Structures of the noodle manufacturer Doshirak may start producing flour in Tambov

A large manufacturer of instant noodles under the Doshirak brand from South Korea is thinking about vertical integration of its business in Russia. The company has created a division in Tambov to produce flour, which can be located at a local plant with a capacity of 270 tons of product per day. The profitability of the flour milling business has increased, and in-house production will allow for better quality control, experts say.

Structures of the manufacturer of instant noodles under the Doshirak brand may start producing flour in Tambov, follows from the Unified State Register of Legal Entities. At the end of October 2023, Doshirak Rus LLC established Doshirak Tambov Flour Milling Company LLC, the address of which coincides with the address of the Tambov mill complex Monolit. After modernization in 2019, this enterprise can process up to 350 tons of grain, producing 270 tons of flour per day, regional media previously reported.

A Kommersant source on the market says that Doshirak Rus structures were interested in Monolit’s facilities and could already rent part of the space. And Doshirak Ryazan, through HeadHunter, was looking for grain purchasing managers in Tambov. Monolit declined to comment; Doshirak Rus did not respond to Kommersant.

Doshirak Rus is a distribution structure of the South Korean Paldo Co., a manufacturer of instant noodles, drinks, snacks, and frozen foods. In Russia, Doshirak noodles are produced at the Doshirak Koya factories in the Moscow region and Doshirak Ryazan. At the end of 2022, Paldo-affiliated Singaporean HYSG Pte. Ltd bought from the Spanish GBFoods (Galina Blanca brand) a factory in the Nizhny Novgorod region, where bouillon cubes, loose broths, seasonings and pasta were produced. In 2022, Doshirak Rus’ revenue increased by 38.5%, to 19.76 billion rubles, net profit – 2.2 times, to 4.57 billion rubles.

General Director of the Institute for Agricultural Market Studies (IKAR) Dmitry Rylko says that Doshirak probably has specific requirements for the indicators of the flour used, in particular for whiteness, and perhaps the company has decided to begin to control the production process itself to obtain the ingredient of the required quality. In addition, Mr. Rylko points out, the profitability of the flour milling business in Russia has improved somewhat in the last couple of years due to relatively low grain prices on the domestic market, constrained by export duties, as well as increased flour exports. Prozerno estimated the volume of flour exports this season at 800–900 thousand tons against 802 thousand tons a season earlier, and the production volume in 2023 at 9.38 million tons.

President of the Russian Union of Flour and Cereal Enterprises Arkady Gurevich says that own flour production may only make sense for a large pasta manufacturer, and small-capacity mills may have difficulty maintaining stable quality. According to him, in Russia in general a lot of flour is produced, the market is characterized by high competition and low prices. According to Prozerno, as of October 20, premium wheat flour cost an average of 22.17 thousand rubles. per ton versus 22.85 thousand rubles. per ton a year earlier.

Mareven Food Central (Rollton and BigBon brands) did not provide a comment. Previously, the company reported that it uses wheat flour from Russian producers to produce noodles. Executive Director of the National Association of Pasta Producers Sergei Nemirovsky says that the largest suppliers of pasta made from durum wheat, such as Makfa and Sea Group (brands Shebekinskie, Maltagliati), produce their flour. According to him, Russian producers often produce durum wheat flour that does not meet modern requirements.

According to NielsenIQ, in Russia, sales of instant noodles in January-September 2023 decreased year-on-year by 1.9% in volume and increased by 6.5% in money. Market participants attributed the dynamics to the end of the period of rush demand, noting that sales volumes had returned to the levels of 2019 and 2021 (see Kommersant on May 30).

Anatoly Kostyrev