by Eugene Vorotnikov - FoodBizDaily.com Moscow
October 27 2009 - One of the largest Scandinavian food producer Norwegian Orkla Foods has officially confirmed that it will acquire part of St. Petersburg's Pekar, one of northwestern Russia's largest producers of bread and confectionery goods. The acquiring assets will be operated by the St. Petersburg's confectionery plant Krupskaya owned by the Norwegian company.
Under the terms of the agreement Krupskaya receives the right to lease manufacturing space in confectionery products area of 12 000 square meters.
According to the general director of OJSC Krupskaya "Confectionery Factory Philip Way, both Orkla and Krupskaya will invest an additional investment in the development and promotion of such famous "Pekar" brands as Prince, Petersburg, Ornament, Polarny, Surprise and Pekar. The transaction will allow Krupskaya to increase its production capacity by 20%, said the official representative of the factory.
The amount of the deal has not been disclosed, but, according to analysts it could reach $10 million. According to them, amid the crisis in Russia Orkla can make a deal with a significant discount, strengthening its market positions by acquiring rival businesses with recognizable brands.
«We will continue to invest in the new business despite the difficult economic situation”, said Paul Jordan, Managing Director of Orkla Brands International.
«Much attention will be given to the distribution of products in the North-West Russia», he added.
Currently the production of "Pekar" is mainly known in the Russian waffle cakes market. Despite the crisis the demand for flour confectionery products in the country is steadily increasing as well its consumption.
According to the Russian Federal State Statistics Service, during the period of January - August 2009 the volume of confectionery production in the country decreased by 6,6% (compared to the same period in 2008). This wan mainly due to falling demand and devaluation of the Russian ruble resulted in cocoa prices increase by 76% and up to 2008, prices of chocolate increased by 24%.
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Orkla ASA
Address: P.O. Box 162 Sarpsborg, 1701 Norway
Telephone: +47-69-118000
Fax: +47-69-118770
About Orkla ASA
Orkla ASA is a Norway-based company which operates in the branded consumer goods, aluminum solutions, materials, renewable energy and financial investment sectors. It is a parent company within the Orkla Group. Its operations are structured into five principal segments. Orkla Brands is a supplier of branded consumer goods and concept solutions, primarily to the Nordic grocery and catering sectors. Orkla Aluminum Solutions develops, manufactures and markets profiles, profile-based building systems and heat-exchanger strip in aluminum. Orkla Materials consists of Elkem, engaged in the environmentally friendly production of metals and materials, and a biorefinery, Borregaard. Orkla Associates primarily consists of Orkla’s investments in Renewable Energy Corporation ASA (REC) and Jotun AS. Orkla Financial Investments consists of three main businesses: the Share Portfolio, Orkla Finans and Orkla Eiendom, and it is engaged in the financial and real estate investments.