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Christmas boosts sweets market

  • 2001-12-20
  • Ilze Arklina
RIGA - Despite a gradual decrease in the consumption of sweets in the Baltic states, producers and retailers still enjoy on average a 30 percent increase in turnover in December.

Amid Christmas and New Year celebrations consumers treat themselves to extra bites of cake or chocolate while vowing to start new and healthier lifestyles in the new year.

As Rita Voronkova, spokeswoman for the leading Latvian candy producers Laima and Staburadze, told The Baltic Times, "The sweets market is seasonal - it stagnates in summer and only wakes up in September, but in December the demand for sweets increases three-to-fourfold, as we consumers pamper ourselves at the year's end."

In Latvia the most popular holiday season purchases are milk chocolate with nuts, dark chocolate, candy bars with dried fruit and nuts, a new brand of chocolate covered wafer called Knock-Out, said Voronkova. Kalev, Estonia's largest producer of confectionery, offers special "Joulushokolaad" (Christmas Chocolate) in five seasonal wrappings, as well as chocolate houses, Rutt Panga, the company's spokeswoman said.

In Lithuania U.S. owned Kraft Foods Lietuva, based in the second city Kaunas, doesn't offer anything special for Christmas. "Our products are good for all occasions, you can eat them every day," said Marius Girzadas, Kraft Foods spokesman.

The Baltic confectionery market has shrunk exceptionally since this spring as consumers have turned to healthier desserts like fresh and dried fruit. The decrease has intensified competition among the market's main players - Kraft Foods Lietuva, international food giant Master Foods, Finland's Cloetta Fazer, Estonia's Kalev and Latvia's Laima.

Kraft Foods Lietuva's dominance of all three Baltic states looks solid however. According to data by market research company Profindex, in Lithuania Kraft Foods has a 60.42 percent share of the chocolate bar market and a 74.32 percent share of the market in individual chocolates. In Latvia, Kraft has 32.81 percent of the chocolate bar market and a 28.9 percent share of the market in individual chocolates, while in Estonia Kraft occupies 8.21 percent of the chocolate bar market.

The company is closely followed by another U.S. giant Master Foods which accounts for 19 percent of Lithuania's chocolate bar market, 36.17 percent of Latvia's and 33.51 percent of Estonia's.

Latvian and Estonian domestic producers still dominate their home markets however. Laima has 40.41 percent of the Latvian market in individual chocolates and 11.49 percent of the market in chocolate bars. Estonia's Kalev has a 59.8 percent share of the domestic market in individual chocolates and 6.26 percent of the market in bars. (See chart for top market players.)

Kraft Foods' introduction of a new range of dark chocolate under the Karuna brand in 1998 set an example for its Baltic competitors to follow. The launch this year by Latvian confectioner Laima of its Ekstra chocolate bar range has helped the company increase its share of this segment of the market by 4 percent, said Liene Vilnite, marketing director of Icelandic owned Laima and Staburadze. In Estonia Kalev produced 5,200 tons of sweets under the Kalev brand name this year, 74 percent of which was sold on the local market while the remaining 26 percent was exported - mainly to Latvia, Lithuania, Ukraine and Scandinavian countries.

The company, which started as a hand-painted marzipan business in Tallinn in 1806, began selling its marzipan to the United States this year, Panga said.

Latvian sweets makers are vulnerable to newcomers to their home market for several reasons, including the fact that they are forced to buy high priced Latvian sugar for products they sell in Latvia, although for exports they can use cheaper imported sugar, said Vilnite. The price of Latvian sugar is 322 lats ($511.11) per ton, while on the world market the sugar price is some $340 per ton.

International companies like Kraft Jacobs are also able to outdo the domestic competition by spending more on marketing and can offer imported products domestic producers do not make, said Vilnite.

Laima for example has nothing comparable to such brands as Snickers and Mars. Latvia's chocolate market is dominated by Master Foods and Kraft Foods with 36.17 percent and 32.81 percent of the market respectively, while Laima has only 11.49 percent, according to Profindex.

But Laima is fighting back. In December, following a $277,777 investment, the company introduced new one-shot technology which allows it to manufacture filled chocolate items faster and cheaper.

Thus, Laima recently introduced 80 gram filled milk chocolate bars with nuts, toffee and cola flavors of which it is now producing 6,000 bars per month. "This product will have 20 percent of the filled chocolate bars market in six months," Vilnite said.

Laima's turnover last year was 13.9 million lats ($22.06 million) with 478,000 lats in losses. This year's turnover is projected to reach 16.6 million lats with 516 tousand lats in profit. Kraft Foods' turnover for 2000 was 254.6 million litas ($63.65 million), but the company's spokesman refused to name any profits. Kalev's turnover in 2000 was 339.6 million kroons ($19 million) and it made a 20.3 million kroon profit. As a public company, Kalev declined to predict its results for this year.