Baltika turns to the West

TALLINN - Baltika, an Estonian garment company, is planning a wide expansion toward Western markets after its Russian market saw another decline this year.

Baltika presented its three collections at the Polish largest fashion fair in Poznan in August and concluded a framework agreement for cooperation with the largest Polish department-store chain, Domy Towarowe Centrum.

"The Polish market gives an opportunity to everyone," said Edward Koster, men's wear director at Baltika. "You have to be strong to get there, and we managed to turn our strengths in our favour."

Koster said that Poles liked the Estonian collection and, the price was acceptable. "Poland is a market with 40 million people, 20 percent of whom have purchasing power. The market is increasing tremendously and has potential," said Koster.

Baltika is planning to sell its products for at least 6 million kroons ($404,000) in Poland next year and for 15 million kroons in the year 2001.

"This is a minimum of what we predict. I believe we are taking faster steps there," said Koster.

Baltika also established its subsidiary Baltika Poland to develop sales on the new Polish market.

The subsidiary of Baltika in Sweden is developing sales in Norway at the same time. "We are doing research on the market, and we have also completed some transactions. It is not easy to enter the Norwegian market , but you have to do a lot of preparation for it," said Koster.

Baltika is also doing well in Sweden. Baltika's collections are sold by famous Scandinavian department stores such as Stockmann and Nordiska Kompaniet.

Baltika together with several other Estonian clothing companies participated at the Stockholm Fashion Show in August this year, thanks to the help of the Estonian Export Agency. "Baltika is one of the most experienced exporters in this field," said Aali Lilleorg from EEA.

"The Estonian, production has a good quality and design, but the trademark is unknown abroad. The problem is that the price seems to be high compared to the awareness of the trademark," said Lilleorg.

The Russian market disappointed Baltika this year, and the company is planning to be more conservative with it in the future. The company took big losses in sales compared to last year's figures.

In Moscow, Baltika owns a shop in the distinguished department store GUM since 1996.

Baltika exports almost two-thirds of its total production. The biggest share of exports (64 million kroons in 1998) go to Latvia and Lithuania, where Baltika owns five shops. Sweden and Finland together represent about one-fourth of the sales, while Russia and the Ukraine generate a slightly smaller turnover.

Not only does Baltika produce its own collections, it is also a manufacturer for several well-known brands such as Burton and Next in England, and Sunde and Pret-a-Porte in Sweden. Subcontracting gives the company 23 percent of its sales - its biggest subcontracting markets are Scandinavia, Germany and Great Britain.

In Estonia Baltika has 12 stores called Christine, Baltman and Evermen. This fall all stores will be renamed Baltman, which will become the biggest retail clothing chain in the Baltics. Baltika has developed five trademarks : Baltman, Evermen, PlusB, Christine Collection and Respect.

Production capacity at Baltika is over 1 million pieces of clothing per year.

Last year the company made a 2 million kroon net profit on a 280 million kroon turnover. The company's turnover reached 140 million kroons for the first half of this year.

According to the Estonian Export Agency, Baltika, Klementi and Sangar are the market leaders in the garment business in Estonia.