Slovenian food sector
Slovenia was part of the Central-European countries joining the European Union in May 2004 and was the first CE country to join the Euro-zone on 1 January 2007. This joining of the Euro-zone, which went on quite smoothly, highlights that the country’s economy was and still is the most advanced in Central Europe. Slovenia is often cited as the ideal transition economy. The accession agreement with the OECD in June 2010 improved Slovenia’s international competitiveness.
GDP growth is forecast to stabilise at 2,4% and at 2,5% in 2023 and 2024, respectively. Economic growth will remain broad-based throughout the forecast period. Private consumption will be driven by high employment, projected wage growth and accumulated savings during the pandemic. After strong growth in early 2022, investment activity gradually became more subdued later in the year and into 2023 due to lower growth in foreign demand and higher prices, and lower availability of capital goods.
The situation in the domestic economy and the external environment is reflected in the inflation forecast, which is expected to average 4,5% and 2,3% in 2023 and 2024, respectively. Against a backdrop of record low unemployment and unfavourable demographic trends, employment growth will come mainly from the recruitment of foreign workers.
The agrifood industry
In 2020, 291 agricultural enterprises with 1877 employees, EUR 76 million in value added and EUR 209 million in net sales submitted their annual reports. Most performance indicators were higher than in the previous year, with the exception of profit, which was 50% lower.
The 772 food companies that submitted an annual report employed a total of 14 486 people, generated value added of EUR 623 million and net sales of EUR 2,2 billion. Their total profits, down 12% compared to 2019, amounted to EUR 112 million.
The share of agricultural land in Slovenia in the total area is significantly lower than in the EU as a whole, but after a long-term decline, this relatively modest share has stabilized. In 2019, the utilized agricultural area covered about 480 000 hectares. Mainly due to the abandonment of agriculture and overgrowth of land by trees and shrubs, but also due to conversion to built-up land, this is 15% less than at Slovenia’s independence, but the same as in 2012.
In terms of ensuring conditions for local food production, the low proportion of arable land is particularly worrying. In terms of arable land per person, which is most important from a food security perspective, Slovenia is among the last four countries in the EU. In 2019, the arable land per person was about 8,4 ares (EU average: 22,2 ares) or a total of 174 000 hectares. Only about 3% of this area was used for growing vegetables, as a large part of the fields is used for growing fodder crops. These are also grown on permanent grassland, which accounts for the largest share of arable land, about six-tenths. Permanent crops accounted for around 6% of the agricultural area, with vineyards and orchards being the main crops.
Organic farming, the most desirable form of agricultural production from an environmental point of view, is more widespread in Slovenia than in the EU as a whole and is increasing.
One-tenth of all farms were included in controlled organic farming in 2019. Again, permanent pastures and meadows for fodder production account for the largest share, and the shares of other types of land are relatively small. However, this does not match the demand, which is highest for organically produced fresh fruits and vegetables and vegetarian processed foods. Given the natural conditions, i.e. the high proportion of farms in mountainous and other remote areas where intensive conventional farming is not possible, there is still considerable scope for further development of organic farming in Slovenia.
Given its moderate average crop and livestock production, Slovenia is not among the countries with high agricultural intensity. The development of Slovenian agriculture has been characterized by dualism for some time: in addition to an increasing intensification of agriculture, which is accompanied by a decrease in the number of farms and thus a greater concentration of crop and livestock production, Slovenia has also seen an increase in organic farming.
A comparison with the EU average in crop production does not give a consistent picture, which can be seen in the average yields of the two most important Slovenian crops, wheat and corn: for wheat, the yield per hectare tends to be lower than the EU average, while for maize it is generally higher. Under the influence of weather conditions, yields of all crops vary considerably from year to year, but in the long term they increase as technology improves. As long as they are not too high, this means an improvement in the utilization of natural resources.
The environmental impact of animal production, measured by the number of animals per unit of agricultural land, is not among the lowest, given the natural conditions, but the average milk yield per animal is below the EU average. From the point of view of animal stress, this is favourable, but from the point of view of environmental impact per unit of production, it could be somewhat higher.
Key agrifood companies
RWA Slovenija represents foreign companies, produces seeds of agricultural plants, and sells cereals and crops (corn, wheat, barley, rye, potatoes, grass seeds, vegetables and others). It exports its production to Austria, Croatia, France, Hungary and Romania.
The encompassing trademark of Skupina Panvita combines three interrelated projects: agriculture, meat and meat products and ecology and energetics. Today Skupina Panvita incorporates 10 interrelated organizations that employ over 600 individuals and realizes the responsibility toward the production of ecologically sustainable food products and the natural raising of livestock. The company’s main focus is production and sale of poultry meat. Export destinations include Bosnia and Herzegovina, France, Germany, Italy, Montenegro, North Macedonia and Slovakia.
Evrosad is a leading manufacturer of fruits in Slovenia. Today, it produces about 10 000 tons of fruit per 250 ha area. Fruit Company Ormoz d.o.o., on their current area of 140 ha, produces more than 4000 tons. They work in cooperation with the fruit growers of Posavske regije, with whom they have a contract on the purchase of apples, pears and peaches, and they produce 3500 tonnes of fruit per total area of 150 ha. Fruit produced in the company’s own production and purchased from its contract manufacturers is sold under a single brand “Evrosad”. Export destinations are Austria, Bosnia and Herzegovina, Croatia, Germany, Hungary, Italy, Lithuania, Romania, Serbia and the United Kingdom.
Although Slovenia is admittedly more a wine growing and drinking nation, there is nearly 200 hundred years of brewing tradition, with Pivovarna Lasko Union as the largest beer manufacturer. Before, there were two separate breweries: Pivovarna Lasko and Pivovarna Union (located in Ljubljana). In 2002 Pivovarna Lasko took over Pivovarna Union. Since 2016 the company is 100% owned by Heineken with the local brands Lasko and Union retained.
The number of small private breweries is on the rise – there were 61 registered in 2018, which is quite an increase compared to 2010 when there were only 13. Still, their market share remains insignificant (1 – 2%). A trend that is important to emphasize is the expected increase in the popularity of craft beer and also the increased share of dark beer in total beer sales.
Bakery and confectionery
The Zito group dominates Slovenian bakery: it produces more than 30 000 tonnes of bread and bakery products yearly. It is also involved in the project “Food 4 future” that aims to develop sustainable production of quality food and to impact the creation of innovative short supply chains.
Another important player on the bakery products market is Pekarna Grosuplje, since 2015 part of the Dondon Group. Mlinotest is the largest and most recognized pasta producer in the region. Besides grain mill products, bread and pastry and confectionery, it started the production of gluten-free products as well.
Confectionery is produced in Slovenia mainly by the Zito group, with its well-known brand Gorenjka (chocolate and pastries). Apart from Zito, there are still smaller Slovenian manufacturers of chocolate and confectionery products. In Ljubljana Rustika and Benedict are well known. Benedict produces its own chocolate and chocolate products under the trade name of Cukrcek, but also distributes imported chocolates & confectionery. Other chocolate producers outside Ljubljana are Dobnik, Cokoladnica Olimje and Rajska Ptica.
The company Ljubljanske Mlekarne is the largest dairy producer in Slovenia, which operates as part of the Lactalis Group. It produces a broad range of dairy products and has a couple of dominating brands. Alpsko mleko milk became a cult Slovenian brand. Of all the dairies in Slovenia, Ljubljanske Mlekarne purchases the largest volume of domestic milk from over 2000 Slovenian farms. Using a tracking system, they can accurately identify the farm where the milk was produced for each milk tank.
Two other important dairies are Pomurske Mlekarne in the Northeast of Slovenia and Mlekarna Celeia near Celje (central Slovenia). In recent years Mlekarna Krepko, which is famous for its buttermilk (kefir) and Mlekarna Planika, whose products are bearing the label “Selected Quality”, have been successfully improving their market position.
Slovenia has two important meat processors, which typically dominate in their region. Kras d.o.o., renowned for its dry-cured ham – prosciutto, based in the Kras-region (Southwest of Slovenia) and Panvita, based in Gornja Radgona (Northeast of Slovenia) Both Kras and Panvita are established brand names in Slovenia and have a solid market position.
Perutnina Ptuj is the leading specialized poultry meat processing corporation, not only in Slovenia, but in the whole Southeast Europe region with companies in Croatia, Serbia, North Macedonia, Bosnia and Herzegovina, Austria and Romania. Pivka Perutninarstvo d.d. is smaller and also a much more national player, even though it has subsidiaries in Belgrade and Zagreb.
Soft drinks and water
Slovenia has quite some tradition in the production of soft drinks. Without any doubt, the most valuable brand is Cockta, a local variant of Coca-Cola with a long history going back well into the Yugoslavia era. The brand Cockta was bought in 2000 by Atlanta Droga Kolinska group. The company is the largest food processor in Slovenia and has a dominant position in the segments of coffee and soft drinks. It also manufactures other food products like snacks, spreads and baby food.
Another well-known Slovenian brand for soft drinks is Fructal. Fructal, which focuses on fruit juices, was acquired in 2011 by the Serbian group Nectar.
Radenska Adriatic is the largest Slovenian producer of mineral water and plans to become one of the three leading manufacturers of soft drinks in the Adriatic region. The company is also manufacturing and distributing Pepsi, Mirinda, and 7UP soft drinks on the Croatian market. In 2015 the Czech company Kofola became the largest shareholder of Radenska d.d.
Having a long history of producing wines, Slovenia has 3 main wine growing areas. Podravje region in the North is the largest wine growing area. The region is famous for its sparkling wines from Radgona as well as for its white wines coming from areas around Maribor (Slovenia’s second largest city hosts the world’s oldest vine), Ptuj (the oldest wine cellar in Slovenia) and Ormoz.
The Posavje region is the only region that produces more red wine than white one (be it by a small margin) and focuses on bulk-production. Primorska in the South of Slovenia consists of 3 sub-regions such as Kras, Vipava and, last but not least, the Goriska brda region (close to Italy) that is internationally renowned for its quality wines (red and white). One of the most internationally renowned cellars is Movia.
LATEST issue 4/2023