Podravka Group realized HRK 92 million net profit in 2014, mostly owing to strong growth of the profitable margins in the segments of food and beverages. The company is expanding in Hungary and taking further steps to strengthen its position in the Central European region.
Kristijan Sabo, managing director of Podravka International Kft. in Hungary describes new developments at the company
How do you assess the current market conditions in Hungary? Are you still in a post-crisis phase or do you see the conditions improving?
Our strategic focus on business internationalization resulted in continued sales revenue growth in foreign markets by 1.7 percent as compared to a previous period. But if we exclude the negative influence of the restructuring program and net exchange differences, a growth of 3,9 percent was achieved.
As for Hungary the good news is that both revenues and profit have been increased in the last two years. It is an organic growth coming from our core businesses: Vegeta brand culinary products and other products, fish&ajvar (Mediterranean products) and rice&pulses.
We continue to consider that, apart from our core markets in former Yugoslavia, several countries bring us valuable customers in the broader Central European region. We have established a deep presence in Hungary and we make every effort to strengthen and increase our market share. Yes, our two large competitors have much bigger budgets but, we have increased our marketing investments significantly in the last two years and more importantly understand that we have to use smarter tactics, which I think we do.
Competitiveness means not only being cheaper but flexible as well. How do you shape your activity in the relatively tough Hungarian market?
Finding quality suppliers is one of our crucial jobs. Fortunately, we have many excellent farmers in Croatia and good partners elsewhere. Sourcing is global and we have suppliers in Hungary, too. For instance the Hungarian company Univer in Kecskemét is our supplier and partner in our HORECA business. Apart from efficiency in the supply chain and quick answers to constant challenges, the most important forces in the food business are the brands. Our Vegeta brand has been widely known in Hungary for decades and now we are working hard to introduce new products under the Vegeta umbrella and to further develop other ones: Eva and Lagris brands in fish and rice&vegetables categories. Certainly, we work on Podravka corporate branding as well.
How do you adjust your assortment to the needs of Hungarian costumers?
For instance, when in 2013 we decided to go back into the market with spice mixes and soup cubes, we analyzed thoroughly the local market and developed special Hungarian recipies for chicken and beef cubes. Last year we decided to extend our product line further. So, we introduced cubes for Gulyásleves and Pörkölt, which were new products in our worldwide assortment, because we realized how important these flavors are. On top of that, we changed our branding in Hungary because Vegeta is much better known brand in Hungary than Podravka under which brand name soup cubes are sold in ex Yugoslav markets.
On Hungarian market we are offering products from Adria region such as Podravka ajvar, EVA sardines and tuna fish. Within our line of Vegeta spice mixes, we launched Mediterranean marinade which was specially developed for local consumers.
However, I do not see your huge presence in the direct advertisement market?
That is relatively true, we simply have a different strategy from our main competitors but we are sponsoring TV shows and conducting a lot of other activities to strengthen our customer base in Hungary. And I can promise you: “the best is yet to come”.
In terms of the size of the company, what are your intended avenues of growth in Central Europe? Apart from the organic way do you consider acquisitions, too?
Podravka is well established in Europe. We think combining the two can result in strengthening our market position and facilitate further growth. We have just finalized the contract on acquiring the majority shares of the company ®ito, one of the biggest producers of food products in Slovenia, which also has great recognition in Southeast Europe. A Czech food company and a Croatian fish producer have also been acquired and we are monitoring the regional market constantly, looking for quality targets.
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