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Nestle Consolidates Russian Assets to Battle Dwindling Sales
Nestle is consolidating its Russian assets, buying out minority stakes in its factories in a hope to reverse a downward trend in sales. The company’s share in packed chocolates in Moscow halved in 2006, compared to the sales in 2004.
Nestle’s 12 Russian plants and distribution firms as well as regional sales offices have all become Nestle’s full subsidiaries, Nestle Russia told Kommersant. The company’s complex structure incurred high expenses and business risks, Alik Taigunov, corporate director at Nestle Russia, said.
The sweets and coffee producer Nestle Food, the mineral water producer Nestle Water Coolers CIS and Nestle Zhukovskoye Ice-Cream were independent companies until this year. All of them were managed by Nestle’s headquarters in Paris and Geneva. This year all the three will be ultimately accountable to Nestle Russia. The reshaping is designed to make the companies more efficient and cut financial and administrative expenses, Mr. Taigunov says.
Nestle has been operating on the Russian market since 1995. The company posted $1.3 billion as its turnover in Russia in 2006.
Nestle is also set to drive its holdings in its Russian factories to 100 percent, such as buying out 4.3 percent in the Altai plant or 4.7 in the Khladoprodukt ice-cream producer.
Nestle has launched the reshaping of business in a reaction to recent dwindling sales. The company’s share on the mineral water market in Moscow fell down from 9.6 percent in 2004 to 8.3 percent in 2006 and in the packaged chocolates from 24.4 percent to 12.7 in the same period. However, the Swiss giant’s total sales in Russia were up 19 percent in the first half of 2006.
Nestle hopes save up to $2 million a year in taxes and some $9 million a year on the asset consolidation, experts estimated.
www.kommersant.com
All the Article in Russian as of Mar. 02, 2007
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