“There is nothing to buy in Romania. If you want to buy something as an investor in this industry, then you buy a brand that means something for the population of that country. The Romanian ‘tuica’ can be turned into a brand, but there is no strategy for this,” Furir told ZF in an interview.
However, it is not only the lack of such a brand that keeps investors at bay, but also the ever shrinking market. From over 100 domestic producers in 2008, the industry has less than 20 left at present.
“I do not believe this industry will attract any major player in Romania,” said Furir.
While focusing on international brands, such as Chivas and Absolut, French-held Pernod Ricard has also acquired local brands, such as Poland’s Wyborowa. However, Romania does not have any major, old brand that should lead domestic sales and attract a major investor such as Pernod Ricard.
Tudor Furir says that Romania “is no longer what it used to be” and while before 2008 it was “the brightest start in Eastern Europe”, now its shine has diminished. Nevertheless, he believes Romania has a high development potential.
“If well managed, Romania could ‘boom’. It is a large market, a still relatively skilled labor market, the population is still young compared with the rest of European countries, we’re still cheaper in terms of salaries, everybody is clearly looking at Romania. But everybody is more cautious. I was also cautious when I drew up my budget,” the manager said.
Worldwide, Pernod Ricard operates through two types of entities: distributors, such as Pernod Ricard Romania, and producers. Between Pernod Ricard holding and the company of Romania there is a partnership, and not a subordination relationship, specifies Tudor Furir.
“Romania does not have an image problem, but an external communication one, of people representing it”.
Beside the fact that Romania is a high potential market owing to the large number of consumers, Romanians prefer renowned brands. “Unlike Germans, for instance, who primarily pay attention to price, we’re still interested in brands and hence this is an important market”.
Pernod Ricard started operations in 1975 in France, and is currently the second largest spirit producer, behind Diageo, owner of the Johnnie Walker brand.
In 2012, the company posted revenue of RON115 million (some EUR26 million) in Romania, where it reported a net loss of RON470,000 and had 37 employees, according to Finance Ministry data. Last year, Pernod Ricard registered a 5% plus, and Furir says that for 2014 he’s upbeat even though the overall industry will be hurt by the rising excises.
“If we manage to generate revenue matching the 2013 level, this will be a positive. It’s hard to say what will happen as we lack predictability in this industry”.
2014 will be a challenging year for the industry as ever less money is spent on this type of drinks on the rising prices and falling purchasing power.
“I believe the imported drinks market will fall by at least 10 percentage points this year,” says Furir.
The Romanian market was hurt in the past few years by the decline in purchasing power, while prices rose following increases of the excise duties.
Annually, 160 million liters of spirits are sold in Romania, with the overall market estimated at EUR700 million euro.
(English version by Catalina Apostoiu)