Nestlé expands Romanian biscuit production
capacity with the installation of a new chocolate wafer production
line at its Timisoara-based unit, Joe. The investment reflects the
rapid growth of the Romanian snack market, reports Bogdan
Nestlé sales in Romania grew by some 60 per cent to around €62 million last year, helped by the continued importance of the biscuit and confectionery sectors there. The Romanian wafers market is worth some €40 million a year (Nestlé has around 35-40 per cent of the market), while the wider confectionery market is valued at around €150 million.
The Timisoara plant accounts for approximately 50 per cent of Nestlé Romania's total production, and also produces wafers for export to Bulgaria, Hungary, the Czech Republic, Slovakia and the countries of FYROM.
"We have invested an undisclosed amount in this new production line and know-how in a bid to expand sales of our Joe Mix line, a mini-wafer sold mainly on the domestic market," Paul Nuber, managing director of Nestlé Romania, told CEE-foodindustry.com.
Nestlé said last year that it planned to invest around €3.5 million in its Romanian business between 2005 and 2007, and while Nuber said that the latest investment was not particularly great in terms of value, it was nonetheless important to help the company increase its share of the mini wafer market.
"About 20 per cent of the Timisoara factory production is exported, mainly under the Joe Milky and Joe Crunch brands. But the growth is coming mainly on the local market," he said.
Nestlé bought the Joe company - a locally owned, greenfield plant built in the mid-1990s- from a Romanian entrepreneur in 2002, and since then has invested more than €10 million in production and marekting. Nestlé has about 350 employees in Timisoara and about 200 in Bucharest.
The success of the Joe Mix brand in particular can be put down to the snacking habits of the Romanian consumers. They are the biggest consumer of roasted sunflower seeds in Europe, and the popularity of this traditional Romanian snack has helped companies develop strong sales of more modern snack poducts.
Alka is the biggest producer of sunflower seed snacks, and is now also the second-largest supplier of wafers, with around 25-30 per cent of the market, just behind Nestlé. In third place is the Netty brand, owned by the local company European Drinks, which previously revolutionised the low-end carbonated drinks market with the launch of the Frutti-fresh brand in the mid-1990s.
Although food exports have been badly hit by the devaluation of the euro against the leu - since November 2004 export values have dropped by some 10 per cent - Nestlé's Nuber said that his company had not seen any decline in value sales as a result of the major improvement in domestic sales.
"Of course, we have lost some profitability from out exports, but this was not significant as our major production costs are in euros," Nuber explained.
The leu has increased in value by some 17 per cent against the euro since November 2004 following the decision of the Romanian central bank to comply with EU recommendations and stop intervening on the currency markets to keep the exchange rate stable.
Food, however, accounts for just 3 per cent of Romania's exports, and the sector has been for the most part unaffected by the depreciation of the euro. Only companies buying incgredients in lei were likely to be hit.