BIOVELA Group, the largest meat processing group in the Baltic region, has signed an agreement to acquire a controlling stake in AS Idavang, which operates modern pig farming complexes in Lithuania. The aim of the transaction is to create a vertically integrated, full-cycle business model covering every stage – from raising the animals through to the finished product.
“The group's strategy is in line with the leading global trends in the food industry – market leaders are consolidating production processes in order to achieve maximum efficiency, competitiveness and sustainability. This model is a precondition for BIOVELA Group not only to remain the leading regional player, but also to be able to compete successfully on the international market,” says Audrius Kantauskas (Audrius Kantauskas), Chairman of the Board of BIOVELA Group.
A strategic necessity and benefits for consumers
Pork remains the most popular meat product in the Baltic States and across most of Europe. While the average Baltic resident consumes around 46.5 kg of pork a year (Latvians 48 kg, Lithuanians around 50 kg and Estonians 42 kg), the region as a whole produces only about 57% of total demand. In Latvia and Lithuania self-sufficiency stands at just 45-50%, whereas in Estonia it is around 72%. Neighbouring Poland consumes a similar amount of pork on average, yet its self-sufficiency figure ranges between 85-90%. The Baltic States' considerable dependence on meat imports increases supply risks, particularly in view of price volatility and geopolitical change.
By acquiring Idavang, BIOVELA Group is seeking to strengthen every link in the production chain, reducing the impact of external factors and encouraging the use of locally sourced raw materials. “This is not only an investment in the long-term sustainability of the company and the industry, but also in securing the region's safety and strategic needs. By combining our processing expertise with Idavang's experience in livestock farming, we will be able to make local pork more widely available, while customers will also be able to feel confident about responsible management and about the origin and quality of meat products at every stage of production and processing,” says A. Kantauskas.
Competitiveness and a shared vision
Since accession to the EU, the total pig population in the Baltic States has fallen dramatically, from almost 1.9 million animals in 2005 to around 1 million today (in Latvia it has slipped to roughly 290,000, in Lithuania to about 500,000, and in Estonia to 260,000). No new farms are being set up in the region, and the number of existing ones continues to decline.
“Meat processing companies in the Baltic States cannot compete on equal terms with the largest producers in Poland and Western Europe, which have long operated on a vertically integrated model. The big European producers manage the entire process – feed production, breeding, farming and processing – and this allows them to make savings through both scale and efficiency. Costs come down and consistent quality control is assured. If we are to compete, we too must move in this direction by increasing production and the availability of local raw materials. And this transaction is one of the cornerstones that will allow us to strengthen the industry's resilience and, in the long term, to restore its export potential,” explains Žilvinas Lenktaitis (Žilvinas Lenktaitis), Chief Executive of BIOVELA Group.
Idavang, the largest pig farming company in the Baltic States, works to the highest standards of animal welfare, biosecurity and modern livestock husbandry. Through consistent investment, the company has earned broad trust in the market and a high rating for the quality of its products.
Idavang's founder and Chairman of the Board, Claus Baltersen (Claus Baltersen), will remain with the company as a shareholder and will continue to work alongside the existing team: “We have built a strong, quality-focused business, and the new shareholder will give us the energy and resources we need to expand further. To all our employees and partners I want to stress the most important point: nothing changes in our day-to-day work. Running the farms will remain the responsibility of our long-standing team, because the new partners have complete confidence in our expertise. But by becoming part of a shared set of values and of the production process, we will not only ensure sound management and traceability of our products – thanks to the additional resources, we will also be able to increase production substantially, addressing the strategic need of the region's countries for self-sufficiency in local production.”
“We share a common approach to responsibility, quality and the sustainable development of the pig farming sector. Together we want to grow faster, expand the network of modern farms and increase the region's pig herds. We will also work to improve efficiency throughout the production process and continue to develop initiatives such as antibiotic-free pork. We believe that together we will create additional value not only for our customers, but also for the industry as a whole and for the economies of the region's countries,” says Ž. Lenktaitis.
The transaction is subject to review by the supervisory authorities, and its completion requires approval from the Competition Council in both Latvia and Lithuania. Until that approval is granted, the two companies will continue to operate as entirely separate and independent market participants.