NCH to capitalise on Romania's bakery industry

Related tags Romania

US-based investment group New Century Holdings intends to
consolidatemarket leader Vel Pitar's position as Romania's
topbakery, writes Bogdan Tudorache in Bucharest.

Vel Pitar holds a 10 per cent share in the market at present, which New Century (NCH) believes shows great potential. Local bread consumption per capita is very high, and Romania will be granted new EU funds for agriculture as it approaches accession,​ has learned.

Indeed, Romania is one of the largest bread consumers per capita worldwide. According to the Economist Intelligence Unit, Romania food accounted for 57 per cent of household expenditure in 2003. No less than 22 per cent of the food budget went on bakery products.

It is this market that NCH intends to exploit.

Over the past three years, NCH injected about $10 million into new technologies, mills, bakery production lines, retail outlet acquisitions and upgrades for Vel Pitar. Velis certified ISO 9001/2000 since 2003 and HACCP din 2004 (HazardAnalysis of Critical Control Points).

Many of Romania's largest cities appear to be opening tens of new Vel Pitar stores a year, and the firm already owns a majority share in companies Panificatie Postavarul, Libertatea and Panem. Vel Pitar is currently present in Bucharest and eight other counties within Russia.

But as Romania approaches EU accession, more and more EU funds will be available, together with grants, for agriculture. "In 2005 Vel Pitar will invest €4.5 million into new bakery production lines,"​ said Vel's PR manager Angelica Iva.

However, this investment figure seems rather small in comparisonto the $250 million injected already by NCH into various differentRomanian shares through three investment funds.

Nonetheless, Vel Pitar, which owns 11 bakery factories, seven mills, and over 174 retailoutlets in 10 cities, is in a good position to build on its position with the added cash injections.

The Vel group was formed in 1999, with NCH acquiring consequently 10firms in the bakery sector. By end 2003, seven of them have been 100per cent bought from their owners, which including the Romanian state.

Three more firms are to be 100 per cent bought this year from other NCH-affiliateBodies, including Panificatie Postavarul and Brasov, in which Vel already owns a 80.6 per cent stake. "We are going to watch for new buyouts, as well as upgrading the existing facilities,"​ said Iva.

Vel Pitar has 4,500 employees, and the revenue for 2004reached $85 million.

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