Financial crisis sends food complement market to break even in 2009

Although the consumption rate of food complements per capita is low, 3.5 euor/year, the growth pace of the local market in the past few years and of food complements will register a break-even annual result at the most, due to financial crisis.

“In 2008, the value of food complement market rose 17%, in pharmacies reaching to nearly 60 million euro without VAT, and 100 million euro with VAT. This year, the best case scenario is a stagnation of the market and a possible decline”, Catalin Vicol (photo) managing director of Walmark Romania (21.7 market share in 2008) told Wall-Street.

Walmark representative said the small companies and newcomers would take the heaviest loss. “At this point, there are 80 companies in food complement market in Romania, but in 2009 I think the small and inexperienced players will take a full-fledged blow of the economic crisis”, he said.

Despite these forecasts, Vicol remains optimistic on Walmark’s evolution in Romania. “For 2009, we expect a 12-15% growth in lei, which would boost our market share up to 25%. However, it will heavily depend upon the macroeconomic factors, which we cannot control”, said the head of Walmark Romania, company with a roughly 17 million euro turnover in 2008, up 20% from the year-ago period.

Some of the best-sold products in 2008 were ArhtroStop, designed for protection and regeneration of joints which geared 20-30% of last year’s turnover, GinkoPrim which improves the blood flow, brain functions, concentration and memory, Varixinal that fights against chronic vessel insufficiency, Martians vitamins for the protection of children against bacterial and viral diseases and for the strengthening and stimulation of their immunity system or Prostenal, recommended for problems with the prostate, the company selling over 4 million products last year.

In order to achieve these objectives, Walmark started since last year, a reshuffle of the business pattern, and one of the most important decisions he has made was the layoff of a number of employees. “In an effort to improve efficiency of the business and to avoid wasteful spending, we have decided to shut down an auxiliary sale support department last year. Thus, from 73 employees, 63 remained and the number will soon fall below 60”, said the representative of food complement maker.

Another measure to cut costs is to reduce the advertising spending. “If in the previous years we were spending about 4 million euro for advertising, this year the expenditures will amount to 3.5 million euro at the most, as we are going through a year of crisis and every money invested bears the risks of not being recovered”, said Vicol.

Walmark was established in 1990 and has extended its activities into multiple fields since. For many years, the company has been declaring its strategic orientation at pharmacy and after the sale of the agricultural division in 2001 and the non-alcoholic beverage division in 2004 it is fully concentrating now on the market of food complements, medication and food for sportsmen

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