Yoplait and Tnuva scouting Romanian dairy
to be in advanced negotiations to establish a dairy venture in
Romania, according to reports.
The online edition of Israeli newservice 'Globe' reports that the initial cost of the venture is estimated to be around €8 million, with initial potential sales in the still highly fragmented Romanian marketed estimated at €40 million, with sales predicted to eventually reach well in excess of €200 million.
Niether Yoplait or Tnuva would make comment about the report. The two companies formed a collaborative deal in 2000, whereby Tnuva has the manufacturing and distribution rights to Yoplait products in Israel.
Industry observers say that the two companies have been probing the market for some time now and that it is not known whether they are looking for a greenfield site or if they wish to buy up existing facilities.
The reports that Tnuva and Yoplait were looking into a setting up production facilities have been confirmed by the Israeli embassy in Romania, which said that it was in talks with several Romanian dairy producers.
At the end of last year Tnuva confirmed that it was looking into a venture in Romania. At the time CEO Arik Raichman said in an interview with Globes: "We found that the market in Romania is the one most suitable for dairy enterprises, because the market is more advanced, where retail chains are concerned. The problem there is the agricultural aspect, because production is not consolidated. Our impression is that the administrative and regulatory situation is favorable for new ventures. The goal is to set up a dairy in Romania, and the matter will be brought to the company leadership for approval."
However, some industry experts believe that Tnuva and Yoplait could be entering the market too late. Florin Popescu of the Romanian Milk Industry Producers Association believes that the market is now fairly advanced and that the only opportunities that now exist are in the south of the country, where investment in the dairy sector has so far been more limited.
It is particularly in the south of the country where milk processing remains somewhat of a cottage industry. Here large-scale dairies have had limited inroads onto the market and such businesses remain very small scale operations. Indeed in this part of the country it is more likely that milk is still sold in its unpasturised state on market stalls.
Last year the milk market in Romania produced an estimated 5 billion litres of milk, of which only 1.2 billion litres was produced by large scale milk processors. Approximately 2 billion litres of the total was estimated to have been sold unpasturised on market stalls. Currently milk and milk production consumption in Romania is approximately 200 litres per capita and is growing at approximately 3 per cent. This compares to the EU's highest level of consumption which is currently 700 litres per capita in the Netherlands.
