Market Scene : Bulgaria’s Modern War of the Roses : * Perfume oil is a state monopoly that stubbornly resists capitalist inroads in the Eastern European nation.

The heady scent and precious-metal price tag of attar of roses hint at the affluence Bulgarians dream of, and its production in grimy, dilapidated factories operated by hidebound managers and slothful workers embodies the Eastern European reality they would like to escape.

Like the expensive essence itself, the soul of perfume, the rose-oil industry is Bulgaria in concentrate. It too has suffered under communism, yet it stubbornly refuses to submit to the capitalist era.

The oil, distilled from rose petals, is an ancient and unique ingredient of perfume, used to fix the scent, and is a major source of hard currency for impoverished Bulgaria. It accounts for 50,000 jobs and at least 2% of the economy. Proponents of privatization believe it could flourish even further with the decline of Communist-era mismanagement, but Bulgaria’s rose growers, distillers and the state monopoly distributor have hunkered down, resisting outside investment.

Mainly, people in the industry fear that sale of their facilities to foreign investors might disrupt the delicate competition between Bulgaria and Turkey, the only two significant producers of attar oil. Specifically, many of them suspect that the Turks themselves might try to buy into the Bulgarian industry and shut it down, taking over the whole market.

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Rose growers and distillery workers have reportedly been sabotaging any efforts to shift attar production from state control, and government officials are doing little to deter them because many are comfortable with a state monopoly that produces a profit, even with the winds of capitalism blowing across the region.

Last year the 12-nation European Union, as part of its program for aiding the transition of former Communist states to market economies, contracted a U.S. company, Boston Consulting Group, to evaluate Bulgaria’s rose-oil facilities in preparation for private sale. European Union sources here complained that their work and that of the consultants was constantly thwarted by industry managers and union leaders.

Managers at such state-owned companies as Alen Mak of Plovdiv have told Bulgarian newspapers they are refusing to disclose details of their financial and marketing positions to foreign consultants trying to determine their worth. They are also closing their records to potential buyers who come to scope out the profit prospects. The Sofia government has so far refused to accept the results of the pre-privatization study, bowing to industry managers who claim its evaluations are inaccurate.

“I am a nationalist as far as rose oil is concerned,” proclaimed Boyan Kalakounov, an expert in aromatic oils at the state-owned Bulgarian Rose Company in Karlovo, summing up the view that attar production should stay in Bulgarian hands.

Yordan Todorov, an agronomist at a state-owned rose farm near the city of Kazanluk, suggests that foreign investors should merely provide cash for new equipment in exchange for a share of the attar output. Like most Bulgarians whose livelihood depends on the industry, he rejects the notion of letting foreigners own and control the means of production.

Bulgaria’s attar distilling, packaging and marketing facilities are poorly equipped and out of date, but production of the oil is as much art as science. Only roses grown in the rich soil of the 60-mile-long Valley of Roses in the heart of the country are used. To ensure that the petals are harvested at their aromatic best, they are picked only during the first two weeks of June and only during the first two hours after sunrise.

Fifteen distilleries scattered throughout the valley extract the attar oil from the roses and then truck it to Sofia, where it is tested and blended to ensure that the Bulgarian product is consistent in quality and composition.

“It’s much like making wine,” said Peter Dragostinov, a quality-control specialist at the Research Institute for Perfumes, Cosmetics and Essential Oils. Each year’s crop of rose petals is slightly different, as is each vat of oil produced by the various distillers, so institute scientists must constantly revise their recipes to create the same properties and scent.

Bulgaria was the only attar-producing nation in the world until the middle of this century, when the Communist takeover after World War II subjected the industry to a series of disruptions and encouraged neighboring Turkey to move into the market.

Turkey now slightly outproduces Bulgaria’s annual output of 800 kilograms, or about 1,760 pounds, of the highly concentrated attar, which sells to wholesalers and major perfume manufacturers for about $150 per ounce. While the quantity of attar produced both here and in Turkey is relatively small, it is so dense that a tiny copper flask, holding about 3.5 ounces, has the power to preserve the fragrance in gallons of perfume.

“All rose oil produced in the country, without exception, is brought here,” said Nikolai Nenov, head of the research institute’s laboratory in Sofia. “Otherwise the product cannot be certified as genuine Bulgarian rose oil and affixed with the seal and national colors that guarantees buyers they are getting the real thing.”

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The Bulgarians claim to be angling to recover some of the market share lost to Turkey over the past few decades. Prices for Bulgarian oil have been cut by about 20% in an effort to close the gap with Turkey and win back important French perfume makers that have turned to the Turkish oil.

“The Turkish producers sell their oil for much less, but the quality is lower as well,” Nenov insisted, noting that the Turkish oil has never sold for more than about $85 per ounce.

Both countries limit production to maintain prices.

“If Bulgaria had a reasonable trade policy during the Communist era, we would now have much better prospects for production and marketing as well,” Nenov said. “It’s not that the authorities adopted a particularly destructive policy toward attar, it was just that agriculture in general was not given much priority.”

Although a historically agrarian region, Bulgaria was subjected to mass industrialization under the Soviet Bloc after World War II. Workers were drawn from farms to factories, and responsibility for food production was transferred to huge collective enterprises. Rose oil continued to be produced most years, but quality and quantity was inconsistent until its value as a hard-currency earner was realized in the late 1960s.

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While the Turks supply the French, Bulgaria dominates the U.S. attar market, selling as much as 80% of its output to American perfume makers and wholesalers, Nenov said.

The oil is reputed to have medicinal uses as well as cosmetic, but Bulgarian industry officials concede that they have devoted too little time to development in that sector. With small-scale production, U.S. and Japanese companies have taken the lead in medicinal research, Nenov said.

Kazanluk and Karlovo, industry centers in the Valley of the Roses, host an annual Rose Festival and Rose Parade each June. This year’s festivities will mark the 350th anniversary of the first production of attar, which began during the time of Ottoman Turkish rule of the Balkans. The Ottomans, who dominated the Muslim world, imported roses from Damascus, Syria, and compelled Bulgarian peasants to cultivate them. Officials at the Rose Institute say the industry’s folklore sets the first attar extraction in 1644.