bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Sunday 22.04.2018 | Name days: Armanda, Armands

Latvian bakery Hanzas Maiznīca to sell bread to US army

FaceBook
Twitter
Draugiem
print
(+1 rating, 1 votes)

The United States (US) army representatives visited us and we are about to close a supply agreement as the potential bread supplier, in case they need to place an order, the bakery AS Hanzas maiznīca Marketing and Sales Director Edijs Vegners told the business news portal BNN.

Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, AS Hanzas maiznīca Marketing and Sales Director Edijs Vegners

AS Hanzas maiznīca Marketing and Sales Director Edijs Vegners

At the same time he stresses sales campaigns goods is a headache for producers, because sales of goods bought through such best offers are surging due to people choosing the cheapest bread. Best offers have turned from a tool to boost sales into an ordinary practice. If you do not offer any sales campaigns, customers are not even considering your offer. At the same time he denies there are any cartels among bread producers and highlights the tough competition in the industry.

Hanzas maiznīca is said to be the market leader since mid-1990s. How do you manage to maintain this position, given the changing market situation?

The problem of producers in the bread market is that the market still keeps dropping, for many years already. The overall level of bread consumption has decreased considerably. Crisis added to it as well. We hoped people would return to such a basic product as bread after the fat years were over. However, the consumption of it is not big enough to boost the market upward. Bakeries Hanzas maiznīca, Fazer maiznīca/Druva and Latvijas maiznieks (former – Dinella) are the three leading market players. However, succession determined this, as it cannot be achieved in one day’s time. Merger of bakeries Baltmaiznieks, Abra and Rēzeknes maiznieks gave way to the current Hanzas maiznīca in mid-1990s. These were roots steaming from Soviet times and they were continued successfully. Hanzas maiznīca’s total market share (according to Nielsen data) makes up more than 30% of bread consumption in the modern retail, excluding schools, hospitals and prisons. Quality, innovations and active work is the key.

What is the point of offering 45 types of bread, if the majority of people switches to cheaper bread?

You are right, the crisis has introduced big changes. People no longer pamper themselves with three to four types of bread. Now they mostly focus only on white bread and rye bread. These 45 kinds of bread include both full loaves of bread and only halves of it. It is common knowledge smaller packages cost more per kilogram, which is not profitable from the perspective of consumers. This option is most suitable for persons living alone, because they might not manage to consume the whole loaf by the time it expires. 0.5kg and 0.8kg packages are gaining popularity. Costumers should turn more attention not the price of a unit, but the price per kilogram.

Is that true you will sell bread to US army?

We have some small partners in the United States and Great Britain, however domestic market is our key focus. We are also exchanging certain amount of production with the other two Baltic states – only within our group. We could supply US army with frozen bread products or pastry, because it would be very complicated to ship fresh bread. US army representatives have visited us and we are about to close a supply agreement as the potnetial bread supplier, in case they need to place an order in a zero hour – to load bread in Riga as a transhipment point of a military mission.

What is the standpoint of the shareholders? Is is that the profit leaves the state or the Latvian market is maintained?

Vaasan Oy group operating in Finland, Sweden, Norway and Denmark has 160 years experience. It owns a bakery in each of the Baltic states – UAB Vilniaus Duona in Lithuania and AS Leibur in Estonia. They are good at managing the market, so they want to control the Baltic bread business as well. Vaasan Oy owns Hanzas maiznīca’s block of shares, while the rest is owned by M. Investīcijas, which is a Latvian company. So, basically, we are a joint venture. Part of the dividends stay in Latvia, while the most of profit is re-invested in development.

What catastrophes do you see in the Latvian economy?

We have been scolded enough for as if too high bread prices. There simply cannot be any cartel among bakeries, because the competition is too tough. Last year bakeries union comprised 80% of them – about 29.

Which bakeries dropped out, when the crisis stroke?

These were bakeries Žaņa Lagzdiņa maizes fabrika in Riga, Jēkabpils maizes kombināts, Zelta kliņģeris in Kuldiga district Vārme, Zelta dona, Valmieras maiznieks, Jelgava and Liepāja joint bakery.

Who took over this market share?

It was divided among the three major bakeries. The small ones covered 5-10% market shares in total. A longer period of time lead them to a bankruptcy. Consequently, they gradually lost their market shares.

Why did you assess the Latvian bread business environment as positive in October 2008?

2008 and 2009 were record successful years for all Hanzas maiznīca bakeries. 2010 was not bad either. We did feel the consequences of the crisis, though, because sales of a number of best offers and campaigns spiked considerably. Most of people switched to cheaper bread. Such best offers actually devalue products. Best offers have turned from a tool to boost sales into an ordinary practice. If you do not offer any sales campaigns, customers are not even considering your offer, unless they are very loyal.

Do you fear the Latvian economy growth recession will be ongoing for another five to ten years?

It is difficult to forecast whether the crisis will go on for yet another three, five or ten years. It depends on many coincidences. We are linked to both the internal and the external market. The government’s policy to slow down internal consumption is hitting bakeries very hard. Bread is among the basic needs, unlike chocolate. People are considering how to make it until the next salary. We once even had bakeries with confectionery and fresh-baked bread, but we have closed them down. This function has been transferred to supermarkets. We are strong at baking industrial bread. We could consider smaller stores right next to the bakeries, selling bread that expires faster, but we have not yet made any decisive decisions regarding that. Supermarkets sell out bread approaching expiry date at a discount of 30, 50 or 80%. More needy customers thus have a chance to get hold of a premium class bread for little money. We have studied what is important exactly for our customers. It is the balance between the flavour, smell and the price. Bread should smell alluring, otherwise it is advisable people avoid it. Bread cut in slices expires faster, because it oxidizes and loses its aromatic and fresh features. Quality bread should remain fresh for several days. Sliced bread is more popular in the industrial sector.


Leave a reply

  1. Robert C says:

    When the zero hour strikes… I guess we should hope it never strikes, but the the company does not get any profit? Any way – good luck!

    Thumb up 0 Thumb down 0

  2. Ernst says:

    Their startegy to obtain more clients is reasonable.

    Thumb up 0 Thumb down 0

Economy Ministry: producer prices will affect dynamics of raw material prices

Producer prices in industry will grow in 2018 similarly as they had in 2017. Producer price level is largely affected by fluctuations of raw material prices in the world, as noted by Latvia’s Economy Ministry.

PUC: Gaso’s separation from Latvijas Gāze was legal

After examining documents submitted by the transmission system’s operator, the Public Utilities Commission concluded that activities performed by AS Gaso as part of reorganization of Latvijas Gāze were sufficient to ensure compliance with requirements for independence, as reported by PUC representatives.

Industrial producer prices in Latvia up 3.5%

Compared to February, level of producer prices in the Latvian industry rose by 0.2 % in March 2018. Prices of products sold on the domestic market grew by 0.1 %, but prices of exported products went up by 0.4 %.

Municipality: after meeting in summer, British Steel refused to buy KVV Liepājas metalurgs

After the meeting that took place at the end of August 2017, British Steel, which had previously voiced an interest in KVV Liepājas metalurgs, refused to purchase the bankrupt company, says Liepaja City Council chairman’s advisor for public relations matters Andrejs Rjabcevs.

SRS determines Latvian officials with the largest salaries

Thanks to real estate transactions Prison Administration Chief Ilona Spure and Healthcare Minster Anda Čakša had the largest income among state officials in 2017. The holder of the largest wage among state officials remains the governor of the Bank of Latvia Ilmārs Rimšēvičs, according to information compiled by the State Revenue Service.

Total tax debts in Latvia – EUR 1.255 billion

At the beginning of April total tax debts in Latvia, including outstanding, halted and payment extensions, was EUR 1.255 billion, which is 3.2% lower than the previous month.

Eight-year-long Latvian-Russian state border demarcation process concludes

Latvian-Russian state border demarcation documents have come to force. 21 April 2018 marked the conclusion of the two countries’ joint border demarcation process that lasted eight years, as reported by Latvia’s Foreign Affairs Ministry’s press-centre.

Prosecutor general turns to Constitutional Court against MPC regulations

Latvia’s Prosecutor General Ēriks Kalnmeiers has submitted a case to the Constitutional Court about the non-compliance of the mandatory procurement component with the country’s Constitution.

Unity may become New Unity; Kariņš may become prime minister candidate

Unity may start in upcoming Saeima elections with a new name – New Unity. The party may pick MEP Krišjānis Kariņš as its prime minister candidate, as reported by Panorāma programme of LTV.

France to fine for naming veggie foods in meat terms

In France, vegetable-based products such as soya steaks or vegetarian sausages marketed as meat substitutes are to be banned in France for misleading consumers as it will be prohibited for food producers to use any meat terms to label products that do not contain meat.

Breach intensity on a rise near Latvia’s state border

Two groups of Vietnamese citizens were caught in an illegal attempt to cross Latvia’s border and multiple cigarette-smuggling attempts were thwarted by authorities in April, as reported by Latvia’s State Border Guard.

Latvia downgraded in openness of civic space rating

Citing Latvian laws as showing less respect fundamental freedoms since 2017, CIVICUS, the international organisation promoting and monitoring civil society and citizen participation in democracies, has downgraded the rating of the openness of the civic space in Latvia from «Open» to «Narrowed».

Authorities to check Riga City Council member Frolovs’ possibly fictive employment in Getliņi Eko

Corruption Prevention and Combating Bureau has commenced an inspection following Riga City Council deputy Juta Strīķe. In it, she detailed concerns about the possible fictive employment of city council deputy Vladimirs Frolovs in Getliņi Eko.

Jekabpils Council divides a pie, not duties; will the management change?

Disputes have commenced amidst the ranks of members of Jekabpils City Council – coalition member Kristīne Ozola from the National Alliance says behaviour of the city council’s management made her change her mind in regards to supporting the ruling coalition.

U.S. urges Moscow to address election, chemical weapons' and Ukraine issues

The United States government has asked the Kremlin to act on U.S. concerns on election meddling, the Salisbury chemical attack in UK, as well as the military developments in Ukraine and Syria.

Latvijas Krājbanka’s administrator recovered EUR 114,800 in March

The administrator of the liquidated Latvijas Krājbanka EUR 114,823 in March, which is 16.9% less than a month ago, according to the report published in Latvian Herald.

Basque militants ETA apologise to killed and injured readying for dissolution

ETA, the Basque military organisation that has fought for the establishment of an independent country in northern Spain and south-western France for 50 years, has apologised for causing harm to victims of its campaign.

Every second resident in Latvia has a loan, and every third – a missed payment

Last year, the number of private person loans had increased nearly 10%, according to the Credit Information Bureau’s data exchange system. Currently this institution’s data archive contains entries for 899 thousand assets in private persons’ contracts. 290 thousand private persons have missed some of their payments.

State Secretary: Latvia and China share good economic cooperation perspectives

To present topical issues of Latvian-Chinese economic cooperation to businessmen, as well as contribute to formation of new business contacts, officials have launched the Latvia-Ningbo Economic & Trade Cooperation Symposium, as reported by Foreign Affairs Ministry.

Wet summer boosted air travel via Tallinn Airport

In Estonian passenger aviation, a considerable 19% growth has been observed by the Tallinn Airport in 2017, which has explained the increase in passenger numbers partly with unusually bad weather conditions.

ABLV Bank urges FinCEN to withdraw «exaggerated accusations»

Lawyers of ABLV Bank, which is currently in the process of self-liquidating, urge US Department of Treasury’s Financial Crimes Enforcement Network to withdraw its published proposal, which details how ABLV Bank’s management had allegedly used bribes to influence Latvian officials and breach sanctions against North Korea.

Stoltenberg: NATO has no plans to boost military presence in Baltic States

NATO does not plan to increase its presence in Baltic States, which have requested additional aid against Russia’s potential aggression, as announced by the alliance’s Secretary General Jens Stoltenberg.

Mass evacuation in Berlin to defuse 500 kg bomb

In Berlin, after an unexploded bomb weighing 500 kg has been discovered, part of the German capital is being evacuated on Friday, April 20, in order to defuse the World War II weapon.

Friday will be warm and sunny in Latvia; weather to become cold and rainy later

Friday will be warm in Latvia, but weather will change on Saturday and Sunday – wind speed will increase and air temperature will drop. A wide low atmospheric pressure area above Northern Europe will be dictating weather next week. This means there will be more rain in Latvia, as reported by State Environment, Geology and Meteorology Centre.

New Cuba's President sees no room for capitalists in country

In Cuba, its First Vice-president Miguel Díaz-Canel has become the first President of the communist Carribean country ending the rule of Castro brothers.

Most read

Most commented

Newest comments