Asian group Lotte has plans to expand the production capacity of Polish confectionery manufacturer Wedel by investing over €200m into the company, according to a Polish media outlet.
The funds will go towards the construction of five new plants in Poland, reports Rzeczpospolita, citing unofficial sources.
The article notes that Lotte will make a preliminary investment of €70m with the remainder of the financing to be phased in.
The Japanese-Korean giant has publically stated its intention to increase its share of global confectionery sales by 20 per cent in the next few years. July saw Lotte acquiring the Wedel business in Poland from Kraft Foods, which it has been forced to sell under European Commission competition rules following its takeover of Cadbury.
And Lotte revealed previously that Wedel was critical to its strategy in Europe and that it planned to diversify the company to extend its product range including chewing gum.
Jonathan Thomas, principal marketing analyst at Leatherhead Food Research, told this publication that Poland remains a growing market for chocolate products, with the more than six kg per capita consumption ranking above the regional average.
“Once the economic situation improves, I think the trend towards higher quality premium chocolate will resume, and Lotte’s Guylian brand may benefit from this,” continued the analyst, who maintains that the Eastern European confectionery market has considerable potential to expand further.
The acquisition of Belgian firm Guylian in mid-2008 for €105m spring boarded the Asian conglomerate into the European premium chocolate sector.
And Euromonitor packaged food analyst Ildikó Szalai sees Lotte as a frontrunner in any potential bids for publically listed confectionery company Lindt & Sprüngli, which she maintains is the most interesting confectionery acquisition target due to its premium portfolio and its post-recession weakened state.
“The purchase of Lindt would instantly give the Lotte group a global standing within the confectionery arena, as up until now its acquisitions have been relatively minor players,” said Ildikó Szalai, packaged food analyst at Euromonitor International.
“Over 80 per cent of Lotte’s sales come from mature markets in Japan and Korea. The group is looking to grow its confectionery portfolio, and while India or China might may more logistic expansion target markets, takeover of a significant premium European confectionery asset would better serve its global growth plans,” added Szalai.