December 20 2007, 09:11

Russia: "Sivma" company invests RUR 1.7 billion to baby food production in Podmoskovye

"Sivma" company finishes the construction of a new plant for baby food production in Voskresenskiy district of Podmoskovye, Vasiliy Labzin, the President of the company told to Vedomosti. The press-service of the district administration confirmed information about the project. The plant is constructed on the territory of the already operating enterprise "Faustovo" - "Sivma" purchased the controlling stake of this plant in 2005. The plant will produce juices, fruit, vegetable and meat purees. The capacity will constitute to 300 mln. of jars per year (30,000 tons). Mr. Labzin told RUR 1.7 billion ($68 mln) was invested to the project. There is a plan to launch the plant in winter 2008. Now the annual sales volumes of baby food under "Babyshkino lukoshko" trademark amount to RUR 1.2 billion ($48 mln), and the sales will double after new capacities are launched, Mr. Labzin forecasts.

Now, according to Euromonitor data, "Babyshkino lukoshko" occupies 13% of baby puree market - this is the third place after Nestle and "Lebedyanskiy" company. According to Euromonitor forecast, the total baby puree market will amount to $319 mln. in 2007; the growth rates constitute 26% per year.

"Babushkino lukoshko" is the product of economy segment. Earlier this product was sold to the wholesalers in tandem with more expensive Hipp, because "Sivma" was the exclusive distributor of this trademark, Oleg Ochinskiy, the Vice-President on marketing and sales of "Nutritek" recollects. Now Hipp has switched to the independent distribution, and "Sivma" is about to have hard times: unlike Hipp, the company does not produce human milk substitutes and cereals, which are to be added to the assortment of "Babushkino lukoshko".

300 mln. of jars is "a very large volume", Andrey Dembikov, General Director of "Ost-Union" (baby food distributor) thinks. One of the market leaders, Azovskiy complex of baby food production (9.7% of market) has temporary stopped sales because of reconstruction, and "Sivma" is able to occupy its share, as the company works in the same price segment.