Finnish retail "conspiracy" alleged

Several Estonian food industry companies fear that Finnish-owned supermarkets and retail chains are no longer stocking Estonian-made products in favor of Finnish goods.

An unnamed CEO of an Estonian company complained to the newspaper Eesti Paevaleht on June 14 that smaller Estonian producers face the risk of being sold only in local, low-profit retail outlets.

Many Estonian managers blame the Estonian-Finnish Bu-siness Executive Union, an association of CEOs of Finnish-owned companies operating in Estonia. The group has denied accusations, saying the hunt for a scapegoat is simply prompted by growing competition.

Others note that national ties are becoming less important when it comes to business. "Naturally I would prefer doing business with Estonians, if there were any," said Argo Teever, manager of a small Estonian fish supplier.

Many retail outlets, from the elite Stockmann supermarket in Tallinn to the fast-growing Saastumarket discount chain, are Finnish-owned. Estonians are still in control of the ETK chain, which is currently facing economic hardships, as well as the Kauba-maja group, owner of the Selver grocery stores.

Dairy producer Tallinna Pi-imatoostus used to be the exclusive supplier of the Saastumarket chain. Now products from the Finnish milk giant Valio are sold there as well.

Neeme Jogi, CEO of Tal-linna Piimatoostus, refused to comment on the "Finnish conspiracy."

Valio operates through its Estonian subsidiary Laeva Meie-rei, one of 1,500 companies in Estonia linked to Finalnd. Accord-ing to the Commercial Register, nearly 600 of them are fully Finnish-owned.

Finland's investments in Estonia are helped by close cultural ties and the flow of hundreds of thousands of Finnish tourists, but it holds leading positions among Latvia's and Lithuania's foreign investors as well.

Finland's leading wholesale and retail group Kesko aggressively entered the Baltic market, purchasing the Saastumarket chain and opening a huge Tallinn-oriented wholesale base which caused some panic among the so far unrivalled Estonian cash-and-carry firms.

Consolidation in the retail sector has already allowed the leading chains to force tough terms upon producers. The Saastumarket chain, for example, has instituted prevoiusly unimaginable 15 percent to 20 percent price cuts from its suppliers. Many fear that Estonia's food market could end up under Finnish control, reducing Estonian producers' chances of survival after accession to the EU where markets are even more strictly divided.

Finns have been increasingly active in Estonian business since the early 1990s, sometimes prompting fears of economic colonization. As for the food production industry, several leading companies are Finnish-owned, including the Rakvere meat plant, Estonia's largest. Estonia's beer market is dominated by the Finnish-owned brewers Saku and Tartu.

Finland accounts for some 29 percent off all direct investments in Estonia. The 14.6 billion kroon ($850 million) total is surpassed only by Swedish companies, which own the country's two largest banks.

In terms of investments in the retail sector, Finland is the uncontested leader.