Bulgaria's largest spirits producer, Plovdiv-based VP Brands International (previously known as Vinprom Peshtera), will buy vinegar maker Veda for an unnamed price. The transaction will substantially boost the market presence of VP Brands, which already has the Kulinar brand of vinegar in its portfolio. With the deal, it will acquire the biggest vinegar producer in Bulgaria with a turnover of nearly 8 million levs (4 million euro). The vinegar market in Bulgaria is assessed at a touch above 16 million levs, according to national statistics.
The Commission on Protection of Competition (CPC) has put two conditions to greenlight the deal.
Market leaderPleven-based Veda produces vinegar under its own Veda brand, as well as private labels of other companies. It is followed by Vinprom Yambol, which is part of VP Brands, and by Vinprom Pleven, which too is indirectly connected with VP Brands.
The CPC has established that the notified deal will give a dominant position to the united group, as the two companies are leading market players. And that may hinder efficient competition.
To avoid that, VP Brands International has suggested to reserve 30% of the production capacity for private labels for a period of three years. It will also provide annual reports to the CPC to ensure the condition is fulfilled.
Another condition envisages termination of the use of a certain brand. Both companies declined to name it but what is certain for now is that the measure concerns neither Veda, nor Kulinar.
"Veda's acquisition is the result of our long-term strategy for growth into categories where we have expertise," VP Brands International told the Capital Weekly. "We plan to invest in enhancing the identity of the acquired brand and considerably improve its distribution. As a result of the deal VP Brands International will become a market leader in vinegar sales in Bulgaria," the company said but did not specify the expected market share.
VP Brands International is owned by Atanas Petrov and Anton Shterev. The company produces spirits and wines and has eight factories in Bulgaria. In 2021 it posted 137 million levs sales and 11.7 million levs profit. The holding also includes a cigarette maker, agricultural land companies, many hotels (in Sofia and the coastal resort of Slanchev Bryag) and other real estate.
Veda is owned by six individuals, the biggest shareholder being Ognyan Kirovski with a stake of 56%. I It closed 2021 with a profit of 1.2 million levs on a turnover of 7.8 million levs.
The company was set up in 1994. Its factory is located in the village of Dolni Dabnik near Pleven and is fully automated. A part of the output is exported to the UK, Germany, Denmark, Cyprus.
According to data of the National Statistical Institute, annual vinegar consumption in Bulgaria stands at about 1.6 to 1.7 liters per person, though the figure was slightly down in 2021 (1.4 liters).
VP Brands International cited official data for 2021, according to which the production of vinegar and vinegar substitutes in Bulgaria amounted to 18.6 million liters. As much as 17.2 million liters were sold worth a total of 16.4 million levs.