Leading local milk producer leaves Tallinn

Photo: Priit Simson

According to Tere deputy chairman Ülo Kivine, final products were made in Tallinn at the end of February, with all remaining machines now being removed. The facilities, rented since 2006, will be handed over to new owners. The Tere headquarters will remain on Pärnu road, but in another building.

Instead of four former divisions, Tere’s production will now converge to two of them: Põlva and Viljandi. Products were divided according to machinery, cost-effectiveness and experience present.

Viljandi, for instance, has mainly been into curds products for decades, and that’s how it is going to be. Yoghurts have moved to Põlva. Film-packaged products are mainly concentrated in Viljandi, carton-packaged ones in Põlva. Plastic cups both here and there. According to Mr Kivine – and earlier confirmed by Tere majority owner Oliver Kruuda – the move is motivated by need to cut costs.

The ever sharpening competition on milk products market demands more cost-effectiveness, and keeping the big Tallinn plant was no longer prudent. «If we are able to guarantee the same market volume in Põlva and Viljandi, even increasing it in the future, cost-effectiveness will significantly be improved,» said Mr Kivine.

Tere spends €4m a year on electricity, heat, steam, water and sewerage, and saving ten per cent of that would be significant, even with added logistics costs on goods carried to Tallinn. However, being located in Southern Estonia, crude milk transport will be somewhat cheaper.

In addition to moving, Tere has been tinkering with new packages. Soon, freshly designed ones should adorn our shop shelves, both by shape and printed texts – also a part of renewal.

Moving south meant laying off close to a hundred employees in Tallinn.

«Again, I wish to thank all those who have, here at Pärnu road, given their input into the company,» said Mr Kivine. «At the same time, we will be hiring new people in Põlva and Viljandi. Altogether, the AS Tere workforce will diminish, providing added cost-effectiveness.»

Other companies are also concentrating their activities. In Paide, milk production is conserved at the moment, at a standstill. Maag has discontinued production in Rakvere, operating in Jõhvi. According to Mr Kivine, they were urged along by the current situation in dairying. Large amounts of crude milk are moving from Estonian farms straight to Lithuania, via dealers, with nothing produced from it here. The state also losing a couple of millions worth of tax money.

«Will it continue like that, time will tell. But I do hope that dairying will be developed in Estonia, also,» said Mr Kivine.

Tere’s 2012 exports were lower than the year before. However, the company remains market leader in Estonia.