Fox charcuterie producer of Bucharest, which ended last year with cumulated turnover worth around 35m euros, abandoned the construction of a second production facility, worth 5m euros, which it had planned as early as 2007.
The plant would have boosted the company's production capacity to 80 tonnes of meat and charcuterie products per day, from just 30 tonnes, the initial capacity of the first production centre.
"We decided not to invest in a new plant because of the very high prices of land. We expanded production capacities and we can now sell even 40 tonnes," stated Cornel Vulpe, Fox shareholder.
The company plans to invest 450,000 euros this year to sustain the expansion of processing capacities, particularly on the specialties' segment, after having earmarked over 500,000 euros for distribution and logistics last year.
Also, the area the plant is located in at present, Vitan Barzesti, is likely to be declared a housing area in the near future, which would push for the current plant to be relocated outside Bucharest in the next five years, according to company information.
"We are not sure what will happen, and this is why we decided to no longer invest in a new production facility," the company's shareholder says.
Moreover, Vulpe expects the charcuterie market to go down in 2009, due to the financial crisis fallout. "The charcuterie industry did not see growth matching the real estate market's, and this is why it will not be equally harmed, but a market drop cannot be ruled out. Consumers' purchasing power will shrink this year (...)," said the representative of Fox, a company accounting for 3% of the domestic charcuterie market, according to company data.
Vulpe added the industry has started feeling the first effects of the financial crisis. "There are cases of default, particularly in the case of smaller customers. However, we believe this is happening not because of a real situation, but rather amid a voluntary cutback in expenses and investments, as well as orders," Vulpe explains.
Amid economic instability, he was cautious in terms of projections for 2009. "External influences can offset our initiatives at company level and this is why we are rethinking everything related to 2009. At any rate, we hope to have performances not below the current year's".
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