IKEA franchisee invests €720 mn to secure trees for its furniture

The largest IKEA franchisee is buying €720 million ($840 million) worth of forest land in Latvia and Estonia in its biggest such acquisition to ensure a well-managed source of sustainable raw material for its furniture.

Ingka Investments, the investment arm of Ingka Group, is buying about 153,000 hectares (380,000 acres) of land from Sweden’s forest owners’ association Sodra, according to a statement on Monday. Just under 90% of the area is covered by woods. Ingka said that the purchase aligns with its long-term strategy to invest sustainably and strengthen local value chains.

The company seeks to take “a generational view” of both forest management and IKEA’s renewable material supply, Managing Director Peter van der Poel said. The plan is to partner with Baltic sawmills and panel manufacturers to process wood regionally.

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.

Sodra CEO Lotta Lyra said the sale allows the cooperative to focus on boosting the value of its members’ Swedish forests. The deal remains subject to regulatory approvals.