Mondelēz downplays Russia sanctions as it announces $110m factory

By Oliver Nieburg

- Last updated on GMT

$110m Novosibirsk plant to capitalize on growing Russian confectionery market
$110m Novosibirsk plant to capitalize on growing Russian confectionery market

Related tags Russia

Mondelēz International has made light of potential trade sanctions against Russia for its annexing of Crimea and announced a $110m factory in Siberia.

The plant in the Novosibirsk region will produce Mondelēz chocolate and biscuit brands and will become the firm’s fifth factory in Russia when operational in 2015.

The investment comes shortly after Russia’s annexation on Crimea and trade sanctions on Russian business leaders with ties to President Putin’s government.

‘No relation to trade sanctions’

“As a company with US shareholding, Mondelēz Russia will always follow applicable US law,”​ Andrey Samodin, external communications specialist at Mondelēz Rus told ConfectioneryNews.

“The sanctions are targeted at individuals, not at specific countries or businesses. Our investment in Novosibirsk is part of our business growth in Russia and has no relation to the above mentioned sanctions or targeted individuals.”

The company spent $1.3m on US lobbying in 2012​ before its split from Kraft Foods, according to data compiled by the Center for Responsive Politics, with campaigning on normal trade relations with Russia among its principal causes.

50,000 ton capacity

The Novosibirsk factory will produce chocolate brands Milka, Picnic and Alpen Gold. It will also produce Jubilee, Barni and TUC biscuits.

The LEED (Leadership in Energy and Environmental Design) plant will have a total capacity of 50,000 metric tons per year and will supply the East of Russia, as well as the fast-growing markets of Central Asia. The company plans to install its own major distribution center for the facility.

Mondelēz’s existing Russian plants

  1. Chocolate plant in Pokrov (Vladimir region) for Alpen Gold, Milka, Vozdushny.
  2. Chocolate plant in Chudovo (Novgorod region) for Picnic, Prichuda (waffle cakes), Alpen Gold Composition (pralines).
  3. Gum and Candy plant in Novgorod (Novgorod region) for Dirol, Stimorol gum and Halls drops.
  4. Freeze-dried coffee plant in Leningrad region – one of the largest of its kind in the world – for Jacobs, Carte Noire, and Maxim brands.
  5. The “Bolshevik” biscuit plant in Sobinka (Vladimir region) for the Russian heritage biscuit brand Jubilee, as well as TUC and Barni.

"To operate the plant, we will need close to 180 skilled professionals,” ​said Samodin.

The investment forms part of Mondelēz’s supply chain restructuring reprogram​ designed to generate $1.5 billion in net productivity in three years. Under the program announced in September 2013, the firm will close older ‘subscale’ facilities and open five previously unannounced sites by 2020.

Position in Russian market

The company’s Russian subsidiary, Mondelēz Rus, has operated in the country for almost twenty years.

Samodin said that Mondelēz’s business in Russia grew double-digits in 2013. The company has invested around $1bn in Russian business since 1994.

“Russia is Mondelēz International second largest emerging market and plays a key role in driving a sustainable, profitable growth for the company,” ​said Samodin.

Mondelēz ranked fourth in the Russian confectionery market​ with a 8.7% share in 2012, according to Euromonitor International. The Russian chocolate market is now led by part-state-owned holding company United Confectioners, which also operates a factory in Novosibirsk. Mars and Nestlé are also major players. 

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