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Growing business

Slovenia’s food industry carves out a cleaner, greener future

With increasing concerns over the provenance of produce and its environmental impact, Slovenia’s big brands are joining forces with SMEs to meet consumer demands and boost business.

Charlotte Ricca


Slovenia’s food and beverage industry is one of its economy’s most important sectors: is the third biggest in terms of employee numbers – and is still growing. 

The county has a tradition of high-quality produce with strong regional brands. However, it also has a history of international imports, due to its challenging agricultural conditions. 

Half of its total surface is located in highlands or mountains, and less than 30% is classified as agricultural land. Therefore, food self-sufficiency in certain sectors is low compared with the rest of Europe. 

However, things are starting to change. While imports remain high, producers are increasing exports thanks in part to easier access to foreign markets, and the number of small and medium-sized enterprises (SMEs) in food production has risen significantly. As a result, more companies are now investing in vertical integration. 

Creating a self-sustaining food chain is also a consumer-driven process and the pandemic has seen a shift in demand. There is increasing awareness among Slovenians about the provenance and environmental impact of the food they purchase. And they are prepared to pay extra for it.

"Consumers are more demanding – it’s not just about price any more. They think about what they are going to buy and how,. On one side they are interested in quality, taste and trusted brands, but on the other, there are concerns about the environmental footprint and provenance of products. These demands are driving the food industry."

Drago Kavšek, board member for SMEs and large corporates at Intesa Sanpaolo Bank

The demand for locally produced, environmentally friendly food represents new opportunities for farmers in terms of food production and waste management. There is growing scope to use agricultural waste more effectively, by recycling and reusing it. There are also exciting new opportunities for banks looking to invest in sustainable agriculture.

This emerging trend extends from field to fork, and it’s not just producers looking to reduce their environmental footprint. Suppliers are also looking at ways to minimise their impact, such as finding alternatives to plastic packaging. “In the past, convenience was the prevailing factor in packaging,” says Kavšek. “But now we are seeing more eco-friendly options such as recycled plastic, and a reduction in packaging materials.” 

There is a growing number of SMEs meeting these demands in terms of provenance and environmental credentials. However, many don’t have the resources to invest in new, green technology. As a result, another trend in Slovenia’s food and drinks industry is a growing number of mergers and acquisitions, as big brands such as Žito take over SMEs. 

What these major brands also bring to the table is access to new markets, and exports are slowly increasing in Slovenia: there was a 2% rise in 2020, generating a revenue of €700m. 

The benefits of these mergers are mutual. While the major corporates help SMEs to expand, they are benefiting from acquiring brands with a strong heritage and loyal customer base. 

This trend has seen a small number of large firms dominate the market in the Slovenian food and beverage sector. Just 2% of companies in the food industry are responsible for 71% of exports, 62% of sales and more than 54% of all employees.

However, it has also created an interesting pattern of stratification: on one hand there are smaller companies focused on carving out their niche, while on the other hand, giants of the sector are making high-profile purchases to satisfy the changing needs of their customer. 

“There is a small concentration of big firms expanding, but also lots of new SMEs emerging,” says Kavšek. “Ultimately, a combination of local produce and self-sustainability – along with the consolation of large multi-nationals, which offers access to new markets – which will secure the future of our food and beverage industry.”

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