IKEA owner Ingka Group will buy €720 million forest land in Europe to boost ‘sustainable raw materials’ for furniture

IKEA's largest franchisee, Ingka Investments, is buying forest land worth around ₹7.39 lakh crore (€720 million) in Estonia and Latvia, to meet its requirement of sustainable raw material for furniture, Bloomberg reported.

The acquisition of this 3,80,000 acres is IKEA's largest such deal to date. Ingka Investments will buy the land from Sweden’s forest owners’ association Sodra, the company said in its statement on October 20.

Ingka Investments, is the investment arm of Ingka Group, which is the holding company for IKEA.

IKEA buying land in Estonia, Latvia: What we know…

• According to the report, around 90 per cent of the land is covered by woods, and was chosen to align with IKEA's long-term strategy to “invest sustainably and strengthen local value chains,” the Bloomberg report said.
• The company's Managing Director Peter van der Poel in the statement said that Ingka Group seeks to take “a generational view” of both forest management and IKEA’s renewable material supply.
• “The plan is to partner with Baltic sawmills and panel manufacturers to process wood regionally,” he said.
• Sodra CEO Lotta Lyra said the sale allows the cooperative to focus on boosting the value of its members’ Swedish forests.
• The deal is subject to regulatory approvals.

About Ingka Group: How much land does IKEA own?

Ingka Group, which operates IKEA stores in 31 markets and accounts for 87% of global IKEA retail sales, already manages 331,000 hectares of forest land in seven countries. Owned by a charitable foundation, it reinvests profits into the business and sustainability projects rather than paying dividends.

The acquisition brings Ingka’s recent investments to more than €1 billion. It has recently bought artificial intelligence logistics platform Locus, a flagship retail and office property in Manhattan for a second IKEA store, and a minority stake in Vanguard Renewables, which turns food waste into renewable natural gas.

(With inputs from Bloomberg)