Baltic, Nordic Countries Aligned for U.S. Consumer-Ready Foods

Private sector entrepreneurs in Estonia, Latvia and Lithuania have moved aggressively to adjust from centrally planned to market-based economies. Reaching out to their neighbors in Sweden, Norway and Finland, they have bridged the Baltic Sea barrier, opening their ports for new trading opportunities.

This emerging partnership is reminiscent of the region's commercial Hanseatic League, which dominated commercial trade activity in northern Europe in the Middle Ages. The new arrangements depend on contacts, trade and cooperation to improve relations once eroded by geopolitical circumstances.

U.S. exporters have been among the first to benefit from this economic re-integration of the Baltic and Nordic countries, enjoying new-found markets for their value-added food products.

But there's another side to this collaboration--one exporters should factor into their thinking and marketing strategies: The traditional, continuing trading relationship of the 6 countries with the Former Soviet Union countries of Russia, Belarus and Ukraine is inevitably drawing them back into the economic fold of the European continent.

In 1996, U.S. agricultural exports to the six-country region totaled $587 million, up over 20 percent from 1995. While basic commodities such as soybeans, rice and cotton will continue to be important exports to this market, the expansion story will be in consumer-ready foods.

These products rang up sales of $359 million in 1996, a third more than 1995, and twice as much as 1992.

Besides the markets provided by the individual countries, two other forces drive these large increases--Russian and Ukrainian trade moving through the Baltic ports of Tallinn, Riga, Klaipeda and Helsinki, and the tourist trade in the Baltics.

Some U.S. standouts in regional trade: poultry meat sales to Latvia ($96 million in 1996), much ultimately destined for the Ukraine as well as wine and beer sales to Sweden ($10.6 million), Norway ($2.7 million), Finland ($3.4 million) and Latvia ($13.5 million).

Other noteworthy increases in 1996 occurred in U.S. pet food sales to Sweden, Norway and Finland; snack foods to Norway and Finland; rice, leaf tobacco and fresh fruit to Sweden; cereals and egg products to Norway; processed fruits and vegetables to Norway, Finland and Latvia; tree nuts to Norway and Finland; and fruit and vegetable juices to Finland.

Lithuania continues to import soybean meal from the United States under Public Law 480 (food aid program to developing nations) to support their poultry and livestock industry.

A major milestone was expected to occur in 1997 when the region's economic growth rate, expected to range between 3 and 5 percent, surpasses that of Central and East European countries as a region.

This stable economic progress has led to increased investment from abroad, a rising per capita income (now at $2,016 for Latvia, $2,863 for Estonia and $2,120 for Lithuania), with ensuing increases in domestic consumption.

The United States faces stiffer competition from European countries as the Baltics prepare for membership in the European Union (EU). Geographical proximity, established trading relationships, improved market access under European free-trade agreements and export and processing subsidies available to EU exporters will place constraints on U.S. trading prospects.

But there are promising developments for U.S. exporters: the Russian economy is expected to continue making progress; solutions are being sought to Russian-Estonian trade problems; and cross-country collaboration, fueled by private sector interests, is accelerating.

Further signs of economic progress are reflected in the stabilization and consolidation within the banking sectors, in investments and growth in the tourist sector and the hotel/restaurant trade and in the employment of women.

Ongoing infrastructure improvements in ports and railways promise to greatly expand the potential market for U.S. food and agricultural products. This construction--designed to improve the transport facilities connecting the Baltics with Moscow and St. Petersburg in Russia, Minsk in Belarus and Kiev in Ukraine--improves market access to 125 million people in former Soviet Union countries.

Sweden and Norway also are experiencing a rise in demand for consumer-oriented products, after recovery from severe recessions in the first half of the 1990s.

Trends indicating recovery: Modest increases in real disposable income, relatively high and evenly distributed per capita incomes ($28,328 in Sweden, $33,319 in Norway and $20,100 in Finland); prevalence of two-income families; rising demand for convenience foods; growing attractiveness of fast-food outlets; and the proliferation of refrigerators and microwave ovens.

Bear in mind, though, that Scandinavian markets are characterized by stringent food labeling and health requirements and a distinct preference for natural food and drink products. For the moment, these attitudes have limited the introduction of biotechnology products.

Besides the regional trade shows, USDA offers several tools that help develop an overseas market--technical assistance, training and agribusiness link programs to ease the transition to market economies while also promoting U.S. agricultural trade and investment activities.

In the six-country region, initial USDA activities concentrated on cereal breeding, dairy cattle genetics and management, forage quality and feed management and the Agricultural Link Program (AgLink), which involves Baltic private firms from such areas as feed mills, breeding stations, seed distributors and food processing industries.

Other promising areas awaiting development by U.S. suppliers include horticultural, soft-fruit and berry production; commercial vegetable production facilities; beef feedlot operations; and an American retail food warehouse approach to retail food sales.

Trade Shows Spark Retail Food Sales For U.S. exporters planning to enter the growing export market in the Baltic and Nordic countries, trade shows such as those listed below provide an effective method for introducing new products to potential customers.

Gastro-Helsinki (March 25-27, 1998)	The biennual Gastro-Helsinki trade fair provides a promotional venue for companies marketing their food and drink products throughout Finland, the Baltics and western Russia. The 1996 event boasted 275 exhibitors and 22,000 professional visitors from 28 countries. These visitors represented hotels/restaurants, caterers, cafes and fast food restaurants. The trade event--which includes a co-located wine trade event, ViiniExpo, '98 Cis now the foremost professional event in the catering, restaurant and hotel business calendar in northern Europe. Trade show organizers publicize the event throughout the northern European, Baltic and Scandinavian region. In 1996, the exhibition area was 6,200 meters, double the 1994 size. Helsinki facilities for this third show will include a modern, adjoining Holiday Inn.
	Contact for USA Pavilion Registration: Inger Gozalbez, Agricultural Marketing Specialist or Bettina Dahlbacka, Agricultural Marketing Assistant American Embassy (AGR) Strandvägen 101 S-115 89 Stockholm, Sweden Email: gozalbezi@fas.usda.gov or dahlbackab@fas.usda.gov
Tallinn Food Fair (October 1998):	The Tallinn '98 Food Show is significant for the Estonian food industry. Companies operating throughout the Baltic, Scandinavian, western Russian and northern European regions always attend. The first U.S. pavilion exhibited at the November 1997 trade fair. Exhibitor and visitor numbers have more than tripled since the show's beginning in 1992, reaching 17,000 in 1996. Space for the 1997 show was 4,000 square meters. Retailers, the catering and hotel industry and importer/wholesalers constitute about 75 percent of all visitors. Show organizers (ProfExpo in Tallinn) guarantee the success of the show via promotional activities that include direct mailings to over 20,000 firms, advance targeted advertisements in Estonian, Latvian, Lithuanian and Russian publications and tailored, individual product market research on behalf of show participants.
	Contact for USA Pavilion Registration: Jolanta Andersone, Agricultural Assistant American Embassy Raina Blvd. 7 LV-1510 Riga, Latvia Tel.: (371-7) 210-006, Fax: (371-7) 227-390; Email: jolika@apollo.lv or agriga@usda1.sprint.com
GastroNord, Stockholm (March 2000)	GastroNord trade fairs are organized by the Stockholm International Fairs in cooperation with the Catering Equipment Manufacturers' and Distributors' Association of Sweden, the Swedish Grocery Manufacturers Association, the Swedish Hotel and Restaurant Association and Swedish Chefs' Association. The March 1997 event included almost 38,000 visitors, made up of representatives from hotels/restaurants, institutional caterers, catering services, fast food companies, retailers, bakeries/tea shops and Sweden's retail monopoly wine/spirits distributor Systembolaget. In 1997, the event included 475 exhibitors representing over 524 companies. Together with VinNordic--northern Europe's major wine/spirits trade fair--GastroNord is northern Europe's premier trade event and affords participating companies exposure in a regional market of some 50 million people.
	Contact for USA Pavilion Registration: Inger Gozalbez, Agricultural Marketing Specialist or Bettina Dahlbacka, Agricultural Marketing Assistant American Embassy (AGR) Strandvägen 101 S-115 89 Stockholm, Sweden