The construction of a new French fries factory is again announced in Russia. This time it concerns plans by agricultural company ZHAK in the Tula region, which is south of Moscow. Is Russia's ambition to become self-sufficient in French fries production gaining momentum?
Market analysts previously predicted that potato processing in Russia will increase in the coming years will take flight. Domestic production of potato products is said to be substandard, but according to the Russians, that is not consistent with the ambition to be self-sufficient and to play a more dominant role in the global export of agricultural products.
McCain builds in the same region
That the world's largest French fries producer McCain this summer announced building a factory in Russia therefore came as no surprise. The plans concern the construction of a factory in the Tula industrial region under Moscow. The same region as where ZHAK is reporting new construction plans, according to Potatobusiness.
ZHAK is one of the largest potato producers in Russia. The company is expected to start building a factory in the city of Venev at the end of this year. This is expected to be put into use at the end of 2022. The intended capacity is not known. It is reported that the construction project would cost €17,4 million.
French fries consumption growth
The sale of French fries is seen as an important growth market in Russia. Euromonitor International previously also predicted that sales of potato products in Russian retail will grow by almost 10% this year. Moreover, the most important sales channel for fries, the catering industry, seems insatiable. According to customs data, the Russians imported almost 2019 tons of processed potatoes from abroad in 100.000, mainly from the Netherlands.
Domestic production of French fries only took off in Russia in 2018. The joint venture Belaya Dacha Group and Lamb Weston/Meijer then opened the first large chip factory in Lipetsk. The processing capacity is estimated at between 100.000 and 200.000 tons of potatoes per year and there are said to be strong growth plans. The realization of those plans seems to have been temporarily stranded this year. Due to declining demand as a result of the corona crisis, production was halted for a number of months.
Higher processing speed
The factory in Lipetsk was originally only going to be closed in the months of July and August, but due to corona this became a period of almost 5 months. Production has now resumed, Agroinvestor writes. In the months that the factory was shut down, the company did carry out a modernization of €7,4 million. This should increase the processing speed considerably. McDonald's is the largest customer, but Belaya Dacha Group and Lamb Weston/Meijer have the ambition to supply the whole of Russia with fries. The question is how much of that market share will McCain and ZHAK take?