18 May 2016 Global

Investing in Russia

HZPC recently acquired 100% of the shares in the Finnish company HZPC Sadokas Oy. As such, it also acquired full ownership of the Russian company AO HZPC Sadokas in Saint Petersburg. HZPC already owned 41.3% of the shares in the joint venture, which has earned a healthy profit over the past few years.

Potato growing in Russia is expected to rapidly become more professional

Investing in Russian production

Russia has a huge potato acreage. HZPC expects potato growing in Russia to rapidly become more professional. A number of potato processing companies have already invested, or are planning to invest, in Russia for sales to the Russian market.

Production of good quality seed potatoes is not easy in Russia, but it is necessary. In addition to its own production, AO HZPC Sadokas Saint Petersburg imports seed potatoes from Finland and the Netherlands, but Western European seed potato is relatively expensive for Russian growers. Moreover, the political situation does not offer any certainty that trade in seed potatoes from Western Europe to Russia will always be possible. This is why HZPC wants to invest in the local production of seed potato from its varieties.

The Russian potato market

The Russian market mainly supplies fresh potatoes via traditional outlets (67%), but the sale of fresh potatoes via supermarkets is growing rapidly. The consumption demand for crisps and French fries is also growing at a rapid pace. There is clearly a demand for the HZPC varieties in Russia for both the fresh market as well as for the industry. AO HZPC Sadokas currently supplies 20 varieties in Russia. Red Scarlet is the most popular variety. Colomba and Sylvana are also doing very well. Nevsky variety is also quite popular. Nevsky is a Russian variety that Sadokas introduced back into Russia via Finland, making the company very popular.

“Production of good quality seed potatoes is not easy in Russia, but it is necessary”

Sadokas distributes to growers throughout Russia. Most customers are currently situated in Central and South Russia. The company wants to expand in the other regions.