Fazer eyes Russia for bakery expansion as low-carb trend hits home markets

By Oliver Nieburg

- Last updated on GMT

Fazer plans to expand its production line in Moscow to produce added-value products
Fazer plans to expand its production line in Moscow to produce added-value products

Related tags: Russia, Fazer

Finnish bakery and confectionery firm Fazer has identified potential in Russia for its bakery arm and hopes to foster growth by developing premium health products.

A trend for low-carbohydrate high fat diets (LCHF) has harmed Fazer's sales in its home market Finland and neighbouring Sweden.

It sees Russia as a growth driver as it aims to become an international firm by 2016.

Russian expansion

Fazer is already the market leading baker in two of Russia’s major cities: Moscow and St Petersburg.

Fazer president and CEO Karsten Slotte told BakeryAndSnacks.com​ that he saw further potential in Russia, a large nation with a strong middle class that has plenty of purchasing power.

Fazer Russia
Hlebny Dom is Fazer’s biggest bakery brand in Russia

“We are investing in new production lines in Moscow for premium health products,”​ he said

Fazer has bakery manufacturing sites in Finland, Sweden, Estonia, Latvia, Lithuania and Russia.

Premium health products

Slotte added that while the factory expansion in Moscow would not increase Fazer’s production capacity, it would allow it to produce “added-value products”.

“All the time you have to develop your portfolio to keep it alive,”​ he said.

He said that the taste and functionality of bread could be improved by adding ingredients such as nuts, raisins and fruits.

Last year, Fazer responded to increased demand for hand-baked bread by acquiring Sweden’s leading artisan bakery Gateau. Slotte said this business had the potential to produce new functional bakery products.

Low-carb trend

In 2011, Fazer’s turnover increased by 4.1% and the group’s operating profit stood at €54.2m.

Although Fazer reported bakery growth in both Finland and Sweden, a growing trend for low-carb products last year harmed sales in these markets.

“During Autumn there was a period when we were generally affected,”​ explained Slotte.

Fazer launched a low-carb bread in response, which has performed to expectations, but Slotte now considers the bread market to be stable.

“Trends like low-carb are coming and going. I believe it won’t grow or sink,”​ he said,

Euromonitor Pasi Hannonen previously told this site that bakery manufacturers could capitalise on the low-carb trend in Scandinavia. Before Fazer’s low-carb launch, he said he expected the company to dip its toes in this market.

Related topics: Markets

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