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Radenska Looking for Growth Abroad (interview)

Radenci, 10 August (STA) - Radenska, the soft drinks company best known for its mineral water, has reached the plateau in market share in Slovenia and is looking abroad for growth, chief executive Zvonko Murgelj said in an interview with the STA.

The entire food and beverage sector is feeling the impact of the recession, as consumers cut spending due to falling incomes. Murgelj says it is hard to say how much Radenska will suffer this year, but figures indicate revenue will drop by 2-5%.

The company has therefore been focusing abroad. "The trends in neighbouring Austria are favourable. Things are also looking up in Italy, but in Croatia we are maintaining contacts and waiting for it to join the EU, when customs barriers will be dismantled."

Asked whether political relations were affecting business in Croatia, Murgelj said "it is difficult to say whether someone will drink Radenska instead of [Croatian] Jamnica just because of the border arbitration agreement."

"The main problem is that Radenska is present in few Croatian stores. But we are holding on nevertheless...We are maintaining Radenska's presence in Croatia, where it used to be well received. Once the barriers are removed we will definitely boost our market share."

Croatia levies a 17% or 18% customs duty on mineral water, Murgelj explained. "This product just can't handle that. Sales depend not only on quality but also on price. This puts us at a disadvantage to domestic producers, which have developed rapidly."

Whereas markets of the former Yugoslavia, where Radenska is a well known brand, are top priority, Murgelj said the company was also looking at the Middle East. But he pointed out that expansion is never easy. "There is no market where they don't sell water. This means you have to steal someone's market share."

Radenska is part of the Pivovarna Lasko group, which has been in flux for months as it struggles with a debt burden resulting from a failed management buyout.

The group plans to become a concern, which Murgelj welcomes. "This will improve the transparency of relationships between the parent company and the subsidiaries. It will be clear who ordered what and who will bear the consequences."

Murgelj said Radenska lost at least EUR 40m by giving loans to two financial firms that the former boss of Pivovarna Lasko, Bosko Srot, used in his MBO attempt. But he was quick to point out that these loans have already been written off so no more losses would be incurred.

Murgelj says he did not take part in the dodgy deals. "I was installed by Bosko Srot, but there was a special agreement and I did not take part in these financial operations. I had told him that I sign only things which I think are right," he said, adding that he has already signed a new job contract and was staying on at least until the end of 2010.

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