"Currently we are only able to supply ourselves with around 20 per cent of our paste requirements and as this is the primary ingredient for ketchup it is essential that we increase our own supply in order to cut costs and ensure a steady and reliable supply," said Milada Goudkova, Baltimor's director of business development and strategy and deputy chair of the board, in an exclusive interview with CeeFoodindustry.com. "We have chosen to focus this increase on our Uzbekistan production facility because, with regards to price, the facility cannot be beaten. Also the factory is based in one of the country's primary tomato growing regions, where both weather and soil conditions ensure a reliable supply of quality fruits."
Goudkova explained that since the company bought the Uzbekistan production facility in 2001, a dispute with minority share holders has meant that the company has been unable to increase production at the plant until now. However that dispute has now been settled, allowing the company to plow ahead with the development of its own tomato paste supply.
As the number one player in the Russian market for ketchup the company supplies 54 per cent of the market, accounting for approximately 130,000 tons of production annually at its production facilities across Russia. With a production as sizeable as this, sourcing of primary ingredients is crucial to margins, and naturally the cheaper and more reliable the source the more favourable it is for the company.
However, although production conditions are ideal for the company in Uzbekistan, the market itself offers little opportunity for the finished product. "The primary aim of increasing tomato paste production in Uzbekistan is to match our needs for the Russian market," said Goudkova. "Right now the average Uzbeki income is still very low, so that market is not of any great interest to us as the market for ketchup and other sauces is still very small.
"Elsewhere I see plenty of opportunity for Baltimor ketchup in both the CIS countries and western Europe," added Goudkova. "Although the market is still relatively small in the CIS countries, the population size is almost as big as Russia, and as incomes increase the potential for our products is becoming increasingly evident. Meanwhile western Europe will also prove to be an area of increasing focus for us, with the UK, Germany and the Scandinavian markets being our primary targets."
Indeed, Goudkova is hoping that Baltimor's expansion into these new markets, combined with the launch of new products such as its own brand vegetable juice, will help to push sales up from $91 million in 2003 to somewhere in the region of $120 million for this year.