Eastern European bakery market consolidates

Related tags Lithuania

Vilniaus Duona Plius, the leading bakery group in Lithuania, has
been cleared to buy compatriot Panevezio Duona by the country's
competition authorities, giving the Finnish-owned group complete
control of the company. Meanwhile, two Hungarian bakery groups have
merged, the latest example of consolidation in eastern Europe's
bakery sector ahead of EU accession on 1 May.

Vilniaus Duona Plius, itself owned by Vaasan & Vaasan of Finland, already has a 95.2 per cent stake in Panevezio Duona, based in the northern city of Panevezys, and did not say how much it had paid to increase its participation to 100 per cent.

According to the Lithuanain news agency ELTA, the two companies have long been partners, with Panevezio Duona marketing its products through the larger group since 2000. They have also collaborated on issues such as investment and production strategies.

The Vilnius bakery group, which has just under 40 per cent of the Lithuanian brown bread market, reported net profits of 4.4 million litas in 2003, up by nearly 19 per cent compared to the year before. Targeted investments (of some 10 million litas in 2003), improved operating efficiencies and a rationalisation of the company's product portfolio were cited as the main reasons for the profit increase.

Meanwhile, consolidation is continuing in another accession market, Hungary, with the acquisition of the Sutev bakery by compatriot Dunantuli Sutodek. Sutev was previously a unit of the grain-based food group Cerbona.

Dunantuli Sutodek will continue to run Sutev's factories, and said it planned to invest in improving production facilities there to strengthen the bakery's long-term position. The price paid for the unit was not disclosed.

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