Eastern European Markets
September 26th, 2007

Fazer’s ten years of success in Russia

Fazer Group has grown into a significant bakery company in Russia in ten years. Now also Fazer Amica offers taste sensations in St Petersburg, and its restaurant business has had a good start. The founder of the company Karl Fazer had great respect for Russian know-how. Local professional skills, functioning cooperation and significant investments of ca 130 million euros have turned Russia into Fazer’s fastest growing business area. The goal is to double the bakery business’ turnover in five years and to achieve significant growth in the restaurant business.

Fazer is one of Russia’s leading bakery companies. During the past three years, Fazer’s bakery operations in Russia have grown at an average rate of ca 40 per cent annually, and today they constitute 14 per cent of the Group’s turnover. Fazer has during the past ten years invested ca 130 M¤ in its operations in Russia and the Group’s four bakeries in Russia employ 3 500 people. In addition, Fazer initiated strategic co-operation with the Tver bakery OAO Volzhky pekar by purchasing the majority of the bakery’s share capital in June. Volzhky pekar´s turnover is 32 M¤ and it employs ca 1 800 people. Co-operation with Volzhky pekar in line with the Group’s strategy considerably strengthens Fazer’s position as one of the leading bakery companies in Russia.

In April, Fazer Group renewed its organisational structure and the bakery operations in Russia formed a new separate division - Fazer Russia. The Group’s CFO Harri-Pekka Kaukonen was nominated Managing Director of Fazer Russia.

Long traditions and great opportunities in Russia

Fazer’s connection to Russia dates back to the time before the company was founded, when the young Karl Fazer studied to become a confectioner in St Petersburg. In 1997, Fazer entered the Russian market by starting co-operation with the Hlebnyi Dom bakery in St Petersburg. At first, Fazer purchased the majority of the share capital of Hlebny Dom, founded in 1934, and has then gradually increased its ownership. In 2002, the Murinsky bakery was bought, and in 2003 -Vasileostrovsky. Now, Fazer owns ca 80 per cent of the share capital of Hlebny Dom. At the moment, Fazer has a market share of 30 per cent in St Petersburg and the surrounding area.

In 2005, Fazer purchased the Zvezdny bakery in Moscow, one of the biggest producers of frozen pizza and dough in Russia. The newcomer Volzhky pekar is the leading producer of fresh bread and coffee bread in the Tver region.

‘According to our strategy, Russia is one of our main growth areas. Our target is to continue growing both through acquisitions and organic growth, and to double our turnover in five years. We are very pleased with the development,’ says Group President Berndt Brunow.

Cooperation breeds success

Being a forerunner, the will to understand customer needs, quality consciousness, care for the well-being of personnel, and know-how in the fields of production technology, logistics and marketing are all among Fazer’s success factors. Considerable investments have made it possible to modernise operations, logistics and distribution. Apart from finances, the Group has invested a lot in Russia also in the form of know-how, time and experience.

‘Our committed and hard-working personnel is an important success factor. The Russian management’s high professional skills encompass the market, customers and the business. Especially Hlebny Dom’s late General director Valery Fedorenko led the company with such far-sightedness, ability to cooperate and a wide competence range as to make it grow into the leading bakery company in the St Petersburg area and entire Russia. Another important ingredient of our recipe for success is the ability to create wide cooperation and active dialogue. We have consistently fulfilled our strategy in Russia and carried out our investments both when the Rouble crashed in 1998 and in times of positive growth,’ says Berndt Brunow.

Over the years, we have frequently visited each other’s companies in order to strengthen a common Fazer culture and to learn from each other. The results of the cooperation are visible also in production, although most of the bread baked in Russia still is traditional Russian bread. Nowadays, the bakery in St Petersburg bakes Krayushki, the model for which was the Finnish Puikula bread. This rye portion bread was introduced to the Russian market in 2001, and it was the first one of its kind then. The idea and know-how of baking flat bread came from Fazer’s Lövånger bakery in the North of Sweden. All recipes have, naturally, been adapted to local taste.

‘This hasn’t been just about doing business together, it has also been about sharing cultural values, which shows today in Hlebny Dom’s production processes and corporate culture. We are satisfied with our cooperation with Fazer. Among its achievements are renewed production, a wide product range, the high quality of products, new technology and motivated personnel,’ says General Director of Hlebny Dom Aleksey Timchenko

‘Today, we will celebrate our ten-year cooperation at Hlebnyi Dom with our personnel. In the evening, we will meet with our interest groups at Fazer Amica’s new Food on Four restaurant in Regent Hall,’ says Berndt Brunow.

Fazer Amica opens first restaurant in St Petersburg

Fazer Amica launched its operations in the food service business in Russia in November 2006 by buying the catering company Abela Service CIS in St Petersburg. The operations, which at first were aimed at offering high class food service to international and Scandinavian companies operating in St Petersburg, have started off very well. Among the customers are Elcoteq, Nokian Tyres and Bosch-Siemens. ‘The personnel restaurant market St Petersburg is rather unorganised, and the demand for well run lunch services for the business community is steeply growing’, says Managing Director of Fazer Amica Russia Svetlana Simonova.

‘We are pleased to announce the opening of Fazer Amica’s first restaurant in St Petersburg in the business centre Regent Hall today. Food on Four, located in the very centre of the city, is Fazer Amica Russia’s first public restaurant. It offers seven days a week a wide assortment of delicious food and sensations, Fazer style. Fazer Amica’s café & restaurant concept is based on an idea of fresh food, which is prepared in a modern kitchen before the customer’s eyes. The customer’s freedom of choice is realized through self-service and an extensive offering of food and beverages. We offer, for example, hot wok meals’, says Simonova

About 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 four divisions, which are all committed to offering taste sensations: Fazer Amica, Fazer Bakeries, Candyking and Fazer Russia. 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, Latvia and Russia. Fazer Bakeries offers fresh and tasty bakery products and operates in Finland, Sweden, Estonia, Latvia and Lithuania. Candyking is a pioneer and a market leader in the pick & mix confectionery business in the Nordic countries, the United Kingdom and the Baltic states. Fazer Russia, operative since 1 April 2007, is responsible for Fazer’s bakery operations in Russia and is one of the leading bakery companies in Russia. 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 2006 was around one milliard euros. The Group employs ca 15,000 people.

Further information
Managing Director Harri-Pekka Kaukonen, Fazer Russia, tel +358 20 555 3184
SVP Communications Ulrika Romantschuk, Fazer Group, tel +358 40 566 4246
General Director Aleksey Timchenko, Hlebnyi Dom, tel +7 812 718 8300
Managing Director Svetlana Simonova, Fazer Amica Russia, tel +7 812 331 1850

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