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. Last Updated: 07/27/2016

Parmalat Seeks Russia Expansion

Italian dairy giant Parmalat plans to spend at least 600 million euros ($812 million) on acquisitions in emerging markets, including Russia, by the end of the year, CEO Carlo Prevedini said, Italian newspaper Corriere della Sera reported Tuesday.

"We are looking into a number of countries where the business for high-added value products, like baby nutrition or milk and drinks with specific health benefits ... is growing quickly and could allow us to ensure high profitability," Prevedini said.

The consolidated nature of the Russian dairy products market means that foreign companies may be limited in their scope to make a breakthrough, however.

"Anybody who wants to enter the Russian dairy market has to make acquisitions. There is no other way in," said Andrei Nikitin, a retail analyst at UralSib. Nikitin suggested that with a budget of 600 million euros, Parmalat could move for a company such as UniMilk, the country's second-largest dairy firm.

Citing the results of market leaders Wimm-Bill-Dann and the considerable gap in consumption rates between Western Europe and Russia, Nikitin said investors could expect high returns. A little less than 10 million tons of dairy products are consumed annually in Russia, he said. "If Parmalat made a good purchase they could certainly reach top-line growth in the high twenties," Nikitin said.