Campina Eyes Growth Opportunities in Russia

18/03/08 2007 was a highly successful year for Campina in Russia. “It’s been a fantastic year – one the whole company can be proud of. Russia is now Campina’s fourth largest home market – an important factor in terms of further investment. There are huge growth opportunities for us here, so it’s only right that we should have high ambitions”, says country director Bob Steetskamp. The aim in 2008 is to continue to build on this success. Campina’s latest achievements have been to open a coffee cup and second yoghurt drink production line, but things won’t be stopping there by any means.

Campina has been active on the Russian market for more than 15 years. It began in 1992 by importing Campina Fruttis yoghurt from Heilbronn in Germany. In 2000 Campina opened a yoghurt production plant in Russia. This was followed by a steady stream of new production lines. There are now six, operating 24 hours a day, seven days a week. Production is centred at Stupino, around 80 kilometres south of Moscow, where Campina’s Russian office is also located. Campina Russia employs a total of around 400 people. The plant currently has three yoghurt lines, two drink lines – which turn out yoghurt drinks marketed under the Campina Fruttis and Campina Nezhny labels – and a coffee cup line. “Last year we achieved a growth in turnover that was well above market growth. We also took a bigger market share, our profits were up by more than 60 percent and demand far exceeded production capacity”, adds Steetskamp.

Opening a new production line every year to 18 months, doubling turnover and boosting growth in the value-added products, low-fat segment and out of home channels will be the main challenges for Campina in Russia over the coming years. Bob Steetskamp: “Russia is developing at a staggering rate and it’s vital that we keep pace with this growth.”

The new coffee cup line and the second yoghurt drink line (which were taken into use in October 2007 and January 2008 respectively) are the latest milestones. However, they’re by no means the last. Russia’s economic growth and the rise in prosperity in the large urban centres means that people are spending more on food and drink, including outside normal mealtimes. Russians no longer buy food exclusively at traditional shops but also from kiosks on their way to work. “There are major opportunities for us here. These kiosks traditionally sell chiefly juices, soft drinks and beer. Yoghurt drinks would be a great addition to the range: it’s wholesome, and it’s quick and easy to eat when you’re on your way somewhere. We would of course need to invest in distribution capacity. We’ll need to expand our existing stable and solid network so that we can increase the number of out of home channels we can supply effectively”, explains Bob Steetskamp.

Campina’s decision to continue operating from Moscow and Stupino was a strategic one, since it’s easy to supply the surrounding region from these centres. Steetskamp: “Two-thirds of the purchasing power in this country lies to the west of the Urals within a radius of 1,200 kilometres of Stupino. We therefore deliberately decided to concentrate production in our existing plant and to make further investments in it. We’re currently expanding our warehousing to increase our storage capacity by 30 percent.”

Campina in Russia has a substantial share of the spoonable yoghurt market. However, the market for yoghurt is now stabilising and Russian consumers are becoming more interested in other, less traditional dairy products. It’s therefore essential for Campina to expand its dairy segments in Russia. This will create scope for innovative products with a greater focus on health and well-being.

Bob Steetskamp: “In Russia we are operating in a growth market characterised by excess demand. It’s a totally different situation to Europe, where supply and demand are in line and the market is stagnating. At the moment we can sell more yoghurt drinks in Russia than we can produce. That’s a real incentive to seek new opportunities.”