UNITED DAIRY COMPANY WANTS THE MONOPOLY ON YOGHURT
United Dairy Company (UDC) AD posted a profit of about BGN250,000 for the first nine months of 2003. The company's turnover for the period totalled BGN21MN. According to the Executive Director Trayan Haladjov the enterprise will see the year off with a profit of BGN500MN-plus and a turnover of about BGN26-27MN. The company's results for 2002 were similar, but nevertheless it posted a loss of BGN1.5MN last year. The main package of shares in the Sofia-based company is divided between Doverie Capital (a subsidiary of Doverie United Holding) and United Milk Holding (owned by the Greek investment fund Global Finance).UDC's assets include four enterprises of the former SO Dairy Industry. These are: Dairy Industry - Plovdiv, Serdika - Shoumen, Bulgaricum - Bourgas, and Serdika - Stara Zagora. They were acquired through mass privatisation and transferred to the diary holding, established in 1999, into which they merged in June 2001. The enterprise in Stara Zagora was closed down as its production capacities could not be sufficiently loaded. The manufacturers in Plovdiv and Bourgas have specialized in the production of fresh milk and yoghurt, and various brands of cheese are made in Shoumen. Vitalact Milk, set up on June 18 after it separated from the Varna-based Vitalact, may also join UDC. However, this depends on the decision of the Commission for Protection of Competition (CPC). The new company has equity capital of BGN1MN-plus and undertook the core activities of the Varna-based enterprise, i.e. trade in and procession of milk and dairy products. Only the buildings and land remained within Vitalact's assets, whose capital exceeds BGN5MN. Presently, the two companies are owned by the Greek Delta Ice Cream, which will soon part with them. Delta Bulgaria will acquire Vitalact and thus the Greek company will concentrate its ownership in this country. UDC's managerial team expects the CPC to voice its stance on the intended purchase of 99.95% of the capital of Vitalact Milk. In September 2002 the commission launched additional research but has not yet come up with a new decision. According to Mr. Haladjov, the acquisition of Vitalact Milk will improve UDC's competitiveness (the increase of the company's turnover will reduce the prime cost of its output and funds for investments will be thus released). The data submitted by the UDC showed it had a 64% share on the fresh milk market in 2002. According to Vitalact's report for 2002, the Varna-based company accounts for 26% of the sales in that segment. The two companies will jontly hold a 90.5% share of the market. The two companies' positions on the yoghurt market are more modest. UDC holds 17% of it, and Vitalact held a 10% share last year. The major competitors of UDC in that segment are: Danon - Sofia, Vitalact AD - Varna, Soflife AD - Svishtov, Mlekimpex AD - Elena, and LB Bulgaricum AD - Sofia. A total of 130,000 tons of yohgurt and about 30,000 tons of fresh milk were sold in the entire trade network in 2002. According to Mr. Haladjov, however, consumption of the two products is equal. The difference between consumed and sold milk is due to the considerable production of households and sales outside the trade network. Farmers usually sell their milk in the streets, both in villages and big towns. This decreases the sale of dairy producers, which pasteurize them and sell them in quality packs. According to Mr. Haladjov, things could change for the better only when the EU requirements are introduced. According to him only 10-15% of the Bulgarian farms comply with EU standards.