Polish dairy may compete with Danone

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Related tags: Milk

Polish milk processing company Mlekovita witnessed strong growth in
2003. This has secured the company third place in terms of market
position in the country. It is now Poland's third largest milk
producer and the growth has put it in a strong position to compete
with multinational dairy companies such as Danone, the current
market leader.

If Mlekovita is able to maintain its current growth rate, local observers claim that it is likely that the company will outperform Danone and second place Mlekpo, the companies that in the past have dominated the Polish dairy sector.

A series of investments in the company's factories is thought to be one of the factors that has lead to the Mlekovita's growth. The company upgraded its Wysokie plant and as a result the plant was able to produce 2 million litres of milk per day. It increased milk processing by 20 per cent to 530 million litres produced in 2003. Furthermore, the company opened two new plants for fat butter, and cheese production which led it to launch several new brands on the market.

French company Danone has been the industry leader in the dairy sector since 1990 when it expanded its business to eastern Europe. Its dairy unit is the most successful part of the company's business.

With accession just around the corner, Poland's dairy sector has come under pressure from the EU to meet regulations. Earlier in the month the Polish government announced that a number of dairy companies were struggling to comply with the regulations that have to be met by May 1 this year. And it is estimated that only 52 of the dairy companies would meet EU guidelines in the industry.

While investment in the Polish dairy industry is something that the government and the EU are encouraging, Mlekovita's dynamic growth has shown that intelligent investment can increase market share position.

It is predicted that most Polish dairy companies will continue to trade after accession even if they do not meet the specified guidelines. Some Polish dairy products may have to be labelled indicating that they are only suitable for the domestic markets.

Related topics: Markets, Danone

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