2023 turnover of Food Union in Latvia exceeds EUR 150 million, growing 12%

Latvia’s leading dairy processing and ice cream manufacturer Food Union, including Rigas Piena Kombinats and Valmieras Piens plants, closed 2023 with EUR 150.2 million in consolidated turnover, which is by 12 percent more than in the previous period (EUR 127.8 million). Gross profit has increased by 49 percent – from EUR 17.7 million in 2022 to EUR 26.3 million in 2023. The company’s net profit in 2023 was negative – at EUR 1 million.

Increase of turnover in 2023 in Latvia is attributed to a new sales strategy, especially in relation to export markets, while increase of gross profit – to reduction of costs in relation to the main supplies and energy resources. Last year the company managed to reduce loss from EUR 4.2 million to EUR 1 million.

“Even though the economic situation did not see any significant improvement last year compared to 2022, costs of some resources stabilized, thus, our operations in Latvian market could change from the emergency mode to a more planned and predictable mode. In 2023 we focused on revising our procurement strategies, further reduction of operational costs, investment projects that will ensure higher automation and energy independence, more powerful approach to winning export markets. Everything was focused, of course, on scrupulous work in our core activities, revising the product portfolio and development of new, innovative dairy and ice cream products,” said Arturs Cirjevskis, Food Union CEO in Europe and Latvia.

Innovations of dairy products

The main Food Union innovations in the category of dairy products in Latvia in 2023 were the flavours of Karums curd snack created by the people – plombir curd snack with poppy seeds in chocolate glaze and curds snack with grated rye bread and cranberry-cowberry filling in chocolate glaze. The new products were created to honour the XXVII Nationwide Latvian Song and XVII Dance Festival. During the campaign, Karums brand invited participants and guests of the festival to vote for the flavour of the Chief Curds Snack dedicated to the event. Both product innovations not only became very popular and much discussed in public, but also exceeded the sales plans.

In 2023, Food Union on Latvia also started production of four different flavours of Lakto sub-brand Lakto Imuno – lactose-free fermented dairy drink. Production of Lakto brand products in 2023 increased by 38 percent compared to 2022.

Ice cream innovations

Food Union in Latvia created six new Pols products in the ice cream category: two Pols ice creams in waffle cup – Banana and Chocolate and Crunchy Strawberry, one Pols ice cream on a stick with – strawberry-flavoured in a strawberry glaze, and three Pols ice cream desserts in the large family packaging – Pols Marmalade, Pols Waffle Crisp and Pols Crunchy Chocolate.

The 2023 summer season turned out to be one of the best seasons of the past six years, with the overall ice cream market in Latvia growing by more than 10 percent, while Food Union sales revenue increased by more than 14 percent than in the summer period a year ago.

Investments

One of the largest investment projects in 2023 was related with increasing automation level in manufacturing. Investing more than EUR 2 million, Food Union purchased automated ice cream, curd snack and cream cheese packaging systems that will allow to increase production capacity, replacing manual work or simplified mechanical work with more contemporary solutions.

The second largest investment project was adaptation of heating generating equipment and use of other types of fuel in order to reduce dependence on one type of energy source, namely, installation of equipment that is prepared to use natural gas and liquefied natural gas (LPG) for the production needs of Rīgas Piena Kombināts and Valmieras Piens.

Responding to constant interest of general education school teachers and pupils in how the popular dairy products and ice creams are produced, in 2023 Food Union created educational and entertaining school program Dairy Class – located in Riga, Latvia. It is aimed at primary and elementary school pupils as an entertaining excursion in the premises of Rigas Piena Kombinats. The concern also plans to continue to develop children and youth education also in the coming periods. Excursions should be booked at https://www.foodunion.lv/pienaklase.

Food Union management in 2023 continued to make donations, worth a total of EUR 173,000, supporting Ukraine and Ukrainian refugees in Latvia.

Future perspective

As reported, there were changes introduction in the Food Union ownership structure early this year. As a result of the transaction that was concluded in March 2024, the world’s leading alternative investment company PAG Private Equity acquired shares of Food Union group in Europe from the company’s founder and other private shareholders. Food Union CEO in Europe and Latvia, Arturs Cirjevskis, continues work, and has set further manufacturing efficiency, revision of the product portfolio and development of new products in the competence centres in Riga, strengthening of the local brands with a broad range of marketing instruments, more active expansion in export markets, and a product portfolio adapted for the needs of clients, as well as development of a new management team as his priorities.