Jovo Vuković, Director and Owner of Vuković Company, Vukovar The company employs multiple types of craftsmen
Administration stifling agriculture We are creating our own obstacles and fostering further losses
RBA retail analysis In September retail registered a 1% increase in real value, 4% in nominal value
INTERVIEW PAGE 3
AGRICULTURE PAGE 4-5
RETAIL PAGE 7 2008 2009 2010 2011
Croatian Business & Finance Weekly Established in 1953 Monday / 28th November / 2011 Year V / No 0176 www.privredni.hr
S U P P O R T E D
B Y
T H E
pvinternational pv international C R O A T I A N
C H A M B E R
O F
E C O N O M Y
SOVEREIGN DEBT CRISIS IN EUROPE AND ITS REPERCUSSIONS FOR CROATIA
LOCAL SAVINGS AS GROWTH PROMOTER Personal savings deposits in Croatia are showing faster growth than loans but fiscal consolidation and reform at state level is imperative Drago Živković he current Eurozone sovereign debt crisis will significantly impact on Croatia. Nevertheless, this does not infer Croatia is helpless. Fiscal reforms, which should foster confidence in Croatia throughout capital markets with a consequent lowering of interest rates, are considered as the crucial challenge for the future government. According to bankers participating at an international conference organised by Banka magazine and the Friedrich Ebert Foundation, unless Croatia significantly modifies her concept of risk, she cannot hope to revive growth. Franjo Luković, Zagrebačka banka Board President highlighted the recommendation of the Austrian Central Bank to leading Austrian banks (Erste, RBA and Bank Austria) to curb new loans to their subsidiaries in Central and South-East Europe and retain them at below 110% of local deposits. Consequently, the inflow of cheap capital will cease from parent banks to their subsidiaries, since Austri-
T
an banks are striving to lower the credit exposure of banks in order to protect their AAA credit rating. The level of credit exposure of Croatian subsidiaries of Austrian banks significantly exceeds the recommended level and the consequences will be felt in the future. According to Luković, the impact of the Austrian Central Bank recommendation can already be felt. Bank and Euro crisis Many European banks will need to boost their capital adequacy ratio by increasing their equity capital or a decrease in their lending due to the sovereign debt crisis. Croatia cannot afford additional capital, since Croatian government bond yields are currently standing at around 7% and high interest rates are a major obstacle for development. Subsequently, some banks might decrease their business activity in Croatia, opined Luković. The financial crisis was triggered by the banking crisis, although initially this might appear less obvious, due to the involvement of government bonds, stated
Vladimir Gligorov from the Vienna Institute for International Economic Studies. According to him, a capital i n crease of between €600 billion and €800 billion for European banks will prevent investor panic. The fiscal crisis does not merely imply the inability to service debt, but also indicates the unpreparedness of some countries to service debts and that is primarily a political and social issue. The
Cheap capital inflows from parent banks to subsidiaries drying up European Union is sufficiently creditworthy to service all its debts, yet member countries cannot agree on amounts to be paid, explained Gligorov. He revealed the forthcoming Euro crisis, since any recovery from the sovereign debt crisis is impossible without
weakening the Euro, possibly with its reaching parity with the US Dollar. It would have a positive impact both on the EU and Croatia, since it would boost Croatian competitiveness in the global market and restore investor confidence. According to Gligorov, writing down debts is not the best idea, as it implies prolonged recession or stagnation. Local savings deposits are considered as the future growth promoter. Croatia ranks satisfactorily in this aspect, since personal savings are currently showing faster growth than loans. Nevertheless, this will not be effective without fiscal consolidation and reform at state level, according to Marko Škreb, Chief Economist at Privredna banka. He mentioned the example of Bulgaria, whose credit rating was on a par with Croatia a year ago, whilst currently capital in Bulgaria stands at 1.3% lower, due to implemented fiscal consolidation reforms.
2
Privredni vjesnik Year V No 0176
Štefan Füle, Commissioner responsible for enlargement and European neighbourhood policy
CROMA AWARDS
Croatia to play a pivotal role in regional European integration
Those who contribute to the world are the best
Croatia has demonstrated that the European perspective of the Western Balkans is very real roatia is a clear example of how successful the transformative power of the European Union enlargement process can be. The signing ceremony of the Accession Treaty on 9 December will be the visual crowning of this success and will put Croatia in the spotlight of European affairs. The signing of the treaty will mark not only Croatian readiness to join the European Union, but will anchor the
C
Western Balkans more firmly to the European integration process. Croatia has shown that this perspective is tangible if there is commitment to maintain momentum in preparation for membership. Croatia was the first candidate country to complete accession negotiations based on a systematic use of so-called “benchmarks” which defined clear conditions to be met before negotiations could be closed in the areas under negotiation. These benchmarks, set out by Member States, guided Croatia during the negotiation process and helped to demonstrate at the end of the road IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription
that all the strict conditions were met. To mention but a few recent achievements: the judiciary has become more independent with the introduction of a new system of appointment of judges and prosecutors and the fight against corruption has brought many positive results. Serious work has started on improving environmental standards. I am the first to acknowledge Croatia’s impressive achievements, but the last to say that the work is now done. Improvements in the functioning of the public service and the judiciary should continue. Additional efforts are needed to further strengthen the administrative capacity necessary for the proper implementation of EU legislation. Food producing establishments need to be upgraded to meet EU standards so that Croatia can be fully integrated in the internal market. The capacity to use EU funds has to be further strengthened to ensure that the significantly increased financial support will be fully used upon accession to boost economic development. I am looking forward to Croatian accession and the new dynamic it will bring to the shaping of EU policy, in particular towards other EU aspirants in the Western Balkans. Croatia has demonstrated that the European perspective of the Western Balkans is very real. Once an EU member state, I expect Croatia to play a pivotal role in paving the way for other countries of the region towards European integration.
FOR PUBLISHER Nikola Baučić +385 1 4846661 uprava@privredni.hr
IMC MANAGER Dea Olup +385 1 5600028 olup@privredni.hr
EDITOR IN CHIEF Darko Buković +385 1 5600003 bukovic@privredni.hr
TRANSLATION Lučana Banek lucanab@gmail.com Mirjana Cibulka mirjana.cibulka@gmail.com
EXECUTIVE EDITORS Andrea Marić maric@privredni.hr Vesna Antonić antonic@privredni.hr
INTERNATIONAL OPERATIONS Ray Fletcher fletcher@privredni.hr
The Croatian Managers’ Association selected top managers for this year Krešimir Sočković he Croatian Managers’ Association CROMA presented awards and recognition to top performers. As the president Vladimir Ferdelji, said a common feature of all participants of this year’s competition is that their companies achieved significant economic growth within a general recession where success equals preserving employment and society values. As industrial “long-distance runners” or self-made entrepreneurs,
T
CROMA also presented their Master Plan for the recovery of the economy they proved that good practice of corporate management and targeted results can only come from authority, personal example, entrepreneurial creativity and a sense of professional responsibility for the company future. Managers of the year In the category of large companies top managers are: Gordana Deranja, CEO of Tehnomont Group from Pula and Josip Mihalić, CEO of Jedinstvo from Krapina. Top managers of medium-sized enterprises are: Ivan Cervečki, owner and president of the Supervisory Board of Kotka from Krapina and Vitomir Klasić, owner and CEO of Ivanićplast from Ivanić Grad. Top young managers are Vedran Gržetić, manager of Grand Hotel 4 Opatijska Cvijeta and director of Mikronis Gordana Puhelek. Top manager of a public company is the director of Zadar Airport Katica PupičBakrač and top manager in the category of foreign companies is Ivana Kolar, director of Terme Tuhelj. Dubravko Hoić, board member of Calzedonia Croatia
was selected as the entrepreneur of the year, and the general director of Styria Media International Croatia is top project manager Jasna Zemljić. CROMA awarded the lifetime achievement award to Alojzije Šestan, board member and director of the company Šestan-Busch from Prelog and Dragutin Špiljak, board president of Vetropack Straža from Hum na Sutli. Master Plan for recovery CROMA presented its Master Plan for the revitalisation of the Croatian economy. According to the Association, the present economic policy is based on the misconception according to which we can achieve high growth through services and consumption based on lending and selling assets without production or industry. For the past 15 years, this doctrine made us spend and sell half of our inherited assets. We also spent everything we produced, increasing our debt by a further €44 billion. The Master Plan introduces measures for 10 fields according to which production should be treated as the foundation of societal economic prosperity, and the main generator of production is industry. Managers say that all measures of macroeconomic policy must have a positive effect on the reindustrialisation process: stimulate production, export and investment; give incentives for new jobs and discourage imports and spending based on indebtedness.
www.privredni.hr Business & Finance Weekly
INTERVIEW
3
( up to €9.5 million ( 360 employees annual turnover
currently employed in Vuković Company
INTERVIEW: JOVO VUKOVIĆ, DIRECTOR AND OWNER OF VUKOVIĆ COMPANY, VUKOVAR
EQUAL IMPORTANCE OF ALL WORK The company employs electricians, plumbers, tilers, locksmiths, carpenters and other craftsmen and can complete most work to a turn-key state without subcontractors Svetozar Sarkanjac he Vukovar based construction Vuković Company has received yet another valuable award. Its annual turnover stands at between €8.7 million and €9.5 million. Jovo Vuković, the Director and Owner of the company, has been extremely pleased to have received the reputable award Zlatna Kuna by the Vukovar County Chamber of Economy. Nevertheless, he pointed out that the fact that he was able to pay his employees regularly made him much happier. “The salaries are not high. The average nett salary ranges between €473 and €540. I am aware of the fact that people need higher salaries yet it is a huge challenge to collect sufficient funds on a monthly basis for 360 salaries for all employees due to the current situation in the construction sector”, explained Vuković. Vuković began in the construction sector in the 1980’s, as an employee in the Osijek-based company Gradnja. He founded his own company employing some 15 staff in 2003. It is currently a mul-
T
tilateral company, performing construction work in high-rise construction, producing various types of nails, universal steel wire twine, locksmithery, steel roofing sheet profiling, ceiling beams, concrete and steel haberdashery, as well as the sale of construction and construction related materials. Seven of the employees hold Master degrees, some 30 professionals and around 200 skilled workers and workers with high school qualifications. According to Vuković, the company core workforce comprises of about 240 qualified workers. What is your competitive advantage? Primarily the fact that our workforce consists of various professions: in addition to employing construction workers, we employ electricians, plumbers, tilers, locksmiths, carpenters and other craftsmen and as a result we are able to complete much work to turnkey standards. We can independently construct and complete a range of residential or
A humane entrepreneur What are your business aims and objectives? We are primarily striving to achieve two objectives. Firstly, job creation and a decent life for our employees and their families. Secondly, we are aiming to provide community assistance. We are currently living in challenging times with continuously decreasing earnings. Nevertheless, I am currently assisting several individuals and associations. I believe that entrepreneurs are obliged to assist the community and people in need. business facilities, which is convenient for investors, as it provides them with security of comprehensive work completion. We provide a full range of services, meeting all deadlines without having to rely on subcontractors. We are capable of organising professional work teams and assistants at construction sites in order to meet deadlines and quality standards.
7 employees hold Master degrees Your references include various construction facilities, ranging from residential to business facilities and even printing offices and farms. Do you perform all types of construction work? We have always focused on meeting the requirements of potential investors and currently even more so
during the crisis. Work cannot be ranked according to importance, it can only be ranked according to whether the receivables have been collected or not. We aim to perform work worth €1,400, €6.5 million or €8 million. In addition, you perform work on sacred and cultural heritage facilities. We, as many other similar Croatian companies, hold a licence to perform work on cultural heritage facilities under the protection of Ministry of Culture. The licence lasts five years and work quality is closely monitored during that period. Our work in that area has been satisfactory thus far. In addition, Vuković Company holds the ISO 9001 and ISO 14001 certificates and we are currently in the process of obtaining ISO standard certification regarding protection at work. It is slightly more specific and it is particularly important due to the forthcoming Croatian EU accession and to be able to work in compliance with European standards.
4
Privredni vjesnik Year V No 0176
HAULIERS ON THE WAY TO EU
610 per hectare Many ( €agricultural subsidies after EU accession opportunities, even more challenges
ADMINISTRATION STIFLING AGRICULTURE
After the expiration of the transitional period (2+2 years), Croatian exporters will have a chance for cabotage Drago Živković oad transport shares the fate of the entire economy, which means it is stagnating, with only a hint of recovery. According to data which Ante Nevešćanin, Chairman of Road Traffic Department in the Ministry of Sea, Transport and Infrastructure, stated in the Euro Trans forum there are currently 2,593 international hauliers, which is a slight increase in relation to 2010 when there were 2,522. The number of vehicles also increased, from 10,906 in 2010 to 11,428. This increase is partly due to some governmental measures which subsidised the replacement of old vehicles for new ones complying with Euro 4 and Euro 5 environmental norms. In 2010, €4.7 million
R
From July 1 2013, all Croatian hauliers will have unlimited access to the EU market was allocated to 275 companies for 508 vehicles, slightly less in relation to the number of vehicles and companies in 2009. Furthermore, from April 1, 2011, fees for using CEMT licenses, individual permits and travel logs have been significantly lowered. The fee for cargo vehicles was also reduced as well as the calculation method for carrier ships, that are now calculated according to the largest mass al-
lowed and not engine capacity. Nevešćanin hopes that other proposals will also be adopted soon. They should improve the position of road hauliers by reducing mandatory insurance for cargo vehicles and the number of risk levels. No more permits Regarding EU accession, Nevešćanin warns that hauliers need to speed up their preparations for big changes. From July 1, 2013, all Croatian hauliers will acquire unlimited access to the EU market, without the need for any kind of permits. This has so far been one of the biggest problems in terms of administration and costs to obtaining permits. On the other hand, EU membership will also eliminate obstacles for hauliers from other member countries that will have the freedom to compete in future with local ones. When Croatia joins the EU, the duration of transport services will considerably shorten, utilisation of transport capacity will increase and transport costs should reduce, according to Nevešćanin. Without customs control, hauliers will no longer wait to cross borders. More time is now spent waiting at customs than in actual transportation. Finally, after the expiration of the transitional period (2+2 years), Croatian exporters will be able to cabotage, that is, transport within member countries, which would increase employment of Croatian hauliers outside Croatia. Naturally, other member countries will also cabotage, which will additionally increase competition.
We are creatin obstacles and
Just 48% of funds allocated through the SAPARD program through the IPARD has been used thus far, with the high lik Drago Živković everal countries and primarily the German-French axis have a dominant role in agricultural policy at EU level and it is an extremely arduous task to make any in-roads into their decisions. Nevertheless, this does not imply that lobbying is useless. Lobbying should be systematic and organised, whilst the best lobbyist is the country which can have the highest impact on common measures in the agricultural policy. Željko Zadro, Board President of Viro sugar factory explained the current situation in this area of the economy at a roundtable discussion with the Croatian Lobbyist Association. The Croatian sugar industry was almost dead until 2000. Then the Stabilisation and Association Agreement opened the doors to EU markets and Croatia was allocated unlimited export quotas. According to Zadro, EU member
S
The IPARD and the SAPARD are competing with less complex procedures of local subsidies countries believed Croatian production to be insignificant and having little impact on European markets. Croatian sugar refineries exports are $1.5 billion thus far and have been transformed into competitive, profitable companies. Production has increased significantly and unlimited export quotas were not an option
during negotiations with the EU on the full Croatian membership. Production exceeded solely by Malta White sugar production quota of 192,877 tonnes was agreed as a result of co-operation between producers and the Ministry of Agriculture, Fisheries and Rural Development. It is lower than the current total production of the three Croatian sugar factories. Nevertheless, Zadro is optimistic, as there is demand for an additional 1.4 million tonnes of sugar in neighbouring markets (Hungary, Slovenia and Italy) and the EU needs to implement comprehensive sugar market reforms. The reforms are seen as a huge opportunity for Croatian sugar factories, yet co-operation between the government and
www.privredni.hr Business & Finance Weekly
5
( 192,877 tonnes ( €12.5 million white sugar production quota
unused SAPARD programme funds returned retu to EU
ng our own fostering further losses
me have been used and Croatia has subsequently returned €12.5 million to EU; a mere 5% of funds allocated kelihood of most funds from 2007 and 2008 programme years being unused yet again
producers in lobbying is an imperative in order to achieve the desired goals for Croatia. According to Miroslav Božić at the Ministry of Agriculture, Fisheries and Rural Develop-
ment, Croatian interests have been protected to the maximum extent during the negotiations in accordance with the frames of reference. Croatia has obtained €610 per hectare of subsidies (European average €399 per hectare), which ranked Croatia as second according to the quantity of allocated subsidies, with only Malta being allocated more which is a statistical anomaly due to its minute land area. There was a unique framework of reference for all countries, which Croatian farmers objected against. Subsequently, subsidies cannot be determined by production quantity, but need to be related to public landscape, such as environment and land protection. In addition, the restrictions regarding vineyard planting, regarded by many as restrictions directly affecting entrepreneurial freedom, were in reality prompted by the wish to maintain a higher price level of grapes and wine in order to
assist producers to be more costeffective. Crucial role of banks The procedure of obtaining pre-accession funds has been intentionally made complex, as considerably high sums are involved and since average
Comprehensive reform of the European sugar market seen as a crucial opportunity for Croatian sugar refineries subsidies in the IPARD and SAPARD programmes stand at €0.27 million. In addition, extensive documentation needs to be submitted. According to the data on the low-level use of the allocated funds presented by Božić, Croatian farmers are not inclined to submit documentation. Just 48% of funds allocated
through SAPARD have been used and as a result Croatia has returned €12.5 million to the EU; only 5% of funds allocated through the IPARD have been used and there is high likelihood that most funds from the programme years 2007 and 2008 will be unused yet again. There are several reasons for this, according to Božić: IPARD and SAPARD are competing with local subsidy measures which have less complex procedures, the local administration is extremely ineffective in EU programme implementation and the EU criteria have been certainly more stringent following the disappointing experiences in Bulgaria and Romania where many projects have been identified as fraudulent. Potential subsidy users need additional encouragement and this could be achieved by local bank support in order to foster the use of funds allocated to Croatian farmers by the EU.
EU accession negotiations results in the Chapter 11 – Agriculture and rural development PRODUCTION RESTRICTIONS · milk production quota: 765,000 tonnes, referral fat content in milk: 4.07% · white sugar production quota: 192,877 tonnes (consumption 2004 -2008) · raw sugar import quota: 40,000 tonnes with export duty of €98 per tonne · ban on new vineyard planting, commencing from the day of Croatian EU accession and in force until this measure has been abolished by the EU CROATIAN PRODUCT PROTECTION · requests for certification of Croatian products with protected label status at EU level to be
submitted within 12 months following Croatian EU accession · obtained approval of protected label certification for authenticity and traditional wine labels · obtained approval of certification of traditional labels opolo, plavac (Croatian counterpart to Zinfandel) and Samobor bermet · obtained approval of label certification for strong alcoholic drinks: Croatian loza (grape brandy) Croatian travarica (an infusion of grape brandy and a variety of herbs), Croatian pelinkovac (a bitter liqueur based on wormwood – the name of the herb in Croatian, Bosnian and Serbian being pelin), Croatian
old plum brandy, Slavonian brandy and Zadar maraschino (a bittersweet clear liqueur flavoured with Maraska cherries) · obtained approval of protected label certification for ‘pekmez’ (jam) and for the label ‘homemade marmalade’ until all stock has been sold · granted the right to use export subsidies, special product protection measures and other trade measures
6
WE PRESENT
HORTILAB, VELIKA GORICA
Privredni vjesnik Year V No 0176
IKS PAVIĆ, ZAGREB
In vitro production of seedlings This method is common throughout Europe pe istration or and producers have no problems with registration obtaining subsidies; this is not the case in Croatia
Clear vision to success Each year we try to place a new product on the market to keep abreast of European trends ortilab was founded last year in Velika Gorica. Its main activity is in vitro production of seedlings in their laboratory and the cultivation and sale of plants. There are currently 40 plants being produced using this method. Explaining the method, the owner and founder of the company, Vilim Elez, says that seedlings are transported from the laboratory to a green-
H
Hortilab is starting an experimental revitalisation project of local organic garlic house where they acclimatise. They are then sorted into seedlings for further transplantation and plants that will be cultivated into an end product. Furthermore, the company also offers landscape and garden design as well as soil treatment. This year they started to import, sell and install irrigation equipment and devices for soil dressing for hydroponics cultivation system as well as cultivation on controlled surfaces. In Europe recommended, in Croatia unrecognised The production method is common in Europe. Not only do producers have no problems with registering their products or ob-
taining subsidises, but they also export them without any obstacles. Everything is quite the opposite in Croatia. The Ministry of Agriculture does not understand this production method which does not require inspections, phyto-certificates and other licenses since the products are cultivated under sterile conditions, said Elez. He continues that the company would develop much faster if he could obtain subsidies for production or at least more favourable loans he could use to develop this type of production. The culture of plant tissues and in vitro cells is a very interesting method of vegetative transplantation. Up to 20 million plants can be produced from just one parent plant. Energy efficiency is enormous in relation to a heated greenhouse. Despite the initial problems, Elez will not give up on this production method. In co-operation with Josip Borošić and Jasna Berljak from the Faculty of Agronomy, he is starting a revitalisation project of local organic garlic. Over 90% of garlic on the Croatian market is imported from China, so local production is almost nonexistent. Elez and his colleagues are financing themselves during this experimental project. We are full of great ideas, but we have no support whatsoever. We did not even manage to obtain subsidies for employing at least one worker for an indefinite period. (J.F.)
he production range of IKS Pavić consists of windows, doors, sliding walls, window shutters and roller blinds, and the company is one of the best in Croatia within its field of activity. Today the company employs 47 workers, half of whom work in direct production processes. All employees constantly develop their skills to keep up with developments and the segment trends since this is the only way they can compete on the market, especially in the challenging markets of Western Europe. In today’s world, the most difficult thing to do is produce. However, our company is dedicated to the development of new products, raising their quality and constantly improving all work processes. During the past several years we have created a strong sales team, strengthened marketing and invested a lot of effort in quality control of products and services, said Nedjeljko Pavić, who founded the company 20 years ago.
T
Modern PVC profiles It is certainly uncomfortable to wake up one morning and realise that over 50% of the market had been lost. This is precisely what happened in late 2009 when the crisis hit Croatia. However, despite the sudden drop in sales, IKS Pavić quickly intensified the placing of their products in
the countries of Western Europe. Today, these products are showing good export results in Austria, Germany and Switzerland. The awareness of ecology, energy saving and sustainable development, where quality PVC products could contribute significantly, has still not reached Croatia. Pavić says the legislation exists, but no-one seems to follow them since systemic or
Last year, IKS Pavić generated income of €3.04 million adequate control does not exist. A large number of companies in Croatia are registered for such production. Unfortunately, most of them use outdated machines and do not introduce new technology or products. Pavić feels this damages the reputation of PVC products. Last year, IKS Pavić generated €3.04 million in income. They sell their products using a retail network of sales representatives, their own stores and certified distributors. Each year we try to place a new product on the market, which is how we keep abreast of European trends. Unlike other companies, our production is completely modernised with CNC machines, concludes Pavić. (S.P.)
www.privredni.hr Business & Finance Weekly
7
CROATIAN FOREIGN CURRENCY MARKET Currency
AUD CAD JPY CHF GBP USD EUR Source: HNB
Kuna exchange mid-rate
EUR
5,475233 5,378914 7,303514 6,108794 8,750396 5,657589 7,4912140 WEEK NOVEMBER 26, 2011
7.492
USD
5.68
CHF
6.12
7.490
5.65
6.10
7.488
5.62
6.08
7.486
5.59
6.06
7.484
5.56
6.04
7.482 21.11. 22.11. 23.11. 24.11. 25.11
5.53 21.11. 22.11. 23.11. 24.11. 25.11
6.02 21.11. 22.11. 23.11. 24.11. 25.11
UNDER THE SCRUTINY OF CNB
Intensified monitoring of four Croatian banks
fter the liquidation process of Credo banka started, the Croatian National Bank will intensify its monitoring of four more: Banka Kovanica, Karlovačka, Varaždinska banka and Nava banka. The banks, however, reassure their clients they have no reason to be concerned. According to Vaba, their operations are completely stable and in compliance with legal, sublegal and internal acts. “The best proof of our quality is customer satisfaction and deposits that are constantly growing. There is no reason for our clients to be concerned”, according to Vaba. Nava banka plans to increase equity capital by €2 million. According to Karlovačka banka, their capital adequacy ratio is above the legally prescribed minimum. During the past year, Banka Kovanica was additionally capitalised with €13 million. It is liquid and operates with stability. However, the liquidation of Credo banka has aroused distress in the banks’ customers and concern for the stability of their savings deposits. Maruška Vizek from the Institute of Economy says that panic in this kind of atmosphere is unnecessary and dangerous. The public could actually dig their own graves by an unreasonable level of distrust in the banking system. (B.O.)
A
RBA RETAIL ANALYSIS
Weak growth to continue In September retail registered a 1% increase in real value, 4% in nominal value ccording to final data provided by the Central Bureau for Statistics, retail registered a 1% increase in real value or 4% in nominal value. The monthly rate, calculated on the basis of average annualised indices, points to a downfall of 1.3% in real value.
A
The market shows no signs of a stable recovery Due to the high annual growth of tourist arrivals in September, seasonal work employment growth in relation to September 2010 and a low base, RBA analysts anticipated higher growth. However, September only confirmed the situation that has been identified for over a year.
Retail is registering growth yearon-year; however, these rates are weak, so we cannot begin to discuss recovery, especially when considering the high and long-term fall which preceded it. Furthermore, the labour market shows no sign of a stable recovery, especially since employment registered little significant growth (excluding seasonal employment). Towards the end of the year the number of unemployed is likely to increase, analysts explain. Spending cautiously Consumer behaviour primarily depends on labour market movements as well as anticipated future movements. In this context the instability of the external factors effect should also be mentioned. Their deteriora-
tion can already be felt, which could certainly affect consumer optimism and spending. By the end of the year, RBA analysts anticipate a mild recovery in the annual growth rate in retail. However, it will not be significant. They do anticipate, however, a slight retail recovery over the entire year, but only a little above 1% (during the first nine months growth was 1.1% in real value annualised), and in 2012 the growth rate might increase even more. The reasons are relatively high levels of household debt (above regional average) and stagnating real income. As a consequence, growth in personal consumption is limited, and as opposed to the year before the crisis, it should follow economic growth, rather than being its generator.
8
Privredni vjesnik Year V No 0176
RUSSIAN WINE FAIR
Grand Prix for Croatian wine makers At the prestigious Russian Wine Fair in Moscow, Croatian wine producers won the Grand Prix for quality and constancy to tradition, arousing great interest in visitors. Participation at this renowned fair was also the debut for Croatian producers on
the Russian market. On an area of 100 m2, 22 wine producers presented their products. In cooperation with the Zagreb Wine Gourmet Festival, the Croatia Gourmet Festival also opened, where top chefs prepared courses of Croatian specialties, serving
them with superb Croatian wines. In conjunction with the Croatia Gourmet Festival, the Master Class was also held - Wines of the Adriatic – Croatia, where the well-known wine expert Darrel Joseph presented top Croatian wines. (K.S.)
Increasing quality of Croatian brandy
Fruit brandy trend According to consumption beer ranks first in Croatia followed by wine with brandy as third although this has been arousing increasing interest Svetozar Sarkanjac ong term market research has indicated that beer ranks as first (beer consumption standing at 83 litres per person per year), wine second (40 litres per person) with brandy and strong alcoholic beverages ranked third in Croatia. Nevertheless, according to trends identified over the last several years at the Osijek fruit brandy producers’ competition, interest is increasing. Hence, the seventh Educational competition in quality traditionally produced fruit brandy organised by the Osijek County Chamber of Economy featured 171 samples of brandy produced throughout Croatia, up 25% over last year.
L
Producers and scientists co-operating “A large number of samples unveiled huge potential. The increase in fruit brandy quality is an important cornerstone for significant development and the recently shown results have indicated a boost in quality, primarily due to co-operation with scientists. The Osijek County Chamber of Economy has received excellent co-operation with experts from the Osijek-based
Faculty of Food Technology and Biotechnology, which was one of the organisers of the competition”, stated Ernest Nad, Competition Organisational Committee Secretary. Drago Šubarić, Dean of the Faculty of Food Technology and Biotechnology, as the Head of the Competition Evaluation Committee, also identified the increasing quality of fruit brandy. Plum brandy is the most common, followed by pear,
Sample quality approaching the desired level grapes, apple, apricot and peach brandy, whilst quince, carob, cornelian cherry, sour cherry, cherry and hawthorn brandy are not produced in large quantities. Nevertheless, the competition was not an end in itself. “All participant producers received the analyses
and quality reports on their products, following the announcement of the competition results. Subsequently, producers have had the opportunity to contact the Faculty of Food Technology experts and discuss the weaknesses of their products and also the ways of improvement in the future”, pointed out Šubarić. Stringent regulations Organoleptic evaluation of brandy samples (following chemical analysis) is performed in compliance with the Regulations on sensory analysis of brandy, using the German DLG method which is the standard for the evaluation of alcoholic beverages. The method uses weighted points for individual analysed features. Subsequently, all the statistical data
is processed, leading to objective results of individual samples and, consequently, replacing subjective evaluation”, explained Borislav Miličević, a member of Evaluation Committee. The long-term impact of the competition may be seen in the increasing respectability of this profession, which is evident in the high quality of the samples, which are consequently increasingly difficult to evaluate. “Sample quality is approaching the desired quality level. Nevertheless, tasters have been gaining experience and we have managed to achieve our goal - to rank samples in accordance with their quality”, explained Miličević.
A demanding task for brandy tasters Snježana Numanović, Senior Professional Advisor at the Croatian Institute for Agricultural Advisory Service, who has been a brandy taster for six consecutive years, explained the evaluation of organoleptic quality of brandy. “We primarily evaluate the colour beverage, followed by the limpidity, the aroma and flavour and, finally, the general impression of the sample. The colour and the limpidity are the easiest to evaluate, whilst other features, such as flavour, are more demanding, particularly regarding plum brandy. Samples have been increasing in quality during the last several years, since producers know the results of analyses and the evaluation of their products”, she pointed out. The five member Evaluation Committee, consisting of Faculty of Food Technology experts, oenologists and the Croatian Chamber of Economy representatives were faced with a demanding challenge of having to taste and evaluate some thirty brandy samples at this year’s competition.