Ultex Tandarei, one of the main players on the edible oil market, has decided to focus more on the domestic market, following the appreciation of the domestic currency, which has led to price rises for raw materials and made exports unprofitable.
Consequently, the edible oil producer, with turns over more than 50 million euros annually, has decided to invest one million euros per year to triple its sales on the domestic market - from 1.2-1.3 million bottles/month to 3.5 million bottles/ month.
The company will launch a new image campaign in September for its new brand called "Ulei de Tandarei", which is to replace the company''s current brands, Ultex and Solio.
"In the second quarter of last year we acquired the raw material at an average exchange rate of 33,000 ROL to the dollar, which brought us a profit margin on edible oil of about 10%. After the ROL appreciation, we introduced sunflower seeds to the production process at an exchange rate of 28,000 ROL to the dollar, which generated significant losses for all the players in the industry," said Vasile Nitescu, chairman of Ultex Tandarei. A short-term solution for Ultex has been to do bottling under a private label system for the Metro cash&carry chain store.
These strategy changes will be followed by a significant shake-up in Ultex''s sales for PET-bottled edible oil: 55-60% will go to the domestic market, 15% of raw and refined oil will go to the chemical industry, while the rest will go to export. The situation is completely different from last year, when some 95% of the company''s production went to export.
Ultex recently acquired two grain warehouse facilities for 1.5 million euros. One of them is located in Cobadin and has a capacity of 21,000 tonnes, while the other is in Liesti, near Galati, and has a capacity of 18,000 tonnes. The company has also purchased 10 trucks for grain transport.
Last year Ultex turned over almost 46 million euros (186 million RON), 40% higher than the previous year, and this year is expecting sales of nearly 53 million euros (over 200 million RON). Ultex had a 9-10% market share last year.
The main shareholder in Ultex Tandarei is the businessman Vasile Nitescu, who holds 98%. Two years ago he acquired the business from Baring Central European Fund (BCEF). Details of the deal have not been disclosed.
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