Estonian food is losing out on its home market to cheap imports from regional competitors, according to a quarterly overview by the Estonian Institute of Economic Research.
Estonian products are losing ground to imports from Latvia, Lithuania and notably Poland, whose huge agricultural sector has been viewed by analysts as a growing worry for not only Central and Eastern European countries but also for the European Union itself.
According to the institute's study, 18 of the 26 food product categories surveyed are still dominated by Estonian products.
However, loss of market share was recorded in 16 categories, while increasing in two categories only.
Local producers have mostly stepped back in traditional product groups such as cheese spreads (down 15 percent), wheat flour (down 12 percent), oat flakes (down 8 percent) and pork (down 7 percent).
Institute President Marje Josing said that while Latvia was the most important export market for Estonian food producers, competing in the lower-price markets of Lithuania and Poland was virtually impossible. Products of the latter are in turn being marketed in Estonia more aggressively than ever.
Prices of Estonian goods are on the rise in 18 of the surveyed categories and already exceed those of imports in nine categories. Analysts also attribute the revamp to consolidation of the retail sector and Estonia's continuos free-market policies that prescribe zero import duties.
Estonian producers have in recent months complained about increasing pressure by foreign-owned retail chains, which seek massive price cuts and set stringent procedures for putting new goods on the shelves. The local range with 62 varieties of ice creams, 42 yogurts, 30 breads and as many as 46 vodkas has, in addition, challenged retailers and wholesalers in terms of economy in supply chain management.
According to analysts, large retailers are ever more concentrating on large and popular brands. The development of discount chains with strictly limited product ranges and shorter shelves in other supermarkets obviously hit the smaller local producers.
Apart from the gourmet-oriented Stockmann, which is reportedly eager to accept any top-class product, the capital is largely divided between three leading chains in turn dictated by large wholesalers. In a recent development, the popular but profitless Italian-owned Primo market has been sold to the Finnish Prisma chain and is to lose its independent concept.
All this has left Estonian producers increasingly worried about being pushed out of the boat. As seen in one recent survey, local foods hailed by experts and tasters are nowhere to be found in the capital's stores.
However, according to another survey by the institute, consumers are increasingly aware of the food origin and health aspects, with more than 80 percent preferring local products if possible.
Yet to address are also the fears that consolidation of retailers means loss of the abundance and return to Soviet-style shelves where most products came in one variety, if at all.