October 12, 2007

 

Russia's Nutritek breaks into New Zealand's dairy industry

 

 

The Nutritek Group, one of Russia's top three milk producers, announced plans to launch a new dairy processing plant in New Zealand Thursday (October 11, 2007).

 

Nutritek invested a total of US$60 million to gain a controlling stake in New Zealand Dairies Ltd, according to Russian daily Kommersant.

 

Nutritek was the first and only foreign investor in the New Zealand dairy industry, after legislators opened up the country's dairy market and ended the monopoly of Fonterra Co, the paper reported.

 

The Russian company formed partnership with several dozen local diary farmers last year, shoring up a 5.6-percent share in the company for US$1.6 million.

 

After obtaining approval from the government, Nutritek may invest an additional US$40 million in the diary plant to double its capacity, which is now 18,000 tonnes of dry milk annually. This would be double the amount the 20,000 tonnes the company currently produces per year in Russia and Ukraine.

 

New Zealand, with its export-oriented dairy industry, presents more opportunities than that of other countries, observers say.

 

Other Russian companies announced plans to enter Western diary markets.

 

Wimm-Bill-Dann, another major Russian dairy company, announced recently it would acquire enterprises in Eastern Europe, China and the US.

 

Nutritek is a grouping of 14 enterprises that produce diary products, baby food and special dietary products in Russia, Estonia and Ukraine. Revenues in 2006 totaled US$378.9 million, half of which came from baby food.

 

The company controls 8.2 percent of the Russian dry milk market.

 

Russia is experiencing a shortage of milk and dry milk, and as a result milk prices have risen 7.2 percent in September, according to Rosstat, the state statistics agency.

 

The price hike has prompted the Ministry of Agriculture to lower its duty on imported dry milk from 15 percent to 5 percent.