Kraft to invest over $100 m in Russia coffee plant

Thursday, 27 October 2011 03:27 - - {{hitsCtrl.values.hits}}

Plans to double coffee production at plant by 2015
Follows Nestle’s Russian coffee plant extension
Russian coffee market grows ahead of E. Europe

MOSCOW, (Reuters) - Kraft Foods Inc said it would invest more than $100 million into its Russian coffee plant until 2015 to double production and meet growing demand for the beverage in the fast-growing market.

The move comes a week after Nestle, the world’s biggest food group, completed an extension of its coffee plant in Russia’s southern Krasnodar region, which now has become its biggest soluble coffee factory in Europe.

Coffee consumption in Russia, traditionally a tea-drinking nation, has been on the rise over the past decade on the back of an explosion of coffee shops in Russia’s cities, including Starbucks and Whitbread’s Costa Coffee chains - and growing disposable incomes.

Market research group Euromonitor expects the Russian coffee market to rise by five per cent annually in volume terms at least until 2016.

Kraft, maker of Jacobs and Maxwell House coffee brands, said the plant would boost coffee production to 16,900 tonnes in 2013 and to 23,000 tonnes by 2015, compared with the current output of 10,500 tonnes a year.

Since 2000, the company has invested more than $150 million in the factory located in the Leningrad region in Russia’s north-west.

Kraft was the second-biggest coffee maker in Russia in 2010 with a 19.4 per cent share, lagging behind Nestle which had 27.8 per cent, according to Euromonitor.

In dollar terms, the Russian coffee market is forecast to grow by 10.3 per cent in 2012 and 12.7 per cent in 2013 against 4.1 per cent and 5.7 per cent forecasts for Eastern Europe as a whole, Euromonitor said.