Liviko profits drop, but sales rise on higher exports

Liviko profits drop, but sales rise on higher exports

Exports of Viru Valge vodka and a distribution deal with Bacardi-Martini helped Baltics-based AS Liviko to increase sales in 2010, but profits fell amid tough economic conditions.

Estonia-based Liviko's net sales rose by 6% for the 12 months to the end of December, to EEK857.3m (EUR54.8m, US$78.5m), a spokesperson for the company told just-drinks today (8 July). The group was boosted by a deal to distribute Bacard-Martini drinks in Latvia and Estonia, as well as by export markets outside of the Baltics, such as Russia and Ukraine.

"The shrinking of consumer markets in the Baltic states and on adjacent markets forced Liviko to concentrate on exports on both existing and new markets,“ said Liviko's chairman, Janek Kalvi. As part of this strategy, during the year, the group acquired 50% of Japanese drinks import and distribution business Hanza Trading for around US$0.55m.

On the domestic front, although the Bacardi deal boosted group sales from imported drinks, Liviko said that the economic situation in Estonia and across the Baltic states remains tough. Its vodka sales in Estonia fell by 20% in volume terms compared to 2009.

Liviko's net profits fell by 30% in 2010, to EEK23.9m (EUR1.53m), while EBITDA fell by 17% on the previous year, to EEK54.5m (EUR3.5m), the firm confirmed to just-drinks.

High costs have proved a drag on the Viru Valge and Vana Tallin liqueur producer. In 2009, Liviko had laid plans to build a new production facility on the outskirts of Estonia's capital. But, the global economic downturn - which has hit the Baltic nations particularly hard - forced the group to put this plan on hold.

Excise tax rises have also hit hard, according to Kalvi, who warned of a growing black market for alcohol. "The difficult economic situation and excise tax increase created a favourable environment for the spread of illegal alcohol in all the Baltic states, decreasing the market of legal alcohol by 30-40%," he said.

At the same time, he said that he is confident that Liviko is improving its market share position in the off- and on-trade sectors in the Baltics.