Narcis Mihai, country manager of FMCG distributor Lekkerland Romania, says a more developed road infrastructure would reduce distribution costs by 10%.
German-based Lekkerland Convenience posted a 74% turnover growth rate last year against 2006, almost 4 times higher than the market average, but Narcis Mihai says he does not expect the same growth rate in 2008.
"The start of the year has been quite difficult. The appreciation of the euro significantly affected our transport costs. Salaries increased by over 10%, given that we intend to position our salaries above the market average," says Mihai.
However, the distributor expects significant growth rates in the coming years, and aims to top the 100 million-euro sales mark by 2010-2011, after it registered turnover worth 54 million-euros last year.
Lekkerland entered the Romanian market through the takeover of the Macromex Convenience division, which specialises in the distribution of FMCG in large petrol station networks. In its first year on the local market (2006), the German company reported turnover worth 31 million-euros, almost three times as high as the sales reported by the Macromex division in 2005. The distributor now has 200 employees, up from 50 in 2005.
In its second year on the local market, Lekkerland stepped into the black, with one of the determining factors being the change in the sales structure. Mihai did not give details on the company's profit in 2007, but specified it was not significant. "We saw the highest increase on the food and non-food segments, where profit margins are higher than tobacco. While tobacco products accounted for 25-30% of sales in 2005, their share fell to 25% in 2006, and dropped to around 12% in 2007. This was not a decline in sales, it was a reduction in their share, amid an increase in other product categories," explains the manager.
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