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Food Union Group’s turnover in Latvia amounts to EUR 127.8 million in 2022

Latvia’s leading milk processing and ice cream production company Food Union, which includes production facilities of AS Rīgas Piena Kombināts and AS Valmieras Piens, has closed 2022 with a consolidated turnover of EUR 127.8 million, which is 14.54% more than in 2021 (EUR 111.53 million). Gross profit decreased by 30.58%, from EUR 25.5 million in 2021 to EUR 17.7 million in 2022. The company’s net profit decreased from EUR 2.9 million in 2021 to a loss of EUR 4.3 million in 2022.

The increase in turnover in 2022 is attributable to rising product prices, while the decrease in profit is due to a steep increase in costs of key raw materials and energy resources, which could not be fully covered by product pricing.

“Last year, our strategically most important objective was to adapt to the new market situation, which continued to be affected by the lingering effect of the Covid-19 pandemic on supply chains, as well as the war in Ukraine launched by Russia in early 2022, which has caused a humanitarian catastrophe in the region and economic instability. Despite these challenges, Food Union continued to pursue its long-term strategy of making high value-added products in the dairy and ice cream categories, developing its e-commerce platform and logistics outsourcing, diversifying its export markets and the ranges of products available there, and implementing a range of sustainability and efficiency initiatives in the production and administrative procedures,” comments Food Union CEO Central Eastern Europe Sergey Beskhmelnitskiy.

In terms of product innovation, Food Union last year demonstrated its ability to flexibly adapt to the changing demand and habits of local customers. Following customer demand, Kārums resumed production of kiwi and strawberry-flavoured curd snacks, and launched brand new flavours – gummy candy and baked apples, cinnamon and cereals. Recognising customer expectations for familiar flavours and positive emotions, Food Union also relaunched the historic Zilonītis yogurt brand and launched a new Dzintars processed cheese with a chicken gyros flavour. In the dairy category, EUR 25,000 was invested in the development of two new Shake Me Up yogurt shakes for the innovative Valmiera brand range – one with cherry and banana flavours and the other with biscuit and cream flavours.

For the summer of 2022, Food Union invested around EUR 80,000 in the development of 10 new ice cream flavours to suit all tastes. At the end of the summer season, the new Jungle Pop ice pop was the most popular ice cream at shops. Food Union also invested approximately EUR 20,000 in the development of two new ice cream flavours for the Ekselence and Tio brands for the autumn season, both available in large family-oriented packaging.

Last year, the company continued successful development of its e-commerce channel, which has grown from an experiment in 2020 to a fully-fledged sales channel in 2021 with a turnover of over EUR 1 million. In 2022, by adapting to the new habits of customers, managed to attract 40% more new regular users, increase the number of products in the cart to 700 products and, as a result, almost double its turnover to EUR 1.7 million in the last financial year.

Once the war broke out, Food Union halted cooperation with companies in Russia and Belarus, and exports to Ukraine, the group’s second largest export country before the war, was temporarily interrupted. In 2022, Food Union not only returned to Ukraine with the same volumes as before the war, but also expanded its exports to other markets – Turkey, Norway, the Netherlands, Kazakhstan and Uzbekistan, and increased exports threefold to its existing markets – Poland, Moldova and Estonia. In the reporting year, Food Union exported products worth a total of EUR 35.3 million.

As reported, Food Union’s management strongly condemns the military aggression against the Ukrainian people and in 2022 made several product and financial donations, worth a total of EUR 200,000, to Ukraine and those fleeing the war who have arrived in Latvia.

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