European processors eye Russian market

Dairy multinationals Nestle and Danone, and German processed cheese manufacturer Hochland, are all looking to invest in the Russian market.

Reports suggest that Nestle and Danone both want to buy Russia’s leading dairy processor Wimm Bill Dann. The news came just six weeks after Wimm Bill Dann issued shares on the New York stock exchange, when Danone bought a 4% share in the company. It is reported that Wimm Bill Dann could fetch up to E1.1 billion.

Hochland has announced that it is to build a E40 million cheese plant near Moscow. The factory will produce 20,000 tonnes of cheese per year – 25% more than Russia’s current largest factory. It is expected to open in summer 2004.

A report in May urged the Russian dairy sector to increase domestic production to stem a flood of imports. In 2001, dairy consumption per capita in Russia increased by 4.7% to 220kg.

However, domestic dairy production increased by only 1.8% while imports increased by 13.2%. The report, from the Agarian Marketing Institute, predicted that Russian dairy consumption would continue to rise by around 5% per year.

Hochland, which controls around 4% of the domestic Russian dairy market, was the first foreign company to make cheese in Russia. It currently processes around 6,000 tonnes of cheese annually at a site owned by Ehrmann in Moscow. It will stop processing here when the new plant opens.

Wimm Bill Dann was formed in 1992 and has a turnover of E570 million from 14 sites across Russia. It has performed well since 1998, when the devaluation of the Russian rouble made imported food expensive in Russia.

The company’s name comes from its founder’s passion for tennis and the Wimbledon championship.