Friesland to build Romanian presence
Coberco Dairy Foods, has made a public offer for a controlling
stake in the Romanian dairy group Napolact, in which it already has
a 41 per cent stake. The acquisition will give the Dutch company a
nationwide presence in Romania - a market with significant growth
potential, writes Danny Vincent.
Friesland first invested in the Romanian dairy company in 2002, and has been steadily increasing its stake in Napolact since then. If the tender offer is successful, Friesland will become the leading dairy company in the eastern European nation.
But the company's plans for Romania remain modest. R.J. A. Van Dongen, spokesman for Friesland Coberco Dairy Foods, told DairyReporter.com:"We are not aiming for major growth in the country. It is our strategy to strengthen and improve our position there."
Friesland has a presence in several other eastern European countries. In the last two years it has acquired stakes in companies in both Slovakia and Hungary - countries which are due to join the EU on 1 May, offering significant opportunities for growth, in particular in terms of cross-border trade in the enlarged 25-country bloc.
However, in Romania - which will not join the EU this year but could become a member in 2007 - the company has made it clear that its primary interest is the domestic market.
Friesland is the market leader in Romania and is in second and third place in Hungary and Slovakia respectively.
Napolact operates five factories in Romania, all situated in the north western region of Transylvania. The company has an annual turnover of €27 million and employs around 1,400 people. It produces a wide range of dairy products including fresh fermented products throughout Romania.
According to Friesland's latest financial results, released early last month, the company struggled as a result of the recession in western Europe, but the Romanian investment is not seen as a short-term means of countering poor results elsewhere. "We are not looking for company growth, we are looking to increase our position [in the Romanian market]," said Van Dongen.
"Our investment is not a direct reaction to the western European recession. We wish to improve our leading brands in a profitable region."