The construction of the plant will be the result of a joint venture between Raisio and Russian agricultural firm Zolotoi Kolos. Raisio will own 75 percent of the joint venture.
Raisio said it hopes the new facility, which is due to be completed by next year, will allow it to increase its presence in the local market.
"We are already active in Russia with our Nordic brand, which isproduced in Finland and exported into Russia. Having our own production in Russia gives us the opportunity to expand into other areas outside of Moscow and St Petersburg, and to increase our market share," said Raisio's Taru Narvanmaa.
The new facility, which is expected to set the company back by around €15m, will be located in Burunduki, Tatarstan, a black soil area that is known to be good for grain cultivation. This is also where the major grain based production of Zolotoi Kolos is currently located.
According to Raisio's vice president of business development Jukka Kaitaranta, most of the oatmeal production from the new plant will target the retail market in Russia and Ukraine. However, the company is also looking to enter the industrial market.
"We don't supply the Russian food industry with oat meal right now, but we will start establishing a business in the industrial area as well. Our partner in this venture has relationships with the local industrial market, so that will assist us in the beginning. But this area will remain a minor share of our business for some time," Kaitaranta told BakeryAndSnacks.com.
The value of the oatmeal market in the major Russian cities is currently estimated at over €100m, with annual growth standing at around 10 per cent. Raisio claims to currently hold some 6 per cent share in these markets because of its Nordic branded products.
The company says the oatmeal plant investment is a continuation of Raisio's "strategic expansion" in Russia. In 2005 the turnover of the firm's Russian operations was €31m, around 7 per cent of the group's total turnover.
Raisio currently also owns a margarine plant in Istra, near Moscow. Its four major divisions are food, feed and malt, ingredients and diagnostics.