Some believe that the only match business in Bulgaria is the match manufacturing plant in Kostenec, a small town in the outskirts of Sofia. However, this is incorrect, as matches are no longer produced in Bulgaria.

The plant has recently entered into another stage of its history - it manufactures unique items that are export-oriented. It is not a problem for the plant because matches are imported from abroad. The most important thing is that the small town plant is now competing in the hostile environment of the developed markets.

On December 1, 1997, Swedish Match acquired 58 per cent of the shares of Plam Bulgarski Kibrit, Bulgaria's leading match manufacturer at a price of $2.35 million. Plam was sold as part of Bulgaria's privatization campaign. The company controlled virtually the whole Bulgarian match market (producing approximately nine billion matches, almost the size of the German market). In addition, half of the matches produced were exported to neighbouring countries.

Swedish Match is an international company that sells niche products such as snuff, cigars, pipe and chewing tobacco as well as lighters and matches in more than 140 countries. The company originates from Svenska Tobaksmonopolet and Svenska Tandsticks AB, which were founded in 1915 and 1917, respectively. It has five divisions - North Europe, Continental Europe, North America, overseas and matches. The Bulgarian subsidiary is part of the matches division.

"Swedish Match is the world's number one in match manufacturing, and holds second place in cigar production," explained Dani Deligyozova, executive director of Swedish Match Plam Bulgaria. This energetic young Bulgarian woman was chosen by the Swedish company to manage its subsidiary here. "Since last year, we haven't manufactured matches in Bulgaria. We import them from Turkey, where Swedish Match has another plant," she said.

According to Deligyozova, that was the only way to eliminate production costs. "We would never be able to cover the cost, because of the low price of matches," she admitted. "And we can't raise the price, because matches are not a competitive product." There are several reasons for this - matches have been replaced by lighters and the number of smokers worldwide is constantly decreasing.

Swedish Match Plam Bulgaria produces two new products and 99.9 per cent of the production is exported, mainly to European Union countries. Plam's firestarters and firelogs are unique products, which have no competition and are very successful in developed markets.

"When the privatization contract was signed we had two major obligations to fulfill. One of them was to invest $1.9 million," said Deligyozova. Actually the investment made by the company by the end of 2000 was $3.2 million. The Swedish owner continues to spend money developing facilities in Bulgaria and by the end of the five-year privatization obligation term its investment will have increased. The term expires at the end of 2002. The second obligation was related to the labour force. This was very important because Kostenets had unemployment problems. The only two plants that give jobs to the local population are Plam and a paper factory. "Now we have 120 employees. We had to lay people off to become more efficient and they received considerable compensations," Deligyozova said.

There are several advantages of being a match producer in Bulgaria. "First of all we have a developed infrastructure here in Bulgaria," she said. Next, come the people. According to the executive director, human resources are a very important advantage of Bulgaria. "We also have enough timber, and the good thing is that this timber could not be used for any other purpose. We use the branches and other timber left-overs," said Deligyozova, pointing to the environmentally-friendly nature of their production.

The environmental policy is a major issue not only for the Bulgarian branch, but also for all the operations of Swedish Match. The group's operations are participating in a program for certification in accordance with the environmental management program ISO 14001. Representatives for the group's primary operations are forming a network for the exchange of experience and formulating a plan of action relating to environmental aspects. This brings back the hope of foreign investors building not only a new economic culture, but also a fresh environmental protection culture in Bulgaria.