Fazer Group to expand bakery operations in Russia and Finland

16-Jun-2016 - Last updated on 17-Jun-2016 at 10:07 GMT

Innovation is increasing in Russian bread market, said Fazer.

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International bakery and confectionery business Fazer Group has announced it is to expand its operations with a new factory in Russia and the acquisition of an artisanal bakery in Finland.

The business has signed an Agreement of Intent to work with the Government of St Petersburg to build a frozen bakery plant.

“We are committed to strengthening Fazer’s competitiveness and profitability in Russia,” said Fazer president and CEO Christoph Vitzthum. “With the agreement signed with the Government of St. Petersburg, we declare our intention to build a new production plant in the city and receive support and consultancy from the city for this project.”

Planned to open in around 2026, the frozen bakery factory would be the company’s fourth site in Russia, where it employs around 3,000 people. The new factory would also potentially be expanded to produce fresh bakery goods.

Major investment

Investment in the new project, including construction and production equipment, could be around 14 billion roubles ($215m), said Fazer.

The business describes itself as one of the leading bakery companies in Russia, where it has already invested almost €300m ($340m). It says it has taken a strong role as an innovator, particularly in the health and well-being category, and has also “significantly contributed” to the development of Russia’s frozen bread market.

Fazer Group

Finland-based Fazer Group is an international family-owned company offering bakery, confectionery, biscuit and grain products as well as food and café services.

The business operates in eight countries and exports to around 40.

In 2015, Fazer Group had net sales of more than €1.5bn ($1.7bn) and nearly 15,000 employees.

The company admitted 2015 had been a “challenging” year for its business in Russia as a result of weakened currency and turbulent economic situation affecting the cost of ingredients.

Changing Russian bread market

But Fazer said its Russian business had developed well in local currency, with sales of around €189m ($213m) – 12% of Fazer Group’s total net sales.

“Bread has been changing rapidly from a commodity category towards a category with an increasing number of innovations in products and technologies,” said Vladimir Kalyavin, managing director of Fazer’s Russian business.

“The new plant will enable us to implement recipes that appeal to consumers, helping us to grow the category with our customers and improving the efficiency of our operations,” he added.

Acquisition of artisanal bakery

Fazer also announced it is looking to tap growing consumer interest in artisanal bread with the acquisition of Finnish bakery business Keisari.

Founded in 1990, Keisari is located in Helsinki and produces baked goods sold direct to consumers in its own shops, and also to retail, restaurants and cafés.

Fazer will be managing the 10 Keisari bakery shops it has acquired as a separate business unit, alongside its existing Fazer Bakery Shops and Swedish Gateau chain that it acquired in 2011 and has grown to 32 shops.

Fazer’s other Finnish bakery unit is the Fazer Bakery Finland Business Unit, which employs around 1,500 people. It operates four large bakeries in Vantaa, Lahti, Lappeenranta and Oulu, and 43 in-store bakeries in hypermarkets throughout the country.

Artisanal bread is a strong worldwide trend, said Fazer.

“With Fazer’s and Keisari’s high-quality products, we can offer consumers an even broader assortment in our own shops,” said Fazer Bakery managing director Petri Kujala. “We see great potential in artisanal bread.”