Confectionery Industry - The Serbian Economy's Hidden Gem
In the twenty years since privatization, the Serbian confectionery industry has grown stronger than ever, exporting well-loved brands to the wider region.
Around 20 years ago, without much hesitation, the Serbian state allowed the privatization of the confectionery industry, probably believing that making and selling wafers could not bring much profit. However, it turned out that such an attitude toward this sector was very beneficial as the country’s confectionery industry has grown to be “the hidden gem” of the Serbian economy.
While in neighboring countries, such as Romania, Bulgaria, and Greece, local producers have practically disappeared through acquisitions by large global players in this field, Serbian confectioners have survived owing to the strength of their brands and customers’ loyalty. Although some factories have become part of global or regional corporations, iconic brands established in ex-Yugoslavia are still present, alive and kicking, on the market. In fact, those acquisitions have created even better conditions for exports to the countries of the region. The most significant effects of these acquisitions are the modernization of production and investments into development of new products. It resulted in confectionery exports growing greater than imports. The main destinations are markets of the surrounding countries where consumers are loyal to the well-known brands from Serbia. Kosovo is also an important market for this industry. The 100% tariffs imposed on goods from Serbia and Bosnia and Herzegovina by the Kosovo authorities in the previous period presented quite a challenge to this industry. But the confectioners managed to compensate the effects.
The arrival of Lidl in 2018 and announcements of other retail chains coming to Serbia were welcomed by the industry. They saw it as an opportunity to extend distribution to the new markets. Even though most retail chains have their own private labels, big players did not fear this, nor it affected them in a significant way. On a contrary, it made them more competitive. Smaller scale, usually family owned confectionary producers in Serbia filled this space. In the recent years number of family businesses in this sector is increasing finding their niche in production of healthy snacks sold in “bio-shops”. In the time of Covid-19 pandemic, due to increased food purchasing attitude of the citizens and imposed lock down, sales of sweet and savory snacks were increased. The confectionary sector in Serbia is growing and has a substantial potential for further improvement. Faced with competition, up to now the confectionery industry has managed to tackle all problems and to consolidate. Strategies of leading companies in the sector are focusing on innovation and development.
Examples of successful confectionary brands and companies
PepsiCo West Balkans purchased the Serbian potato chips and savory snacks producer Marbo Product in 2008. Together with Karlovarské Minerální Vody from the Czech Republic, the company acquired the Knjaz Milos mineral water and juice producer in 2019. PepsiCo West Balkans management think that the industry is underrated compared to some others and that it is lacking recognition. Over the years this company brought gold medals from worlds prestige competitions and fairs and is considered to be Serbia’s best national team in the confectionery industry. They intend to become a production hub and to attract investment in research and development. This company manages its operations in the area between the Adriatic and the Baltic Sea from the office in Belgrade.
Bambi Success was established in 1967 and has significant percentage of the Serbian biscuit market share. Its brands: Bambi, Plazma, Wellnessat are well recognized and present on the markets of all Western Balkan countries. Their strength lays in the strong distribution network, including the distribution through strategically important channels such as traditional retail and HoReCa. After the acquisition by Coca-Cola in 2019, the portfolio of leading beverage brands has added complementary to confectionary brands familiar to the consumers. In May 2020, Bambi Success was provided with state land to build a new coffee factory. According to the agreement, the coffee factory should be built in the industrial zone of the company’s home town Pozarevac,. This is their first green field investment since the acquisition. An investment of approximately €3 million will result in 1,600 m2 hall with a processing capacity of 200 tons of coffee/month. Plans are to expand facilities in 2021.
BarryCallebaut SEE started the construction of a chocolate factory in Novi Sad in January 2020. Their CEO said the regional market had consolidated and the Serbian confectionery industry had managed to tackle all the challenges. Innovation is the key to further development and the strategy of this company.
Kappa Star Group, the owner of Jaffa cookies, is also striving to invest in research and development. They achieved good results thanks to good organization and substantial investment in people. Their moto is: “We have a good industry that creates added value and has something to say”. Kappa Star Group plans for the future are to extend to the region of Western Balkans. They failed in their attempt to purchase the Croatian company Kras in the fall of 2019. There are not many acquisition opportunities in the neighboring countries, but Serbian confectionary is monitoring developments in the region and will not miss the opportunity if certain Croatian companies, like “Agrokor” are put up for sale.
SwissLion Group took over the well-known production candy factory facilities in Takovo, Serbia in 2005. Years of experience as well as a wide range of products and popularity of Takovo brands were sufficiently attractive for SwissLion DOO. In 2008, Swisslion Group acquired the Croatian Euro Food Markt company from Sisak. They have invested in similar production facilities in North Macedonia and in Bosnia and Herzegovina from 2010-2015. Being in the business for decades now, SwissLion’s vision for the coming decade is to take central position in production confectionary products in SEE Region by improving technology and standards and creating healthy and quality products.