Fazer to build new Russian bakery

By Charlotte Eyre

- Last updated on GMT

Related tags: Fazer, Russia

The Fazer Russia group this week said it has signed an agreement to
build a new bakery in Leningrad, as part of the company's ongoing
plans to increase its presence in the Russian market.

"Thegreenfieldbakery inSt Petersburgsupports Fazer's growth strategy and strengthens our position as one of the leading bakery companies inRussia,"​ said Fazer president Karsten Slotte in a statement. The Finland-based company said earlier this week it has made a €100m investment in the plot of land, where it will construct the bakery to manufacture fresh bread, frozen bread and fresh coffee products. These products will then be distributed to Fazer outlets throughout Russia, the company said. Russian bakery market​ Fazer's decision reflects a trend amongst bakery manufacturers to move into booming Eastern European markets, where input and labour costs are lower than Western Europe or the US. Indeed, Russia is one of the most dynamic markets in the region, experiencing 13.7 per cent compound annual growth rates since 2000, according to Euromonitor. Fazer already has a number of bakery plants and retail outlets in the country, and the company claims that their Russian operations have grown at an average rate of 40 per cent every year. Most recently, Fazer took a majority stake in the bakery OAO Vozhky Pekar in July last year, hoping the acquisition would allow the company to increase production volumes by 50 per cent to 75,000 tonnes per year. Fazer​ Russian operations now account for 14 per cent of Fazer's business, and turnover in the country was €170m in 2007, the company said. Fazer is also one of the major bakers in the Nordic and Baltic regions, with operations in Finland, Sweden, Estonia, Latvia and Lithuania.

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