Investors smell of fried food – Newspaper Kommersant No. 178 (7379) of 09/27/2022

Against the backdrop of the departure of large foreign manufacturers of French fries from Russia, new investors began to be interested in this business. A large supplier of snacks, Martin, has planned such a project in the Voronezh region. Restaurateurs are experiencing a shortage of local French fry producers, but investors may find it difficult to purchase equipment.

The structures of the owners of a large producer of snacks “Martin” were established on September 21 this year in the Voronezh region by LLC “Domfri”, follows from the data of the Unified State Register of Legal Entities. The main activity of the new company is the processing and canning of potatoes. Martin did not provide details about the new project on Friday.

“Martin” is primarily known as a manufacturer of seeds, crackers and nuts under the brand of the same name. Also produces drinks, sauces, pasta, beer, coffee. Includes agricultural enterprises in the Krasnodar Territory and the Voronezh Region, manages the complex for the production of mushrooms “Voronezh champignon” with a capacity of 12 thousand tons per year. In 2021, the revenue of Martin LLC remained at the level of 12.3 billion rubles. The main owners of the group are members of the Baboyan family.

“Martin” thought about a potato processing project against the backdrop of the withdrawal of large specialized foreign investors from the Russian market. The structures of the Dutch Lamb Weston / Meijer came out of the capital of the Lipetsk French fries manufacturer LVM Rus, which was developed jointly with the ex-general director of Belaya Dacha Vladimir Tsyganov. And the Canadian McCain handed over the construction project of its French fries plant in the Tula region to McCain Foods Rus Vasily Starodubtsev. The representative of LVM Rus and Mr. Starodubtsev declined to comment.

Varvara Serdyukova, senior expert at the Institute for Agricultural Market Studies, believes that against the backdrop of current difficulties with imports and unsatisfied demand for french fries, there is potential for new projects in this sector. The group of companies “Shokoladnitsa” also sees a need for new suppliers of french fries. Now the group, amid a shortage of a local product and rising prices, is working on the supply of french fries from Egypt. The Vkusno-i Tochka chain, which operates former McDonald`s restaurants in Russia, also reported a need for Russian suppliers. Previously, the chain removed french fries from the menu of a number of outlets due to supply chain issues. The Russian network Burger King did not answer questions.

The largest producer of french fries in Russia is LVM Rus with a capacity of 100 thousand tons of products per year. McCain planned to build a plant to produce up to 150 thousand tons of product per year. Imports of processed potatoes to the Russian Federation before the current crisis were at the level of about 100 thousand tons per year. Aleksey Krasilnikov, executive director of the Potato Union, says that the potential of the potato processing market in Russia is not satisfied and existing enterprises are also planning to expand their capacities. According to him, there is a demand for potato products in stores and fast food chains also maintain development plans. According to NielsenIQ, from January to the end of August, frozen potato sales decreased by 3.3% in volume terms and grew by 24.2% in money terms year-on-year.

In addition, Mr. Krasilnikov continues, French fries produced in Russia have export potential. At European enterprises, water is used to wash potatoes several times, which can cause an unpleasant odor in production, while Russian sites have almost no such problem, he explains. Processors should also have no problems with raw materials. According to the Ministry of Agriculture, in 2022, the potato harvest will increase to 6.8 million tons against 6.6 million tons a year earlier.

But, according to a Kommersant source on the market, difficulties may arise with the purchase of equipment for the production of french fries. After leaving McDonald’s, he notes, large suppliers of production lines have certain restrictions in cooperation with Russian companies, because investors have to look for alternative ways to provide enterprises.

Anatoly Kostyrev