Fazer Russia expands bakery operations

The company hopes the purchase will double the bakery's turnover in five years, as it aims to profit from the booming cereal, bakery and snacks markets in Eastern Europe.

The share purchase was made through Fazer Russia, a subsidiary formed in April this year specifically for the Eastern Europe market.

Berndt Brunow, president of Fazer Group, said in a statement last week that the company is targeting Russia as one of the company's main growth areas.

"According to our strategy our target is to continue growing both through acquisitions and organic growth," he said.

"Co-operation with Volzhky Pekar is a big step forward in fulfilling our strategy."

Fazer Russia is currently making a large investment at the Volzhky Pekar's bakery in Moscow, with the aim of increasing production volumes by 50 per cent to 75,000 tonnes per year, he said.

The focus will be on fresh bread and pizzas, the company said.

The company will also invest in developing Volzhky Pekar's bakery in St Petersburg to expand its current range of baked goods.

"The bakeries' location is perfect for deliveries to Moscow and the assortments of our bakeries complete each other," he said.

Volzhky Pekar bakes 45,000 tonnes of bread, 5,000 tonnes of bagles and 5,000 tonnes of different flour confectionery products, Brunow said.

Volzhky Pekar's turnover was €32m in 2006, he added.

FinFood, a government funded food information service in Finland, recently praised the Fazer Group for its investment in Russia, citing successful product innovations and strong operational developments.

Bakery operations in Russia have grown 39 per cent annually over the previous three years, FinFood said.

Fazer Group's other subsidaries include Fazer Bakeries, operating in Scandinavia and Eastern Europe, Fazer Amica, a contract catering company in the Baltic countries, and CandyKing, a pick and mix confectionery business operating in the Nordic countries, the UK and the Baltic states.

Other companies that have invested in the bakery and snacks markets in Eastern Europe include PepsiCo, which hopes to invest €127m over five years in a second snack manufacturing plant in Russia.

Finnish Raisio also built plants in Russia last year to market its oatmeal products in the country.