Bunge spears Russian edible oils market with first plant

Related tags Petroleum

Spearing opportunities in the emerging Russian oil market, US
edible oils giant Bunge has signed off €54 million to build its
first sunflower seed crushing and refining plant in Russia,
writes Lindsey Partos.

Targeting the number one edible oils market in central and eastern Europe, the biggest processor of oilseed in the world said the new Russian facility will be up and running by early 2006.

Bunge joins rival US oils competitor Cargill that in January this year announced plans to break ground on its first Russian refinery.

Sunflower, rapeseed and corn oil, as well as palm and coconut oil, will all pass through Cargill's new €46.1 million plant expected to be completed by February next year.

Both ingredients behemoths will compete against domestic, and other foreign investors, eager to grab a share of this growing market.

In December 2004 the Aston group, a Swiss led alliance of private firms, announced clear ambitions to become the biggest raw vegetable oil manufacturer in Eastern Europe.

The group has begun supplying retailers with refined deodorised oil from its $60 million extracting plant MEZ Volshebnii Kray and recently launched a new $22 million oil refining line to produce 130 tons of refined oil a day for its own brand sunflower oil.

Rostov-based firm Yug Rusi is also nearing completion of its own vegetable oil production expansion. When finished the extracting plant will have the potential to supply about 4,000 tons a day.

And there is one more bidder for market leadership. The RusAgro group is planning to increase its annual seeds processing capacity from 450,000 tons at its three plants to 800,000 tons by building a new oil refinery plant in the Voronezh district with an annual capacity of 350,000 tons.

Bunge's new plant, also located in the Voronezh area about 375 miles south of Moscow, will have an annual crushing capacity of approximately 500,000 metric tons and an oil refining and bottling capacity of about 200,000 metric tons.

"Bunge's strategy is to increase its share of the country's consumer bottled oil market by creating an efficient, domestic production chain and building a national distribution network,"​ said Ben Pearcy, area director for eastern Europe.

It will have efficient access to growing Russian sunseed production and to the large markets of Moscow, St. Petersburg and central Russia, he added.

The US firm competes on the Russian consumer oil market with two bottled oil brands: Ideal, a brand acquired in 2004, and Oleina.

"With these two brands and its new facility, Bunge believes it is well positioned to increase its bottled oil sales to this important, yet regional and still fragmented, market,"​ said Bunge, that in February reported $6.3 billion worth of sales, a fall from $6.4bn last year.

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