Baltic Food Holding, a merchandising company with Scandinavian owners, is planning to further expand its operations in the Baltics with the support of the European Bank for Reconstruction and Development.
The chain has 65 shops and two wholesale companies in Estonia and Lithuania with a distribution center in Latvia. Financing from the EBRD, 12.1 million euros ($11.6 million), will enable the company to develop its retail and wholesale activities in the Baltic states by acquiring new supermarkets, upgrading its existing stores and expanding wholesale operations.
“The project builds on the company’s current position as one of the largest pan-Baltic food retailers and wholesalers,” said Hans Christian Jacobson, director of the EBRD’s Agribusiness team. “As a result of this project, consumers and food producers across the Baltic states will benefit from an improvement in food distribution.”
“It is still a small company. All the money they make they invest and as a result don’t make much profit,” explained Jacobson. He said that the EBRD is interested in supporting other retail companies, too.
Baltic Food Holding is currently operating under Rema 1000, Spar and Dagab trademarks in Estonia, the total sales of which will exceed 1 billion kroons by the end of 2000.
“Starting this fall, we will increase our visibility in the market by converting our retail stores into Spar,” said Stein Skjorshammer, managing director of Baltic Food. “Few, if any, chains have more stores in the Baltics than we have.”
Although it is one of the biggest pan-Baltic chains, its market share in each country is very small. Marge Rahu, marketing director at Baltic Food Holding, said the company’s market share in the regulated market of Estonia is about 10 percent. If the unregulated market, about 35 percent to 55 percent, is taken into account, the market
share is even smaller.
Hans-Jorgen Blomsemt, chairman of the board at Baltic Food Holding, said the Swedish market was also quite unregulated in the 50s, 60s and 70s until the authorities increased control over the market.
“I hope the local authorities will have more control over the market in the Baltics, and people prefer shopping at modern shops,” he said.
“Our goal is to establish neighborhood Spar stores with a nice and clean interior, low prices and high quality,” Blomsemt said. Rahu said renaming Rema’s 1,000 stores as Spar was a good reason to start training in the stores.
Spar is the world’s largest retail food store chain with over 17,500 stores in 28 countries across five continents.
Baltic Food Holding was started in 1995 in Estonia by Skjorshammer and Blomsemt. Today the ownership is even wider, including Norwegian Selvaag Group, Swedish Axfood and the Norwegian Government Regional Development Fund.
Besides managing the company, Selvaag is supporting the operations of the company on property side, and Axfood with its expertise on food wholesale and retail.