Romania and Moldova may still be small markets, but Indena says it sees in them what it saw in Poland 20 years ago.
The Italian health food and pharma firm has teamed with chemicals distributor, Azelis, to move into the markets as part of an overarching plan to expand its global presence in the pharma and health-food industry.
Ferruccio Bellati, sales director at Indena, told NutraIngredients: “Romania is at the moment a very poor country. But what we see is the same as what we saw in Poland 20 years ago.”
The heart of growth
He said the “dramatic” growth in the countries' economy was the motivation behind this team-up. “The market is very interesting for us,” he said.
“Together [with Azelis], we expect to consolidate and broaden our pharma and health-food customers’ portfolio in Romania and Moldova, countries that are the heart of the growing Europe.”
He said that even if the market maturity was not yet comparable to that of Western European countries like France and Germany, the firm believed it was important to invest in promotion in these areas.
Last year a market report from PMR pinpointed Romania as a key area of food supplement growth within the Central European market. According to the research firm, the food supplement markets in Poland, the Czech Republic, Romania, Hungary, Bulgaria and Slovakia was worth over €1bn in 2011, pushing past this billion marker for the first time that year. Of this figure, Romania was the fastest growing, with 24% growth in 2011, but had the lowest per capita spend.
Cheap Chinese competition
Bellati said challenges lay in price competition from Chinese companies, which currently dominate the local market. He said price remained a central driver within the Romanian and Moldovan industry, something which is not always possible to keep up with whilst maintaining certain standards.
“We have tried to emphasise quality and safety issues like contamination,” he said. “But several times we were not able to catch business because they want cheap materials.”
Nonetheless he said it was important for the firm to gain a foothold presence in the countries today in order to build towards future business.
He said than in Romania in particular there was already an interest in botanical and traditional products, especially tea-based products. What the firm aimed to do was to offer “more sophisticated forms” of these traditional remedies.
Neighbours Romania and Moldova have experienced a complicated relationship since the two were partitions at the beginning of the Second World War in an agreement between Germany and Russia.
Yet in recent years, particularly since Romania joined the European Union in 2007, the two have strengthened ties with suggestions of a possible reunification. In 2009 Romania offered citizenship to Moldovans able to attest recent Romanian heritage, an offer which around a fifth of Moldova’s five million population were estimated to have accepted.
Commentators have suggested such a move would not sit well with Russia, which in recent years has taken measures to lock its neighbouring countries into its own customs union.