The company will spend the money on improved ammonia compressors, which draw heat from processes to create a safer working environment. It will also install also secondary trays for chemical agents.
The factory, which Nestlé acquired when it bought domestic producer Svitoch in 1998, produces tablets, chocolate boxes, wafers, chocolate countlines and sharing sweets. It is home to 828 workers, who earn an average of UAH 3,350 UAH ($412) per month.
Nestlé’s latest investment comes soon after a Lion bar line and new chocolates tablets, chocolate forming and Artek wafer lines were recently added to the plant
At the end of 2012, Nestlé also invested UAH 6.7 million ($824,000) on new sewage works to reduce water usage. It also replaced 40% of its mercury vapor lamps with energy-saving LED lamps. The company eventually plans a full replacement.
Ukrainian confectionery market
According to research analysts Leatherhead Food Research, the overall Ukrainian confectionery market has declined 20% since 2007 and recorded a retail sales value of €925m ($1.2bn) in 2011.
Chocolate consumption in the Ukraine is around 4.2 kg per capita, around the same as Russia.
The market is dominated by local players with Ukrainian firm Roshen holding a 20% share, followed by Konti on 15%.
Multinationals including Nestlé and others such as Mondelez, Mars, Haribo and Perfetti Van Melle are present, but command much less of the market.
Russian export fiasco
Russia recently imposed import sanctions on Ukrainian produced chocolate in retaliation to emergency duties Kiev placed on imported cars.
The nation’s federal service for health and consumer rights group (Rospotrebnadzor) also raised concerns about the sanitation of products produced by Roshen, which the company strongly refutes.
According to Ukraine’s news agency Interfax, Russia went one step further today by banning imports from Roshen. However, we have yet to verify these reports and Roshen says it has not received any official notification.
A Nestlé spokesperson said: “Svitoch produces chocolate mainly for the markets of Ukraine and Moldova. Export to Russia is not a factory main priority.”