Serbian food and beverage market
In the Food and Drink Business Environment Ratings (BER) for first quarter of 2010, Serbia slipped from ninth to 12th position in the emerging Europe matrix. Unlike in the previous quarter, Serbia is now judged to represent a less viable commercial opportunity for food and drinks companies than the Baltic states, as the economic situation there slowly improves. Nevertheless, the assessment of Serbia’s longer-term market potential is relatively optimistic, buoyed by high per capita consumption of food and beverages, as well a positive trade balance figure. Additionally, the country’s food consumption growth score is on a par with some of the more developed regional markets, although factors such as the widespread grey economy, high unemployment and unresolved political issues will remain the main obstacles to foreign investment in the shorter term, as will the downward pressure on food and drinks prices.
The outlook on the country’s ability to avoid a deep and potentially protracted recession in 2009 and into 2010 is relatively guarded. In fact, risks related to short-term financing and economic growth are considered particularly problematic, although large players based in other parts of the former Yugoslavia, such as the leading Slovenian mass grocery retail (MGR) operator Mercator, seem to have no qualms about continuing their investment into the country. This should also provide them with a competitive edge over new international players on the scene, with many international conglomerates likely to wait until the country’s economic situation shows stronger signs of recovery. Indeed, having announced its intention to enter the Serbian MGR market in 2009 a while ago, Spar Austria is now choosing to ’observe’ the situation, with no store openings planned during the current year.
Some European majors are, however, already recognizing the longer term potential of the Serbian food and drinks market. In late September 2009, French dairy behemoth Groupe Danone was poised to close in on two of the country’s leading dairy companies owned by UK-based Salford Fund, namely Mlekara Subotica and Imlek, the market leader that also boasts a strong export portfolio. Danone already boasts a strong emerging Europe portfolio (the region accounted for 15% of group sales in FY08). In addition to topping the much-sought-after Polish market, Danone also leads in the Balkan markets of Bulgaria and Romania, with Serbia to provide a complementary investment.
Around the same time, however, Belgian brewing behemoth Anheuser-Busch InBev (A-B InBev) was reportedly in talks with private equity firm CVC Capital Partners over the sale of its Central and Eastern European (CEE) operations. CVC Capital Partners actually submitted a EUR1.57bn bid, although this falls short of the EUR2bn asking price. The decision was made due to a steady worsening of conditions for brewers across the CEE region since the start of 2009, severe economic stress has forced a sharp alteration in consumer spending, which continues to profoundly affect the non-essential beverage category. What is more, with populations declining or remaining flat in many of the region’s markets, the long-term demographic outlook does not favour brewers, particularly those that are not market leaders.
Key Players in Serbian food and beverage market
Bambi Banat a.d. is a biscuit manufacturing company in Pozarevac, Serbia. It was founded in 1967 and employed 37 people. Today Bambi is one of the largest and most profitable companies in the country. One of its signature products is biscuit called Plazma biscuit. From the start, the company’s focus was on manufacturing biscuits made out of domestically grown grains with an emphasis on healthy food. Within the first ten years of its existence the company had 230 full-time employees and manufactured 3,100 tons of products. In 1979 it received its first award for consistency in quality. Over the years the company grew and expanded to different regions of former Yugoslavia. In 1981 the company started production of their now famous Plazma biscuit, and today it is one of their best selling products. In 1990 the company started production of another well-known biscuit called Grandma’s cookie. In 1997 the company was the first in the country to receive international certificate for the standard in quality management ISO 9001 in food industry.
Mondi Foods has more than 40 years experience in the fruit business and today it is one of the major European processors of red fruit products. Within its strategy of backwards integration, in 2002 Mondi launched a greenfield investment in central Serbia - the freezing and sorting of red fruit for the European market, raspberries, strawberries, blackberries and Oblacinska cherries. It was the first foreign investment in the Serbian fruit processing industry.
Today, Mondi Serbia’s turnover amounts to about EUR 7.5 million. In Serbia, it has a storage capacity of 3,500 tons, and employs around 150 people year round. Mondi Serbia has a flow freeze tunnel that is already processing IQF fruits in combination with a new laser sorting line. Thanks to these investments the company is able to serve its customers with top quality fruit products from Serbia. Production capacity is over 6.000 tons of frozen products per year.
Mondi Serbia produces according to the HACCP quality system. Moreover, in 2004 this company became the first Serbian fruit cold store to attain a high level BRC certification.
Coca-Cola/IBP Beograd AD
Coca-Cola HBC has been operating in Serbia since 1997, when the purchase of the IBP Beograd company represented the biggest foreign investment in the what was then the Federal Republic of Yugoslavia. The company has been hiring local employees, continually invested in the local market and supported the local community. Coca-Cola HBC Serbia, with its long-term business plans and interests in Serbia, plays an important role in the economic development of the country, having invested more than 150 million EUR in ten years. Since 1997, Coca-Cola Serbia has tripled its production in order to meet the growing needs of its customers as well as introduced 39 new products and packages. Today, Coca-Cola HBC Serbia is the country’s leading soft drinks producer, which together with more than 3,000 business partners creates one of the most successful business systems in Serbia. The main office is in Zemun, where some 65,000 square meters of land are occupied with six production lines, a warehouse and business premises. The company has seven distribution centers across the country. Coca-Cola acquired Vlasinka, the bottling company of "Rosa" water-leader in the market of natural spring waters, and Fresh&Co., leading producer of juices, thus positioning the company as one the biggest non-alcoholic beverages producing companies in the region. These acquisitions are in line with the Coca-Cola HBC strategy to broaden its beverage offer for consumers and symbolizing a significant and long term commitment to the company’s operations in Serbia.
Carlsberg Serbia/ Pivara Celarevo
Pivara Celarevo, which is situated in the city of Celarevo 130 km north of Beograd, became part of the Carlsberg Group in 2003. Now called Carlsberg Srbija, it is one of the most successful privatization and foreign investments in Serbia. A re-launch of the local LAV brand and a successful launch of Tuborg, the first international brand produced in Serbia and Montenegro, helped the company to grow by 65% and take second place in the Serbian beer market in 2005.
The brands have been closely associated to some of the major national events. LAV is the official sponsor of the Serbian national football cup, now named the LAV CUP, while the music-focused Tuborg Green sponsors EXIT - the largest music festival in South-East Europe.
Apatinska pivara, located in the town of Apatin, was built in 1756 and is the biggest brewery in Serbia. Registered as joint stock company it has 1287 employees.
The brewery follows a long tradition. Its popular products are Jelen pivo (deer beer) and the Pils Light, which comes in several different packaging solutions such as cans or stubbies. This brewery is also well known for its production of many soft drinks varieties, as well as Ice-Tea flavors.
Apatinska Pivara AD is one of the most technologically advanced facilities of its kind in Europe. Technology is constantly improving in part due to German involvement in the brewing process. The brewery itself is located in the central district of Apatin and is surrounded by public streets and houses. The factory is operational 24 hours a day, seven days a week. In December 2003, Belgian-based brewing company Interbrew bought 99% stake in Apatinska pivara. In 2004, Interbrew merged with Brazilian beer company AmBev to form the new entity InBev, which has since then been the majority stakeholder in Apatinska pivara. In November 2008, InBev merged with Anheuser-Busch to form the new entity Anheuser-Busch InBev, which has since then been the majority stakeholder in Apatinska pivara. In mid October 2009, private equity fund CVC Capital Partners bought all of Anheuser-Busch InBev’s holdings in Central Europe (including Apatinska pivara) for E2.23 billion.
Arteska International Company
Arteska International Company manufactures and distributes refreshment non-alcoholic beverages, alcoholic drinks, and marmalades and jam product lines. It also offers natural spring water and fruit products. The company serves the alcoholic and refreshing beverages market. Arteska International Company was founded in 1997 and is based in Subotica, with additional branch offices in Novi Sad, Beograd, Sabac, Uzice, Kragujevac, Nis, Kovin, Zrenjanin, etc.
BB Minaqua A.D.. is a leading mineral water producer in Serbia. Its production facilities are located in Novi Sad, Northern Serbia. The history of mineral water sources is dating back to 1897. It was used for therapeutic purposes as well as for drinking. Appreciating it’s quality, in 1911 Minaqua - in that period known as "Franc Josef’s water" was rewarded with GRAND PRIX for it`s exquisite quality on Fairs in Rome, Paris and London. After the Second World War Minaqua mineral water have been sold all over Yugoslavia by the name "Mineral water of Novi Sad". From 1972 after construction of new plant, this mineral water gained new name Minaqua.
In 1999, Minaqua is transformed in private company with around 100 shareholders. With new leadership and new company goal within next five years, Minaqua became one of the leaders in production of mineral water in Serbia and Montenegro.
Since it was transformed to "share holding" company BB Minaqua invested a lot in new production and filling lines for water and soft drinks from well known producers such as: Krones (Germany) capacity of 9000 units of 2 liter bottles/h; SIG (SIG Coproplast Germany and SIG Simonazzi Italy) capacity of 14000 units of 2 liter bottles/h; Sidel (Italy) capacity of 16000 units of 2 liter bottles/h and THOMASON MACHINERY Production of 5,751 l 2000 units/h (Cyprus).
Minaqua’s 3 blow moulding machines (SIG Corpoplast 2 units and Sidel 1 unit) for PET bottle production of 2 liter, 0.5 liter and 0.33 liter bottles have capacities 16000 bottles/h and 22000 bottles/h respectively. Company invested in Injection Molding System for production of PET performs for bottle production. Two Husky Injection Molding Systems have capacity of 11.000 units per hour. By the end of 2008 new warehouse with innovative Radioshuttle System was installed, the first of this kind in Serbia. It is the only one in Serbia. During 2008 Minaqua has also purchased and installed Robot Palletizing System with Robot Palletizer Motoman EPL 500 for packing bottles of 5,75 liters. It can wrap up to 2000 units of 5,75 liter bottles per hour.
Pivara MB/Novosadska pivara
Novosadska pivara (Novi Sad Brewery) is a brewery owned by Heineken International. Registered as a limited liabilty company, it started production in 2003 and is the youngest brewery operating in the country.Located in the Serbian province of Vojvodina, in the city of Novi Sad, the brewery was founded as part of TUP Rodic M&B Company. Through aggressive marketing campaign that featured a "Svetsko, a nase" slogan and a series of public personalities such as Lazar Ristovski, Ceca Raznatovic, and Pierluigi Collina, it quickly established its MB pivo brand. For the 2004/2005 basketball season, the company was the main sponsor of KK Partizan.
At the time when Rodic Company decided to sell the brewery in December 2007, it held 7% of Serbian beer market with annual production of 1.5 million hectolitres, placing it fourth - behind Apatinska pivara, Carlsberg Srbija, and Efes Srbija.
On December 5, 2007, Dutch beer producer Heineken International announced its purchase of Pivara MB. The amount of transaction was not disclosed. The takeover was finalized on February 19, 2008 at which time it was also announced that the company is changing its name to Brauerei MB.
In October 2008, Heineken’s Braurei MB (Novi Sad facilities) merged with Efes Srbija (had two breweries: Pancevo and Zajecar) to establish a new entity - Ujedinjene srpske pivare (United Breweries of Serbia).
Knjaz Milos AD
is a carbonated mineral water producer and distributor based in Arandelovac, Serbia.
Knjaz Milos has been produced and sold since 1811. The natural mineral water is bottled deep in the Serbian mountains of Arandelovac. In addition to its centerpiece Knjaz Milos carbonated mineral water, the company also produces a line of Golf fruit juices and soft drinks, Aqua Viva spring water, Aqua Una mountain water, and Guarana energy drink.
After much legal wrangling, and several highly publicized competing takeover bids, Knjaz Milos AD majority stake (58%) was bought in 2004 by FPP Balkan Ltd. consortium. The takeover was done in stages: in September 2004, FPP Balkan Limited investment fund, part of London-based FPP Group, bought through takeover bid a 25% stake at RSD17,200 per share. In December 2004 it launched another takeover bid and bought another 33% for RSD23,000 per share, which made a total of 57 million Euro investment for 58% of the equity. In January 2005, FPP Balkan Ltd. Added Salford Capital Partners fund as their partners. In December 2006, Knjaz Milos AD obtained an ISO 22000 certification for food safety, the first company to obtain this certification in Serbia. Knjaz Milos is imported in the United States by A.B Company, Inc., and Grand Prix Trading Corp.
Source: BMI’s Food and Drink Business Environment Ratings (BER), listed companies web-sites.
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