The investment to build malt and sweetener plants will amount to over $100 million (€81m). Groundbreaking took place last week, with Tula regional government representatives and Cargill Europe executive vice-president Bram Klaijsen present.
"Our new facilities will be producing malt and a broader range of liquid sweeteners, to be marketed predominantly in Russia," a Cargill spokesperson from the group's Russian division said. "When fully operational, our malt plant should produce approximately 10 per cent of the malt processed in Russia. Our production is distributed across a range of food and drink segments, many of which are undergoing significant growth."
The move into malt production is seen as a particularly strategic step into a market where Cargill has previously had no representation - Russia. With the rapid growth of the beer sector, the company is expecting that that this will provide significant opportunities for the division.And the production is distributed across many of the food and drink segments, many of which are undergoing significant growth.
In an opening speech, Cargill's general manager of Starches and Sweeteners Russia, Dominique Le Doeuil said the acquisition, running and upgrading of the corn syrup plant was bought about because of "the potential the company sees in its employees and the Tula region, which were key factors in the decision to invest further in Efremov."
In order to accommodate the new plants, the company says that the Efremov site will undergo a significant infrastructure upgrade, adding that this will create opportunities for local construction companies and other local and regional businesses.
Cargill claims the local farming community will benefit significantly from the building of the plants as wheat and barley amounting to an additional 300,000 million tonnes annually of local grain will be required as raw material. Most of this volume will be sourced in the region and its immediate vicinity.
The company acquired OAO GPK Efremovsky in 1995 and has invested over $60 million in modernising the plant. The company is now the leading supplier of liquid sweeteners to the confectionery and the beer industries in Russia. The facility also produces a range of starches for the food and industrial sectors as well as a range of feed products for the local agricultural complexes and farms.
The two new plants, a sweetener plant and a malt plant, will create new business opportunities for Cargill in the Russian market. Cargill expects that its wider range of locally-produced ingredients will allow the company to increase its presence as a supplier and solution provider to the local food and drink producers.
The company added that the OAO GPK Efremovsky corn plant will continue to operate, stating that it will align processes and quality control with the practices that will be introduced in the two new plants.
Cargill's move to develop the ingredients supplies for the beer and confectionery industries concentrates on two of the fastest growing market sectors in Russia at the present moment.
Although the annual growth of beer has slowed from double digit figures to 6 per cent this year, market analysis provider Euromonitor believes that the beer industry will continue to experience significant market growth for the next 20 years. Analysts also predict that future growth is likely to concentrate on the premium sector.
Likewise, growth in the confectionery sector has slowed down after the double digit growth experienced during the past five years. Annual growth is now expected to run at between 3 and 5 per cent over the next six years. Also mirroring the market trend in the beer sector, growth in the confectionery sector is expected to concentrate around the premium chocolate segment.