Business News

In Business News this week: the Czech Republic's leading retailers enjoy a big increase in sales; government incentives attract a major increase in inward investment, soft drinks manufacturer Kofola branches out into food supplements, and the Czech government could face sanctions from the European Commission for failing to impose a 48-hour working week.

Ten largest retail chains in CR account for 63% of FMCG market

The ten largest retail chains in the Czech Republic increased their year-on-year sales by 32.9 billion CZK or 1.5 billion USD in 2006. The figures were reported by the Incoma Research company, which says that the country's ten leading retailers now account for 63% of the fast-moving consumer goods market, a 10% increase on 2005. Incoma Research says that retail chains in the Czech Republic are now approaching European standards, which means that they may begin focusing on other sales incentives other than low prices to compete for customers, including emphasising the quality and freshness of their produce.

Altogether, the top ten merchants had combined revenues of 261 billion CZK or roughly 12 billion US dollars last year. The leading retailer in the country was the Schwarz group, which owns the Lidl discount chain. Ahold and Tesco came second and third respectively. Both these retailers took over other retail outlets last year, with Ahold acquiring 60 Julius Meinl shops and Tesco taking control of 11 Carrefour hypermarkets. Experts expect similar amalgamations in the future as the Czech retail market consolidates.

Czech Republic attracts 114.6 billion CZK in investments during 2006

The Czech Industry and Trade Ministry has announced that the Czech Republic directly attracted 176 inward investment projects last year, amounting to a sum of 114.6 billion CZK or roughly 5.3 billion US dollars, which is more than the combined value of similar investments for 2004 and 2005. These projects were given investment incentives from the state and should create over 34,000 jobs in the Czech Republic.

The largest investment announced last year was that of South Korean car maker Hyundai, which plans to pump 42 billion CZK into building a car plant in North Moravia.

Despite the increase in government-mediated investments last year, projects that receive investment incentives still only account for 14% of all inward investment to the Czech Republic. The Czech Ministry for Industry and Trade, Martin Riman, has ordered a review of the actual impact of state investment incentives on the Czech economy.

Kofola acquires 80% stake in food supplement company

Leading Czech soft drinks producer Kofola has acquired an 80% stake in food supplements producer Green-Swan for an undisclosed price. Kofola is number two on the Czech soft drinks market behind Coca Cola and is aiming to be one of the top three soft drinks makers in the Central European region within five years. In 2006, it posted a record turnover of 3.5 billion CZK or 160 million US dollars. In acquiring the food supplements concern, Kofola appears to be trying to diversify its interests, having specialised in beverages until now.

Czech courts propose new measures to wind-up non-operational companies

Czech courts have called on the government to make it easier for non-operational companies to be wound up. There are currently thousands of companies listed in the Czech Commercial Register, which do not exist in practical terms. They can't be reached at their registered offices and none of their executives can be contacted. Such firms are often used as a front for illegal activities. At the moment, shutting down inactive companies like this can take several years and cost tens of thousands of crowns in state funds.

CR faces EC sanctions over working hours

The Czech Republic could face sanctions from the European Commission for failing to observe its so-called Working Time Directive, which stipulates that EU states cannot have a working week longer than 48 hours. The European Commissioner for Employment, Social Affairs and Equal Opportunities, Vladimír Spidla - who is himself Czech - has warned that nine EU countries, including the Czech Republic could face heavy financial penalties and other sanctions for failing to implement the directive.