Latvian dairy goes multi-functional

Related tags Dairy European union

Latvian dairy producer Rigas Piensaimnieks has made an interesting
side-step into the world of multifunctional manufacturing in an
effort to increase its market share and maintain future growth.
Sauces and condiments will now become another key area for the
company, writes Simon Pitman.​ spoke to RP director Arvids Usca to find out what has inspired the move, how the company intends to implement its expansion and what exactly its objectives are.

"Rigas Piensaimnieks has been an active player in the dairy sector for more than 11 years now,"​ Usca said. "We believe that the dairy sector will continue to develop in the future, but our philosophy is that along with development of the sector a constant growth of our company and development of new businesses is essential.

"RP's decision to become multifunctional is not a sudden one. For several years our product portfolio has included both quality dairy products as well as various non-dairy foodstuffs (fruit jelly, pancakes with stuffing and products for HoReCa segment - mayonnaise and jam). In 1997 the company started production of Jungle Pop ice lolly brand. According to co-operation agreements concluded between RP and major European retail chains this product is currently available within various European retail chains including Aldi, Migros, Spar and Ica Ahold."

The success of this move has encouraged the company to think laterally and in turn that lateral movement has moved farther a field in an attempt to try and carve out greater market opportunities for the company. It also helps to counteract the effect of falling dairy production in Latvia. In 2003 milk production was down by 3.4 per cent on the previous year on account, due largely to the saturated state of the domestic market. This has meant that increasingly Latvian diary producers have had to look to export markets to maintain or increase their market share.

Currently RP exports its products to 21 countries worldwide, with primary destinations including European Union, Asia and Americas. The company's primary export, its Jungle Pop lollies, can be purchased in EU markets such as Belgium, France, Germany, UK, and Portugal as well as Mexico, Venezuela, Hongkong, Korea and Japan.

"RP does not exclude the possibility of moving into the production of other non-dairy products in the future,"​ said Usca. "However, first we consider expanding our non-dairy product line with foodstuffs particularly for Hotel Restaurant and Catering segment. We are looking into traditional products such as ketchup, mustard and honey, which are popular among our consumers.

"The RP decision to become multifunctional is driven by the wish to efficiently use the company's resources and maximise potential by applying its know-how and technologies into the production of popular, healthy and high quality food-stuffs."

Currently the proportion of non-dairy products make up around 15 per cent of total company sales. According to RP it is aiming to bring these sales up to 30 per cent of total turnover by the end of 2004. In 2003 the company announced sales of LVL 15.3 million, up from LVL 14.2 million the previous year.

Related topics Markets