Following eighteen years of complex negotiations, Russia has become a member of the World Trade Organisation (WTO). This long-awaited moment marks the entry of the last remaining large non-WTO economy into the international rules-based trade system.

Russia has traditionally been an important export destination for EU food and drink products and remains the European Union’s second largest foreign market after the United States. However, despite substantial trade flows (exports worth Eur7.2 billion in 2011) and the existing level of direct investment worth billions of Euros, the Russian market until now has remained outside of the prevailing multilateral trade system.

President of FoodDrinkEurope, Jesus Serafín Perez.

Welcoming the development, the President of FoodDrinkEurope, Jesus Serafín Perez, says: “The accession of Russia to the World Trade Organisation is a welcome development for the world economy and for Europe’s food and drink industry. Increased transparency and reduced barriers to trade between Europe and Russia will open up new opportunities for Europe’s food business, stimulating some much needed growth in our economy at present.”

Living up to its WTO membership commitments, Russia should ensure that its food-related legislation develops in conformity with the Agreements on Technical Barriers to Trade and Sanitary and Phytosanitary Measures, as well as with other requirements of WTO law (eg non-discrimination and national treatment principles). Europe’s food and drink operators look forward to new opportunities that are unfolding in the Russian market, and welcome the expected increase in transparency in trade related policy planning in Russia and the future Eurasian Economic Union.

Other noteworthy benefits are a planned gradual reduction in the average tariff ceiling for agricultural products from 13.2% to 10.8%, the expected opening of tariff quotas for some agri-food products and the introduction of bilateral consultations with the EU on envisaged export restrictions on agricultural commodities.

European food and beverage manufacturers also welcome the efforts being taken by the Russian Government to simplify and facilitate customs procedures, stimulate innovation and infrastructure modernisation and further develop country’s investment climate.

WTO membership is expected to be a powerful catalyst for efficient growth and modernisation in EU-Russia trade relations for the benefit of all partners. Welcoming Russia as the 156th WTO member, FoodDrinkEurope hopes for a new balance of interests within the Organisation and for Russia’s constructive role in advancing the complex multilateral negotiating process.

Carlsberg Group has reported a 2.8% rise in revenue to DKr12.9 billon (Eur1.7 billion) but operating profit declined by 43% to DKr574 million for its first quarter as volumes falls in Russia, due to destocking, offset solid growth in Northern & Western Europe and in Asia.

Northern & Western Europe and Asia achieved operating profit growth in spite of slightly higher cost of sales and higher sales and marketing investments due to different phasing than last year. Profits in Eastern Europe declined mainly due to lower volumes, slightly higher cost of sales and different phasing of sales and marketing investments compared to previous year.

The Carlsberg Group grew market shares in Northern & Western Europe and Asia during the quarter. InEastern Europe, its Russian market share improved slightly compared to Q4 2011 but declined as expected versus Q1 2011.

Jorgen Buhl Rasmussen, chief executive of Carlsberg Group, comments: “2012 is a year where focus, prioritisation and efficiency are key in everything we do. We are focusing our commercial activities behind our most important brands and events. We are putting significant resources behind the EURO 2012 sponsorship, which will be a key driver behind the support of the repositioning and the growth of the Carlsberg brand in 2012. In addition, the rejuvenation of the Tuborg brand will support the brand growth through improved performance in existing markets, as well as through introductions into new growth markets such as China.”

Abrau Durso, the largest sparking wine producer in Russia, has been floated on the Russian stock exchange. The IPO is expected to raise $15 million for a 15% stake by the end of April.

The proceeds will be used to develop tourism in the Krasnodar region of Russia, where Abrau Durso is based. Abrau Durso also plans to double production up to 34 million bottles by 2015.

The company was founded in 1870 and has been majority owned by SLV Group since 2006. Following modernisation Abrau Durso increased production from 4 million bottles in 2005 to 14 million in 2008. Abrau Durso became the first Russian wine company to receive an award at the International Wine Spirit Competition in 2010.

Baltika Breweries has filed an application to have its shares delisted from the Russian stock exchange as soon as possible. The delisting reflects Carlsberg Group’s aim to increase its ownership in the Russian brewer from around 85% to 100%. The move is costing up to DKr6.5 billion with a net cost for the Carlsberg Group in 2012 and beyond of maximum DKr4.4 billion (Eur590 million) due to a positive impact from financial arrangements.

Russia is the world’s fourth largest beer market and the Carlsberg Group firmly believes in the longterm market and profit pool growth opportunities. The transaction is in line with the Carlsberg Group’s strategy of having 100% ownership of its most important subsidiaries to achieve greater operational flexibility.

By having 100% ownership of Baltika, the company can be fully integrated into the Carlsberg Group which will speed up the implementation of decisions and also make Baltika a vital part of the back-end integration which the group has accelerated recently. Carlsberg Group expects the transaction to be immediately earnings-enhancing when completed.

Carlsberg Group intends acquiring the remaining 15% stake in its Russian subsidiary, Baltika Breweries, for up to DKr6.5 billion (Eur870 million). The move will involve a delisting of Baltika.

The net cost to Carlsberg for increasing its ownership from around 85% to 100% in 2012 and beyond will be a maximum of DKr4.4 billion due to a positive impact from financial arrangements. Full ownership of Baltika will give Carlsberg greater operational flexibility. When completed, the transaction is expected to be immediately earnings-enhancing.

Russia is the world’s 4th largest beer market and Carlsberg firmly believes in the long-term market and profit pool growth opportunities. The transaction is in line with the Carlsberg’s strategy of having 100% ownership of its most important subsidiaries to achieve greater operational flexibility.

By having 100% ownership of Baltika, the company can be fully integrated into the Carlsberg Group which will speed up the implementation of decisions and also make Baltika a vital part of the back-end integration which Carlsberg has accelerated recently.

Olam International, a leading global, integrated supply chain manager and processor of agricultural products and food ingredients, has formed a partnership with the Russian Dairy Company (RUSMOLCO) for the large scale development of dairy and grains farming in thePenza region of Russia.

The first step under this partnership is the investment of up to $75 million by Olam in exchange for 75% of the equity of RUSMOLCO, which is a growing player in the Russian dairy industry. In the first phase of expansion spread over the next four to five years, RUSMOLCO will invest to expand the area under grains cultivation from the current 52,000 hectares to 106,000 hectares. In addition, four new modern dairy farms will be constructed, taking the total milking cow population from the current 3,600 heads to 20,000 heads. The total investment required for Phase 1 will aggregate up to $400 million to be spent over the next four to five years in a phased manner.

RUSMOLCO plans to establish a training and development centre aimed at inculcating best practices in international farming and milk production. Initially, the centre will focus on training of RUSMOLCO’s own staff, which later may be expanded into a national centre to promote adoption of best practice and latest technologies across Russia.

In Phase 2, Olam and RUSMOLCO envisage further investments which could include the enhancement of the area under cultivation to 130,000 hectares, increasing the milking cow population to 50,000 heads of cattle, investing in sugar cultivation, milling and refining as well as other adjacent initiatives that are aligned with Olam’s strategic plan.

Olam has been in Russia since 1993, with operations across grains origination, domestic trading and exports, imports and distribution of cocoa and cocoa products, green coffee and soluble coffee, edible nuts, dairy products as well as domestic trade and import of raw sugar, toll refining and distribution.

Russia is one of the most attractive markets for dairy farming today and this partnership is aligned with Olam’s dairy strategy of selectively investing in attractive value chain activities, such as upstream dairy farming in geographies that provide a potential for profitable growth.

The attractiveness of the dairy sector in Russia stems from the following factors:

* A high demand for milk and a large and growing demand-supply gap, makingRussiaone of the largest importers of milk in the world;

* A strong need for a modern, reliable supplier of high-quality milk;

* Low cattle-feed cost driven by availability of fertile agricultural land at competitive prices; and

* Increasing emphasis and direct support by the Russian government on enhancing private investment into the agriculture sector as well as local dairy productivity and output.

Grain farming inRussiaprovides an attractive investment opportunity with a potential for generating excess returns on account of the following factors:

* Low cost of farm land: Yield-adjusted agricultural land cost in the US/Western Europe is 14-15 times more expensive than in Russia;

* Soil and agro-climatic conditions are favourable for grain cultivation; and

* Inland and port logistics are well developed and provide a smooth and cost effective route to export grains from Russia.

Bonduelle Group, the world leader in processed vegetables, has concluded negotiations regarding the acquisition of the agro-industrial and commercial assets of French co-operative CECAB in Russia and in the countries of the Confederation of Independent States (CIS). The acquisition, which was announced last October, should take effect in the first quarter of 2012 for the start of the sowing season for the 2012 harvest. It is however still subject to the agreement of the Russian competition authorities.

Bonduelle has had a commercial presence in Russia and in central and eastern European countries, where it enjoys a leading position in canned vegetables, since the 1990s. Bonduelle currently supplies its markets in the region from three factories: two in Hungary. and one in Russia, which is currently operating at maximum capacity.

In 2007 the CECAB group, which has been present inRussia since 2001, invested in the construction of a factory in Timachevsk, 30 kilometres from the Bonduelle plant. The acquisition will provide Bonduelle with obvious synergies, resulting from the geographical proximity of the two Russian plants.

Arla Foods has taken another significant strategic step into Russia by agreeing a joint venture for the production of yellow cheese with Molvest Group, the country’s third largest dairy company. The agreement is in keeping with Arla Foods’ ambitions to become one of Russia’s leading dairy companies within yellow cheese.

Following several years of growing exports to the Russian market, Arla Foods now intends to set up local production in Russia for the first time. Production will be centered on the city of Kalacheevsky in south-west Russia, where Arla Foods’ Russian subsidiary – Arla Foods Artis – in partnership with the Molvest Group will be converting one of  Molvest’s existing dairies to yellow cheese production. The two parties have agreed on terms for joint production at the dairy. The terms and conditions are subject to approval from the Russian Federal Antimonopoly Service (FAS).

Peder Tuborgh, chief executive of Arla Foods.

Molvest will be responsible for collecting the milk from farms in the area as well as weighing-in and processing the milk at the dairy. Arla Foods will subsequently buy the milk and with its experience and expertise from its Scandinavian operations will be responsible for the production of yellow cheese at the dairy. The finished products will be distributed and sold by Arla Foods. For Arla Food, the conversion of the dairy represents an investment of DKr25 million (Eur3.4 million).

Arla Foods and Molvest anticipate joint production will begin in early 2013. Initially, the aim is to produce approximately 6,000 tons in 2014, with a subsequent annual volume increase of 10%.

”As Russia is one of our strategic growth markets this agreement is important because it provides us with the opportunity to combine our export business to Russia with local production,” says Peder Tuborgh, chief executive of Arla Foods. “This is unlikely to be our final expansion into the Russian market but this agreement alone is expected to double our turnover in Russia before the end of 2015.” Arla Foods’ Russian business grew by about 30% in 2011 to DKr500 million – growth that was largely driven by exports of Lurpak butter, Castello speciality cheese and cream cheese under the Arla Natura brand.

World grain production fell, exacerbating a global food situation already plagued by rising prices, according to new research published by the Worldwatch Institute. Despite record rice and maize yields around the world, global wheat production dropped substantially enough to bring total grain output to just below 2008 levels.

Maize, wheat, and rice provide nearly two-thirds of the global human diet and serve as critical inputs for both animal feed and industrial products. The significance of these crops guarantees that a decline in production will produce ripple effects throughout the global economy, particularly as increased food prices continue to take a toll on the world’s neediest populations. Overall, rice and wheat production have tripled since the 1960s, and maize production has quadrupled, despite global acreage of these crops increasing by only 35 percent.

“Production increased worldwide, but there was greater reliance on irrigation, synthetic fertilizers, and pesticides – all of which take resources, can be costly, and may cause substantial environmental degradation,” says contributing researcher Richard Weil.

Nevertheless, preliminary data for 2011 indicate that grain production is recovering from the 2010 slump. The United Nations Food and Agriculture Organization (FAO) recently forecast that cereal output in 2011-12 will be 3 percent higher than in 2010-11.

“Grain remains the foundation of the world’s diet, and the failure of harvests in recent years to keep pace with growth in meat consumption and population is worrisome,” comments Worldwatch president Robert Engelman. “It’s important that we identify and implement more inventive and sustainable strategies in grain production. Reducing the proportion of grain harvests lost to weather disasters and waste or diverted for corn ethanol production and animal feed is among such strategies. It’s also important that we prioritize grain availability for those who need it most.”

Recent growth in agricultural production has been uneven. In many regions, climate change has brought irregular weather patterns such as rising temperatures, violent storms, and flash flooding. In Russia, where severe drought has plagued large farming regions, overall wheat yields plunged 40 percent in 2010, compared to a decline of only 5 percent worldwide. Subsequently, Russia – the fourth largest wheat exporter in 2009 – banned all wheat exports, severely disrupting world grain markets. Poor weather took its toll elsewhere as well: El Nino in the west Pacific, for example, brought rice production down significantly in thePhilippines, already the world’s largest food importer.

Rising demand for ethanol fuel, which in the United States is produced almost exclusively from corn feedstock, is having an impact on grain prices as well. “According to the CBO, about 20 percent of the increase in maize prices between 2007 and 2008 was due to domestic ethanol demand,” says Weil. Demand for grains is also rising in countries such as China and India, where growing middle classes are adopting more diverse diets.

“Farming has always been an uncertain business that depends in large part on the weather, and it could be entering an even more difficult phase,” adds Weil. “As the global climate changes, the warmer, less stable atmospheric conditions could be detrimental for food production.” In an already fragile economy, continued volatile prices and unpredictable weather-induced shortages are sure to negatively affect both producers and consumers in developing countries.

Stanford Universityresearchers who created a model to determine how changing weather patterns affect crop yields found a 2.9 percent increase in global rice production as a result of greater precipitation, but losses of 3.8 percent for wheat and 2.5 percent for maize.

Kraft Foods plans to invest $100 million to more than double the capacity of its coffee production plant at Gorelovo in the Leningrad region of Russia. Kraft Foods, which owns the Jacobs and Maxwell House brands, is the second biggest player in the expanding Russian coffee market with a share of 19%, behind Nestle with 28%.

The investment will increase annual coffee production at Gorelovo to 16,900 tonnes in 2013 and to 23,000 tonnes by 2015, from a current level of 10,500 tonnes. Kraft Foods has already invested in excess of $150 million in developing the factory to date.

Nestle has completed a SFr240 million (Eur195 million) expansion of its soluble coffee factory in Timashevsk, Russia. Located in the Krasnodar region, the site is Nestle’s largest soluble coffee factory in Europe. It is also the company’s biggest investment project in Russia so far.

The factory uses advanced freeze-dry technology to make Nescafe coffee products for consumption in the Russian market and for export to other Commonwealth of Independent States (CIS) countries. Nescafe is the leading soluble coffee brand in Russia; the world’s biggest market for soluble coffee.

The expansion of the Timashevsk site, announced in 2008, has equipped the factory to produce Nescafe Gold freeze-dried coffee from raw material processing through to packing. It will also produce other soluble coffee products including Nescafe Gold Mild, Nescafe Gold Strong, and Nescafe Montego.

The factory, which employs 1,200 people, was alreadyRussia’s first “full-cycle” production site for soluble coffee. It has produced Nescafe Classic coffee ever since the first phase of its construction was completed in 2005.

“This factory is a perfect example of our long-term commitment to Russia and its consumers. It highlights our ongoing investment in the country,” says Paul Bulcke, chief executive of Nestle. “We have invested more than one billion US dollars (around SFr885 million) into manufacturing and distribution facilities in Russia over the past 15 years.”

Russia plays an important role in Nestle’s European operations, particularly in central and eastern Europe. The company’s brands in the country include Comilfo, Nescafe, Mega, Maggi, Perrier and Purina.

Currently, Nestle Russia employs more than 10,000 people and operates 12 production sites, ten sales offices and ten distribution centres. In August this year, the company announced it will invest more than SFr38 million to double pet food production at its Purina PetCare factory in Russia’s Kaluga region. This followed an investment of SFr60 million in 2010 in a new factory for Maggi products in the Vladimir region. The first phase of construction is expected to be completed by the end of 2011.

Unilever is expanding its presence in Russia and enhancing its personal care portfolio with the acquisition of 82% of Concern Kalina, the leading Russian beauty company. The transaction, which is pending required regulatory approvals, values the equity of the total business at RUB21.5 billion (€500 million). Concern Kalina is Russia’s largest local personal care player with leading positions in skin and hair care and an expected 2011 turnover of around RUB13 billion (€303 million).

“This will transform Unilever’s personal care business inRussia, giving us leading positions in skin care and hair care, as well as establishing a presence in oral care. It will also strengthen and re-balance Unilever’s portfolio and competitive position in Russia, an emerging market with considerable potential and one of our priority countries,” comments Paul Polman, chief executive of Unilever. “Organic growth remains the cornerstone of our ambition to double the size of Unilever whilst reducing our overall environmental impact. Acquisitions such as Concern Kalina supplement organic growth and add powerful new brands to our portfolio.”

The Coca-Cola Company and its bottling partner, Coca-Cola Hellenic, have announced a new Russian investment programme of $3 billion over the next five years, commencing 2012. The announcement was made at the official opening of Coca-Cola Hellenic’s newest plant in Europe, located in the Rostovregion of Russia. Indeed,Russia is the largest marketplace in Coca-Cola Hellenic’s business, which incorporates operations in 28 countries, serving a population of more than 560 million people.

The Coca-Cola Company and Coca-Cola Hellenic have already cumulatively invested over $3 billion in Russia. Investment in the Coca-Cola Hellenic Rostov facility, which has a production capacity of 450 million litres of beverages per year, and is located within a 26.5 hectare area, has to date amounted to over $120 million.

Nestle will invest more than SFr38 million (Eur33m) to double pet food production at its Purina PetCare factory in Russia’s Kaluga region. The investment in the new manufacturing building at the factory – located in the village of Vorsino – follows the installation of a new production line earlier this year.

Creating around 60 new jobs, it will enable the factory to produce almost the entire range of Purina pet food products for sale in Russia and for export to other Commonwealth of Independent States (CIS) countries. “With this latest investment, we expect to double wet pet food production within the next three years,” says Laurent Freixe, executive vice president for Nestle and head of Zone Europe.

Nestle Purina PetCare offers a wide range of pet food products inRussia, including Friskies, Darling, Felix, Gourmet, Pro Plan, Dog Chow, and Cat Chow. The company opened its first local factory in Vorsino in 2007 to produce its Friskies and Darling brands.

In 2009, Purina expanded the factory with an investment of more than SFr29 million to produce wet pet food under the Friskies brand. Earlier this year, it opened both a new production line and a new distribution centre at the Vorsino site. The distribution centre was built with an investment of almost SFr15 million, and employs around 50 local people.

The continuing decline in beer consumption in Russia, Carlsberg’s largest market, has impacted the Danish brewer’s financial performance in the first half ended June 30th 2011 and forced a review of its full year projections. Although Carlsberg achieved beer volume growth  of 5% and increased net revenue by 8% to DKr31.3b (Eur4.2b) during the period, operating profit declined by 5% to DKr4.7b.

Despite an improved Russian macro economic environment, the beer market in Russia declined by approximately 1% for the first six months and by 2% in the second quarter. Over the past 18 months, consumer prices on beer have been increased by an average of 30% reflecting the duty increase. Russian consumers have not yet fully adjusted to these substantially higher price levels resulting in an extended period of declining consumption delaying the overall recovery of the Russian beer market. Furthermore, unfavourable weather conditions during the second quarter also impacted consumption negatively.

Jorgen Buhl Rasmussen, chief executive of Carlsberg.

Overall, Carlsberg’s group beer volumes grew by 5% to 58.3m hl with 4% organic growth but with large variations between regions. Northern & Western European volumes grew organically by 1% and Eastern Europe by 5%. Asia continued its strong expansion and delivered 10% organic beer volume growth.

As expected, operating profit was impacted by higher input costs and sales and marketing investments across the group. Eastern European operating profits were further impacted by higher logistics costs and the Russian market development being below expectations. The Asian and Northern & Western European regions delivered good organic operating profit growth in both the first and second quarters. Group net profit was DKr 2.2b compared to DKr2.7b in the corresponding period in 2010.

Carlsberg is now forecasting a low single-digit decline in the Russian market for 2011 (against previous growth expectation of 2-4%). As a result of this, the brewing group has revised its 2011 earnings expectations. Group operating profit before special items is now expected to be around DKr10.0b compared to DKr10.25bn in 2010 and against previous expectation of high single digit percentage growth. Similarly, adjusted net profit growth is now expected to be 5-10% against previous expectation of more than 20%.

“With the adjustments we’re making to our local portfolio, channel approach and forward pricing strategy, I’m confident that our Russian business will return to growth,” says Jorgen Buhl Rasmussen, chief executive of Carlsberg. “At the same time, I’m pleased with the performance of the rest of the group. In the first six months we have continued our relentless focus on driving efficiencies as well as long-term sales value growth.”

Reflecting solid performances across all its business categories and geographical regions, Danone increased consolidated sales by16.3% to Eur9.73b in the first half of 2011 and trading operating income by 6.9% on a like-for-like basis to Eur1.39b. Danone has confirmed its full year targets for 2011.

Excluding the impact of changes in exchange rates and the integration of Unimilk, Danone’s majority owned fresh dairy product businesses in Russia and other CIS member countries, organic sales growth was 8.7% – a 4.0% increase in sales volume and a 4.7% growth in value.

Danone’s trading operating margin (EBIT) stood at 14.35% in the first half, down 23 bp like for like from the same period of 2010, but in line with group targets. The decrease mainly reflects the basis for comparison of Unimilk’s margin for the first half, prior to the very steep increase in milk prices in summer 2010. Excluding Unimilk, trading operating margin decreased only by 8 bp, due entirely to the catastrophe inJapanin March 2011 and its impact on Danone’s Fresh Dairy Products operations. Excluding these developments, trading operating margin held steady in the first half of 2011, even in face of the sharp increase in raw material prices, notably milk and PET.

Franck Riboud, chairman and chief executive of Danone.

The rise in raw material prices was offset by cost reduction initiatives that generated savings of Eur246m over the six-month period, as well as competitive price increases applied in the first half of the year in the Fresh Dairy Products, Waters and Baby Nutrition divisions.

“Danone has once again met its targets in a persistently difficult environment shaped by trends in consumption and rising raw material prices. Sales show remarkable growth in the first half, with our Waters division doing particularly well,” comments Franck Riboud, chairman and chief executive of Danone. “We have also met our margin targets, countering steep rises in raw material costs with major efforts to raise productivity and fine-tune pricing. Finally, Danone-Unimilk is on track to achieve its targets and its priorities.”

Danone has reaffirmed its targets announced at the beginning of the year. These include a 6% to 8% increase in sales on a like-for-like basis, and an increase of around 0.20% in trading operating margin, like for like, which will be fueled by all group activities, but especially by Unimilk and synergies from integration. Danone is also projecting·an increase in free cash flow in keeping with the Eur2b target set for 2012.

Cherkizovo Group, one of Russia’s leading integrated and diversified meat producers, has commenced operations at the meat processing plant in the Kaliningrad region, which it acquired in 2010. The first production line is for smoked sausage and has a production capacity of 10 tonnes per day or 300 tonnes per month.

The plant was acquired in September 2010 with the aim of focusing its operations on the production of delicacy meat products. Part of the planned modernisation includes the installation of new equipment manufactured by Italian company, Travaglini. This newly renovated meat plant will produce smoked sausages, using the best Russian and European technologies. Investment in the first stage of the project is $2.9m.

“We will continue the modernisation process at the site and by the beginning of 2012, we plan to launch a second production line for delicacy products and hams,” says Sergey Mikhailov, chief executive of Cherkizovo Group. “One of the most important benefits of this site is its location in the free economic zone, where it receives special customs preferences. This advantageous position will enable Cherkizovo to leverage opportunities for the effective distribution of value added products in the European part of Russia.”

Cherkizovo Group has been restructuring its meat processing business to reduce costs. “Last year’s acquisition of the meat processing plant in the Kaliningrad region was another significant step towards increasing efficiency and securing a strong resource base for this segment,” he adds.

Heineken has commenced the brewing of its Amstel brand at its St Petersburg brewery in Russia. Heineken is reported to be aiming to capture a 1% share of the Russian beer market for Amstel by the end of the year as consumer demand for premium beer brands, such as Heineken and Zlaty Bazant, recovers.

During the past decade the Russian beer market has expanded by more than 40% and is now the fourth largest in the world. However, a 200% increase in beer tax imposed by the Russian Government in 2010 dampened demand.

Five brewers – Baltika Breweries, SUN InBev, Heineken, Efes and SABMiller – control over 80% of the Russian beer market. Calsberg’s Baltika Breweries is the clear market leader with a 40% share.

Cargill, the global food, agricultural, financial and industrial products and services group, has further expanded its presence in Russia by opening a new animal feed facility in Efremov. The facility has the capacity to produce 50,000 tonnes of swine and poultry feed products and will operate under the LNB brand in Russia.

The new facility forms part of Cargill’s cluster of operations at Efremov (pictured), which include corn and wheat sweeteners plants; a vegetable oil refinery and bottling facility; a malt plant and an animal feed mill. A previously announced poultry processing plant is also in construction at present.

Natalia Orlova, head of Cargill in Russia, says: “Since we acquired the Efremov site in 1994, we have continued to expand and upgrade operations. The overall investment in Efremov industrial site is about $400 million to date. This addition reinforces our commitment to both the economy of the Tula region and to primary processing in Russia.”

“In recent years, we have seen a significant increase in meat consumption and meat production in Eastern Europe,” notes Luis Masroua, general manager of Cargill’s animal nutrition business in Russia. “This investment will enable us to leverage our global expertise, technology and knowledge to support the growth of the local feed industry in Russia. Our main goal is to help Russian farmers use high quality feed to get the best results.”

Cargill began its activities in Russia in 1991 with the opening of a representative office in Moscow, although a prior trading relationship with Russian-based organizations dates back some 30 years. Today, aside from the company’s significant grain and oilseeds activity, a large number of other Cargill businesses operate in Russia, in locations including Voronezh, Efremov, Krasnodar and Rostov.

The company employs over 1,500 people and is one of the most significant foreign investors in Russia with over $700 million invested in the local agriculture and food industries. Main activities in Russia include grain processing and trade; production, processing and packing of oils; starches, sweeteners and other ingredients production; an animal feed mill and consultations to specialists in the meat, confectionary and other food businesses.

PepsiCo’s Frito-Lay manufacturing facility in Azov, Russia, has been officially awarded LEED Silver by the US Green Building Council (USGBC). The manufacturing facility is the first site in PepsiCo’s European network to receive the prestigious LEED certification for New Construction/Major Renovation, bringing the total number of LEED certified PepsiCo facilities around the world to 27.

LEED certification is an internationally recognised distinction for the design, construction and operation of high performance green buildings. To achieve LEED certification, the Azov facility boasts a number of impressive sustainability results including:

* More than 18% projected energy savings,

* More than 40% projected water savings for installed plumbing fixtures,

* 100% reduction in potable water use for landscape irrigation,

* High performance electric lighting and daylighting for more than 75% of the building spaces,

* Increased ventilation rates and low toxic materials for improved air quality,

* Occupant control of lighting, temperature, and indoor environment.

PepsiCo’s 27 LEED certifications, include its Frito-Lay North America headquarters in Plano, Texas, Chongqing plant and office in China, PepsiCo Plaza and Sustainability Center in Chicago, City of Industry manufacturing facility in California, and Frito-Lay plants in Casa Grande, Arizona and Killingly, Connecticut.

Moscow Brewing Company has signed a 20-year deal with Kirin Holdings of Japan for the licensed production of Kirin Ichiban beer in Russia. The brand will be produced at the Moscow Brewing Company’s state-of-the-art brewery in Moscow.

Founded in early 2008, Moscow Brewing Company is one of Russia’s leading producers and importers of beer and beverages. Its beer and beverage manufacturing facility was commissioned in October 2008 and is located in Mytischi, Moscow Region.

Moscow Brewing Company also brews and distributes the Coors Light brand in Russia for Molson Coors Brewing Company, the North American beer group.

With consumption per capita at around 71 litres and a market size of approximately 100m hectolitres, Russia is the fourth largest beer market in the world by volume and has seen significant growth in beer sales in the past decade. International premium brands that are locally produced, in particular, have grown in popularity in Russia and despite the recent imposition of new taxes, the category shows signs of even greater growth potential in the coming years.

The European Bank for Reconstruction and Development has invested Eur10m to acquire a minority stake in Hlebprom, a leading Russian cake and biscuit producer which has developed its own national distribution system. The funding will mainly be used to upgrade the privately-owned company’s existing plants so as to increase efficiency and productivity.

The acquisition by the EBRD, a significant investor in Russia’s agribusiness sector, will encourage Hlebprom to purchase more raw materials from domestic suppliers, particularly cream and butter, thus stimulating the development of higher-grade products by Russian dairy farmers in order to meet the company’s quality standards.

“This transaction is a good example of how the EBRD can stimulate primary agricultural production in Russia through its investments in processing and other segments of the agribusiness sector,” says Gilles Mettetal, the EBRD’s director of agribusiness.

Hlebprom, founded in 1982 and privatised in 1994, specialises in producing flour-based confectioneries and chilled cakes which are mainly sold through supermarket chains. The company’s main plant is in the city of Chelyabinsk, in Russia’s industrial heartland.

In the agribusiness sector alone the EBRD has directly committed over Eur6.4b (in over 420 projects across Central and Eastern Europe and the Commonwealth of Independent States since 1991).

Global brewer SABMiller has reported that its lager volume in Europe declined by 3% in the 12 months to March 31st 2010, reflecting a particularly challenging first half impacted by generally weak economic conditions. Fourth quarter volumes were up 2% benefiting from a weak comparative period due to prior year excise increases in Russia and the Czech Republic.

Poland’s volumes were down 4% for the year with the market impacted by widespread flooding and alcohol sales restrictions during a nine day national mourning period in the first half, as well as significant competitor discounting in the economy segment. In the Czech Republic SABMiller’s volumes were down 6% due to continued weakness in the on-premise channel, further downtrading into lower value segments and increased competitor discounting.

Russia’s full year volumes were 1% ahead of the prior year as a result of a stronger second half supported by a gradual economic recovery, and despite competitor price reductions in the local premium segment. In the fourth quarter Russia’s volumes grew by 17% reflecting lower volumes in the fourth quarter of the previous year following significant buy-in ahead of the January 2010 excise increase.

Volumes in Romania were down 8% as the market remained in recession and continued to be impacted by government austerity measures.

Moscow-based Rusagro, the Russian sugar, pork and agribusiness group, is seeking to raise $30m through an initial public offering of about 17% of its equity on the London Stock Exchange. The IPO will value Rusagro, which controls about a sixth of Russia’s sugar production and owns the country’s fifth largest pig farm, at up to $2.08b.

Rusagro incorporates six food processing plants and 38 agricultural companies in the Belgorod, Tambov and Voronezh Regions. Rusagro is also engaged in dairy farming and hog farming in Belgorod Region.

The money raised will be used to fund Rusagro’s expansion strategy. Rusagro is 95% owned by founder and Russian billionaire Vadim Moshkovich and his family.

Finnish meat processor Atria is launching an efficiency improvement programme to achieve annual savings of approximately Eur4m at it production plant at Nurmo in Finland. The group has also appointed Juha Grohn as its new president and chief executive with immediate effect.

Juha Grohn was previously managing director of Atria Scandinavia and deputy group chief executive. Atria is the largest meat processor in Finland and one of the leading food industry companies in the Nordic countries, Russia and the Baltic region.

Atria’s net sales in 2010 were Eur1.3b and it employs about 5,800 people. The group is divided into four business areas – Atria Finland, Atria Scandinavia, Atria Russia and Atria Baltic.

Austrian group Agrana is to invest Eur27.6m to expand its Russian fruit preparation plant at Serpuchov over the next five years. Agrana is one of the leading producers of fruit juice concentrates in Europe, and the top global manufacturer of fruit preparations for the dairy industry.

The expansion programme will boost the factory’s production capacity by 63% from around 38,000 tonnes to 62,000 tonnes per year when the project has been completed, allowing Agrana to capitalise on the potential of the growing market for fruit preparations in Russia and the CIS states.

Agrana began operations at the Serpuchov site with two production lines in May 2005 and has tripled its volume of sales since then in the course of two earlier expansion phases. With 238 personnel and annual revenues of around Eur55m, this subsidiary currently has a 48% share of the regional fruit preparations market, which, in addition to Russia, also includes several other CIS states and a total of approximately 217 million consumers.

Fruit preparations are used primarily in the dairy products industry in the production of fruit yoghurts but also for cakes and pastries as well as ice cream. With a current estimated pro-capita consumption level of around 3.5 kg per year, the CIS yoghurt market offers considerable growth potential compared, for example, with Poland, where this figure is approx. 8.5 kg, or Western Europe, where consumption amounts to around 16.5 kg of yoghurt per year.

“Fruit yoghurts are becoming increasingly popular in Russia and the neighbouring states as prosperity and health consciousness are rising. This expansion phase in Serpuchov is key to our being able to profit from the forecast growth of around 50% in demand for fruit preparations from a current level of 82,000 tonnes to 124,000 tonnes per annum by 2014/15, and to consolidate our excellent market position as the quality, service and innovation leader,” says Johann Marihart, chief executive of Agrana Beteiligungs.

In addition to fruit preparations and fruit juice concentrate, Agrana is also a leading sugar company in Central and Eastern Europe. It is the leading supplier of specialised starch products in Europe, as well as being the largest producer of bioethanol in Austria and Hungary. In its 2009/10 business year, Agrana recorded revenues of approximately Eur2b. Agrana employs around 8,000 personnel at 52 facilities in 25 countries around the world.

Norway-based Orkla Brands has decided to merge its Russian chocolate and confectionery companies – Krupskaya and SladCo – into one entity named Orkla Brands Russia. The integration process has already started. Headquartered in St Petersburg, Orkla Brands Russia will have about 3,350 employees and a turnover of approx. RUB6.8b (Eur170m).

Vadim Ter-Israelyan has been appointed chief executive of Orkla Brands Russia and the chairman is Paul Jordahl, chief executive of Orkla Brands International.

“Combining the best of both organisations, we will improve our competitive position in a demanding Russian market. The establishment of Orkla Brands Russia is an important step in our long-term commitment in the Russian chocolate and confectionery business. We will keep and develop the local brands, thereby maintaining the Russian tradition and proud history,” says Paul Jordahl.

SladCo has been owned by Orkla since 2005. In 2010, the company had net sales of RUB3.8b and 2,100 employees. SladCo is the market leader in Urals and South Volga, with production in Ekaterinburg and Ulyanovsk.

Krupskaya was acquired by Orkla in 2006. The company is located in St Petersburg, and is the market leader in Northwest Russia. The company had net sales of RUB3.0b in 2010, and 1,250 employees. Over the past years, Krupskaya has fortified its position in Northwest Russia by acquiring several companies and trademarks.

Reflecting a highly challenging year in Russia, its largest market, Carlsberg increased net revenue by 1% to DKr60.05b (Eur8.0b) and operating profit by 9% to DKr10.25b in 2010. However, revenue fell 3% organically during the year with volume down 2% and a 1% decline in price/mix. Favourable currency factors were responsible for 8% of the rise in operating profit and organic growth was 1%.

Net profit grew by 49% to DKr5.35b but included special items of DKr598m related to step acquisitions. The group’s beer volumes were down by 1% to 114m hectolitres and the organic volume decline was 2%.

Carlsberg is focusing intensively on driving profitable market share growth, while simultaneously improving efficiencies across the group. This is a continuous process and an integrated part of the Carlsberg strategy and business model. During 2010, Carlsberg significantly intensified investments behind its key brands, including innovations, new products, media, digital, consumer and customer activities. The Danish brewer also invested in innovations to be launched in 2011 and beyond.

Market Trends

According to Carlsberg, overall beer market trends improved in 2010 compared to 2009. The overall beer market in Northern & Western Europe declined by an estimated 2-3% – a slightly improved trend compared to the estimated 5% decline in 2009.

Jorgen Buhl Rasmussen, chief executive of Carlsberg.

Carlsberg continued to strengthen its position in the UK growing value and volume market share in both the on-trade and off-trade channels. In a UK market, which declined by 4%, the group grew volumes and added 110bps to take its market share to 15.4%.

The Russian market was stronger than anticipated. At the beginning of the year, Carlsberg expected a market decline of low double-digit percentages following the sharp rise in excise duty in January 2010, as consumer price increases of approximately 25% were needed to offset the duty increase. However, due to favourable weather conditions, overall faster and ongoing recovery of the Russian economy and improving consumer sentiment, the Russian beer market picked up in the second half of 2010 leading to a decline of approximately 4% for the year.

The other Eastern European markets improved significantly compared to 2009. The Asian beer markets, which were largely unaffected by the economic crisis in 2009, continued their very strong growth pattern.

“2010 was an extraordinary year for the group due to the substantial excise duty increase in our largest market and we are very pleased with the strong 2010 performance. The improved market share in a large part of our businesses demonstrates our ability to strongly execute on our plans,” comments Jorgen Buhl Rasmussen, chief executive of Carlsberg. “For 2011 we believe market dynamics will improve slightly, not least in Eastern Europe where we anticipate the Russian market to return to growth. In our efforts to balance profitable growth with continuous efficiency improvements we will roll out innovations and market tools to support growth during 2011.”

In 2011, Carlsberg is projecting low single-digit decline in Northern & Western European beer markets, growth of 2-4% in Russia and continued growth in key markets across Asia. The impact from increased input costs will be mitigated by higher sales prices in all regions. In Eastern Europe, the input impact will be higher than the group average and consequently operating profit margin in the region will be impacted negatively for 2011.

For 2011, Carlsberg expects market share growth in markets representing two-thirds of its business, high single-digit percentage growth in operating profit and adjusted net profit growth of more than 20%.

Tony Maher, chief executive of Wimm-Bill-Dann Foods, will leave the Russian dairy and food group on May 1st 2011. His decision to step down as chief executive follows the successful conclusion of the landmark sale of Wimm-Bill-Dann Foods to PepsiCo. An announcement on Tony Maher’s successor will be made in the coming weeks.

“The last five years as chief executive of Wimm-Bill-Dann have been some of the most exciting and satisfying of my career. I am pleased that I have accomplished almost everything I set out to do when I joined the company,” Tony Maher comments.

Tony Maher.

He continues: “I was lucky to have had a rare professional opportunity to shape the future of one of Russia’s most advanced companies and have a strong influence on the overall development of the Russian consumer market. My focus has always been to develop the company, its people and its products for the long-term. I have had the privilege of working with a fantastic team of people on every level of the company. Now I really believe Wimm-Bill-Dann and its remarkable people have a great future ahead as part of a more global organisation.”

With all of its divisions and regions posting gains, global food and beverages group Danone achieved a 14.2% rise in underlying net income to Eur1.67b on sales ahead by 13.5% to Eur17.01b for 2010. Excluding the impact of changes in exchange rates (+6.0%) and acquisitions, total sales were up 6.9%. This organic growth reflects a 7.6% rise in sales volume and a 0.7% decrease due to price mix.

Fresh dairy sales were up 6.5% to Eur9.73b with volume growth of 7.5%. The water business increased volume by 7.8% and sales by 5.3% to Eur2.87b. Baby nutrition sales rose 8.9% to Eur3.36b and volume growth was 7.6%. Danone’s medical nutrition division was the fastest growing with sales up 9.0% to 1.06b and volume growth was 8.7%.

Danone’s trading operating income rose 7.1% to Eur2.58b and the trading operating margin (EBIT) improved by 3 bps to 15.2% in 2010, despite the steep rise in raw material prices, particularly milk. The increase in raw materials was primarily offset by various cost-cutting measures that generated record savings of over Eur500m during the year.

Danone completed a number of major transactions in 2010. In October, Danone sold its 18.4% stake in Wimm Bill Dann Foods, Russia’s leading food and beverage company, for $470m. In November, Danone agreed to acquire YoCream, the leading producer of frozen yogurt in the US, for around $103m.

Also in November, Danone and Unimilk finalised the merger of their fresh dairy product businesses in Russia and other CIS countries, creating the region’s market leader in fresh dairy products. Indeed, Russia is now Danone’s largest single national market, with France.

Outlook

Danone expects the trends which were evident in 2010 to continue in the months ahead. Consumer spending in both the industrialised world and emerging economies shows no sign of either significant improvement or worsening, However, raw material prices remain on a volatile upward path.

Franck Riboud, chairman and chief executive of Danone.

The French group expects total raw material and packaging costs to increase by 6% to 9% on average over the year, with a steeper increase in the first half reflecting the comparison with figures recorded in 2010. Danone plans to manage these increases through consistently high productivity and will also continue to use pricing to maintain a competitive edge.

Another priority for 2011 will be the integration of Unimilk’s operations in Russia and CIS countries, with sales and cost synergies set to boost Unimilk’s operating margin from the second half on.

Danone’s targets for 2011 include a 6% to 8% rise in sales on a like-for-like basis and an increase of around 0.20% in trading operating margin, also on a like-for-like basis. This will be fueled by all the group’s activities, but especially by Unimilk and synergies from its integration. As a result, the rise will only take shape in the second half, with first-half trading operating margin down slightly from the same period of 2010. A rise in free cash flow will be in line with the Eur2b target set for 2012.

“The strength of our group, businesses, brands and teams, and our exposure to regions with robust growth prospects mean that we can look to 2011 with confidence,” says Franck Riboud, chairman and chief executive of Danone. “We will aim to outperform our competitors in organic sales growth, margin, and cash generation.”

Driven by gains across its worldwide snacks and beverage businesses, and from the acquisitions of its anchor bottlers earlier in the year, PepsiCo has reported a 34% surge in net revenue to $57.84b for 2010 with net income up 6% to $6.34b and ahead by 15% on a constant currency basis.

The successful integration of its two anchor bottlers to create more-efficient and effective beverage businesses in its key North American market and in Europe, allowed PepsiCo to deliver more than $150m in synergies from the acquisitions in 2010, above target for the year. The strong pace of synergy realisation and the identification of additional synergies have led PepsiCo to increase expectations for total synergies through 2012 to more than $550m.

During the year, the US-based soft drinks and snacks group acquired Wimm-Bill-Dann, Russia’s preeminent food and beverage company, to significantly strengthen its competitive position in Russia and Eastern Europe, while also providing a strong foothold in the attractive dairy category.

Indra Nooyi, chairman and chief executive of PepsiCo.

“The underlying performance of our businesses remained solid despite a challenging macroeconomic environment,” says Indra Nooyi, chairman and chief executive of PepsiCo. “We posted broad-based worldwide gains in both snacks and beverages, our businesses deftly balanced a delicate price-value consumer equation, and we aggressively managed costs and productivity to deliver top-tier financial results.”

She continues: “Importantly, we are entering 2011 an even-stronger, more-capable organisation. Our core global snacks and beverage businesses benefit from strong brands, world class go-to-market systems, and innovative and differentiated products and we strengthened these advantages in 2010 through targeted investments.”

While encouraged by the momentum of the businesses entering 2011, she is mindful of a weak consumer landscape given the poor macroeconomic picture, especially in key developed markets, the high levels of cost inflation for the coming year, driven by broad and pronounced commodity inflation, and a potentially difficult competitive pricing environment, particularly in beverages.

PepsiCo has received Russian regulatory clearance for its acquisition of 66% of Wimm-Bill-Dann Foods, Russia’s leading branded food and beverage company, for $3.8b. The US-based soft drinks and snack foods giant now plans to close the acquisition on or about February 8th, 2011. After closing the acquisition agreement, PepsiCo will own approximately 77% of the total outstanding ordinary shares of Wimm-Bill-Dann.

The transaction will make PepsiCo the largest food and beverage business in Russia and will strengthen the group’s position in the fast-growing Eastern European and Central Asian markets. It also will raise PepsiCo’s annual global revenues from nutritious and functional foods from approximately $10b today to nearly $13b. This moves PepsiCo closer to its strategic goal of building a $30b nutrition business by 2020.

Sales at Roshen Confectionery, the Ukrainian confectionery manufacturer, surged by 32% to exceed $1b during 2010. Production volumes rose by 12.7% to about 410,000 tons.

During last year, Roshen commenced construction of a new confectionary plant at Vinnitsa in Ukraine. The first phase of building has now been completed. When completed the site will become the largest milk production facility in Ukraine and will incorporate the production of milk powder, condensed products and butterfat.

The first phase of the modernisation of Roshen’s Klaipeda factory has also commenced. Here Roshen is investing in the installation new lines for manufacturing high-boiled candies and increasing the energy efficiency of the plant.

In 2011, Roshen plans to invest $250m in building a new production complex in the Lipetsk region of Russia. It will be Roshen’s third factory in Russia. Construction of the 230,000 sq m complex, which will incorporate a factory and depot, will start this year and will be finished in 2016. The factory will specialise in the production of high-quality chocolate goods.

Baltic Beverages Holding, Carlsberg Group’s brewing business in Russia, Ukraine and the Baltic countries, has, through a series of transactions, increased its ownership in Belarus-based OJSC Olivaria Brewery to 67.8%. Earlier in the summer of 2010, BBH increased its holdings in Olivaria from 30% to 47%.

Olivaria is now a full member of the Carlsberg Group and can obtain further access to the international expertise within sales and marketing as well as brewing technologies.

OJSC Olivaria Brewery produces 15 sorts of beer under brands such as Alivaria, Brovar and Data 1864. The brewery was founded in 1864 and currently employs 475 people. Olivaria Brewery is ranked third in the Belarus beer market. The second major shareholder of OJSC Olivaria Brewery is European Bank of Reconstruction and Development. The remaining shares are owned by individuals.

Wimm-Bill-Dann Foods, the largest manufacturer of dairy products and a leading producer of juices and beverages in Russia, is continuing its eastward expansion with the acquisition of Kungur Dairy Plant in Perm region for an undisclosed sum. The plant is the region’s leading dairy producer and is recognised as one of Russia’s most technologically advanced dairy facilities. The transaction is subject to preliminary approval by the Russian Federal Antimonopoly Service.

The purchase of Kungur Dairy Plant is in line with Wimm-Bill-Dann’s strategy of expanding its business through the selective acquisitions of successful companies with strong market positions, established brand portfolios and a sustainable raw-materials base. Situated in the southeastern part of Perm region, Kungur has excellent access to raw materials in the region. The plant supplies the wider region and its products enjoy strong consumer recognition in both Sverdlovsk and Chelyabinsk regions.

“This acquisition in Perm region is in line with our strategy of expanding eastward and increasing our leading positions in the fast-growing Urals,” says Silviu Popovich, head of the WBD Foods business unit. “We are buying a state-of-the-art facility in the right location with a highly skilled and experienced local team that will significantly strengthen our market presence in a key geography for us. Its high quality products represent an excellent fit with our existing portfolio. The Kungur plant complements our existing manufacturing base and moves us to a whole new level in the Urals in terms of competitiveness and market reach.”

Nestle is reported to have sold its Altai Confectionery business in Russia to local private company Corminus Enterprises for an undisclosed sum. The Altai plant produced about 17,000 tonnes of confectionery products, including brands Altai and Savinov, in 2009.

The disposal will allow Nestle in Russia to focus resources on its well established core confectionery brands such as Kit Kat, Rossiya-Schedraya Dusha and Nestle.

Over the past 15 years, Nestle has built up a strong presence in Russia and currently operates 13 production facilities, ten sales offices and employs around 10,000 people. With double-digit growth rates and sales of around SFr2b in 2009 in Russia, Nestle is market leader in coffee, chocolate, infant cereals and culinary products.

PepsiCo is acquiring a 66% stake in Wimm-Bill-Dann Foods, Russia’s leading branded food and beverages company, for $3.8b, pending the required government approvals. Wimm-Bill-Dann is a leader in both traditional and value-added dairy products, with a solid position in juice.

The transaction will establish PepsiCo as the largest food-and-beverage business in Russia, make it a leader in the country’s fast-growing dairy category and build its presence in key markets in Eastern Europe and Central Asia. It will also raise PepsiCo’s annual global revenues from nutritious and functional foods from approximately $10b today to nearly $13b. This moves the US-based beverages and snacks group closer to its strategic goal of building a $30b nutrition business by 2020.

“Adding Wimm-Bill-Dann to PepsiCo’s portfolio is financially attractive and gives us a strong, high-growth platform in the dairy category,” says Indra Nooyi, chairman and chief executive of PepsiCo. “It also gives us clear leadership in the food and beverage industry in Russia, a fast-growing, strategically important market offering abundant opportunity. At the same time, Wimm-Bill-Dann’s strong, value-added dairy business immediately advances our global nutrition strategy to provide consumers around the world nutritious foods and beverages that are accessible, affordable and advantaged by science. Dairy has a huge, untapped potential to bridge snacks and beverages. We see the emerging opportunity to ‘snackify’ beverages and ‘drinkify’ snacks as the next frontier in food and beverage convenience.”

Wimm-Bill-Dann was founded just 18 years ago with a handful of employees. Today the group employs over 16,000 people and operates 38 production facilities.

The integration of Wimm Bill Dann is expected to yield pre-tax annual synergies of approximately $100m by 2014. The completed transaction will bring together PepsiCo’s large global food and beverage brands (Pepsi-Cola, Lipton and Lay’s), its Russian juice and water brands (Fruktovi Sad, Ya, Tonus, Hrusteam and Aqua Minerale) and Wimm-Bill-Dann’s portfolio of leading dairy and juice brands (Domik v Dorevne, Chudo, Imunele, J7, Lubimy Sad, 100% Gold Premium and Agusha).

Upon completion of the full Wimm-Bill-Dann acquisition, PepsiCo’s brands will rank first among food and beverage companies operating in Russia, with approximately $5b in revenue. PepsiCo will have six of the twenty largest food and beverage brands in Russia.

PepsiCo will be approximately twice the size of its nearest food and beverage competitor in Russia, with an unmatched distribution platform for its products. PepsiCo will employ approximately 31,000 people in Russia, Ukraine and Central Asia and have 49 manufacturing facilities, making the company one of the largest food and beverage employers in the region.

Danone and Unimilk have completed the merger of their fresh dairy products businesses in Russia and other CIS member countries. The new entity, controlled by Danone with a 58% equity interest and in which former shareholders of Unimilk own 42%, is the new leader for dairy products in the CIS area. Russia is now Danone’s largest market.

The board of directors of the combined business comprises three members, including the chairman, Andrey Beskhmelnitsky, representing Unimilk, and four members, including Bernard Hours and Pierre-Andre Terisse, representing Danone.

Filip Kegels, previously general manager of Danone Fresh Dairy Products in Eastern Europe and Central Asia, is in charge of operational management.

An integration committee has been set up to coordinate Danone and Unimilk teams during the integration phase and ensure that business targets are met. The new entity will be consolidated in Danone financial statements from December 1st, 2010.