Monday, March 06, 2006
Kraft to build a plant near St. Petersburg to satisfy Russia's growing taste for instant coffee
Food and beverages giant Kraft said it would invest $100 million to build a new plant near St. Petersburg in a bid to satisfy Russia`s growing taste for instant coffee. With a production capacity of 5`000 tons per year, the new plant will work alongside Kraft`s existing coffee-packaging facility near St. Petersburg. The move of production to Russia coincides with a boom in coffee consumption: Russia has become the fastest-growing market for the company in general and coffee in particular, Kraft said in a statement. "Up to now, we have imported coffee from Germany and the U.K., but as demand continues to grow we`ve decided on a plant in Russia," Michel Boon, director for Kraft Foods in Russia, said. The company`s existing coffee plants in Europe have now reached capacity, he added.
The move makes Kraft the second foreign company after Nestle to have a full-cycle coffee operation in Russia. When the plant begins operating in October 2007, it will handle production of Kraft`s Jacobs Monarch, Carte Noire and Maxim brands. Its Maxwell House and Jacobs Aroma brands will continue to be imported from Western Europe and packaged in St. Petersburg. The new plant is to employ some 250 people, Boon said. Kraft will invest $50 million in the St. Petersburg plant`s infrastructure, with the remaining $50 million going into the equipment required to produce freeze-dried coffee, the most expensive type of soluble coffee.
Sales of freeze-dried coffee grew by more than 80% in 2005 in real terms, Kraft said. In November, rival food and beverages conglomerate Nestle started production at its $120 million plant in Timashevsk, in the Krasnodar region. This year, Nestle plans to make 12`000 tons of granulated coffee, sold under its Nescafe Classic brand, at the plant. In February, the government suspended for nine months a 5% import tariff on green, unroasted coffee beans in an effort to support domestic production. In Russia, seen as a traditionally tea-drinking country, 80% of the coffee Russians consume is instant, according to British-based consultancy Euromonitor.
The move makes Kraft the second foreign company after Nestle to have a full-cycle coffee operation in Russia. When the plant begins operating in October 2007, it will handle production of Kraft`s Jacobs Monarch, Carte Noire and Maxim brands. Its Maxwell House and Jacobs Aroma brands will continue to be imported from Western Europe and packaged in St. Petersburg. The new plant is to employ some 250 people, Boon said. Kraft will invest $50 million in the St. Petersburg plant`s infrastructure, with the remaining $50 million going into the equipment required to produce freeze-dried coffee, the most expensive type of soluble coffee.
Sales of freeze-dried coffee grew by more than 80% in 2005 in real terms, Kraft said. In November, rival food and beverages conglomerate Nestle started production at its $120 million plant in Timashevsk, in the Krasnodar region. This year, Nestle plans to make 12`000 tons of granulated coffee, sold under its Nescafe Classic brand, at the plant. In February, the government suspended for nine months a 5% import tariff on green, unroasted coffee beans in an effort to support domestic production. In Russia, seen as a traditionally tea-drinking country, 80% of the coffee Russians consume is instant, according to British-based consultancy Euromonitor.
# posted by Buck @ 4:57 AM 
