Nestle is strengthening its production capacity in Europe, investing more than SFr54 million (Eu45 million) to extend its Purina pet food factory in Hungary. The extension to the factory in the town of Buk will create about 150 new jobs by the end of 2012.

Nestle’s latest investment in the factory is part of its long-term commitment to developing its European operations. Earlier this year the company invested over SFr265 million in a new Nescafe Dolce Gusto factory in Germany, while in Switzerland it invested SFr300 million in a new Nespresso factory, creating 400 direct jobs.

The new factory extension will be equipped with four new production lines to double its manufacturing capacity of Nestle Purina pouch pet food brands such as Felix and Friskies. It also produces dry and canned Purina pet food such as Darling, Felix, Friskies and Dog Chow to meet the growing demand for the company’s pet care brands in Central and Eastern Europe.

The new factory extension aims to be operational by March 2013. It follows a SFr45 million in a factory extension in 2011 to open four new production lines and increase the number of employees to 600 people.

Nestle began manufacturing products such as Maggi in Hungary in 1974. Today it operates four factories and employs over 1,750 people. The company bought the Buk pet food factory in 1998 to produce Purina pet food products.

In Hungary, Nestle uses chocolate from the UK to make its After Eight and Kit Kat hollow chocolate products at its site in Diosgyor. Nestle coffee and powdered beverages including Nescafe and Nesquik are produced in Szerencs for export to other European markets. Nestle Aquarel and Theodora bottled mineral and spring water brands are manufactured in the village of Kekkut.

Bonduelle Group, the world leader in processed vegetables, has strengthened its position in Central Europe after receiving the approval of the Hungarian competition authorities for its acquisition of Kelet-Food, a canning factory with a capacity of 25,000 to 30,000 tonnes. Located in Nyiregyhaza, north-east of Budapest, Kelet-Food produces canned sweet corn and peas, which it sells under retailers’ own brands at national and local level. The company produced 15,000 tonnes of canned foods in 2011, well below its production capacity.

Bonduelle Group has had an industrial presence in Hungary for 20 years, producing 130,000 tonnes of canned food – mostly sweet corn and peas – in two industrial units, both located in the south of the country: Nagykoros, acquired in 1992, and Bekescsaba, acquired in 2002.

The Kelet-Food plant will enable Bonduelle to supply its booming markets in Central Europe. It is located in a different production area from the group’s other two Hungarian factories, which will allow for a better distribution of agricultural risks

The factory at Nyiregyhaza will be operational for the next harvest with 2,850 ha planted. It employs 60 permanent staff to which will be added 250 seasonal workers this summer. It is expected to produce 20,000 tonnes of sweet corn and 7,000 tonnes of peas.

Unilever is reported to be investing HUF2.2b (Eur8m) to increase production capacity at its ice cream factory at Veszprem in Hungary. The intention is to expand annual capacity from 75m litres to 90m litres during the next four years.

Unilever plans to build 7,500 sq m of cold stores and expand packaging facilities at the site. Unilever opened a 3,500 sq m expansion last year. The Veszprem factory produces the Algida brand of ice cream products and over 90% of output is exported to Western Europe.

Unilever, which also operates a food factory in the country, had revenues of over HUF70b in Hungary last year.

Nestle has opened a new pet food factory extension in Hungary producing Purina brands such as Felix, Friskies and Gourmet. With an investment of over SFr45m (Eur38m), the 10,000 sq m factory extension – equipped with four new production lines and new pouch-packaging technology – now forms part of the manufacturing factory site in the Hungarian town of Buk.

The company’s investment has reaffirmed its presence in Europe and looks set to enhance its drive to meet the growing demand for Purina PetCare brands in Central and Eastern Europe. The investment has also created more than 200 additional jobs, boosting the number of employees to 600 people.

“We have been operating in Hungary for more than 20 years. The Central and Eastern Europe region is a very important part of our business and this investment demonstrates our long-term commitment to business sustainability and economic development in this region,” comments Laurent Freixe, Nestle executive vice president and zone director for Europe.

In Europe, Nestle Purina PetCare is present in 35 countries, operates 14 factories and employs around 5,300 people.

Nestle began manufacturing products in Hungary in 1974, where it now operates four factories and employs around 1,650 people. In addition to producing pet food in Buk, a factory in Diosgyor manufactures chocolate brands including After Eight and Kit Kat. The Company also produces powdered beverages including Nescafe and Nesquik for European markets in the Hungarian town of Szerencs. Furthermore, its bottled mineral and spring water brands Nestle Aquarel and Theodora are manufactured in the village of Kekkut.

Ed Haas, the Austrian confectionery manufacturer, has commenced production in a 6,000 sq m plant at Janossomorja in Hungary. Employing 100 people, the new Eur3.5m facility will produce the group’s PEZ candy brand. Annual production is expected to be 2,000 tonnes.

Nestle is creating a new service centre in Ukraine to facilitate its continued expansion in the emerging markets of Central and Eastern Europe.

The world’s biggest food group will invest SFr25m (Eur19m ) over three years to establish the Shared Service Centre in the Ukrainian city of L’viv. The new facility will support more than 20 countries in the region such as Russia, Poland, Romania, Hungary and Bulgaria.

L’viv was chosen for its location due to its local transport infrastructure, employee talent potential, real estate and office space availability. In addition, the city is also home to Nestle’s Svitoch confectionery factory.

The L’viv centre is set to become the third internal Shared Service Centre worldwide led by Nestle Business Services (NBS) – an international unit under the Nestle umbrella that performs a standardised and cost-effective way of running financial and HR services.

The centre will reflect the model of two other internal NBS Shared Service Centres that support the Latin American region and the Asia, Oceania, Middle East and South Africa region – with a centre based in Ribeirao Preto in Brazil since 2006, and a centre in the Philippine capital, Manila, since 2008.

At the Brazil centre, around 400 employees support 21 Latin American countries in financial services and employee services focusing exclusively on accounting activities, HR administration and payroll. While in the Philippines, a workforce of around 550 employees support countries from Australia to Vietnam in the same categories.

Bringing together financial and human resources transactional activities as a single entity, the L’viv centre will be the first of its kind to make its mark in Central and Eastern Europe.

NBS aims to form partnerships with some of the 12 universities in the L’viv region to develop specific curriculums including foreign languages and international finance, to align with the Shared Services industry. As part of this goal, Nestlé has already commenced talks with Ivan Vakachuk, Rector of L’viv National University.

Mainly focused on business, law and management, the university partnerships will follow similar learning initiatives already implemented by Nestle in Malaysia. Since 2006, the Malaysian programme has focused on the development of local Nestle executives into first line managers. This has upgraded workforce competencies in order to meet the needs of the company and challenges of the global market.

Nestle in Ukraine

Established in 1994 with its head office in Kiev, Nestle has built up a strong presence in Ukraine over the past 16 years and currently employs 4,500 people there. Acquiring confectionery brand Svitoch in 1998 and culinary brand Torchyn in 2003, Nestle Ukraine also offers internationally recognised brands such as Nescafe, Nesquik, Nuts, Kit Kat and Lion.

In January 2010, Nestle acquired Ukrainian brand Mivina, a market leader in instant noodles, instant mashed potato and dehydrated seasonings. The acquisition enables Nestle to complement its culinary portfolio in Ukraine and boost its presence in one of the fastest growing segments of the Ukrainian food market.

CEDC is the world’s largest vodka producer with annual sales exceeding 270m litres.

Warsaw-based Central European Distribution Corporation (CEDC), the world’s largest vodka producer with annual sales exceeding 270m litres, has decided not to pursue an acquisition of Nemiroff, the Ukrainian vodka producer.

Nemiroff is the world’s third biggest vodka company in terms of sales, and is estimated to be worth more than $300m. In addition to CEDC, other parties reported to be interested in Nemiroff include Russian Alcohol Group, Brown-Forman, Pernod Ricard and Stock Spirits of Poland. Founded in 1992, Nemiroff saw its net sales fall 14% in 2009 to $217.6m and net profit by 50% to $38.3m with debt standing at $10.5m.

CEDC enjoys leading positions in its key markets of Poland, Russia and Hungary and is also a major importer and distributor of alcoholic beverages. The group’s brand portfolio includes BOLS, Zubrowka, Absolwent and Soplica in Poland; Green Mark and Parliament in Russia; and Royal Vodka in Hungary. CEDC is also major exporter, selling its brands, in particular Zubrowka, Green Mark and Parliament. Zubrowka is exported to over 40 countries around the world, including the US, the UK, France and Japan.

“We have decided to withdraw from the sale process of Nemiroff. We have full respect for the management of the Nemiroff Group, who have been able to build a successful brand over the last ten years, but after thorough analysis we have determined that it is not in the company’s interests to continue to pursue this transaction at this time,” comments William Carey, president and chief executive of CEDC.

He adds: “We have invested over $1.5 billion over the last three years in Russia and will look to maximize the return on this deployed capital. We believe we have a solid leading market position to capture further growth in the region in the next three to five years and management will continue to focus on maximizing this opportunity.”

CEDC was going to use the net proceeds from the expected sale of its Polish distribution business, as partial consideration for the acquisition of Nemiroff. CEDC is still on track to close the sale of its Polish distribution business to Eurocash at the beginning of August 2010, and will then determine the use of the proceeds. The distribution business being sold has an estimated operating profit of $17-21m on projected net sales revenue of approximately $675m for 2010.

In line with its international expansion strategy, Lantmannen Unibake, , which is one of Europe’s leading frozen bakery products suppliers, is acquiring a new fast food bakery from Hungarian milling and bakery group Elso Pesti for an undisclosed fee. The acquisition of new production capacity in Hungary strengthens the Danish bakery group’s position in the Central European market.

“We want to follow our international customers into the Central and Eastern European market and with production in Russia, Poland and now Hungary we have the best possible set-up for matching our customers’ needs and demands for the future,” explains Bent Pultz Larsen, chief executive of Lantmannen Unibake.

The new Hungarian bakery also secures Lantmannen Unibake a solid production platform and direct access to a well-established sales and distribution network throughout the region. “With its location in the Central European region, the Hungarian market has a remarkable potential for future growth both in existing as well as new and unexploited sales channels,” he adds.

Five Major Deals

The deal marks Lantmannen Unibake’s fifth major investment in expanding its international presence since 2008. In February 2008, it acquired Baco Oy, the largest fast food bakery in Finland, as a step toward expanding its market share in the Baltics and Russia.

In April 2008, the company took its first steps toward establishing itself as a major player in the American bread market with its acquisition of Euro-Bake, one of the Southeast’s premier artisan bakeries, a 200-person bakery specialising in European inspired bread types.

In June 2008, Lantmannen Unibake acquired production capability in the UK for the first time with the purchase of Eurobuns, a leading bakery just outside London. The acquisition opened the door to the frozen bread market in the UK, of which Eurobuns at the time controlled around 50%.

In May 2009, Lantmannen Unibake became the majority shareholder in Bakehouse, the UK’s leading supplier of sweet and savoury pastries and speciality breads. The purchase continued Lantmannen Unibake’s massive investments in the British market making it the group’s biggest market.

Including the Hungarian bakery, Lantmannen Unibake now has 86 bakery lines in 26 bakeries in 11 countries. It employs 4,000 people and has an annual turnover of Eur727m.