Eastern European Markets
May 3, 2005

The Fazer Group expands its bakery operations to Moscow

Fazer acquires Zvezdny bakery in Moscow

The Fazer Group expands its operations in Russia as it acquires a bakery in Moscow called OAO Experimentalny Konditersko-Bulochny Kombinat´s Zvezdny´s. Zvezdny is one of the biggest manufacturers of bake-off pizza and frozen dough in Russia. The bakery also manufactures pastries and fresh bread. In line with the Group´s strategy, the acquisition of the Zvezdny bakery considerably strengthens the position the Group has in the bakery business in Russia.

Fazer has acquired 96.68 per cent of the shares of the Zvezdny bakery. In 2004, the turnover of Zvezdny was approximately 830 million roubles (approximately 23 million euros) and it employs all together roughly one thousand people. On a yearly basis, Zvezdny manufactures some 1,800 tonnes of bake-off pizzas and 5,100 tonnes of frozen dough, as well as 12,900 tonnes of bread, 6,100 tonnes of pastries and 1,240 tonnes of rusk.

One of the strategic goals of the Fazer Group is to grow in the Baltic Sea region, where Fazer Bakeries holds a leading position in the market. Through its Hlebny Dom bakery operations, Fazer Bakeries is a market leader with its 27 per cent market share in the Greater St. Petersburg area. In addition to Finland and Russia, Fazer Bakeries has operations in Sweden, Estonia, Latvia and Lithuania as well as export operations to approximately twenty countries. Fazer Bakeries has been operating in Russia since 1997.

The growing market of Moscow opens up to Fazer

With its 13 million consumers and the annual growth rate of 10 to 15 per cent in the retail trade, the Moscow region is one of the most attractive market areas in Russia. However, the increased trends of chain trade and internationalisation in the trade sector have tightened the competition in Russia.

Fazer Bakeries has enjoyed strong development in the St. Petersburg area and the acquisition of the Zvezdny bakery will strengthen the operations in Russia significantly. Zvezdny enjoys a strong position in the market in Moscow, due to the modern bakery facilities and equipment as well as extensive product assortment.

"We have very positive experiences in St. Petersburg and the expansion of our operations to Moscow, where there are more growth opportunities, is a natural step. In Moscow, our long-term goal is to achieve a central position in the bakery market. Being situated in Moscow, we have better opportunities for expansion to other locations in Russia", says Berndt Brunow, the Group President. He continues: "Our other divisions are also interested in starting operations in Russia. Offering the Pick & Mix confectionery concept, Candyking has a pilot project in St. Petersburg and Fazer Amica, our contract catering division, is currently investigating the opportunities in the Russian market."

Zvezdny and Hlebny Dom, the biggest bakery in St. Petersburg and also part of the Fazer Group, will together be able to benefit from clear strategic and operative synergy benefits. Fazer has introduced extensive know-how to the Hlebny Dom bakery and the expertise can also be utilised at Zvezdny. The cooperation between the two bakeries is already underway and the Zvezdny bakery is already making product deliveries to the St. Petersburg region and vice versa. The bakeries complement each other´s product assortment and the distribution channels can be utilised more effectively.

Sergey Melnichenko was appointed the Managing Director of Zvezdny on 29 April 2005. Prior the appointment, Melnichenko was Fazer Bakeries´s representative of the St. Petersburg area in Russia since 2002.

Fazer Group
Fazer Group originates from a family business founded in 1891. Today the Group offers meals, bakery products and confectionery and operates in a total of nine countries. Its operations are based on passion for customer, quality excellence and team spirit. The Group operates in three divisions, which are all committed to offering taste sensations: Fazer Amica, Fazer Bakeries and Candyking. Fazer Amica is a leading contract catering company in the Nordic and the Baltic countries, offering customers delicious food and tailor-made service solutions. The company operates in the Nordic countries, Estonia and Latvia. Fazer Bakeries offers fresh and tasty bakery products and operates in Finland, Sweden, Russia, Estonia, Latvia and Lithuania. Candyking is a pioneer and a market leader in the Pick & Mix confectionery business in the Nordic countries and the United Kingdom. Fazer´s most important associated company is Cloetta Fazer AB, which is the leading confectionery company in the Nordic countries. Fazer Group´s turnover for 2004 was 916 million euros. The Group employs over 13,000 people.

For further information:
Fazer Bakeries, Managing Director
Markku Numminen
tel. +358 400 216 404
Fazer Group, Senior Vice President,
Communications, Ulrika Romantschuk,
tel. +358 40 566 4246

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