The food sector, expectedly, turned out to be resilient to the COVID crisis. This is one of the few sectors in which average profits increased last year, if meagerly. The 30 largest companies in the ranking have grown by 3.19%. This is almost half the increase for 2019 (6.6%). A closer look at specific producers reveals some variation: the growth comes mainly from oil producers (by 26%) due to the international price growth of sunflower oil, while drink producers have experienced more significant rollbacks, probably because of the decrease in restaurant consumption and weak tourist demand. If one factors out the five oil producers in the ranking, the sector has shrunk by 5%.
On the other hand, average cost effectiveness has nearly maintained its level - 6% as compared to 6.7% in 2019. Only two companies reported losses. In Mondelez's case the losses are miniscule. In Kamenitsa's case, however, they are quite significant, even abnormal.
The shifts in the rankings are insignificant. Oliva and ADM Razgrad (Amilum Bulgaria) are once again in the lead. However, in 2020 Papas Olio pushed Coca-Cola HBC out of third place. There is no clear tendency among the highest earners: the companies with the highest profit margins are Carlsberg, Chipita Bulgaria and KEN.
A billion worth of business
For the second consecutive year Oliva has the highest gross sales in the rankings. The difference is that in 2020 the company's revenue surpassed 1 billion levs (511.3 million euro)for the first time, marking a 40% increase year-on-year, and its profits doubled, reaching 45 billion levs. The sale of sunflower oil is the main source of revenue. The company has also earned some cash from trading in colza.
"The growth came from the larger quantities of oil we produced and record high prices. 2020 saw a large global oil deficit which led to record high prices. All of our production facilities are currently operating at full capacity. Making forecasts is complicated, the harvest and the consumer demand for the upcoming season are unclear but we don't expect a sharp drop in prices. We expect similar revenues in 2021," representatives of the company told Capital.
In September 2020 Oliva bought the old sunflower seed processing plant in Dobrich of its peer Kaliakra for 2.3 million levs, aiming to expand storage space. Moreover, Kaliakra's facility is situated close to Oliva's new factory in Varna region which has doubled the company's export capabilities.
The purchase of the facilities in Dobrich is part of the company's ongoing expansion. In June 2020 the Black Sea Trade and Development Bank lent he company 35 million euro meant to be used as operating capital of the factory near Varna. The investment in this factory adds up to 40 million euro, 31 million of which is a corporate loan from the European Investment Bank as part of the Juncker plan. This is not the only piece of European funding Oliva has received. In 2013 the company took out a 22 million euro loan from the European Bank for Reconstruction and Development to finance the construction of a factory in Polski Trambesh specialised in the production of unrefined sunflower oil. The entire investment amounted to 30 million euro. The three production facilities (in Varna, Polski Trambesh and Kneja) which the company owns and operates allow it to process 700 thousand tons of oilseeds annually.
Oliva is owned by grain trading company Bildkom, the sole owner of which is Angel Georgiev.
And some more oil
Four more edible oil manufacturers feature in the rankings, with all of them reporting growth. Papas Olio which ranks third is owned by Saint Jiran which in turn belongs to Georgi Tashev. The company owns refineries in Yambol and Balchik as well as a manufacturing facility for cold-pressed oils in Byala Slatina. Papas Olio has holdings in several subsidiary companies: Zarneni Hrani 99 (producing agricultural products and providing grain storage), PapasMel (producing flour and providing grain storage), Granturko (Turkey) - trading in grain and oil-bearing crops and providing storage for them.
Again through Saint Jiran Georgi Tashev owns the next company for oil-bearing crops in the rankings - Balchik-based Sun Foods. The combined profit of the two surpasses 550 million levs. In the past, Ukrainian national Oleksandr Minov who now owns Biser Oliva also invested in Tashev's group. Klas Olio, based in Karapelit, close to Dobrich, generated 114 million levs in revenue in 2020, up 22%. The family-owned company was created in the 90s by a Turkish entrepreneur who at the time ran a similar business in Turkey. Later, his wife Nermin Ylmaz and his son Mertgyun Ylmaz inherited the company. Last year they sold it to Varna-based Magic Оlame which is owned by Eduard Bagdasarian.
Stara Zagora-based Biser Oliva has also reported growth. The Angelov brothers Ivan and Luka, owners of poultry and egg producer Gradus, are shareholders in the company. Oleksandr Minov and Shota Hadjishvili recently acquired, through Risoil, a stake in the company larger than the interest held by the Angelov brothers.
Taking it easy with the sweets
Once again Razgrad-based ADM (Amilum Bulgaria) is second in the rankings. Even though its sales dropped last year, its profits increased. The company, owned by Archer Daniels Midland (ADM), manufactures corn starch, glucose syrup, crystal and liquid dextrose, corn syrup and other sweeteners. Its products are the result of corn processing which makes the company the single largest corn consumer in Bulgaria.
"Despite the pandemic the company was able to work at full capacity, as it did during the previous couple of years. It did not lay off any employees. Simultaneously, the company kept working on the final phase of a project for expanding production (worth 240 million levs) and on launching new products," its CEO Svetozar Karadjov told Capital.
Nestle Bulgaria's sales for 2020 are a little lower than those in previous years.
"During the past year the food and drink industry remained stable despite COVID," the CEO of the company, Petar Stoilov told Capital. According to him, the emergency situation has had a negative impact on exports while the shuttered restaurants and work from home have decreased sales in some categories, especially when it comes to products for immediate consumption. In 2020 the company invested 23 million levs in modernising its Sofia factory. Part of the investment went towards a new robotized assembly line for KitKat packaging. Nestle exports the products it manufactures in Bulgaria to 35 markets worldwide.
"In the first quarter of this year Nestle Bulgaria recorded a 4.3 % revenue growth year-on-year, to 60 million levs. The expectations are that by the end of the second quarter the revenues will increase by 5-6%," Petar Stoilov said. The investments planned for this year exceed 22 million levs, with more than 89% of them going towards expansion and modernization of the factory.
Mondelez Bulgaria (10) and Chipita (11) swapped the positions they held in 2019. In future rankings the two companies will move further ahead. This is because in May it was announced that Mondelez International is buying Greek croissant and bake rolls manufacturer Chipita for about $2 billion. It is anticipated that the deal will give birth to a giant in the Bulgarian sweets production sector. The united company will have the largest revenues in the sector. Based on data from 2020 these revenue will exceed 340 million levs. The American and the Greek company are absolute leaders in several categories which do not overlap. Mondelez, for example, is hegemon in the chocolate sector, while Chipita rules the realm of croissants.
In 2020, Mondelez leads the Bulgarian market for chocolate and chocolate confectionery with a market share of 31.9%, up 0.2% compared to the previous year. Mondelez has a 60% market share in the chocolate sector. Milka is the leading brand in this sector. Every second chocolate bar bought in the country is from a brand in Mondelez's portfolio: Milka, Svoge, Mlechen, Toblerone, the general manager for Mondelez in Bulgaria, Romania and the East Adriatic Ivailo Naidenov said. At the same time Chipita Bulgaria has an 84% market share in the croissants sector and 59% in the baked snacks one.
Mondelez runs its business in Bulgaria through 5 companies. Another one of them has also made it into top 30 - Mondelez Europe Procurement Bulgaria (16).
Sugar producer Zaharni Zavodi - Gorna Oryahovitsa registered 8% revenue growth in 2020, to 68 million levs. The company ranks 27th. It is public and comprises companies centered on the production of sugar and sugar confectionery, ethyl alcohol and high protein feed. It also runs a printing house, a power station, a repair center and a trading company. The main shareholders in the company which was privatized 20 years ago are GU - Faradei owned by Georgi Uzunov and Ritam-4-TB owned by Tanya Daneva and Rusi Danev. The two companies have provided financing to Zaharni Zavodi management buyout team during the privatization process. Together, the three companies own 97.07% of Zaharni Zavodi's capital. A report issued by the company shows that last year it worked on a project for the construction of a photovoltaic power plant. In October 2020 the company decided to stop producing packaging for its own needs and external clients.
A dry yearCoca-Cola Hellenic bottling company no longer ranks Number 4. Its revenue dropped to 357 million levs in 2020, probably due to the closing of restaurants during the pandemic. In the summer of 2020 Coca-Cola HBC started distributing a new line of coffee beverages - Costa Coffee. Bulgaria was the first European market where these beverages were sold. This is the second coffee brand which enters Coca-Cola HBC's portfolio. For three years the company distributed Lavazza but the partnership ended in September of 2019.
If you judge based on Devin's annual report, the water sector has struggled less during the pandemic. Since its establishment in 1992 Devin (which is part of Belgian group Spadel) has been a market leader in the bottled water sector. "The pandemic magnified the appeal of natural (mineral and spring) waters due to the health benefits they provide. The rise in consumption in recent months is proving this conclusion. We expect a quick recovery in this category over the course of the year because of the easing of restrictions and reopening of hospitality and on-the-go sectors," Devin CEO Borislava Nalbatanova said.
Local and meat investments
Food holding group Bella Bulgaria registered a 14% revenue growth in 2020. During the fall of last year it emerged that Bella owner, Impala Invest Group, has bought Greek charcuterie producer Creta Farms. Bella Bulgaria manufactures salami, pastries, margarine and mashed potatoes. The foods are manufactured at 9 facilities with a combined daily capacity of 350 tons. The holding owns three meat processing plants (Idea - Plovdiv, Fermata - Kostievo, Orehite - Dobrich) as well as facilities for manufacturing pastries in Yambol and Svilengrad. In Yambol the company operates a facility for manufacturing margarine and vegetable oil. Bella Bulgaria is owned by Dimitrios Vintzileos and Jorj Valentinov Veselinov.
Boni Holding ranks 7th in the top 30 with a revenue that exceeds 220 million levs. At the end of 2020 the company arranged a 30 million euro loan from the European Investment Bank for modernization of existing facilities and expansion of production capacities. "This sum covers half of the project's cost. The rest of the funding will be provided through loans from UBB and DSK Bank as well as own funds," Tsvetan Iliev, authorized representative of Boni Hilding told Capital. The financing will be used for the renovation of a pork production facility, a slaughterhouse, silos and a facility for processing animal waste products. The project is expected to be completed by the start of 2024.
KEN-Stara Zagora (30) is the other salami producer which made it into the rankings. The company's sales grew by 7% last year while its profits increased by 117%. KEN, which was created in 1991, is one of the first private enterprises in the sector. It is owned by Rumen Stefanov Nonov, Rumen Ivanov Kuzmanov and Plamen Evtimov Isionov.
The closure of restaurants due to the COVID pandemic has an adverse impact on poultry producers. Expert evaluations show that 30% of sales in this sector come through the hospitality sector. The two large poultry producers - Pilko and Gradus, have recorded lower sales and significantly lower profits. Part of the explanation lies in the rise in the cost of feed by more than 40%. The increase affected the prime cost of production but it did not affect retail prices due to the large imports of frozen chicken from Europe which were released on the market.
Pilko - Razgrad is part of Ameta holding group owned by German company PHW, one of the largest poultry producers in Europe. The Bulgarian group comprises Pilko's poultry farms and slaughterhouse selling products under the brand Ludogorsko Pile, feed production facility Rositsa - Pavlikeni and poultry farms around Shumen and Zavet.
The Gradus group (13) is owned by the Angelov brothers Luka and Ivan. This spring Ivan Angelov was involved in a scandal sparked by claims of alleged ties between politics and business made by local agricultural producer Svetoslav Ilchovski.
Beer struggleThe beer market experienced a downturn in 2020. "Data from the Customs Agency shows that last year 5.22 million hectoliters of beer were sold in the country. This marks a 5% dip compared to 2019," Ivana Radomirova, member of the board of the Union of Brewers in Bulgaria, told Capital. The three largest breweries in the country saw their sales decline because of restaurant closures and a drop in the number of tourists. Carlsberg Bulgaria kept its leading position with 199 million levs in revenues. The drop in the sales of Zagorka and Kamenitza is in the double digits.
Two companies which produce liquor usually make it into the rankings. VP Brands International (Vinprom Peshtera) which grew by 17% ranks 14th. The revenue of Minyo Staikov's SIS Industries which owns Vinprom Karnobat shrank by 14%.
Cheese and bread
Milky Group Bio which ranks 9th grew by 2%. The company produces milk and dairy products under the Sayana, Nabor and Milky Dream brands and is owned by Polya Peeva. The company also participates in the wholesale trade of powdered and fresh milk, vegetable oils, cocoa products, for the food industry.
United Milk Company (OMK) ranks 20th. The company produces milk and dairy products under the Vereya, Fibela, Hansko and Rusalka brands. Created in 1998 as a holding company, OMK unites seven dairy firms controlled by Doverie privatization fund. In April 2007 Greek company Vivartia bought OMK for 18.7 million euro. In the fall of last year Marfin Investment Group (MIG) which owns Vivartia Holdings received a binding offer for the sale of the holding group to Luxembourg-based CVC Capital Partners as an equity investment. CVC priced the Greek holding group at 600 million euro. If you take into account the proportional size of the Bulgarian business, OMK would have been priced at 35 to 42 million euro.
Tribul which produces dairy products under the Olympus brand recorded a 5% drop in revenue in 2020, but registered profits for the first time in three years. The Sliven-based company is part of Greece's Hellenic Dairies (formerly Tyras) group which has manufacturing facilities in Greece, Bulgaria and Romania. The Bulgarian company produces various brands of hard cheese, yellow cheese and quark. "Our main markets are in the EU, the USA, the Arab countries, China and Australia. However, Greece, which has the highest consumption of cheese per capita in the EU, remains our largest client," Radoslav Pshankov, the company's trade manager for Bulgaria, told Capital. Between September 2019 and April 2020 Tribul planned, constructed and put into operation a new manufacturing facility for grilled cheese that costs half a million euro.
Dairy producer Kremio which sells its products under the My Day brand made it into the rankings for the first time. The company produces cooking cream. About 60% of Kremio's products are exported to over 40 countries in Europe, Africa and Asia.
Kremio was founded as Meggle M J and until July 2006 was owned by German company Meggle and Lebanese company MJ Pack. Afterwards it changed its owners and its name and had Italian shareholders. Since December 2015 it is named Kremio and has a new owner: the longtime business manager Georgi Gankovski who received funding from Elvin Guri's Empower fund, and United Industries of Georgi Stoimenov who is managing Bulgarian tennis pro Grigor Dimitrov. In March 2018 the investors sold their shares to Gankovski.
Goodmills Bulgaria which produces flour under the Sofia Mel brand reported 80 million levs in revenue and increased its sales by 9%. However, the company's profits decreased. "The stockpiling of food during the first stage of the lockdown increased flour sales. At the same time, weak tourist demand contributed to a drop in sales. The decrease in our profits comes from the high price of wheat last year," CEO Stefan Hristovski commented for Capital. The company plans to invest 3 million euro by 2025.
The company dates back to 1986 when state-owned Vaptsarov dairy plant was established in Sofia. In 2000, Greek milling holding Loulis Group became majority owner of the company and renamed it Sofia Mel. In May 2009 the company was bought by Austria's LLI Euromills. Three years later the owner of the capital was renamed to GoodMills Group and its Bulgarian branch - to GoodMills Bulgaria.
Topaz Mel, the other representative of the sector in the ranking registered a 10% growth in sales and unlike in 2019 closed last year with a profit. The company is part of Minyo Staykov's group.
Bread and pastry producer Simid Sofia, owned by Mitko Karadjov and Krisitna Chorleva-Aleksieva, registered a negligible drop in revenue. Karadjov chairs Simid 1000 companywhich controls over 20 firms connected to the production of flour and bread. The company also runs a distribution network.