KE 4/2010, s. 32 Modernization process in Romania and Bulgaria brings many new business opportunities

Romania has second place in CEE in consumer market potential. Romanian food industry is very attractive for investors. Modernization of the food technology is going on. Excellent growth potential also is in Bulgaria. This all gives new business opportunities for Finnish food technology industry

Romania is one of the most attractive countries for business in Central and South Eastern Europe taking notice of its competitive advantages: attractive location, skilled labor force with solid knowledge in different sectors, rich in natural resources including e.g. fertile agricultural land, oil, gas, advantageous fiscal policy, continuously developing infrastructure and structural funds. In terms of consumer market potential, Romania ranks second place after Poland with its 21,7 million inhabitants.

Many big foreign investors in different industrial sectors have chosen Romania despite the economical crises world wide. One of the most attractive industries for investors in 2010 is food industry. Some of the top investors are Pepsi Americas (the biggest production unit in Europe, € 150 mill.), Coca Cola (cogeneration plant, € 45 mill.), Jean Valvis (mineral water plant, € 12 mill.) and Unicarm (4 plants producing milk, ice-cream and bread, € 30 mill.).

Food industry is high of interest for the government of Romania, who made it a priority of development.

EU funds for food sector has a great value for Romania

Romania, as a member of the European Union since 2007, benefits of EU funding grants destined to its continuous development in order to reach the standards of the other member states. By the National Program of Rural Development in the areas of agriculture, forestry, rural development and investment projects over € 8 billion will run with the European Agricultural Fund for Rural Development until 2013.

Already in the pre-accession period 2000 – 2006 Romania were granted support from European funds (the SAPARD program) in order to align the agriculture to the EU standards. This had a major impact to start the modernization of the industry. According to Mr. Mihai Visan, Executive Director of ROMALIMENTA (The Romanian Federation of the Food Industry), only in the meet processing sector there were projects worth over € 300 mill. in the last years, which is a great value for Romania.

The meat processing plants are not qualitatively inferior to the ones in Western Europe, moreover they have newer and more modern technology.
Based on the model of those food companies, which upgraded and modernized their production processes, technology, machines and equipments with pre-aderation funds, companies will apply EU funds for adding value of their agricultural and forestry products (according to “Measure 123” and the “State Aid Scheme 578”, which objectives are to support the investments aiming at improving the processing and marketing of agricultural and forestry products.).

Business opportunities in Romania

In the context of the economic crisis, the decrease of the purchasing power combined with the extension of the rural population led to very high sales of lower-priced artisanal products as well as significant consumption of fresh food from own-farm resources. Furthermore sales of artisanal products from the production site or in open markets also limited the growth of packaged foods compared with its potential.

The structural problems of the primary agriculture (the restitution of state owned land to previous owners which led to land fragmentation) affected the raw material sector (high production costs and medium quality), making Romania dependent on imports.

The big need for modernisation of production processes and facilities required by Romania’s EU membership as well as the availability of EU funds for investments provides many interesting opportunities for suppliers of machinery, equipment and technology, especially also the food industry sub-branches.

Suppliers of different raw materials for the food industry can find new clients, as the country is, despite its agricultural potential, importer of raw materials (meat, meat products, dairy products, malt, wheat flour, cereals, edible oils, sugar, vegetables, processed fruits, fish, and seafood). Also the large consumer base and its openness to new products and international influences make Romania attractive for foreign investors.

During the last years, food industry has improved significantly, but there still are a lot of things to develop.

Having in view that in Romania there is a diverse agricultural activity, as well as all kind of animal breeding, the activity is from the soil to the table (cultivation, harvesting, primary processing, depositing, slaughtering, canning and freezing, packaging, etc). All technologies for the above mentioned activities are needed: agricultural equipment, milk industry, meat industry, fruits and vegetables industry, drinks industry).

When buying machines and equipments, companies consider European countries with tradition like Germany, Italy, and Holland. Finland is nowadays very well known in this sector.

Excellent growth potential for Bulgaria

Bulgaria has been a member of the EU since 01 January 2007. The food industry in Bulgaria generates about 23% of the total GDP in the country. At present, the most important thing for the Bulgarian food and drink manufacturers is the utilization of the EU funding programs that would give them a chance to take breath and hopes for improvement. Hopes that the first signs of the crisis end, appearing in the world, will be felt in Bulgaria, as well. Bulgaria is not isolated from Europe and its economy forms a part of the global one and it naturally reflects every twitch of the global market. Having that said, for the present year Bulgaria is expecting fresh investments for both raw materials producers and manufacturers.

During the last two years (2009 – 2010), because of the economic crisis, some small companies were closed but the leading ones are doing well. In the years before joining EU, development in the sector was mainly driven by pre-accession assistance (SAPARD program) and foreign investors; now those of them who were persistent are reaping the benefit.

All conditions for production of high quality dairy production, meat production, fruits and vegetables in Bulgaria are present. Strong traditions, excellent climate, availability of qualified workforce combined with low operational costs make this sector extremely attractive to investors. Compared to other major EU producing countries, the production costs are significantly reduced, and all it takes is good transportation to the EU open market, which Bulgaria is already a part of. However, it is objective to say that the sector remains strongly underdeveloped, but with excellent growth potential.

Foreign presence in Bulgaria food technology

Most of the companies in the food industry were established before Bulgaria’s adhesion to the EU. They were already well equipped with machines, having very strongly developed food machinery engineering industry as legacy from the period before 1989. Some of the newly established companies used different financial instruments, such as pre-assecion funds, Government support, etc.

Main suppliers for the machinery and packaging in the sector are from Germany, Italy, the Netherlands, Spain, etc. Most of them have local representatives, for instance Tetra Pack, KRONES, SIDEL, ZIG Combiblac and MESSER.

Bulgaria is very attractive for investments in this sector because it has many competitive advantages like: 60 % of the territory is agricultural land, favourable climate and natural conditions, highly fertile soil, established local manufacturers and strong traditions, high-quality organic products, strong marketing channels in the former Eastern block, skilled and qualified labour force at competitive cost, EU food legislation integrated in the Bulgarian laws.

There is a good potential for Finnish companies in three sectors – Brewery and related packaging industry, wine making and dairy industry. Especially dairy, having in mind the long tradition of Valio in production of Bulgarian yoghurt, which every Finn knows.

Alina Ionita
Market Analyst
Finpro – Finland Trade Center
Central and East Europe & Middle East
Embassy of Finland
Romania

***************************

Finnish products are already available in Romania

One can already find Finnish food and beverage products in the Romanian supermarkets, e.g. products from Fazer, Vaasan, Raisio, Lignell & Piispanen, Altia – Finlandia, etc.

As well the Finnish company Kometos Oy, assisted by Finpro in the first stage of entering the market, has already sold one mobile slaughter house for sheep and goats and there are some other three-four projects in other locations for multi-functional purposes. The Finnish company Vulganus Oy, as well assisted by Finpro, offers complete lines for bakery and food industry: spirals for extreme conditions: bread cooling lines, raw frozen products and half-baked products. Another Finnish company, Wipak-Wihuri Oy, is selling packaging foils for meat processing industry.
The process of modernisation opens significant business opportunities in agriculture and food industry sectors.

Finpro’s industrial sector experts with solid market knowledge are experienced in assisting Finnish companies to create new businesses worldwide.

*********************************

Main agri-food fairs in Romania and Bulgaria

Romania
• Indagra Farm in Bucharest, 10 –14th November 2010
• Indagra Food in Bucharest 10 –14th November 2010 (also included Allpack and The International Wines Fair)
• Agraria in Cluj-Napoca 4 – 8th May 2011
• Romagrotec (agricultural machinery) in Bucharest on 26 – 30th May 2011.

Bulgaria
• FoodTech – International Exhibition of Food Products, Machines and Technologies, organized annually and a UFI approved event, 10 – 15th May 2011
• International Food and Drink Exhibition, 10 – 13th November 2010
• the International Specialised Exhibitions: THE WORLD OF MILK, MEATMANIA, INTERFOOD & DRINK, Salon de Vin and BULPEK, at Inter Expo and Congress Center (IEC), Sofia, 10 – 13

Muut teemajutut samasta lehdestä :