In 20 Years, Trade Has Dominated the Economy at the Expense of Industry

If medals were awarded for revenue achieved like at the Olympic Games, world and European championships, the same winners would stand on the podium in the Croatian business sector today as they did 20 years ago. Gold would go to Ina, silver to HEP, and bronze to Konzum (plus). At first glance, it seems that nothing has changed at the top of domestic business from 2005 to 2024.

However, the changes have actually been dramatic. In the top 10, only Zagrebačka banka has remained alongside the leading trio, but it has slipped from fifth to seventh place. When the analysis expands to the top 20, only four companies have survived in that company – HEP production, Hrvatski Telekom, Pliva, and Privredna banka Zagreb. Twelve have dropped out of the ranks of the 20 most powerful. Two no longer exist – T-Mobile has been merged into its parent Hrvatski Telekom, and OMV Hrvatska was first taken over by Crodux derivatives of Ivan Čermak, who then sold the entire business with gas stations to Petrol.

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The former Getro as a retail chain no longer exists. The Slovenian Mercator took over the stores, which later merged into Konzum, while founder Vjekoslav Gucić retained ownership of the real estate, renamed the company to Get nekretnine, and lives off rent. This way, he generates about ten million euros in revenue. This is a significant drop compared to 276 million euros in 2005, when the company was at the peak of its power. However, revenue of 10.5 million euros with a reported profit of 7.5 million with only seven employees indicates that Gucić is still doing well today.

Bad 2024 for Energy Companies

The rise and fall of the company Hypo-Leasing Kroatien was quite different, which, during the construction boom, rising real estate prices, and loans in Swiss francs in the Croatian market, even surpassed its parent Hypo bank, which mainly followed by financing vehicles, equipment, and real estate. As part of the expansionist strategy of the Hypo group in the region, it became the convincingly largest player in the leasing market, with revenues three times larger than its first competitors. At that time, the bank was around 50th place, and its leasing was 18th in 2005 and further advanced into the top ten – reaching sixth position in 2007. But then the real estate bubble burst, a prolonged financial crisis arrived, loans in Swiss francs entered the category of bad debts, losses were recorded, and a scandal involving fictitious accounts erupted.

It was claimed that around 2.4 million euros were withdrawn. Criminal proceedings were initiated against several managers, which were only suspended in 2025 with an interesting justification that ‘the acts were not committed with direct intent’. In the meantime, HLK survived restructuring and layoffs and became part of HETA Asset Resolution, established to manage the bad assets of the former Hypo group. In April 2024, this company was taken over by Višnja Kallay through her company Bono Modo and renamed Blue Iris Resolution. The next transaction followed in July this year, and the new owner is the Sarajevo company Slide owned by Almir Grcić. Blue Iris Resolution generated four million euros in revenue last year, while HLK had revenues more than a thousand times larger at its peak – over 4.5 billion euros.

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It can be said that the energy sector has been very stable, not only because of the two companies at the very top of the list. The past year has been unfavorable for energy companies due to controlled energy prices. This was significantly felt in lower revenues. At the same time, due to the drop in gas prices on the world market, turnover and profit from international trade decreased. Despite this, five companies (Ina, HEP, PPD, Petrol, and HEP Production) remained at the top, all in the top 10, while the sixth narrowly missed the top 20 (HEP – ODS was 21st). The sector’s share of revenue logically fell from 38.2 to 26.7 percent, but precisely because of the stability and resilience of large companies, this was not seen as shocking.

Among individual companies, the story of Ina with Hungarian management is well-known, and the growth of Petrol and its acquisition of Crodux should be highlighted. Although Ina still has more than three times larger revenues, it will be interesting to observe the energy triad of Slovenian and Hungarian companies and the domestic PPD in the upcoming period.

PPD Riding the Wave of Liberalization

From the challengers’ side, right behind the trio of medalists, two new companies emerged – PPD (4th) and Lidl (5th). PPD was indeed founded in 2001, and in 2005 it was still owned by E.ON. The company, without visible ambitions, mainly accumulated losses, which is why the German energy giant decided to withdraw from the gas business in Croatia. The business was taken over in 2010 by financial director Pavao Vujnovac, who was at the right place at the right time. Business exploded in 2012 after the liberalization of the gas market, which had been announced since 2007 as it was known to be part of the accession package for entering the EU. In all of this, Vujnovac’s friendship with Ivan Vrdoljak – who operationally led the liberalization as Minister of Economy – was certainly not a hindrance. On the contrary!

Lidl, on the other hand, opened its first 13 stores in Croatia only in 2006. In the meantime, it has convincingly taken the second position among retail chains. In the years of Agrokor’s decline, it seemed that it would threaten Konzum’s leading position, but the retail leader consolidated and managed to keep the German challenger at bay. The entire company consolidated as well, but with the new owner Vujnovac. His takeover of the rebranded Agrokor did not only signify a change at the top of Croatian entrepreneurship.

Vujnovac is now the majority owner of Fortenova, PPD, and Energija Naturalis, has entered railway transport, real estate business, and food distribution, controls Luka Ploče as the largest shareholder, and is also the leading shareholder in Pevex. In this way, he controls almost ten percent of the revenue of the Croatian economy, so it can be said that he is now more powerful than Ivica Todorić was at the time when the founder of Agrokor was at the peak of his power.

There are also ten new members in the top 20 society. Of these 12 challengers, eight were not even among the top 50 in 2005, and three companies did not even exist or were at the beginning (along with Lidl and PPD, there is also Phillip Morris). Two more retailers achieved rapid growth in twenty years – the Split-based Tommy jumped from 105th position to twentieth. The company of Tomislav Mamić increased its revenue more than seven times, and the number of employees grew fivefold – from 850 to 4400. Just after 2005, the retail chain, which had until then been exclusively local, began to expand outside Dalmatia in 2006 by opening a store in Novi Vinodolski. The number of stores has grown from about 50 Dalmatian ones to 230 distributed across nine counties and Zagreb.

Even faster and more significantly grew Spar, which opened the first hypermarket in Croatia in 2005 in Zadar, and at that time was the 495th company by revenue. In the meantime, it rapidly opened new stores, acquired 20 locations from Diona in 2014, and took over 62 Billina sales points in 2017. Today it has 140 sales points, and those are larger formats – hypermarkets and supermarkets. The number of employees increased from about 200 to over 5000, and revenues increased sixtyfold – from 18 million euros to over a billion. Today, Spar is the third retail chain in Croatia.

Trade-ization of Croatia

In the past twenty years, trade has achieved the most convincing growth at the top of Croatian business. Of the two representatives, one dropped out (Getro), but Lidl, Spar, Plodine, Kaufland, Studenac, and Tommy joined Konzum. Retail chains collectively raised revenues from 1.4 billion euros to 7.6 billion, which is an increase of five and a half times. During that time, non-retailers failed to even double their revenues – they grew by 77 percent, which means that inflation, which was 67.7 percent during that time, was barely compensated. Thus, in the top 20, the share of retailer revenues jumped from 10 percent to 27 percent in twenty years!

But there are still three companies: wholesale of consumer goods Orbico Branko Roglić, wholesale pharmacy Medika, and Philip Morris, which does not have production in Croatia but only distributes products of the parent company. All of these are retailers, and none were in the top 20 in 2005. When they are taken into account, trade has increased revenues sevenfold in the top business elite over 20 years and the share from 10.8 percent to as much as 35.5 percent!

On the sectoral seesaw, the biggest victim of the trade expansion was industry. Vindija, Dukat, TDR, and Brodosplit dropped out of the top 20, where only Pliva remains as the only true manufacturer. This does not mean that the industry has collapsed. Indeed, Brodosplit is in pre-bankruptcy with an uncertain future, which has been exacerbated by the hostile stance of the new ruling Split administration towards shipyard owner Tomislav Debeljak, intensified by the termination of contracts with the Ministry of Defense for the completion of three military ships. It is also indicative that Philip Morris, as a distributor, has surpassed TDR in terms of revenue, which has production in Croatia and cannot be said to be doing poorly. This applies to Vindija and Dukat as well, but the industry as a whole is still on the defensive.

Twenty years ago, the industry had a larger share in the top 20 than trade – 11.5 percent, but now it has fallen to Pliva’s 3.4 percent. And Pliva deserves a few sentences of comparison with the largest regional competitor, the Slovenian Krka. In 2005, Pliva was acquired in a dubious privatization by the American Barr, which was taken over by the Israeli Teva in 2008. Krka is also a private company, but 80 percent of the ownership is held by Slovenian funds. Since privatization, Pliva has more than doubled its revenues, moving from a loss of 62 million euros to a profit of 139 million euros, and has about 1000 more employees than in 2005.

During that time, Krka has surpassed Pliva – increasing revenues 3.5 times, profits five times, and opened 6500 new jobs, of which about 3500 in Slovenia. The comparison is even more catastrophic when observing the results of the entire Pliva. The group, which at that time also had a strong research and development business (which has since been sold), had revenues of 992 million euros in 2005, and last year – 896 million.

The story of deindustrialization is less sad when observing the consolidated results of companies. Besides Pliva, the groups Končar and Braća Pivac (with consolidated results of the meat industry in Vrgorac, Čakovec, and Karlovac and with added results from Kraša) would also enter the top 20. In this way, the industry on the ‘consolidated list’ of the top 20 in 2024 still has a share of 12 percent. However, comparing it to the state from 20 years ago would be very complicated as the results were not consolidated then, and today’s groups have different portfolios.

Why Telecoms Stagnated

The second winner – as expected – is the financial sector. Banks, alongside Zaba and PBZ, gained a third representative in the top 20, Erste Bank. Thus, revenues increased almost threefold, and the share of revenue grew from 7.6 to 9.7 percent. In contrast, the unexpected decline in the share of the telecommunications sector, which had three representatives 20 years ago – HT, T-Mobile, and Vipnet (today’s A1 Hrvatska). The main challenger grew slower than inflation, 35.5 percent, and dropped out of the top 20, while T-Mobile has since been merged into its parent HT and no longer exists. HT has remained among the largest, but with a slight revenue growth of four percent, it slipped from fourth to eleventh position. However, when T-Mobile’s revenue from 2005 is added, HT has actually lost almost half a billion euros in revenue, which is a decline of 23 percent.

It is paradoxical that this is a sector that has experienced a significant boom in the last two decades. Smartphones have arrived, internet communication is stronger than ever, and telecoms are also increasingly important providers of on-demand television programs. However, new players have emerged. Only Telemach has surpassed 300 million euros in revenue in 2024, and a number of small local players have also appeared. The drop in prices has been contributed to by increasingly strong competition, breaking the former monopoly that functioned for a time as a duopoly.

Once, telecoms billed based on every started minute of conversation, and today the billing unit is a second. Prices have fallen due to new technological possibilities, but also due to European regulations, which abolished roaming in the EU area. Because of all this, telecoms today operate more dispersed than 20 years ago, which is also evident among the 20 largest.

Nevertheless, the entire information and communication technology (ICT) sector has achieved some growth. We compared the current published data for 2023 with those from 2008, since the State Bureau of Statistics has been showing basic structural-business indicators of companies since then. The share of the number of ICT companies increased from 3.3 to 7.2 percent, and the share of the number of employees rose from 3.4 to 5.7 percent. The share of turnover increased slightly, from 4.4 to 4.5 percent. A possible reason is remote work, meaning that not all revenues are recorded in Croatia. Therefore, it is encouraging that the share of added value from ICT has increased from 7.1 to 9.3 percent.

Shopping Center for Tourists

Meanwhile, tourism with hospitality has grown the most – practically doubling its share in turnover, from 4.4 to 8.3 percent. Construction, with a share of 9.5 percent, despite recent growth due to post-earthquake reconstruction, has not yet reached the share of 12.5 percent from 2008. After that peak, the real estate bubble burst, which triggered a six-year recession. The structural changes do not indicate a green transition. The ecological sector (with water supply and sewage) has remained at the same share in turnover and has even reduced its share in added value.

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The two largest sectors – trade and manufacturing – have slightly reduced their shares in turnover and increased those in added value, and this is with fewer companies (which means consolidation) and a smaller number of employees (which means greater productivity). Energy prices have boosted turnover for energy companies, while transport and storage stagnate despite the push for Croatia as a logistics center. Therefore, the share of other service activities (tourist and nautical agencies, employment agencies, security services, property management, cleaning services…) has increased. On the other hand, mining and extraction have survived only on a symbolic level; these are quarries and services related to oil and gas (Ina is in the statistics in the manufacturing industry).

In absolute amounts, energy companies have increased turnover the most (258 percent), due to the aforementioned rise in energy prices, followed by tourism and hospitality (213 percent), other services (155 percent), real estate business (147.5 percent), ICT (58 percent)… Trade (52 percent) and manufacturing (50 percent) narrowly defeated inflation, which was 45.3 percent during that period. The biggest losers are builders, who increased turnover by only 28 percent, which, considering inflation, is actually a decline of 17 percentage points.

From this, it is clear how far Croatia is from the proclaimed strategic goals. Namely, in the ‘National Development Strategy of the Republic of Croatia until 2030’ from February 2021, it states that by 2030, Croatia will be ‘a competitive, innovative, and safe country with a recognizable identity and culture, a country of preserved resources, quality living conditions, and equal opportunities for all’. However, it is already clear that changes in sustainability, green and digital transition, and regional development are not only insufficient but are aimed at turning Croatia into a large shopping center for tourists. At least until they keep coming.