Greece’s Largest Dairy Firm Fage Is Enjoying Significant Success On The Export Front

July 29, 2009 - PRLog -- The Greek dairy sector has tremendous potential for international growth, with demand for Greek style yoghurt, feta cheese and other Greek dairy specialities increasing rapidly. This is in contrast to the domestic sector where high levels of competition and market maturity mean that many firms struggle to turn a profit. With the opportunities abroad so much greater than those at home, Greece's major dairy producers are now turning their attentions to the international stage.

Greece's largest dairy firm Fage is enjoying significant success on the export front, led by its Total yoghurt brand. In 2008, Fage's international sales increased by 22.5% in volume terms and 17.7% in value terms – thanks largely to volume growth of 42% in the US, 11% in the UK and 9.5% in Italy. The firm's products therefore look well positioned to deliver dynamic growth in international markets in line with growing interest in ethnic and regional cuisines. Total yoghurt also has the additional advantage of being produced from 100% natural ingredients (indeed the only ingredient is yoghurt). A move towards natural products that use a limited number of ingredients has been one of the major food trends of the last few years and sets Total apart from the offerings of other international dairy firms. This growth has been matched with investment, and in February 2008 Fage inaugurated new production facilities in the US, which should facilitate the firms continued expansion in this region.

Meanwhile, in January 2009, Greece's largest food group Vivartia announced that it had established a partnership with Japanese dairy group Morinaga. The deal will see Vivartia supply the Japanese firm with the technical know-how to produce Greek-style yogurt and give the Greek firm a base for offering its products to the Japanese market. To aid its international expansion, Vivartia has reached the conclusion that these types of partnerships will become increasingly important and has recognised that its current organisational structure may be too large and unwieldy to facilitate this. The group will therefore split into four separate subsidiary companies – responsible for drinks and dairy, bakery and confectionery, food service and entertainment, and frozen, as part of a wide-ranging revamp designed to aid international expansion. The move is being pursued to help the firm attract international partners and bring greater flexibility to each unit's decision making. Vivartia will remain as a holding company for the group.

This international success is in contrast to the Greek domestic market, where high levels of competition have put a dampener on profits. This level of competition meant that Fage actually posted a net loss in both 2007 and 2008, with its gross profit also declining. This suggests that while opportunities abound on the international front, there may be over capacity on the domestic front, which could prompt future consolidation activity.

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