Baltic market pushes Laima to act

  • 2000-04-13
  • By Vineta Lagzdina
RIGA - Fixed sugar prices in Latvia and souring of the Russian market have prompted the relocation of Laima sugar confectionary production.

According to a press release, Latvian sugar products cannot compete on the market. The Baltic Common Market ruling of January 1998, which should have increased production and sales on sweets for all Baltic countries, has not been beneficial for Latvia.

"In the latter part of 2000, Laima has a project with a partner organisation in Russia to begin production services in Novgorod, Russia." said Laima's spokeswoman Rita Veronkova.

The situation is currently politically unclear because sanctions have been imposed on Latvian products in Russia, but Veronkova hopes this is only temporary and a more pragmatic approach will take effect.

The Russian market has always been a major one for Laima chocolates, but now export has virtually stopped. Laima is interested in opening up the Russian market again and producing caramels in Russia at competitive prices.

The fixed sugar prices in Latvia are prohibitive for companies such as Laima because Latvian producers can use only Latvian sugar by law, and it is expensive. Estonia is able to buy sugar from the world market at less cost. Lithuania has a subsidy scheme for producers and sellers, so even though there is a common Baltic market regarding trade back and forth, there are different competitive conditions at work.

It turns out that Latvia pays about three times more than its Lithuanian or Estonian colleagues for sugar and the caramel market for Laima has kept falling since 1998.

Laima Chocolates has a long and acclaimed history and currently operates two production centers in Riga -one at Miera Street 22 and the other at Sporta Street 2. Laima's second objective is to build a new building with modernized production methods on Sporta Street to make even better quality sweets to meet European standards without the present hands-on experience, letting modern machinary do the work. Tenders are in as Laima prepares to join a competitive, broader-based European confectionary market.