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Kraft Foods takes on Russian cheese sector

By Angela Drujinina , 05-Sep-2005

Kraft Foods, one of the world's largest food producers, has begun selling melted cheese in Russia and has an aggressive expansion plan to become a leading player within seven years.

Russia will be the first European country where melted Kraft cheese will be sold. The first batches have just hit the shops in three formats: melted cheese in a tray, cheese 'a la carte' and sliced cheese. The prices will be in the upper middle segment.

"In the beginning, cream flavoured cheese will be available. We have information that more than 80 per cent of melted cheese consumption is cream flavoured cheese," said Kirill Bolmatov, corporate director of Kraft Foods Russia.

 

"Nevertheless, we plan to enlarge our flavor range," added Bolmatov, saying the products were currently imported from the firm's Namur factory in Belgium.

 

However, Kraft said it planned to begin local manufacture as it looked to expand nationally, branching out from its current focus on Moscow. "In order to have uninterrupted supplies and to quickly react to consumer's requests, it is necessary to pass from import to local manufacture," said Bolmatov.

 

"We don't have yet specific plans on building factories, but we are in the process of studying different options."

 

So far, Kraft has invested in the development of the distribution network and marketing support. Specific figures were not disclosed, but representatives of the company said that"it plans to spend more than any competitor".

 

Some press reports have said that Kraft plans to break in to the top three of the Russian cheese market in five to seven years.

 

"We have a huge experience, the best specialists and powerful resources. It allowed us to create a high-quality melted cheese, enriched with calcium in an attractive package," said Bolmatov, adding that "research has shown that our KRAFT has a better taste, is more beautiful and attractive for customers than any other competing brand".

 

Kraft's main competitors in Russia are Valio and Hochland, which occupy 57 per cent of market volume and 69 per cent of market value. The main Russian manufacturers competing with Kraft are Moscow's Karat and Voronej Yantari.

 

According to AC Nielsen, Russia's cheese market volume was about 60,000 tonnes in 2004, yet this has increased by a fifth in the first half of 2005. The market also rose by a higher 26 per cent in value, suggesting value-added trends may be gaining speed.

 

Kraft Foods is already the world leader of the entire cheese market with around a 10 per cent share. The firm also controls more than a third of the melted and cream-cheese categories.

 

Michel Boon, general director of Kraft Foods Russia, said: "Russia is a priority for us. We have invested a lot in manufacture and our brands are popular with the Russian consumer. Activity has now started in a new category of the Russian market, proving once again the seriousness of our intentions and that our plans are of a long-term".

 

There are two Kraft Foods factories in Russia: a factory for packing soluble coffee in Leningrad oblast and a confectionery in Pokrov, Vladimir oblast. Its main brands already present on the Russian market are Maxwell House, Jacobs, Carte Noire, Milka, Toblerone, Karuna, Vozdushnyi, Alpen Gold, Chudnyi Vecher, Estrella potato cheeps.

 

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