One of the five biggest Russian chocolate makers, SladCo incorporates the factories SladCo and Volzhanka. Ninety-six percent of the SladCo factory and 50.55% of Volzhanka belong to the Dutch company United Confectioneries, which in turn is owned by a fund managed by Baring Vostok Capital Partners. Volzhanka stocks are 45.45% owned by Hermitage Assets Management and UFTG.
Philip Wegh, Orkla Foods Russia & Ukraine director, announced that Orkla had bought United Confectioneries from Baring Vostok Capital Partners.
At the same time, Orkla is buying the remaining stocks of Volzhanka from the minority shareholders, Mr. Wegh claims.
The SladCo and Baring Vostok press services confirmed the deal.
The sum of the deal has not been officially revealed but analysts estimate it at $75-120 million.
Now that Orkla has arrived, business will have fresh opportunities for expansion, says Garry Wilson, director-general of the managing company SladCo.
The arrival of Orkla is bad news for players on the Russian confectionery market, believes Alfa-Bank analyst Alexander Svinov. "It spells more competition and less profit on a market that grows a mere 2% to 3% a year anyway," he says.
But Jennifer Galenkamp, a spokesperson for Nestle's Russian office, is of the view that a company that lacks chocolate market know-how and experience will find it hard to win a niche on the highly competitive Russian market.
And Andrei Sterlin, general director of the Biznes Analitika research company, cites an overabundance of chocolate making capacities (more than 150 enterprises) and expects a consolidation of the branch. In large cities, according to Biznes Analitika, chocolate consumption is already comparable with that in Europe - five to six kilograms per capita a year - while in smaller and average ones, it is only two to three kilograms.
