Wimm-Bill-Dann to Open Georgia Plant

Wimm-Bill-Dann, Russia’s biggest dairy and baby food producer, will open a plant in Tbilisi in late September, spokeswoman Marina Kagan said Tuesday.

Wimm-Bill-Dann has invested about $500,000 in modernizing the 80-ton-a-day plant, which will be the company’s 38th production site, Kagan said at a news conference.

“We hope that our Caucasian milk, kefir, sour cream and chocolate-glazed curd bars will help improve relations between Russia and Georgia,” she said. The company’s chairman, David Yakobashvili, was born in Georgia.

Wimm-Bill-Dann bought the plant, the third-largest dairy producer in Georgia, in October 2007 and has been modernizing it since then. The plant’s products will be sold locally and exported to Azerbaijan and Armenia. The raw milk will be purchased from Georgian farmers.

Wimm-Bill-Dann, which among other products makes Chudo brand yogurts and J7 juices, is expecting sales volumes for its dairy products to fall no more than 3 percent year on year in the second quarter, up from 6 percent in the first quarter, Kagan said. “We have seen some stabilization on the dairy market. Consumption has stopped falling,” she added.

Vladimir Labinov, head of the Russian Dairy Union, said Tuesday that dairy consumption rose 2.5 percent for the first half of the year. Consumption rose 5 percent throughout 2008. “Milk is the cheapest source of protein, so people don’t refuse buying it even during a crisis,” Labinov said.

Consumers, however, are becoming more cautious about which dairy products they buy. “They have switched to cheaper brands and basic products like cottage cheese and drinking milk rather than desert yogurts,” said Natalya Smirnova, a consumer analyst at UralSib.

And among the inexpensive brands, those seen as Russian-made have an advantage during the lean times. “Our yogurt volumes are growing, as consumers prefer Russian brands to the foreign ones and are trying to cut their spending,” Kagan said.

“This factor is more psychological, however, as foreign dairy producers have their production sites in Russia,” she said.

Danone, Ehrmann and Campina are Wimm-Bill-Dann’s major foreign competitors on the Russian market.

Wimm-Bill-Dann’s net profit for the first quarter dropped by 70 percent to $12.6 million, which Wimm-Bill-Dann attributed to the ruble devaluation.

The company will disclose it’s financial results for the second quarter early next month, Kagan said.

This original version of this article should have said the plant invested $500,000 in modernizing the plant.