BALTICOVO is the largest producer of eggs and egg products in Northern Europe. The company employs more than 300 people, who raise poultry and produce eggs, sort and package eggs, as well as produce various egg products on a daily basis. We also produce our own poultry feed. Our hens lay almost 700 million eggs a year. 70% of production is exported to 20 different countries worldwide.
The beginnings of BALTICOVO date back to 50 years ago. The first steps in export were taken in the nearest neighbouring countries, while the current export situation we know today only developed after 2010. This was a major time of development, when egg processing facilities for producing liquid eggs and boiled egg products were established. With the development of these product lines, sales outside the domestic Latvian market to new markets in Scandinavia (Sweden, Denmark), as well as the Czech Republic started. These historic markets are currently our main export targets – neighbouring countries Lithuania and Estonia, which we perceive as part of our domestic market in our sales strategy, Czechia, Poland, Scandinavia, as well as Germany. We basically export eggs, liquid egg products and boiled egg products.
Since we became a large merchant, the support options provided to us have decreased. Until 2016, the Latvian Investment and Development Agency (LIAA) was an indispensable partner in facilitating our company’s exports. They provided significant financial support to us for participation in the PLMA trade fair in Amsterdam. After 2016, we put our participation in this fair on hold, returning only in 2022. Trade fairs are one of the most important platforms to maintain relationship with existing customers, meet contacts face to face who are not yet our customers but with whom negotiations are under way, show our novelties to others, as well as familiarise ourselves with competitor novelties and offers. Although a fair only contributes to about <5% of new client acquisition, in our industry trade fairs are a very good, convenient place to meet foreign customers and understand how the market is evolving. Every two years, we participate in either SIAL in Paris or ANUGA in Cologne, as well as GULFOOD in Dubai.
For our company, tapping into new markets is a rather slow and long process which can take 3-4 years or even longer from conception of the idea to acquire a new target market to the first export of production. With respect to Europe, this process, of course, takes less time, but when we turn to markets outside Europe this becomes a more complicated and lengthy process which includes work with food and veterinary authorities of the target country, reconciliation of food certificates, audits, matching of requirements, etc. For example, when planning exports to Hong Kong, the audit in our production facility here in Latvia only took place 4 years after the first steps were taken to develop this market. Despite that, we also have positive experiences, such as the opening of the New Zealand market, which took “only” 12 months. It is precisely due to this lengthy and complicated process that the decision to develop new markets is based on a thorough market analysis. We take into account both our previous market experience and detailed market research based on information about the self-sufficiency of the market and the volume of eggs and egg products in the country.
With respect to New Zealand, we should mention that LIAA is currently expanding its network of representative offices and planning to open one in Australia. On one hand, this is a logical progress of economic cooperation and development, which means that after the opening of representative offices in the USA and Canada in the spring of 2022, Latvia must certainly continue to put more emphasis on exports to countries outside the European Union and investments in third country markets, incl. Australia, New Zealand, Japan, Korea and the South East Asian region in general. One of the main tasks of the representative office in Australia could be an in-depth and sectoral market analysis of the respective region. We believe that the aim of assessing the competitiveness of all sectors of the Latvian food industry and, more importantly, determining the main factors for the competitiveness of our food sector on the global market, has not been achieved.
Based on our experience, New Zealand strictly controls imports of various goods on the basis of such criteria as “community protection”, protection of the ozone layer, control of toxic substances and consumer protection. This is due to a very broad and legitimate set of arguments designed to protect the New Zealand market and control potential threats to the local economy, incl. producers of goods such as fish, dairy and eggs. For these reasons, New Zealand imposes a very strict quarantine regime on imported products to protect its agricultural and forestry sector from contamination by pests or diseases. On its website, the customs of New Zealand lists the goods which require import approval.
The experience of “Balticovo” with “opening” the New Zealand market was successful largely thanks to the fact that a competent, experienced and, most importantly, motivated importer was found who could handle reconciliation of the coordination documentation (at least on a draft level) between the responsible authority of New Zealand and the Food and Veterinary Service of Latvia. Since “Balticovo’s” partner has extensive experience in coordinating import processes on the New Zealand and Australian markets, this process of reconciliation progressed rather smoothly and took less than a year.
Export is the most direct investment without any guarantees for the future or expected market return. It requires a great deal of patience. Export is not a fairy tale, because hard work does not always yield results. This process is very balanced. The farther you want to export something, the more complicated it is. This is because the process is influenced by several factors, and there are many unknowns. The lack of a physical presence makes it even more complicated, because you don’t have control over the situation. This is why it is necessary to use the tools and support mechanisms provided both by LIAA and other organisations for the development of export – direct matchmaking events, fairs and exhibitions and organisation of direct meetings. Any support, be it in the form of travel expense reimbursements, fair stand fee compensation or accommodation co-financing, is very important. For us as a large company, the availability of support mechanisms is limited, however, we take advantage of the ones that we are eligible for.
BALTICOVO is a global player. We cannot afford to lag behind our foreign competitors. If support programmes in other countries are generous, then this is where foreign competitors could outcompete us. Therefore, it would be very worthwhile if there was an organisation in Latvia that could monitor the availability of support programmes in other countries. This would help greatly to stay in the same ecosystem and not lag behind foreign companies, and to successfully compete with them on international markets in future. For instance, on the German and Czech markets, we compete with the Poles. As soon as Polish companies are entitled to any subsidies or VAT rebates, we instantly feel that they have acquired an advantage. This is especially important for large export-capable companies in Latvia, because we are the ones who feel any market deviations.
The second thing which comes to my mind is market protection. Other countries take very good care of their companies by providing comfortable conditions for their existence and functioning within their territories. This helps protect the market from intruders.
What is the key to export success? To understand the notion of export-capability – understand what it means and whether the company is really export-capable, i.e. does it have the time, resources and quality to ensure both the capacity and suitability of the product for foreign markets. It is very important to do this homework by engaging in thorough consideration and analysis. Export is targeted and intentional work which goes hand in hand with market research and understanding of market suitability. It is certainly better to invest more time in target market research prior to launching exports. This protects against unnecessary failures and freezing of funds, and secures investments. Careful preparation is needed to avoid victimisation or ridicule. Taking advantage of any support opportunities is important, especially when it comes to small and medium-sized companies, because the range of support is very wide. These possibilities must be used efficiently. Consult with and allow experienced exporters to mentor you. Don’t be afraid to ask questions, but make sure that the questions you ask are the right ones. I don’t know any large companies that would be unwilling offer advice or share their experiences.
We determine the future of BALTICOVO. We compete to sell products within the EU’s internal market, and our competitive advantages depend on how successfully we are able to use the exclusive possibilities offered on the single market by one of the European Union’s basic pillars – the free movement of goods. If we develop and grow, it will be thanks to exports.
However, outside the domestic market (the Baltics), competitors would rather see “Balticovo”, as a producer of goods, exiting rather than entering a market. At the same time, retail chains, wholesalers and distributors expect us to offer:
- a lower price than that of local producers;
- an identical service level to that provided by local producers;
- better quality than that offered by local producers;
- more initiative in terms of seasonal discounts compared to local producers.
This harsh and simple truth is the guiding motto of BALTICOVO sales on the EU’s single market. But the most important thing is, of course, having the right motivated, strong partners who are ready to work long-term and take hits from the side-effects of soft protectionism of each national market.
The article was written in cooperation with the Association of Latvian Exporters "The Red Jackets," www.eksportabarometrs.lv"