Estonian Food Industry on the Eve of Accession

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Estonian Food Industry on the Eve of Accession

• Csaba Jansik

Hämeen maakuntaseminaari
Forssa, 19.1.2004
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The food supply chain
Consumers
Agricultural input producers
Agricultural producers
Food processors
Food wholesale and retail trading
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Food processing industries
The industrial output of Estonian food industry
fluctuating in the 1990s
Upsurge in the mid-1990s, Russian crisis in 1998
Domestic consumption driven increase since 2000
Million EUR
Only industrial production, without VAT
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Food processing industries
Privatisation.
The elimination of companies (e.g. milling, meat
industries). Reasons
excess capacity,
ownership,
liberal trade policy,
declining demand,
old-minded management.
Concentration few large players, or one dominant
company in several industries.
Foreign direct investments (FDI), mostly from
Nordic countries.
Significant Finnish investments in the meat,
bakery, beer and dairy industries.
About 45 of the food industry company capital
is owned by foreigners.
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Food processing industries sales in 2002
Dairy
Fish
Meat
Bakery
Beer
Distilling
Soft drinks
Feed
Confectionery
Vegetable oil
Milling
Fruit and veg
million EUR
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Food processing industries FDI-concentration map
Definitions
an FDI-concentration map is a snapshot of the
status of the food processing sector, including
the positions of individual industries in a given
year, by market concentration and FDI penetration
Vertical axis Concentration ratio CR4 the
share of top four companies in the total sales
revenues of the industry Horizontal axis FDI
penetration is measured by the proportion of
foreign ownership in the aggregate company
capital of the particular industry Example in
the dairy industry the top 4 firms have 55 of
sales and about 50 of the industrys company
capital is owned by foreigners.
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Food processing industries on the
FDI-concentration map
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After the accession
Competition on the Finnish and Estonian food
markets
Factors affecting the entry of Estonian food
processors to Finland
productivity of Estonian companies and quality of
Estonian food products improved
lower input costs subject to change
activities of wholesale and retail companies
(private labels, hard discount stores)
probable product groups confectionery,
distilling, beer and culinary products
questions dairy and meat products
Factors affecting the entry of Finnish food
processors to Estonia
FDI can still be a relevant option of market entry
the removal of EU export subsidies
increasing consumer loyalty towards Estonian food
high quality food products available by domestic
firms now
Competition on the food markets of third countries