TALLINN - Balbiino, one of Estonia's leading ice cream producers, announced on Feb. 19 that it has purchased Latvia's Margota for some 3.2 million euros. The acquisition is part of the company's ambitious plans to expand market share in the region and boost exports.
"More concrete negotiations with the owners lasted for half a year, and both sides are happy with the outcome," Balbiino CEO Riho Niils was quoted as saying.
Niils said that Balbiino had a 10 percent share of the Latvian market and Margota 7-8 percent, and the goal for 2007 was to increase the share to 25 percent.
Teet Anier, marketing director at Balbiino, said that Latvia's ice cream market has a greater potential for growth than does Estonia's. Consumption of ice cream per person in Latvia is 30 percent less than in Estonia, he said. Niils also noted that Latvia's ice cream market is growing 15 percent per year.
Anier also said the Balbiino would keep Margota's best brands and decide at a later time what to do with the trademarks.
In Latvia the market leader 's and chief competitor 's is Riga Dairy, which accounts for 30 percent of the local ice cream market. But Balbiino executives are confident that they can beat the competition.
"Logistic capacity in Latvia is poor: it is hard for smaller players to adequately operate across the market and investment capacity is absent," Anier said.
Balbiino, which controls 40 percent of the Estonian market, posted revenues of 335 million kroons (21.4 million euros) in 2006. The company has targeted sales of 500 million this year.
Other than Latvia, Balbiino also exports to Lithuania, Finland and Germany. Earlier this year the company noted its success in Finland, where it was able to boost sales by 60 percent in 2006. Overall, exports increased 30 percent last year.
Balbiino, which employs 200, is planning to complete a 28 million kroon extension of its Tallinn-based logistics center this spring. The new facility will be the largest refrigerated logistics center in the Baltics and will improve the quality of service for all export markets, Anier noted.
Margota ended last year with a loss of roughly 3 million kroons on sales of 80 million kroons. The firm produces frozen pelmeni and vegetables. It employs 80 people.
