Actuality, December, 3, 2007

American company Kraft Foods has bought the confectionery plant “Bolshevik”. Earlier, the producer of the popular in Russia “Yubilejnoe” cookie and other sweets belonged to the French corporation Danone Group.

Kraft Foods representatives have officially announced about the confectionery plant “Bolshevik” purchase at French corporation Danone Group for €5,3 bln. ($7,2 bln.). The company “Bolshevik” is one of the leading Russian producers and distributors of confectionery products. It holds such trade marks, as “Yubilejnoe”, “Prichuda”, “Prince”, “Tornado”, and other brands popular among Russian sweet teeth.

36 factories all over the world belong to the Danone biscuit subsidiary now. According to the 2006 results, Danone cookie sales volume has made up more than €2 bln., and profit totals €318 mln. Among the brands that belong to Danone are LU, Petit Dejeuner, Cracotte, Ourson, Mikado, Pepito, Tuc, Czech Opavia.

Kraft Foods is one of the leading world grocery companies. Its turnover was over $34 bln. in 2006. The company profit made up $3 bln. in 2006. The most known in Russia Kraft brands are coffee Jacobs, chocolate Milka and Alpen Gold. Kraft Foods production is sold in 155 countries all over the world. More than 90 thousand people work at the company enterprises.

Let’s remind, that the market experts estimated the Danone cookie production subsidiary at $3,5-4 bln. However, Kraft Foods paid for the Danone assets much more than the real cost. Hence, the French company stocks have suddenly increased in price. The overpayment, most likely, is connected with the fact that Kraft Foods hurries up greatly to buy the Danone assets all over the world.

This company takeover that has cost Kraft Foods €5,3 bln., will allow to obtain admittance to the assets in 20 countries. It is written in the official Kraft Foods press release that new takeover will add to the company business approximately 20 percents. In China the Danone assets will allow Kraft Foods to increase its presence twice. The company will get such brands, as LU, Tuc and Prince. Besides, the American position will become stronger in Russia, Europe, Indonesia and Malaysia.

The factory “Bolshevik” was the leader on sweet cookie retails in 2006 (that’s one of the most fast-growing segments of the Russian market). According to “Business Analytics” Company, Kraft Foods yields only to Nestle and to “the United confectioners” in the chocolate market. Kraft Foods chocolate sales have a little bit fallen, however the company Kraft Foods positions do not become worse as a whole in the market.

“Bolshevik” is not the only one Russian asset that the Kraft Foods company owns. Now Kraft Foods has two enterprises in Russia. They are the confectionery plant with the power of 80 thousand tons in Pokrov, the Vladimir Region (that produces chocolate “Vosdushniy”, Milka, Alpen Gold, sweets Cote d’Or) and an instant coffee packing plant in Leningrad Region. In the same place Kraft Foods finishes the full cycle factory construction of sublimated coffee production. The total investments amount that has been invested into the Russian assets by Americans is estimated at approximately $200 mln.

In the end of November, 2007 Vera Shamota, the head of “Kraft Foods Rus” external economic relations department, informed, that it was planned to construct a cookie production factory with the power of 30 thousand tons a year in Sobinsk district, Vladimir Region.

It is not excluded, that the assets bought from Danone in Russia would be in Vladimir Region in immediate proximity to the other “related” production shops. It is also known, that Danone has earlier bought a place in this area for production accommodation.

First the company Kraft Foods declared about a desire to buy the Danone confectionery business in July, 2007. In particular, Kraft Foods offered to keep the European cookie production subsidiary as an independent business with the head office in France and the head managemen of director general George Kasal.