Spar sets sights on retail lead in Baltics

Jun 22, 2000
By Kairi Kurm

The chain has 65 shops and two wholesale companies in Estonia and
Lithuania with a distribution center in Latvia. Financing from the
EBRD, 12.1 million euros ($11.6 million), will enable the company to
develop its retail and wholesale activities in the Baltic states by
acquiring new supermarkets, upgrading its existing stores and
expanding wholesale operations.

"The project builds on the company's current position as one of the
largest pan-Baltic food retailers and wholesalers," said Hans
Christian Jacobson, director of the EBRD's Agribusiness team. "As a
result of this project, consumers and food producers across the
Baltic states will benefit from an improvement in food distribution."

"It is still a small company. All the money they make they invest and
as a result don't make much profit," explained Jacobson. He said that
the EBRD is interested in supporting other retail companies, too.

Baltic Food Holding is currently operating under Rema 1000, Spar and
Dagab trademarks in Estonia, the total sales of which will exceed 1
billion kroons by the end of 2000.

"Starting this fall, we will increase our visibility in the market by
converting our retail stores into Spar," said Stein Skjorshammer,
managing director of Baltic Food. "Few, if any, chains have more
stores in the Baltics than we have."

Although it is one of the biggest pan-Baltic chains, its market share
in each country is very small. Marge Rahu, marketing director at
Baltic Food Holding, said the company's market share in the regulated
market of Estonia is about 10 percent. If the unregulated market,
about 35 percent to 55 percent, is taken into account, the market
share is even smaller.

Hans-Jorgen Blomsemt, chairman of the board at Baltic Food Holding,
said the Swedish market was also quite unregulated in the 50s, 60s
and 70s until the authorities increased control over the market.

"I hope the local authorities will have more control over the market
in the Baltics, and people prefer shopping at modern shops," he said.

"Our goal is to establish neighborhood Spar stores with a nice and
clean interior, low prices and high quality," Blomsemt said. Rahu
said renaming Rema's 1,000 stores as Spar was a good reason to
start training in the stores.

Spar is the world's largest retail food store chain with over 17,500
stores in 28 countries across five continents.

Baltic Food Holding was started in 1995 in Estonia by Skjorshammer
and Blomsemt. Today the ownership is even wider, including Norwegian
Selvaag Group, Swedish Axfood and the Norwegian Government Regional
Development Fund.

Besides managing the company, Selvaag is supporting the operations of
the company on property side, and Axfood with its expertise on food
wholesale and retail.

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