BALKANS: And Now for Some Mergers

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric Zimonjic

BELGRADE, Sep 14 2006 (IPS) - It seemed impossible only some years ago, but ex-Yugoslav nations that fell apart in bloody wars are coming together again in economic cooperation.

“We are not hiding our cooperation now,” Ivica Todoric, owner of Agrocor, the biggest consumer chain store in Croatia told reporters last week in Belgrade. “In the past few years we have invested almost 200 million dollars in Serbia, but did not speak openly about it. Our only chance for development is joint enterprise.”

Todoric was addressing reporters after an announcement that Agrocor and the biggest Serbian holding company Delta have agreed to merge in three years time.

“This is an opportunity that will enable improved investment in local and regional markets,” said Delta vice-chairman Ivana Veselinovic. “We’ll continue the mutual distribution of locally recognisable brands, with equal shares of our goods in the two countries, and invest in joint economic enterprises such as food factories.”

Market experts say such moves are inevitable. “It was illogical to expect such things immediately after the wars ended in the mid-1990s,” financial analyst Misa Brkic told IPS. “However, under the changed circumstances it is logical to see this, as the area of former Yugoslavia shares the same language, customs, habits and tastes that existed for 70 years before the war.”

Agrocor is the largest food chain and producer in Croatia, with 570 outlets in a nation of 4.4 million. Delta has 400 outlets in a nation of 7.5 million.

Each has about a 30 percent share of the food retail market in their respective countries. Both also have a presence in Bosnia, the former with food halls and the latter with food products.

“Fractioned, these are small markets. Together with the former Yugoslav republics of Macedonia and Slovenia, this is a market of more than 20 million customers with growing income,” analyst Stojan Stamenkovic told IPS.

For years since the wars ended in 1995, all kinds of barriers existed between the former brethren turned enemies. Croatia introduced visas for Serb nationals, and trade with Serbia was banned under international sanctions for its role in the 1991-95 wars.

The new peace and the exit of all political leaders that led the nations into wars changed all that. Croatian wartime leader Franjo Tudjman died in 1999, and Serbian wartime leader Slobodan Milosevic fell from power a year later.

“Private enterprise, flow of capital, and expected profits are motors for cooperation and development,” Stojanovic said. “This had to begin anew. One can also not put aside the factor that the better part of former Yugoslavia simply grew up on the same brands, be it food, furniture or other things. That is what people – consumers – still do remember.”

Serbian food brands were traditionally the quality product sold widely in the region. Croatian dairy products, sweets, household appliances and furniture were also sought after.

Markets began to re-connect slowly in 2001 after Agrocor stepped into the Serbian food market. But products still have local packaging because some distributors fear that the origin of products may offend some consumers.

The acquisition of the Serbian food chain Rodic Company by Slovenian Merkator marks another step in a joint economic direction. Merkator bought 76 percent of the Serbian company that also owns big meat production factories and one of the most sophisticated breweries in the region.

Through Merkator, which has dozens of stores in Croatia and Bosnia as well, Serbian food products have obtained another slice of local markets. Slovenian brands, particularly in furniture, clothes and wines, are already present through several Merkator shopping malls.