The EBRD is lending Stark, the leading Serbian confectionery producer, up to €10mn to support its modernisation programme to upgrade and renew its machinery, as well as to develop new products and to further support its brand and market development.

Stark’s performance and sales have in the past been affected by lack of investment. In 2005 Grand Kafa, a local company majority owned by Slovenia’s largest food and beverage company, Droga Kolinska, became the majority shareholder. Soko stark has made and intends to make significant additional investments to support restructuring, which, with the EBRD investment, will be further extended.

Gilles Mettetal, EBRD director for agribusiness, says this deal will help continue the transformation of this company with a long tradition in the region to build on its success as a leading sweet and savoury-producer in Serbia. The loan also reflects the EBRD’s strategy of supporting projects that have a regional dimension and that demonstrate the benefits of cross-border investment, says Mettetal.

Established in 1922 as the leading confectionary producer in Serbia, Stark employs 1,419 staff at its offices in Belgrade. Its main products include sweets, biscuits and savoury products. Droga Kolinska Group is a global company that sells leading brands such as Argeta, Grand kafa, Soko Stark, Donat, Cockta Barcaffe, Bebi, Maestro and Zlato Polje worldwide.

Droga Kolinska has been successfully implementing a strategy to grow internationally by investing in acquired companies in Serbia, such as Grand Prom and Soko stark, and completing investments in its Greenfield factory in Bosnia and Herzegovina.

These investments, together with the EBRD’s support, are crucial to helping Droga Kolinska achieving its goal of becoming the largest food company in the region, says Robert Ferko, CEO of Droga Kolinska. In the first nine months of 2006 group sales reached €240mn, with a net profit of €13.5mn. The current performance of Grand Prom and Soko stark also indicate that their sales and net profit targets in 2006 will be met, which are both significant also for increasing the sales of other Droga Kolinska brands in the market of Serbia.

This deal is important as it supports the restructuring and the immediate modernisation of the leading Serbian confectionary producer following its privatisation process, says Dragica Pilipovic-Chaffey, EBRD director for Serbia. It further demonstrates the opportunities available to other strategic investors who want to develop their business.

The EBRD signed its first projects in Serbia in 2001 following the Yugoslav conflict, and has to date invested almost €1.07bn in 63 projects in the country. In the agribusiness sector the bank has committed €4.3bn in over 304 projects across central and Eastern Europe and the Commonwealth of Independent States.