Snackmaker Frito-Lay, a unit of PepsiCo, said it will officially open its first Russian snacks factory making potato and corn chips, in Kashira, around 100 km south of Moscow, tomorrow.
"The new plant, including investment in agriculture and construction, cost around $60 million (€61m)," Michael D. White, president and CEO of Frito-Lay Europe, Africa and the Middle East, told journalists.
He said another $10 million would be invested in the plant in 2003 and around $30 million in 2004.
It has the capacity to produce 40,000 tons, or 1.4 billion bags of chips a year.
White said the company would probably open another snacks factory in 2005.
"It will have to be in a potato-producing region, possibly in Novgorod or to the east. Geographically we need more plants," he said.
Up until now Frito-Lay has been importing potatoes for processing or chips for sale from Poland, Hungary and Belgium.
"Affordability and the need to grow potatoes are the two big challenges in an emerging market like Russia. We work as hard on our agricultural strategies as anything else," said White.
Frito-Lay started selling chips in Russia in 1995 and now says it has 42 per cent of the market.
It expects the market to grow 40 per cent in 2002 and says Russians eat only 250 grams of potato chips per person per year compared to 5.5 kg in Britain.
Russian sales for 2002 are expected to reach $80 million, compared to $100 million in Poland and $20 million in Hungary.
PepsiCo, which first opened a production plant in Novorosiisk in 1973, has invested around one billion dollars in Russia over the last six or seven years, White said.
Frito-Lay intends to invest $25-30 million in a new production line each year.