Finns slice up Baltic meat market

  • 2001-07-05
  • Kairi Kurm
TALLINN - Finland's leading poultry producer, HK Ruokatalo, and the Federation of Swedish Farmers signed an agreement on June 26 to acquire 55 percent of the shares of Estonia's largest poultry and egg producer, Tallegg.

HK Ruokatalo has been a major player on the Estonian meat market since August 1998, when it acquired a majority share in the meat plant Rakvere Lihakombi-naat.

"Acquisition of a majority holding in Tallegg supports our growth strategy and provides the potential to expand in the Baltics and elsewhere in Eastern Europe," said Simo Palokangas, CEO of HK Ruokatalo.

Palokangas said that Tallegg is the clear market leader in its sector in the Baltic states. It controls a fifth of the market.

Last year Tallegg controlled 90 percent of Estonia's entire refrigerated poultry market. Around 76 percent of the company's 10.2 million kilogram production volume was sold in Estonia, some 17 percent in Latvia, and the remainder in Lithuania. Tallegg has seven facilities, mostly around Tallinn, and a subsidiary in Latvia.

The shares were bought from the European Bank for Reconstruction and Development through the Baltic Privatization Fund, which invested 45 million kroons ($2.43 million) in the company in April 1999. With the investments the EBRD hoped to bring the company into accordance with European Union norms and find a strategic investor.

According to Ants Kasper, the managing director of Tallegg, the company will meet EU norms by the end of 2001.

The new owners of Tallegg are not planning to make any changes in the company.

"The change in ownership means that one foreign owner replaces another foreign owner," said Palokangas. "Tallegg is in good condition and its products are of a good quality. HK Ruokatalo wants to continue developing Tallegg's activities in Estonia and elsewhere in the Baltic countries on a client-oriented basis."

"They are long-term strategic investors. They promise a stronger and a more secure future," said Kasper.

The other majority investor in Tallegg is Uhispank with a 10 percent share.

Tallegg includes a feed factory, a hatchery, a slaughterhouse, poultry processing and marketing arms. The company produces nearly 90 million chicken eggs and sells more than 10,000 tons of broiler products annually. The biggest competitors to the 45-year-old company are the meat plants in Valga, Kuressaare and the companies that import poultry products.

Andi Saagpak from Saaremaa Liha-ja Piimatoostus was of the opinion that the deal would not affect the meat market.

"Tallegg had a monopoly and I don't think they would change their strategy now," he said.

Tallegg made profits of 36 million kroons on 372 million kroons in turnover last year. This year's sales should amount to nearly half a billion kroons. The company employs 700 people.

HK Ruokatalo has been in the poultry business in Finland since the early 1960s. Its subsidiary, Broileritalo OY, controls more than 50 percent of the Finnish poultry market. The group's turnover for the year 2000 was $430 million.

HK Ruokatalo owns a majority stake in Rakvere Lihakombinaat, which has four subsidiaries in the Baltics – Linnulihatooted and Ekseko in Estonia, Rigas Miesnieks in Latvia and a sales company called Rakveres Mesos Produktai Vilnius in Lithuania. The turnover of Rakvere Lihakombinaat was $43 million last year, which is 21 percent more than in 1999.