Outsourcing in the textile and car industries is now being applied to the milling and bakery industry. Romanian producers are being approached by major European companies to do their production for them at lower costs.
Croco Bacau salty sticks producer, a business developed by Romanian businessman Damian Mereu, is in the final stages of discussions to take on production for a company from the European milling and bakery industry.
"We are in the final stage of negotiations with two major milling and bakery producers to start the production of salty sticks, crackers and pretzels to be sold under the private-label system in Aldi and Kaufman supermarkets," announced Damian Mereu.
He was unwilling to identify the two companies in question or the value of any possible transaction.
Industry sources maintain that one of the two companies in negotiations with Croco is Intersnacks of Germany, owner of the Chio and Wolf brands. The same sources say the German producer is even interested in a take-over of Croco. Mereu denied the existence of talks for such a sale, saying "It is not true at all that I am planning to sell my business."
The "private-label" system is embraced by large chains and top distributors who buy in bulk and sell to large retailers; and by major players in food industry that produce at low costs in eastern Europe and sell their products to supermarkets.
Croco is negotiating a contract for cracker and pretzel production of 30 tonnes per day (over 8,000 tonnes per year). The company has a total production capacity of 93 tonnes per day (over 25,0000 tonnes per year), of which the domestic market and sales to foreign markets currently account for only 55-60 tonnes per day (15,000-16,000 tonnes per year). "We recently finalised investment in a new production line and we had to find partners for whom to produce," explained Mereu.
The company last year made turnover of 8.5 million euros and is the market leader in Romania with a market share of over 40%, according to research by AC Nielsen, a market research firm.
"Low costs are the main reason major foreign producers in this industry come to produce in Romania," concluded Mereu.
Aurel Popescu, chairman of Rompan, one of the two organisations of producers in the milling and bakery industry, says Croco's move is a beneficial one. "On the one hand, it is a good thing that Romanian products reach foreign markets, while on the other, this is good because it frees up the domestic market where competition is very tight," says Popescu.
stelian.negrea@zf.ro
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