TALLINN - Sweden's IKEA is reportedly prepared to order a billion kroons (64 million euros) of Estonian furniture and interior design products annually starting this year.
The Aripaev business daily reported that IKEA, the world's largest retailer of such goods, is ready to sign contracts with several Estonian companies, most notably Wendre, whose sales to IKEA are expected to reach a total of 500 million kroons over the next three years.
IKEA spokeswoman Charlotte Lindgren would not comment on the plans, saying that IKEA had no obligation to do so since it was not a public company.
As part of the contract, Wendre will build a new storage facility for products made for IKEA. It is common for company subcontractors to ship their products straight to intermediate storage facilities, but Wendre is likely to supply its products directly to several of the chain's stores.
The opening of this logistics center, which should be completed by August, also means that IKEA will buy 3 million pillows and 3 million blankets from Wendre annually over the next three years. Right now the Estonian company produces only 1.7 million of each.
A similar supply arrangement is being used by AS Hansa Candle, which makes all outdoor candles and one-fifth of the tea candles sold at IKEA's Finnish stores.
Also, Viljandi-based Delux-Domotex, a holding of Finnish national Goran Sjoholm, will start producing blankets and pillows of the higher price class for IKEA beginning in May, Aripaev wrote.
The new contracts will solidify the strong relationship between Estonia and the Swedish retail giant. Parnu-based furniture maker AS Viisnurk makes shelves and cupboards for IKEA, while Kreenholmi Valdus produces textile dyes that are used by IKEA.
Horizon Pulp and Paper, based in Kehra in north-central Estonia, manufactures about 28 percent of the printed napkins sold at IKEA stores, which translates into a turnover of about 16 million kroons for the company annually.
IKEA has 182 department stores in 23 countries. Sales by the company in the last financial year amounted to some 13 billion euros, up by 600 million euros.