This means some consumers pick the private label products of the major retail chains, which sell for a lower price, while other consumers choose high added value products.
“The market will probably remain stable in 2013. The big changes will only be visible in three to five years. The polarizing trends we are seeing now will be even stronger: a choice of either low-priced private label products or high added value products specially designed for certain consumer segments,” Vartolomei said.
The year 2012 did not come with spectacular changes for an industry where small producers were affected by the consumer-spending decline, which rendered them unable to make investments.
“It was a difficult year for all players involved, and especially for the small ones who were unable to invest to adjust to change. It was equally hard for those that planned two-digit growth in the hopes that they would attain it as easily and in the same way as in the past years,” Delaco’s CFO said.
The company sells both medium-priced and premium products.
Delaco posted EUR47.6 million revenue in 2011, up on 2010 and had 400 employees, according to its filing with the Finance Ministry.
“The year 2012 came with slight growth for us, but our main goal was consolidating market share by new product releases,” Vartolomei said.
Dairy production consumption is still low in Romania. Whereas a Romanian eats less than three kilos of cheese a year, a Pole or Czech eats four times as much, while Greeks and French eat ten times more than Romanians.
“All of us on this market are trying to see it as an opportunity, but after several years of projects and separate actions, Romanians’ eating habits have not changed that much,” he added.
Vartolomei, who is one of the founders of Delaco along with brothers Tudor and Dragos Comaniciu, said that his company is aiming for growth this year as any other in the business.
Delaco’s majority shareholder is Bongrain Europe, world leading specialty cheese producer. Bongrain got the approval of the Competition Council in mid 2010 to buy 52% in dairy producer and importer Delaco. The deal was estimated at more than EUR10 million at the time.
“2013 will pose the same challenges to us as 2012 did: crowded media market, many products on shelves and fewer consumers, with incomes as low as this year,” Vartolomei said.
Delaco is a top ten dairy company and sells three types of products: yellow cheese, fresh cheese and process cheese. Its brands include Delaco, Apetito, Del and Lurpak. Its best seller is a yellow cheese brand, Sofia.
The largest dairy companies in Romania include Danone, Hochland, Albalact and Lactalis. The industry is also attracting new investments such as announced by Radu Timis, the majority shareholder of cold cuts producer CrisTim and has also seen insolvencies, like Israeli-held Tnuva’s Romanian arm.
(English version by Loredana Fratila-Cristescu)