Jacobs coffee in Leningrad packaging
Yesterday in the village of Gorelovo, Leningrad Region, the acceptance procedure for a new coffee packaging factory, built by one of the world's largest manufacturers, the Kraft Jacobs concern, took place. After reaching full capacity, the new enterprise will be able to produce about 6 thousand tons of coffee per year and will become the largest in the industry.

The international concern Kraft Jacobs already has experience in producing its own goods in St. Petersburg, although the first such business project did not lead to success. In 1995, the concern acquired 100% of the shares of the Samoilova confectionery factory, renaming it Kraft Jacobs Suchard Petroconf. However, at the end of 1998, foreigners decided to get rid of this enterprise (officially explaining this by the fact that confectionery production was not a core business for them) and sold it to Red October.
Construction of the new Kraft Jacobs factory in the Leningrad region took more than a year and cost the concern about $10 million. The enterprise will reach full capacity in 2001. At first, the factory will produce two brands of instant coffee - Jacobs and Maxwell House. Company specialists are exploring the possibility of expanding the range to include ground coffee. This will require investing about another $30-40 million in production.
The creation of local production by one of the leading suppliers of instant coffee to Russia (Nestle, Cacique and Kraft Jacobs together control approximately 2/3 of the market) is quite logical. Coffee sales fell markedly during the post-crisis period of rising prices for imported goods. If before the events of August 17, the instant coffee market was estimated at 39-45 thousand tons, now it is at 28-33 thousand. In this situation, moving production to Russia will reduce prices by 10-15% and thereby increase sales.
As for local producers, to whom Kraft Jacobs will compete, the Mospishchekombinat has been packaging coffee since Soviet times. Last year, in Tuchkovo near Moscow, the Moscow Coffee House on Shares company opened a coffee packaging factory with a capacity of 3 thousand tons per year. This summer, a similar production appeared in Nizhny Novgorod (2 thousand tons of coffee per year). Finally, a week ago, the Angstrem Trading company opened a small factory (480 tons per year) for packaging coffee in St. Petersburg.
It is possible that these companies will soon be joined by the sales leader in the coffee market (45%) - the Swiss Nestle. According to the manager of the Russian office of Nestle, Kristina Minina, the company is discussing the possibility of creating a coffee factory. So it is likely that in a year or two all instant coffee sold in Russia will be packaged at local facilities.

ROMAN OVCHINNIKOV, St. Petersburg; DMITRY Ъ-DOBROV

Newspaper "Kommersant" No. 188 dated 07.10.2000, page 4

Authors:

Dmitry Dobrov