The milk processing and ice cream production company “Food Union”, which includes the production centers AS “Rigas piena kombināts” and AS “Valmieras piens”, closed the year 2023 with a consolidated turnover of 150.2 million euros , which is +12% more compared to the previous period (127.8 million euros).
Gross profit increased +49% from 17.7 million euros in 2022 to 26.3 million in 2023. The company’s net profit in 2023 was negative in the amount of 1 million euros.
The increase in turnover in 2023 is related to a new sales strategy, especially in terms of export markets, while the increase in gross profit is due to a reduction in costs related to key raw materials and energy resources. Last year, the company managed to reduce losses from 4.2 million euros in 2022 to 1 million euros.
“Although the economic situation did not improve significantly last year compared to 2022, the costs of some resources remained and, therefore, our operations could change from emergency mode to a more predictable and predictable mode . In 2023, our attention was directed to a review of procurement strategies, further reductions in operating costs, investment projects that would ensure greater automation and energy independence, a more powerful to conquer export markets, of course, hard work was in our core business – portfolio revised product and development of new, innovative milk and ice cream products,” comments results 2023 Artūrs Čirjevskis, head of “Food Union ” in Europe and Latvia.
In 2023, “Food Union” also started producing four different flavors of “Lakto” sub-brand fermented milk drinks “Lakto Imuno” without lactose, the production volume of “Lakto” brand products increased by 38% in 2023 compared to 2022. .
The summer season 2023 became one of the best in the last six years, with the total ice cream market in Latvia growing by more than +10%, and sales revenue “Food Union” up more than 14% in the summer a year earlier.
One of the biggest investment projects in 2023 was related to increasing the level of automation in production. By investing more than 2 million euros, “Food Union” purchased automatic packaging systems for ice cream, cottage cheese and cream cheese, which allows to increase the production capacity of these products, simplify manual or mechanical work, replace it with a solution. that meets today’s requirements.
The second largest investment project was the conversion of thermal energy production equipment to use other types of fuel to reduce dependence on one type of energy, namely the installation of equipment to prepare for the use of natural gas and liquefied gas (LPG). in the production of “Rigas piena kombinata” and “Valmiera pies”.
Responding to the continued interest of teachers and students of general education schools in how different milk products and ice cream are made, in 2023 “Food Union” created an educational and entertaining curriculum “Milk Class”. It is designed for children of elementary and primary school age as an interesting trip that takes place in the building “Rigas piena kombinat”. The concern intends to continue developing the path of education for children and youth in the future as well.
In 2023, the management of “Food Union” continued to provide donations worth about 173 thousand euros, supporting Ukrainian refugees and Ukrainians in Latvia.
As previously reported, at the beginning of this year changes were made in the ownership structure of “Food Union”. As a result of the transaction that ended in March 2024, the other leading investment company in the world “PAG Private Equity” bought shares of the “Food Union” group of companies in Europe from the company’s founder and shareholders another private. The head of the group “Food Union” in Europe and Latvia, Artūrs Čirjevskis, continues to lead the work and prioritize streamlining the group’s production, review of the product portfolio and development of new products in the competence centers in Riga, strengthening of local brands with a wide range of marketing tools, more active expansion in export markets and existing product portfolio, as well as the creation of a new management team.
2024-11-19 12:52:00
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Eating habits among the younger generation. This initiative aligns with our company values of transparency and sustainability while fostering a sense of responsibility towards food production and consumption. By teaching children about the journey of milk from farm to table, we hope to instill a respect for food and an understanding of its importance in nutrition.
Hello and welcome to our interview today! I’m pleased to introduce you to our first guest, Artūrs Čirjevskis, the Head of Food Union in Europe and Latvia. Thank you for joining us today.
To begin with, can you tell us more about the strategies that Food Union implemented in 2023 which led to a significant increase in turnover and gross profit? What were the main challenges faced during this period and how were they overcome?
Guest: Thank you for having me. The main strategy that led to the increase in turnover and gross profit was a focus on expanding our export markets. We invested heavily in marketing and sales efforts to promote our products in new regions, particularly in Europe and Asia. Additionally, we reviewed our procurement strategies to ensure we were getting the best prices for our key raw materials and energy resources. This helped us to reduce costs and improve our gross profit margin. In terms of challenges, we faced ongoing economic uncertainty and volatility in the global market, but by being agile and adaptable, we were able to navigate these challenges effectively.
Moving on, can you provide more details about the investment projects undertaken by Food Union in 2023? How do these projects align with the company’s long-term goals and future plans?
Guest: Yes, we invested over 2 million euros in automation projects last year. This included the purchase of automatic packaging systems for ice cream, cottage cheese, and cream cheese, which has increased our production capacity and simplified our manual processes. Additionally, we installed equipment to diversify our energy sources, reducing our dependence on a single fuel type. These investments are part of our broader goal to modernize our operations and increase efficiency, while also preparing for future challenges and opportunities.
We’ve also heard about the “Milk Class” education program launched by Food Union in 2023. Can you tell us more about this initiative and how it fits into the company’s overall mission and values?
Guest: Absolutely. The “Milk Class” program is designed to educate children about the origins of milk and ice cream, as well as the production process. It’s an interactive and engaging way for us to connect with our local community and promote healthy
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