Klaipeda, Lithuania, June 10 (RFE/RL) -- In a formerly-communist country, famed like Lithuania for its
agricultural produce, the response of the dairy industry to free
market competition can be instructive.
Competiton in the last four years has forced some smaller dairies
out of business. Top survivors have re-thought their marketing and
About 40 dairies exist today in Lithuania. A Ministry of Agricuture
official says two dozen dairies are privately owned and that perhaps
ten are losing money.
The Birzai joint-stock milk company, in 1992 the first dairy
privatized in Lithuania, is one of the most successful. Dairy
director Vladas Songaila says that when the dairy replaced glass
bottles with plastic containers and packaging, the management was
ridiculed by other dairy bosses. He says that when the dairy, in
northern Lithuania, expanded its market area, it created a furor.
Songaila phrases it in an understatement: "We risked a lot."
Actually, somebody, perhaps desperate competitors, bombed his home
and the factory, apparenty seeking to stop the the invasion of new
markets. Four years ago, Lithuanian dairies just did not send their
produce far afield. Today a buyer in most major cities can choose
dairy goods from half a dozen dairies.
Birzai director Songaila tells an RFE/RL correspondent in Klaipeda that his firm's variety attracts shoppers, and that its quality keeps them coming back. Birzai was the first dairy to introduce cottage cheese with fruit, using high-quality jam imported from Germany.
About 50 percent of the Birzai dairy's production is exported to
Germany and such distant countries as Japan and Venezuela. The dairy
expects to begin exports soon to neighboring Latvia and Estonia, if
tariff barriers are mitigated.
The all-Lithuanian, internationally-minded management also is
considering selling a minority stake to foreign investors
While Vilnius and Klaipeda dairies are well known and well
established, the Birzai dairy evidently sets the pace. Klaipeda dairy
director Jonas Vilionis says pressure from more distant producers is
making the competition keen in Klaipeda, Lithuania's third-largest
city. When sour cream and cottage cheese from Birzai appeared in
Klaipeda stores, Klaipeda dairy officials began seeked markets in
other cities, principally Vilnius and Kaunas.
Today in Klaipeda, shoppers can choose milk and dairy products from
half a dozen dairies. The well-known cow logo of the Birzai
enterprise attracts most buyers. Now, 1,600 stores sell Birzai dairy