Russian butter production 'does not compensate' for embargo losses: Valio
Late last year, after a "multi-stage complex audit by experts from Finland and Russia," Valio selected Russian dairy Kochmeister to produce butter under its Viola brand in Russia.
Kochmeister began production of Viola brand butter at its plant near Moscow in December 2014.
The butter, produced exclusively in Russia, is now sold "in the biggest cities" in the country.
This is not, however, a solution to the Russian ban on Western food imports, says Valio.
Speaking with DairyReporter.com, Evgenia Ponyatova, head of corporate communications, Valio Russia, said "this subcontracting does not compensate the losses of the business."
Russian embargo
Valio has been unable to export products, including its popular FIN brand butter, to Russia since August 2014, when Russian Prime Minister Dmitry Medvedev introduced a one-year ban on the import of beef, pork, poultry, fruit, vegetables, milk and dairy products from the European Union (EU), United States, Australia, Canada and Norway.
Valio claimed to be the “hardest hit of all companies in Finland” by the ban.
In 2013, its exports to Russia – valued at €242m – accounted for almost 20% of the company’s revenue.
Russia has since extended its ban on Western food imports until January 31 2016.
Prior to the Russian ban, Valio controlled a 50% share of the Russian butter market with products, including its Finnish-made FIN brand.
Finnish flag
In February 2015, the Finnish flag from packs of Russian butter after an Federal Anti-Monopoly Service (FAS) investigation.
The FAS investigation, which was triggered by a complaint from Valio, determined that Nevskie Molokoprodukty and Finnish Milk Company had violated Russian competition law.
The Finnish flag, a blue Nordic cross on a white background, and the phrase 'The Freshness of the Finnish Morning' previously featured on packs of Tysyacha Ozer (Thousand Lakes) butter.
"To buyers, this created an idea the product was manufactured in Finland," FAS said in a translated statement. "Meanwhile, the production is in Russia."
FAS determined that Nevskie Molokoprodukty and Finnish Milk Company had "mislead consumers as to the place of production of the food."
