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Gross profit from January to June The main feature of the economy is the high concentration of entrepreneurs and employed in trade and processing

Interview: Anđelka Buneta Fina distraint orders prove to be efficient, says Board President of Croatian Financial Agency (FINA)

Food producers Food quality standards in Croatia are considerably stricter compared with those in the EU



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Croatian Business & Finance Weekly Established in 1953 Monday / 22nd October / 2012 Year V / No 0218


Subsidies for risk capital funds

SUBSIDY LIMIT INCREASES State subsidies for risk capital funds investing in small and medium-sized enterprises expanded their limit from €1.5 million to €2.5 million. The decision was made by the European Commission, and Croatia has adopted it within its legal system at a recent governmental session. A similar decision on the rules for regional subsidies was also adopted. According to Boris Lalovec, Deputy Finance Minister, these subsidies are worth over €50 million. Financial limits of this type of subsidies were stricter before. However, the economic crisis motivated the European Commission to allow country members to evaluate the effects of individual cases under the defined rules. When evaluating subsidies, which could cover 10-50% of investor expenses, it must be taken into account whether the subsidised entrepreneur acquires a privileged position on the market. The region to which large subsidies are allocated must be considerably more underdeveloped than the European average according to GDP data, demographic development and other economic indicators. (I.V.)



pvinternational pv international C R O A T I A N





Croatia has become the Mediterranean leader in terms of overnight stays Croatian tourism has been growing at an average annual rate of between 4% and 5%, exceeding average European annual growth rates of between 2% and 3% Jozo Vrdoljak he Days of Croatian Tourism conference was recently held in Dubrovnik, with around 1,000 participants discussing a large number of issues considered crucial for a sector that is strategically important for the overall Croatian economy. The 12th Croatian Tourism Forum, held during this event primarily focused on prospects for Croatian tourism following EU accession. Croatian tourism has been growing at an average annual rate of between 4% and 5%, exceeding the average European annual growth rate of between 2% and 3%. “This year we have become the Mediterranean leader in terms of the number of overnight stays and I would like to warmly congratulate all those who have contributed towards achieving this goal. We can express our utmost satisfaction at this year’s achievements, which are due to excellent preparation, the application of our knowledge and expertise and the extreme efforts made by all those involved in the creation and development of Croatian tourism. We believe we can state that this tourist season will be the best in Croatian history”, pointed out Veljko Ostojić, the Croatian Tourism Minister.


According to Luigi Cabrini, Director of Sustainable Development at UNWTO, Croatia and Europe have achieved significant results in tourism irrespective of the severe European and global crisis. “We are anticipating an annual rise in tourist arrivals of 42 million by 2020, whilst by 2030 the annual rise in tourist arrivals is anticipated to be 45 million.

According to Tourism Minister, this tourist season will be the best in Croatian history The proportion of tourists visiting Europe is expected to decrease in the future. In the 1980’s they accounted for 63%, whilst currently it stands at 45%. The level of tourists visiting Asia and the Pacific is expected to see a substantial

increase. The Mediterranean has a fundamental role in European tourism”, emphasised Cabrini. “The European Commission has highlighted the importance of planning concerning the allocation of Tourism Enhancement Funds (TEF), which has not been strictly implemented thus far”, stated Mathieu Hoeberigs, Principal Administrator of the European Commission Tourism Unit. “We need to wait until December for negotiations to be completed between EU members on the budget for 2013, in order to be provided more information on the level of planned funds. These funds will be allocated to projects which will enhance tourism competitiveness and promote the entire tourism sector”, announced Hoeberigs, who has advised senior officials in Croatian tourism on the fact that the European Union is planning to allocate substantially higher funding in the near term.


Privredni vjesnik Year V No 218

Edo Unković, Director, Bačvice beaches

Financial Agency report on business over H1

Aquarium at PROCESSORS Bačvice – an GROSS PROFIT intriguing concept OF €0.73BILLION Bačvice beach which used to rank eighth amongst Split brands, is now the leading Split tourism symbol Beaches are one of the most valuable aspects of the Croatian natural heritage. Consequently, beach management is becoming increasingly important with a primary focus on responsible and sustainable management. Moreover, the ‘blue flag award’ needs to become a prerequisite in order to be in the running for concession, which would greatly impact on who is awarded a beach concession as well as on privately managed beaches. The ‘blue flag award’ implies compliance with specific criteria – satisfactory reports over 6 monitoring sessions with three secret monitoring sessions performed by foreign assessors. Environmental beach management is essential, since the award guarantees water quality and beach cleanliness and impact on site choices. Beach management, primarily near to cities, is extremely demanding, since both the various requirements of local residents and of foreign tourists (who normally require compliance with global standards) need to be met, which is often extremely difficult. The beach at Bačvice has introduced compliance such standards. It also managed to retain the support of local residents who perceive it as a symbol of tradition and local custom. It has been recognised as an attractive beach, with local residents benefiting from rental possibilities and providing tourism services near at IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 subscription

The main feature of the economy is the high concentration of entrepreneurs and employed in trade and processing ccording to results of entrepreneur statistical reports from January to June 2012, 92,787 entrepreneurs employed 841,396 workers. The results have yet again confirmed that the main feature of the economy is a significant concentration of the number of entrepreneurs and the employment rate in trade and processing, according to the FINA analysis. The majority of entrepreneurs (25,795) are in trade, having a 27.8% share in the total number of entrepreneurs. Trade employs 186,387 or 22.2% of all employees. The highest employment rate is in processing, with 229,783 employees (27.3% of all employees), employed by 11,221 enterprises (12.2% of all entrepre-


hand. In addition, Bačvice beach, once ranking eighth amongst Split brands is now the leading Split tourism symbol. Its success is mainly due to the synergy between local and international regulations, recognised and valued by many Split residents. The Bačvice beaches have huge potential. The construction of an aquarium in an abandoned city area near the beach and the renovation of the pier (to provide a mooring for tourist boats transporting bathers from Split) could significantly enhance the attractiveness of the beach. Thus attracting private investors is crucial. In addition, the projects would create around 200 jobs. Split would benefit substantially from similar projects not having to be financed through the budget. The implementation of these projects would greatly affect both the social and age structures of visitors.

FOR PUBLISHER Nikola Baučić +385 1 4846661

IMC MANAGER Dea Olup +385 1 5600028

EDITOR IN CHIEF Darko Buković +385 1 5600003

TRANSLATION Lučana Banek Mirjana Cibulka

EXECUTIVE EDITORS Andrea Marić Vesna Antonić


Almost half of current entrepreneurs are active in trade or processing neurs). When all entrepreneurs and employees are combined, it is evident that the within the structure of the economy, trade and processing accounts for almost a half of all employees (49.5%) and entrepreneurs (39.9%). These two activities combined achieved almost half of total income and expenditure: 61.7% of total income (€23.96 billion) and 61.4% of total expenditure (€23.06 billion). According to size of total income and total expenditure, the largest share (over 30%), covers trade

with 35% of total income (€13.57 billion) and 35.7% of total expenditure (€13.43 billion), followed by the processing industry with 26.7% of total income (€10.37 billion) and 25.7% of total expenditure (€9.64 billion). Relatively good business According to the same period of 2011, entrepreneurs were relatively successful as income exceeded revenue in terms of value; that is they achieved an overall gross profit, even though it was 50.4% lower. Notwithstanding, in four activities (accommodation services, food preparation and catering, real estate, construction as well as agriculture, forestry and fisheries) expenditure exceeded income, achieving an overall gross loss. In the processing industry and trade, gross profit was over 50% down. After the past three years, when trade created the highest gross profit, this year the processing industry leads with the highest gross profit in the first half of 2012. During the first six months, entrepreneurs in processing earned €0.73 billion (59.2% of total gross profit), trade €0.16 billion (12.5% of total gross profit), with communications and information showing €0.19 billion (14.6% of total gross profit). (V.A.) Business & Finance Weekly



Fina distraint orders prove to be efficient Creditors can deliver promissory notes to Fina and decisions with final force and effect on the basis of which Fina starts distraint process Igor Vukić he new Financial Operations and Pre-Bankruptcy Settlement Act entered into force on the 1st October, giving Fina an important role to play in its implementation. Board President of Fina, Anđelka Buneta, explained to Privredni vjesnik the procedure of implementing a pre-bankruptcy settlement. We also talked about other services which the Agency offers to the entrepreneurs.


Who files the pre-bankruptcy settlement procedure and on what conditions? The procedure can be filed by the debtor exclusively. This procedure can be implemented on a company or an individual (individual trader or craftsman), but not on an individual who is not registered in the Crafts Register as a craft owner, or a Court Register as an individual trader. The debtor must file a request if he is unable to recover liquidity within 60 days, having taken the measures of financial restructuring outside the pre-bankruptcy settlement procedure. The request is filed 21 days from the start of insolvency, and 90 days at the latest, from the date the law enters into force, if it was already insolvent at the moment the law entered into force. What are the deadlines for pre-bankruptcy settlement and what if the bankruptcy procedure was filed against the debtor? The proposal for opening the prebankruptcy settlement procedure is not allowed if a bankruptcy procedure has already been filed against the debtor. The pre-bank-

ruptcy settlement is an urgent procedure and must be closed before a settlement committee within 120 days at the latest, or 60 days in case of a summary procedure. The settlement committee brings the decision on opening the prebankruptcy procedure within 8 days after receiving the debtor’s request to open the procedure. The Financial Agency will publish on its website this decision as well as others brought during the pre-bankruptcy procedure.

count of the enforcement debtor, the enforcement creditor will collect the debt. From 15th October 2012, the new Distraint Act enables creditors to request direct collections from Fina based on a

judgement or settlement of the local court or an administration without the need to place the distraint procedure before a court as before.

Small and medium-sized entrepreneurs often complain about the collection of debts. How can the Fina distraint system help regarding this problem? What are the results of applying this system? The first two years since the implementation of the Distraint Act, the results are better than expected, and the Fina distraint system has proved to be success-

The new Distraint Act enables creditors to request from Fina direct collections on the basis of a judgement or settlement ful. Creditors can deliver promissory notes to Fina and decisions with final force and effect on the basis of which Fina will start the process. The bank has to report to Fina all funds that arrive into the account of the enforcement debtor, from which the distraint will be executed. This means that both the debtor and the bank cannot make any payments while the account is frozen. Therefore, if the money is arriving into the ac-

We are preparing the market for e-accounts What new services have you introduced this year and what are the results of the Fina Infoblokada or Fina e-Account? Let us mention here our e-signature service, and state with great pleasure that our solution Web e-signature registered over 21,000 transactions in one year. User interest remains strong. Concerning the e-Account service, it must be pointed out it is a complex system that enables the exchange of e-accounts, and it is completely harmonised with legal regulations and international standards. This service is developing slowly, but this is to be expected. According to our legal regulations, explicit good will and permission have to exist in order to exchange e-accounts. This means no one is required to change their business habits (i.e. the habit of using paper still very much present on the market). We are currently dedicated in providing training on how this process enables efficient business and how much it is actually safe and secure, both from the point of view of information security, and tax control. Regarding the service of FINA Infoblokada, it was introduced less than three months ago, and we registered 3,000 messages. This service allows the receiving information via a mobile phone in real time regarding frozen accounts of any economic operator in Croatia.


Privredni vjesnik Year V No 218

chocolate still much cheaper than foreign “Croatian produce but foreign chocolate is more expensive in Croatia than in the EU. ”

Srečko Debelak, Senior Director at A.T. Kearney

Croatian food industry and the EU

Price pressure puts chocolate and water in jeopardy A study by A.T. Kearney shows that when Croatia joins the EU some Croatian products, like chocolate, water, ice-cream and salami, will be faced with intense price pressure whilst producers of prosciutto, milk and tea will have a chance to increase theirs Krešimir Sočković roatian products (chocolate, water, ice-cream and salami) will be pressured by lower prices from foreign brands, while EU accession will be a chance for growth and new markets for producers of prosciutto, milk and tea. This is the result of a study conducted


Exit from CEFTA will not affect Croatian producers as much as severe competition from the EU market by the consulting company, A.T. Kearney, on the influence of the forthcoming EU accession on the Croatian food industry. The study compared prices across 19 food products in Croatia to those in four neighbouring countries already in the EU – Italy, Austria, Slovenia and Hungary. The study showed, despite general opinion, that a majority of Croatian food products are still cheaper than those from Europe. However, when Croatia joins the EU, this will change. Due to the weak spending power in relation to the EU27, even the slightest change in price could cause significant changes in the behav-

iour of Croatian consumers. Upon EU accession, trade barriers will disappear in relation to the EU27, which will simplify importing for foreign producers present on the local market, and create more room for price reductions. Foreign products currently here, will find their way to Croatia, and at the same time doors to new markets will open for Croatian producers. Even though Croatia will cease to be a CEFTA member when it joins the EU, which will create certain barriers for other members, this will influence local producers as much as the severe competition from the EU market. That is why it is extremely important for the Croatian food i n -

dustry to take the necessary steps to use this moment and out-perform the competition, explains Srečko Debelak, Senior Director at A.T. Kearney and an expert in the food industry. Attackers and fighters Local products, for example ground and instant coffee, fruit teas, long-life milk, yogurt and prosciutto, are not only cheaper than foreign products in Croatia, but they are also cheaper than similar products from the observed EU countries. That is why they are for now in the best price position. This group of products, that we named attackers, has a chance to achieve good results on the EU market through a strategy of growth and repositioning. As a result, local prosciutto is considerably cheaper than the prosciutto in any of the studied EU country. In H u n g a r y, for example, there is not a single large prosciutto producer present on the market. This is a great opportunity for local producers to penetrate the EU27 market, concludes Debelak. A large number of Croatian food products have a good price position; however

when Croatia joins the EU, they will be pressured to lower prices due to cheaper competition. These products include chocolates, espresso coffee, cappuccino, green tea, natural water, ice-cream, butter and Gouda cheese. Chocolate is an excellent example of the group we named fighters. Croatian chocolate is still much cheaper than foreign products; however, foreign chocolate is more expensive in Croatia than in the EU. Croatian producers will have to respond to the anticipated fall in prices of foreign brands, in order to maintain margins by increasing operating efficiency, explains Debelak. New strategies Sparkling water, which will probably be cheaper after EU accession, falls into the category of local products jeopardised by cheaper foreign products. Some foreign products, for example winter salami, yogurt, chicken frankfurters, are already cheaper than local products. Therefore, when Croatia joins the EU and duties are abolished for individual products, producers will increase productivity and invest more in expanding their market share. A.T. Kearney recommends that Croatian food companies enhance operating efficiency and/or growth and reposition their strategy. Business & Finance Weekly


Croatia there are several additional food quality standards for “Inproducts, whilst in the EU similar products need to comply solely with health and safety standards. ”

Božica Rukavina, Assistant Minister of Agriculture


Croatian producers are familiar with a good quality Food quality standards in Croatia are considerably stricter compared with those in the EU, and there is huge potential in the EU for Croatian small farmers if they opt to create co-operatives Svetozar Sarkanjac he formation of co-operatives for small-scale farmers is fundamental to the future, as was concluded during the conference recently held in Osijek to mark World Food Day. The principal topics covered included food quality and safety standards. “Food safety standards in Croatia are in full compliance with safety standards in the EU and are also stricter in several areas. Nevertheless, absolute food safety can never be guaranteed. However, I believe that the system applied and adopted in Croatia is fully functional”, stated Zorica Jurković, Director of the Croatian Food Agency (HAH) during the international conference entitled Croatia on its Way to EU Integration-Challenges and Expectations toward Food Safety and Agricultural Policy held in Osijek to mark World Food day. It was sponsored by the Croatian Food Agency (HAH), the Food and Agriculture Organisation of the United Nations (FAO), the Ministry of Agriculture and the Ministry of Foreign and European Affairs.


Huge potential for smallscale farmers Ivo Josipović, President of the Republic of Croatia, one of the conference sponsors, participated via video conferencing. During his address to participants, he emphasised the crucial

importance of exploring the potential for Croatian food production and enhanced competitiveness, stressing that fact that small farmers need to be given prime focus. Božica Rukavina, Assistant Minister of Agriculture, added that small farmers would benefit enormously from forming producer associations.

try has not had to tackle many problems during the reconciliation with EU standards concerning food safety. On the contrary, it can be stated that in several areas, Croatian food producers are familiar with complying with significantly stricter standards than those applied in the EU.

High quality standards “Small farmers become eligible for financial support by forming co-operatives and producer associations, which subsequently fosters their competitiveness in the EU market. Cluster formation also needs to be encouraged, since this significantly links production and sales. In addition to quality, small farmers can be competitive concerning the specificity of their products. There is huge potential for ecological production, as well as for products awarded Protected Geographical Indication (PGI) and Protected Designation of Origin (PDI) labels, primarily concerning top quality products which can gain ample benefits from forming cooperatives”, highlighted Božica Rukavina. Conference topics also included the preparedness of the Croatian food processing industry for the market race in the EU, as well as the harmonisation of current regulations in Croatia with those in the EU. Božica Rukavina pointed out for Privredni vjesnik the fact that Croatian food processing indus-

Croatian food producers are used to complying with significantly stricter standards than those in the EU “In Croatia there are several additional food quality standards for products, whereas in the EU similar products need to comply solely with health and safety standards. The Croatian meat processing industry required the setting of standards for meat and meat products in order to ensure the quality of local food products”, stated Rukavina. Current standards and regulations on food quality and safety originated during the former Yugoslavia. On the other hand, the currently applied and adopted standards and regulations throughout the EU are less detailed also due to the current use of new technologies in food production. Health standards and food safety standards applied in the EU are not in question, yet there are several differences in regulations on quality.

::: news Valamar Group revenue 10% up Consolidated revenue for the Valamar Group was €126.9 million, 10.5% up over the same period last year. Valamar tourist facilities recorded a total of 3.9 million overnight stays, a 7.5% increase. The highest revenue per unit was recorded in Dubrovnik, at €11,990, with the lowest on the island of Krk, at €4,700. M San ranked first The Zagreb-based company M San Group generated revenue of €246 million, and ranking first amongst the largest companies in the Adriatic region. The Belgrade-based Comtrade Group, the Slovenian Avtera, IBM and the regional systems integrator, S&T Group, also ranked amongst the top five, according to a survey conducted by IDC Adriatics analysts. The top 100 IT companies in the Adriatic region generated total revenue of €2.53 billion in 2011. Finvest reduces borrowing Finvest Corp, the wood processing company, confirmed its settlement of liabilities and stated it is meeting planned business targets. Company borrowing has been reduced from €23.73 million to €17.2 million over the past five years, in addition to structural changes concerning long term assets with a total investment value of €8 million. A substantial loss was due to transferred losses from Finvest Drvar in Bosnia and Herzegovina. Almost €0.26 billion revenue generated by DM

The retail chain DM had turnover of almost €0.26 billion, with an anticipated profit of around €10 million. Its share in the retail pharmacy market accounts for 26.5%. DM has invested over €6.4 million mainly in opening new stores, now standing at 145 in Croatia. It is planning a further investment of €7.3 million to open 10 additional stores in 2013.


Privredni vjesnik Year V No 218




Kuna exchange mid-rate


5,985824 5,854666 7,291422 6,234449 9,278359 5,777454 7,534955
















7.49 15.10. 16.10. 17.10. 18.10. 19.10.



5.72 15.10. 16.10. 17.10. 18.10. 19.10.

6.19 15.10. 16.10. 17.10. 18.10. 19.10.

::: news


International reserves dip slightly Total assets of the Croatian National Bank (HNB) stood at €11.31 billion at the end of September, whilst international assets were €11.4 billion, indicating a decrease of 1.7% down over the end of August. Following an increase in April, international reserves have been dipping since May and in September reached the same level recorded in September last year. According to HNB projections, international reserves fully cover liabilities towards international creditors, which will be overdue by the end of the second quarter of 2013, implying they are sufficient to maintain a stable exchange rate.


Uljanik reducing subscribed capital The Central Depository & Clearing Company has recorded a reduction in subscribed capital of the Uljanik shipyard. The decision on the reduction ordinary shares from €40 to €12 was reached during the General Meeting on 30th August, reducing the subscribed capital from €89.45 million to €26.8 million, comprised of 2,236,253 ordinary shares. Hypo: €100 million of new savings Hypo Alpe-AdriaBank recorded a 7% rise in personal saving during the first eight months, showing an increase of €100 million. The bank has expanded its retail product range by providing a six-month incentive, with interest rates up to 4.3%. In addition, the bank has expanded its all-purpose loan range by introducing seasonal loans in local currency for amounts up to HRK110,000 at a variable interest rate of 9.3%.

Year-on-year, as expected, price rises have been generated by higher energy and food prices, which is also the highest growth rate since October 2008

roducer prices and consumer prices both increased in September. According to the latest data provided by the Central Bureau for Statistics, consumer prices grew 5% year-on-year in September, the highest growth rate since October 2008. They also increased 1.4% on a monthly level. On an annual basis, as expected, price rises were mainly generated by higher food and energy. Monitored on a monthly basis, the basket of consumer goods and services, excluding tax paid, the prices of food, housing, water, energy, gas and other types of petrol accounted for over 42%. Considering the high proportion of these prices in the consumer goods basket, it is not surprising they have a strong influence on the movements of consumer prices despite weaker demand.


Consumer prices, energy excluded, increased 2.9% yearon-year, and when food prices are excluded from the index, growth was 1.5%. The annual growth of food prices increased to 6%, with the highest increase in the price of fruit (18.2%) and vegetables (25.1%), which is probably the result of the long period of drought. Concerning housing, water, energy, gas and other types of petrol, the annual growth rate in consumer prices has also mildly intensified compared with August, standing at 13.5% with a 15.7% share of the total index. Further price increases possible In this category, high annual growth rates were seen in the prices of electric energy (+22.1%) and gas (+30.5%),

where the annual growth rate in electric energy remained at the same level as August, whilst growth in the price of gas increased (in May, the price of electric energy increased by 20%, and the price of gas increased by 22%). However, other components are also seeing price increases (water supply (3.7%) and drainage (7%)), and at the same rate as in August. The price of liquid petrol increased by 11.6%, exceeding the level in August. On a monthly level, consumer price growth was mainly generated by the cost of clothing and footwear, which increased 11.2% as a result of usual seasonal movements. Considering weak local demand and a lack

High annual growth rates achieved by the price of electric energy (+22.1%) and gas (+30.5%) of economic recovery, demandside prices are not increasing. However, the increased VAT rate, higher costs of electric energy and gas as well as food products will become visible in annual rates of growth. By the end of the year, we anticipate higher prices for heating, causing the annual prise rise to additionally intensify, according to RBA analysts. (V.A.) Business & Finance Weekly





A wide cross-section of clients Altus IT has recently implemented new IBM solutions based on PureSystems to become a cloud service provider

Scents for delight and health Aromatherapy services maintain health and alleviate and cure various health conditions ltus IT was founded in February 2011 and currently operates in five countries throughout the region, as well as in Spain, Russia, Argentina and the US. However, the company has been operating for a longer period of time, continuing the operations of the Markoja company, founded in 1994. Altus IT has been a data service provider since 2005. Markoja as a data service provider has been recognised as one of the leading telecommunication nodes in Croatia through which many local telecommunication companies connect with the world. Its data centre business was fully transferred to Altus IT, including the infrastructure, services and employees.


Altus IT centre encompasses virtually all telecom operators Currently Altus IT comprises a data centre with two server rooms located in the Zagrebbased Ericsson campus. Both are in full compliance with high security and quality standards. They are independent and yet can subsequently be used as a backup to each other.

Altus IT co-operates with a wide cross-section of companies, including financial institutions and virtually all telecom operators in Croatia, which greatly helps with peer-to-peer working and provides ample opportunity to create communication routes. Flex system Altus IT has recently implemented new IBM solutions based on PureSystems to transform its operation from data service provider to become a cloud service provider. “We assessed a wide range of systems and opted for IBM Flex system based on the concept of smart computing”, explained Goran Đoreski, Board President of Altus IT. “IBM PureSystems is a fully integrated solution which can assist us in achieving growth and providing quality services for clients”, he added. Consequently, Flex system will accelerate the delivery of our services to clients by 60%. Furthermore, the implementation of a new, flexible, scalable and effective infrastructure will enable Altus IT to explore room in existing data centres more effectively, as well as provide the opportunity to deliver a wide cross-section of services contributing to much higher added value. (J.V.)

modern lifestyle results in many negative effects such as alienation from nature, which is an alienation from one’s inner self. Aromatherapists believe they can provide the optimum assistance to preserve health through aromatherapy which is in complete harmony


in healing, provide a cure and/or assistance in reaching a harmonious psychophysical attitude. Each client undergoes a subtle transformation, which enables them to exploit the full potential of life and assists in living a more relaxed and healthier life. “Aromatherapy scents go beyond relaxation”, highlighted Katica Wolf.

Scented essences heal and provide care and help in reaching harmony

Aroma cosmetics Aromaterapija Viola has organised natural cosmetics workshops including the production of lip balms, cocoa butter bars for skin peeling and care, the preparation and manufacture of facial creams and masks, as well as lanolin creams. In addition, many workshops have been organised on the preparation and production of natural deodorants and toothpaste. The workshops are intended for all who are aware of the adverse effects of chemical substances and preservatives used in the manufacture of standard commercial cosmetics and are striving to use products made from natural ingredients. She purchases top quality ingredients for aromatherapy products exclusively through specialised stores and is planning to organise several workshops on aroma cosmetics and enable both potential and existing clients to replace entirely commercial cosmetics. (S.P.)

with nature. Katica Wolf, a nurse and the founder of Aromaterapija Viola, fully supports this view. She founded her micro business last year following several years of professional work experience. “Aromaterapija Viola was created to provide aromatherapy services for disease prevention, to help health preservation and alleviate and cure a wide range of health issues through massage and counselling on aromatherapy products. In addition, I organise workshops to provide information for both potential and existing clients, to popularise aromatherapy. My clients are mainly women, aiming to improve the quality of life” stated Katica Wolf. She pointed out that she introduces them to the magical world of aromatherapy and its flowery essences, which help


Privvrreedn Privredni dni vjes dni vjesnik Year 218 Ye eaarr V No 2

( 470 hectares

area of vineyards under cultivation owned by Erdutski vinogradi


Erdut wines in the Far East soon Target markets are Poland, Ukraine and Germany with Chinese and Indonesian markets having high potential Svetozar Sarkanjac rdutski vinogradi has invested in the complete renovation of its vineyards covering some 400 hectares of its overall area of 470 hectares. Total cellar capacity amounts to 6 million litres.


We expect yields across the entire vineyard over the next few years Following a two year struggle for survival against the backdrop of excessive borrowing due to investment in development, as well as significantly reduced purchasing power, the company has now found a solution to its problems. Restructuring has entered its final phase and the company will finally focus on enhancing its operations following its success in overcoming its previous financial problems. “We expect yields across the entire vineyard over the next few years, which implies we will provide substantial quantities in addition to excellent quality”, stated Goran Dumančić,

the majority owner and Supervisory Board President, adding that there are plans for recapitalisation which also implies changes in the ownership structure. Plans for 2013 There were concrete plans for the acquisition of the company by Russian and Spanish businessmen, yet Erdutski vinogradi opted to merge with local strategic partners. “We are expecting to finalise all contracts and define the management strategy for the future by the end of 2012”, stated Dumančić who currently owns 87% of the company. Following the planned recapitalisation, the company will enter a more stable phase of business. It is planning to invest mainly into the complete renovation of the vineyards, the modernisation of the bottling plant, as well as the purchase of additional machinery. Thereafter, it plans a completely amended market development approach. 95% of annual production (some 3 million litres) is sold through the local market, which has on the one hand become weak, whilst on the other it is becoming increasingly saturated with imported

Demand for harvest of 2012 This year’s grape yields of Erdutski vinogradi and most Croatian winegrowers have been around 30% lower than average as a result of an extremely severe winter, followed by an extremely dry spring and summer. “Yields are lower, yet grape quality is extraordinary, whilst sugar-to-acid ratio is almost ideal. Hence, we are anticipating production of top quality wines. I believe there will be substantial demand for our wines from the 2012 harvest”, stated Boris Lovretić, Director of Erdutski vinogradi. wines. It is extremely difficult to achieve a price that could recoup overall investment in viticulture and winemaking. Exports are fundamental “Annual exports of about 1.5 million litres are essential for market survival. The average price of wine in Croatia ranges between €1.5 and €2 per 0.7 litre bottle, whilst on the global market the lowest price per 0.7 litre bottle currently stands at €3. Price positioning of Croatian wines is currently below average both in Europe and globally. Nevertheless, Croatian wines are top quality. Consequently we are planning to focus on international markets over the next year. Our strategic goal is to achieve 50% exports of production, primarily in 0.7 litre bottles”, explained Dumančić.

Target markets are Poland, Ukraine and Germany, and we have great expectations from Chinese and Indonesian markets which are the new wine markets and have high potential. “Following the extremely positive experience gained during our recent visit to China, we are anticipating excellent business arrangements. We are not aiming to “conquer the Chinese market”, since we believe we need to focus primarily on individual provinces. Consequently, we have recently organised a visit of our economic delegation to the Chinese province of Anhui and its capital, Hefei”, stated Dumančić. He pointed out that he has recently received an invitation to participate in a fair in Jakarta, whose market has shown increasing interest for quality wines.

PV International 0218  

PV International - The first weekly newsletter covering the Croatian economy as well as that of the wider region, in English

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