RIGA - Latvian juice producer Gutta is concerned over Estonia's recent decision to introduce a deposit system for single-use packaging made of glass, plastic or metal. Implementation of the new system could possibly force Latvian beverage producers to halt exports to Estonia.
"This decision will significantly restrict competition for Latvia's producers in Estonia because prices will be pushed up artificially. Latvia's economy could lose an export market worth millions if Estonia does not lift its deposit-system decision," said Svetlana Safonova, Gutta trade and marketing director for the Baltic states.
She added that Latvian producers would be forced into a situation of unequal competition, conflicting with European Union free market principles.
Exports account for 42 percent of Gutta's total sales, which came to 8.74 million lats (12.8 million euros) last year. The company estimates its Latvian market share at some 43 percent and a share of more than 25 percent in the Baltics. Gutta's largest owner is Nordic Partners company, which has owners in Iceland.
Cido Partikas Grupa, another major player also affected by the packaging deposit system, is not ready to lessen its presence on the Estonian market by next year, said Cido Partikas Grupa marketing director Dmitrijs Tairovs.
"Cido Partikas Grupa is not set to reduce its involvement in Estonia's market because Estonia is one of the most important market shares, and the company has boosted its sales over the past years," he said.
Tairovs added that Estonia's legislative initiative should be assessed, as it could contradict European Union principles regarding the free movement of goods.
According to Cido Partikas Grupa information, the producer leads the juice and nectare market in Latvia with a 46 percent market share. The company, which holds a 23 percent market share in the Baltics, expects to be bought by The Danish Brewery Group, of Denmark.
The deposit system law in Estonia will take effect on Jan. 1, 2005.