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The two Tallinn-based ice-cream factories are Tallinn Cold Storage and Balbiino. As to the exact market share of the different companies, that depends on whom you ask. According to Avld Krlu, financial manager of TCS, the company has 53 percent of the market, while Balbiino has 30 percent of the market share. Meanwhile, according to Teet Anier, marketing manager of Balbiino, TCS has a 43-percent share of the domestic ice-cream market while Balbiino has a 38-percent share.
Unlike some Western countries, a majority of Estonia's ice-cream sales come from prepackaged ice-cream novelties, rather than hand-dipped ice cream. Baskin Robins-style ice-cream outlets have made no significant inroads in the Estonian ice-cream market. The most popular ice-cream novelty in Estonia is the filled wafer cone - specifically the caramel wafer cone. Both giants produce different versions of the treat. Both companies say that the wafer cones represent a large scoop of their profits. Balbiino reports that these cones account for 35 percent of their sales, and 40 percent of their profits. For TCS waffle cones also represent 35% of their total sales, and 35% of production, according to Avld Krlu.
On the streets, vendors sell one brand or the other, but not both. In the heart of the tourist district in Old Town Tallinn, the cones cost between 4 kroons ($0.27) and 5 kroons. That's close to the 6 kroons for a McDonald's soft-serve cone, less than an 8 kroon soda but more than the 2 to 5 kroons for most pastry.
The cones come in traditional flavors: chocolate, vanilla and mixed berry. Because of the way the cones are constructed, they tend not to drip. The older of the two Tallinn factories, TCS was established in 1951, and began making ice cream in 1953. In mid-June TCS opened a 2,500 square meter factory reported to be one of the most modern ice-cream factories in the Baltics. The factory is capable of producing up to 7,500 tons of ice cream a year. The new factory cost 90 million kroons. The other Tallinn based ice cream producer, Balbiino, was the idea of an individual who sold his idea to the Norma group in the early 1990s. Like TCS, Balbiino also sells wafer cones. Lots of wafer cones. Balbiino's production of cones is estimated to top 2.5 million units just for June.
Since 1996, according to Balbiino, the Estonian ice-cream market has experienced a remarkable shift away from foreign domination. In 1996, foreign companies occupied 60 percent of the domestic market for ice cream. In 1999, foreign companies represent only 15 percent of the Estonian ice-cream market. One of the possible reasons for this shift, according to Balbiino marketing manager Teet Anier, is that there is always a demand for locally made goods in some product areas, such as beer and ice cream. One of the things that distinguishes Estonian ice cream is its fairly low sugar content. According to Merike Puskar, TCS managing director, Estonian ice cream uses only 14 percent sugar, a significant difference from ice cream produced elsewhere.
"It is much less sweet than ice cream produced in the U.S.," said Puskar.
Low-sugar ice cream represents only a tiny fraction of the Estonian ice-cream industry and only a small percentage of his business. Balbiino reports that they have a sugar-free ice cream for diabetics currently in development.
Anier estimates Estonian consumption of ice cream close to the figures for other European countries, hovering at around 6 to 7 liters per person per year. Yet Estonia's consumption is nowhere close to Finland's consumption of 15 liters per person, or the U.S.A.'s 20 liters per person.
In Tallinn, convenience grocery representatives from the Celtic Corner and Drakkar shops in the Old Town report that between 50 percent and 60 percent of their summer customers buy ice cream. In winter, that figure is closer to 10 percent, according to Mare Palvari of the Drakkar grocery store. But ice-cream companies cannot live by domestic markets alone. Both companies are hoping to expand their export markets. Currently TCS is selling approximately 10 percent of its ice cream to Latvia, a figure that includes both cones and family packs. Balbiino typically exports 3 percent to 5 percent of its monthly production to Latvia, although according to Anier, their percentage of exports to Latvia reached 8 percent last month. According to both Liivi Tamm, a spokesman for Balbiino, and Anier, the Estonians consume a greater amount of ice cream, but the Latvians consume a greater portion of wafer cones. Non Baltic expansion plans for the ice-cream companies stretch east and west.
TCS wants to expand sales to the EU, while Balbiino wants to export its ice cream to Russia. This possible EU expansion may be threatened by global factors that have nothing to do with Estonian ice cream. According to Hendrik Kuusk, for the Estonian Veterinary and Food Inspection, Estonia has already reached its limit of dairy product exports to EU countries. EU certification of factories may also be a problem for exports to EU countries. There are currently no EU certified ice-cream factories in Estonia. According to Kuusk, it is not what the certificate costs, but what the improvements cost. The factories must consider the cost of improvements in relation to the possible profits from EU markets. "It is a business decision," said Kuusk. "They have to be sure that they have the market." According to Puskar, TCS is hoping to get EU certification for their new factory. "We want to get an EU certificate of quality in the future. A requirement for this is that all the equipment, such as tables and pipes, must be stainless steel. No wood," said Puskar. Despite not having an EU certificate, both of these factories are currently in compliance with Estonian food law. Witness the great cream debate. "We are using cream. Thirty-five percent to 38 percent natural cream. Most ice-cream producers are not using cream," said Puskar of TCS.
"Every morning we have cream delivered. In June it was 140 tons of cream," said Krlu of TCS. And then the most damming statement:
"Balbiino uses milk powder."
According to Liivi Tamm of Balbiino, it is true. "Yes, it is true. We do use some powdered cream in some of our products. But it doesn't make any difference at all. The quality is absolutely the same."