiv and other large cities host a wide range of chains, while several regions operate with only three to five major retailers, creating uneven market power and regional disparities. Despite these differences, price levels remain largely uniform nationwide, even though incomes vary widely - for instance, annual income per person is about 55,000 euros in Sofia compared with just over 7,100 euros in Vidin.

The regulator reviewed the pricing practices of ten major chains for June, July and August this year. The findings show no coordinated, speculative price increases linked to the introduction of the euro. However, the study reports unusually high trade markups created through a combination of discounts negotiated with suppliers and the additional percentage added by retailers on top of delivery prices. In milk, markups range from 2 to 59 percent of the regular delivery price and can reach up to 77 percent after discounts. Cheese shows margins between 21 and 66 percent, rising to 82 percent after discounts. For yellow cheese, the markup spans from 10 to 62 percent of the regular price and can go up to 91 percent. Eggs (size L, pack of ten) carry margins from 20 to 89 percent, with no supplier discounts identified. A 60/40 minced-meat blend shows markups between 7 and 68 percent, reaching 73 percent after discounts. The steepest increases concern 1.5-liter mineral water, where margins range from 13 to 72 percent and can reach as high as 135 percent once discounts are taken into account.

According to the CPC, these large markups - especially when applied after significant delivery-price reductions - can distort competition. They place heavy pressure on producers, limit their ability to set prices, reduce profitability and make negotiations with large chains more difficult. The interim report recommends encouraging producer cooperation, shortening supply chains, establishing national quality standards, improving institutional oversight, ensuring targeted financial support for the processing sector and increasing transparency in retailer practices.

The next stage of the inquiry will focus on three areas: the structure of retail markets in economically weaker regions with low purchasing power and higher retailer concentration; the system of pricing, discounts, markups and commercial terms between suppliers and traders; and the production, processing and trade of milk and dairy products. Karadimov noted that the Commission hopes the report will prompt voluntary reforms and sector-wide self-regulation. If this does not occur, and signs of unfair practices, dominance abuse or problematic mergers emerge, the CPC is prepared to open formal proceedings.