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. Last Updated: 07/27/2016

Campina Opens $50M Yogurt Plant

A $50 million Campina yogurt factory in the Moscow region celebrated its official opening Thursday.

The factory is located in Stupino, a town 70 kilometers south of Moscow. It is a joint venture of the Dutch firm Campina Melkunie and Campina GmbH, based in Heilbronn, Germany.

Campina branches invested $40 million in the factory and $10 million was lent by The International Finance Corporation, a member of the World Bank Group.

The highly automated factory employs 85 staff, mostly young, ambitious Stupino residents. Its facilities are located on 5.5 hectares of a total of 15 hectares of land leased from the Stupino administration for 49 years.

Bernard Bijvoet, a former chairman of Campina Melkunie's board who brokered the deal with district authorities, said at the opening the factory might need more land in the future.

The factory is next to a $100 million Mars chocolate factory that opened in May 1996 and since then added production lines to bring total investment to $150 million.

The first Campina production line started in May, and the factory is already processing 65 tons of milk daily.

After the second line starts soon, the factory will be able to process 50,000 tons a year, said Tiny Sanders, the new chairman of the Campina Melkunie executive board elected this month.

Full capacity of 80,000 tons of yogurt a year will be reached by year end and further expansion will be linked to "how the market goes," Sanders said.

Production at the new factory is more expensive than at Campina operations in the Netherlands and Germany because all packaging f even aluminum foil f is imported, Sanders said.

He added that the company's strategy is to work with "only local suppliers, on the condition that they provide a high-quality product."

"Over time, our products will be 10 percent to 20 percent cheaper than those made abroad," he said.

The factory has contracts with eight local dairy farms to which it has leased equipment so that the milk quality is up to "Western standards, which are tighter than Russian standards," Sanders said.

Campina officials said they were committed to developing their business in Russia, but they were cautious to say anything certain about long-term plans.

Sanders said only that the investment will be recovered in five to 10 years "if we grow" and "if things go badly, our target will be at least not to lose our investment."

Campina, which appeared in Russia in 1992 with its Fruttis brand of yogurt, is now selling about 3,000 tons of yogurt per month, almost all of which is imported, said Michael Feller, general manager of Campina Russia.

When the factory's production of milk and yogurt is at full capacity, Campina will stop importing them, but about 1,000 tons of cheeses and desserts will still be imported, Feller said.

Both Sanders and Bijvoet praised the Stupino administration for good partnership and district regulations that created competitive conditions for foreign investors.

Pavel Chelpan, head of the Stupino district administration, said that, according to district laws, investors who invest more than $10 million into their projects in the region don't have to pay district taxes for the first three years of operation.

"Mars is paying 20 percent of our district administration's budget. We expect Campina to account for at least 6 percent to 8 percent of the budget in three years," Chelpan said.

Sanders said Chudo-Yogurt, produced at the Lianozovo milk factory, which belongs to local company Wimm-Bill-Dann, is Campina's biggest competitor on the local market, while among the western brands he named Danone and Ehrmann yogurts.

According to COMCON media and market research company, yogurt consumption grew nationwide and in the capital last year. While at the beginning of 1999, only 29.7 percent of consumers throughout the nation and 46.8 percent of Muscovites ate yogurt, in the first quarter of 2000, the percentages rose to 34.5 percent and 51.3 percent, respectively.

The nation's most popular yogurt is Chudo, with 15.8 percent of the national population and 30.1 percent of Muscovites eating the Chudo yogurt at least once in the last three months before the latest poll.

COMCON's nationwide rankings put creamy Fruttis next with 7 percent, milk Fruttis with 5 percent, Danone's Volshebny with 4.4 percent, and Danone with fruit with 4.4 percent. Ehrmann's Extra holds 10th place with 1.8 percent.

In Moscow, second place is held by another Wimm-Bill-Dann product, Lianozovsky, with 19.5 percent. It is followed by Danone with fruit with 8.9 percent, creamy Fruttis with 8.3 percent, Frugurt with 5.8 percent and milk Fruttis with 5.5 percent. Extra Ehrmann is 14th with 2.5 percent.

Yulia Belova, public relations manager for Wimm-Bill-Dann, said her company is not at all afraid of the opening of Campina's factory.

"Campina is a serious, solid company and it is always good to have such producers in Russia. We have been competing with them for quite a while and until now we have been standing up to the competition."