The Slovak firm will be the ninth food company to invest in the Cuban market, after Heineken and Nestlé.
25 year contract
Once approved, the Cuban Government will sign a contract with both Proxenta and Confitería Caibarién for a period of 25 years to produce and supply biscuits filled with custard; waffles; sweets (hard); sweets (soft) and sweet treats – characters (with icing).
Cuba's economy is forecast to grow at about 1% this year the same as in 2018 with an austerity program set up in 2016 to continue, according to Rodrigo Malmierca Diaz, Minister of Foreign Trade and Investment, Cuba.
“Following several years of negotiations Proxenta enters the Cuban market as a foreign investor and establishes a joint venture with the Cuban party,” said Pavol Kožík, founder, Proxenta.
The investment will include the upgrade of an existing state-owned plant for sweets production Confitería Caibarién situated in Caibarién in the Cuban province Villa Clara.
“The demand for sweets products on the Cuban market represents about 20,000 tons. Due to insufficient domestic production about 61%, i.e. about 12,000 tons of the demand are covered from exports,” added Kožík.
“The long-term objective of the Cuban government is to replace imported sweets with domestic production while ensuring a quality of products and product range.”
Cuba has faced challenging times since the economic collapse of its strategic ally Venezuela, a decline in export earnings over four consecutive years, bad weather and the Trump administration's tightening of sanctions.
Economy minister Alejandro Gil Fernandez said austerity measures, which were introduced in 2016 continue to be rolled out in 2019 including; cuts in energy and fuel to state companies and reduced imports, which has led to shortages in bread, medicine and eggs for example.
Production of the state-owned plant Confitería Caibarien started in 1975 but ground to a halt in 1976.
Since that time, the technology used in the factory, bought in the mid-70s and mid-80s is now obsolete.
The investment by Proxenta includes replacing the existing technology with modern equipment including; a production line for waffles with a capacity of 2 tons in an eight hour shift; a production line for soft, hard and filled sweets; packaging; and production lines for sweet biscuits filled with custard and sponge biscuits with icing; icing of sponge-biscuit characters and waffles.
Once the 8,620m² plant is in operation it will produce approximately 10,000 tons of sweets, which will replace 83% of imports.
The factory will work in three rotation shifts with about 250 employees. The company will also ensure demand for domestic Cuban raw materials such as sugar, salt, cocoa and flour.