3 Food Giants Build Local Yogurt Plants

Foreign oil companies may pull out of Russian projects and several automobile joint ventures have been postponed, but international food processing companies feel now is the time to move production to Russia.

Three major Western food producers – Germany's Ehrmann, the Netherlands' Campina and France's Danone – (to press) ahead with their plans to build yogurt factories in Moscow suburbs.

"The August [Rouble devaluation] made us realize all the more how important to is to have our own production here," said Christof Muller, head of Ehrmann's Moscow office.

The German company (to begin) building a dairy plant near the town of Ramenky, a 40-minute drive southwest of Moscow, a few weeks after the financial crisis (to break) out in the middle of August.

Estimated to cost around 70 million Deutsche marks ($40.9 million), the factory is to start production next fall. It (to have) the capacity to process 300 tons of milk a day into yogurt, sour cream, kefir and other products, Muller said.

The milk (to come) from local farms, while fruit for the yogurts will initially be imported frozen from Germany, he added.

According to the Ehrmann representative, the company (to import) 43,000 tons of yogurt to Russia, which, by company estimates, (to account) for 25 per cent of the local market.

Muller (to say) the yogurt market could easily double, in the next two or three years. "There (to be) no fear of surplus production," he said.

"The market is far from saturated and there (to be) still plenty of room for expansion," he added.

Another reason Ehrmann (to build) a local production facility is stiff competition from Russian yogurt producers, such as Moscow's Wimm-Bill-Dann. Muller said the idea (to be) to combine Ehrmann's quality "with a Russian image."

Campina, a Dutch yogurt maker, is scheduled to begin work in May on its dairy plant at Stupino, 120 kilometers south of Moscow, (to say) a company executive who wished to remain anonymous.

The plant, which (to cost) more than $40 million to build, is expected to be completed in a year's time. It (to produce) about 84,000 tons of yogurt a year, the executive said.

The French company Danone (to start) work on its dairy plant near the town of Chekhov, 60 kilometers south of Moscow, several months ago, and will have invested around $2 million in the project by the year's end.

According to foreign analysts, the companies (to have) good reasons to establish operations in Russia: cheap labour and raw materials, first of all.

"But some of the calculations made before the crisis – payback periods of investment, volumes and prices – may have to be reviewed," the analysts say.

Words you may need:

payback period срок окупаемости

Ex. 11. a) Fill each gap with a suitable word from the box.

b) Comment on the type of investment in this deal.

board	huge	strengthen	benefit
provider	approval	praise	buy
deal	used	projects

Norwegians to Buy 25% of Vimpelcom

State-owned Norwegian telephone company Telenor said Tuesday that it will_______a 25 per cent stake in Russian cellular phone provider Vimpelcom for $160 million.

"Russia is a _______ market for mobile telephony and an important part of Telenor's international growth strategy," Tormod Hermansen, president and CEO of Telenor, said in a statement. "Vimpelcom fits well with our existing Russian investments."

The_______would mark Telenor's entrance into the Moscow mobile phone market. It already owns stakes in the St. Petersburg mobile phone company North West GSE, Extel in Kaliningrad and Stavtelesot in Stavropol.

The companies said the $160 million will be_______to develop Vimpelcom's cell phone licenses, fiber optic network, Internet services and other telecommunication_______ "We believe that the infusion of capital into the company at this time will_______the company's competitive position in the Russian cellular market, Vimpelcom's President said in a statement.

Under the terms of the deal, Vimpelcom will hand over a 25 per cent plus one share stake to Telenor.

Vimpelcom said it expects to________from Telenor's experience in penetrating and developing the global telephone market, and the Norwegian provider will in return get access to the Russians' extensive engineering expertise.

Vimpelcom, the first Russian firm to be listed on the New York Stock Exchange in 1996, posted a net profit of $61 million on turnover of $306 million last year.

The company, however, is suffering as the financial crisis shrinks its customer base.

The company, though, remains a favorite with stock analysts, who ________ it as one of the most transparent and well-managed in Russia.

Vimpelcom had 110,140 subscribers in the Moscow area at the end of 1997, the most recent figures available.

Telenor is a ________ of fixed, mobile, satellite and Internet services and is based in Oslo, Norway. Telenor has 1.5 million cell phone clients in Norway, or 75 percent of the market.

Telenor also operates mobile telephone networks in a number of countries including Norway, Germany, Ireland, Greece, Bangladesh and Ukraine. It came to Russia shortly after the first mobile phone license was granted to the Leningrad region in 1991.

The deal between Telenor and Vimpelcom is subject to the ________ of Vimpelcom shareholders and Russian federal authorities, including the State Anti-Monopoly Committee, the Federal Securities Commission and the Central Bank.

Vimpelcom said it plans to hold an extraordinary shareholders' meeting in late January at which its ________ of directors will recommend the terms of the alliance.

Words you may need:

stake n доля

CEO (Chief Executive Officer) главный исполнительный директор (корпорации, компании)

infusion n вливание

post v делать проводку, заносить в бухгалтерскую книгу

shrink v (зд.) уменьшать, сокращать