CONFECTIONS SECTOR OF THE UKRAINIAN FOOD PROCESSING/PACKAGING INDUSTRY
14 JAN 00
SOURCE US EMBASSY KIEV
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INTERNATIONAL COPYRIGHT, U.S. AND FOREIGN COMMERCIAL
SERVICE AND U.S. DEPARTMENT OF STATE, 1999. ALL RIGHTS
RESERVED OUTSIDE OF THE UNITED STATES.
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1. SUMMARY: THE UKRAINIAN CONFECTIONERY MARKET OFFERS
OPPORTUNITIES FOR U.S. EXPORTERS OF RAW MATERIALS AND
PRODUCERS OF EQUIPMENT AFFILIATED WITH CONFECTION
PRODUCTION AND PACKAGING. SINCE THE CONFECTIONERY
INDUSTRY IN UKRAINE IS A PROFITABLE BUSINESS, -SWEETS-
PRODUCERS ARE SEEKING NEW TECHNOLOGIES AND ENERGY
SAVING EQUIPMENT TO EXPAND THEIR SHARES IN THE DOMESTIC
MARKET AND TO INCREASE EXPORTS. CONFECTIONERY OUTPUT
HAS BEEN STEADILY ON THE INCREASE FOR THE LAST FOUR
YEARS. FOR THE ELEVEN MONTHS OF 1999, PRODUCTION OF
CONFECTIONERY ITEMS INCREASED 12% COMPARED WITH THE
ENTIRE 1998 FIGURE. U.S. EXPORTERS ARE URGED TO PAY
ATTENTION TO THIS ATTRACTIVE SECTOR OF THE UKRAINIAN
FOOD PROCESSING/PACKAGING INDUSTRY. END SUMMARY.
1. 28 LARGE CONFECTIONERY FIRMS REPRESENT THE
UKRAINIAN -SWEETS- INDUSTRY. THE TOTAL PRODUCTION
CAPACITY OF THESE FIRMS AMOUNTS TO 625,000 TONS PER
YEAR. ALL OF THESE COMPANIES ARE MEMBERS OF THE
UKRKONDYTER ASSOCIATION, A CLOSED JOINT STOCK COMPANY,
WHICH CONTROLS 76% OF THE DOMESTIC MARKET. BESIDES
CONFECTIONERIES, THE ASSOCIATION/AMALGAMATES COMPRISES
OF 3 ENTERPRISES THAT PRODUCE FOOD CONCENTRATES, 1
TEA-MAKING COMPANY, AND 1 MILK ACID FACTORY. THE
CHERKASSY BISCUIT FACTORY IS THE ONLY STATE OWNED
MEMBER OF THE UKRKONDYTER ASSOCIATION. LOCALLY
PRODUCED CONFECTIONERY MEETS 75-80% OF THE DEMAND. IN
THIS SECTOR, PLANTS WITH BOTH UKRAINIAN AND FOREIGN
CAPITAL OPERATE SUCCESSFULLY, INCLUDING JSC "KRAFT
JACOBS SUCHARD UKRAINE" (U.S. COMPANY), CJSC "SVITOCH"
(A PARTNERSHIP WITH NESTLE), "A.V.K" AND "ROSHEN"
(CORPORATIONS OF UKRAINIAN PLANTS), AND OTHERS.
2. DURING THE JANUARY - NOVEMBER PERIOD OF 1999,
PRODUCTION OF CONFECTIONERY ITEMS INCREASED BY 12% IN
COMPARISON WITH THE ENTIRE 1998 FIGURE. 80% OF THE
PRODUCTION CAPACITIES IS BEING UTILIZED. IT IS
EXPECTED THAT THE OUTPUT OF THE UKRKONDYTER FACTORIES
WILL REACH 500,000-510,000 TONS OF SWEETENED ITEMS
THIS YEAR.
ASSOCIATION FACTORIES OUTPUT (IN THOUSAND TONS):
1996 198
1997 235
1998 302
1999 338 (JANUARY-NOVEMBER)
2000 500-510 (PROJECTED)
SPECIALISTS WITH UKRKONDYTER ESTIMATE THAT DOMESTIC
PLANTS INCREASED CHOCOLATE PRODUCTION FOUR FOLDS.
3. THE STATE STATISTICS COMMITTEE OF UKRAINE REPORTED
THAT DURING THE FIRST HALF OF 1999 THE MONIES GENERATED
FROM THE SALE OF CONFECTIONERY PRODUCTS WAS
APPROXIMATELY 750 MILLION HRYVNYAS (US$ 139 MILLION),
WHICH AMOUNTS TO 9% OF ALL FOOD ITEMS SOLD. MARKET
INSIDERS ESTIMATE THE ANNUAL SALE OF CONFECTIONERY
ITEMS SOLD IS WORTH ABOUT US$ 300-500 MILLION.
4. THE UKRKONDYTER PRODUCTS ARE POPULAR AMONG
UKRAINIANS. ACCORDING TO A MARKET RESEARCH, PUBLISHED
IN THE UKRAINIAN MAGAZINE "FOOD PRODUCTS", UKRAINIAN
CONSUMERS RATED THE FOLLOWING DOMESTIC CONFECTIONERY
BRANDS AS THE MOST POPULAR:
"SVITOCH" LVIV CONFECTIONERY 32%
KARL MARX CONFECTIONERS 31%
KRAFT JACOBS SUCHARD UKRAINE 12%
A.V.K. 10%
KHARKIV CONFECTIONERS 8%
OTHERS 7%
5. THE CONSUMER PREFERENCE HAS BEEN CHANGING TO THE
ADVANTAGE OF THE UKRAINIAN SWEETS-MAKERS. IN 1998,
THE MARKET SHARE FOR IMPORTED CONFECTIONS AMOUNTED TO
30%. 1999 FIGURES HAVE DECREASED THIS TO 10%, WHILE
SOME EXPERTS ESTIMATE THAT THE IMPORTS SHARE OF THE
MARKET IS ONLY 3-4%. MOST CONFECTIONERY IMPORTS COME
FROM GERMANY, FRANCE, POLAND, TURKEY AND RUSSIA.
6. ATTENTION SHOULD BE PAID TO AN UNDEVELOPED SECTOR
OF THE CONFECTIONERY INDUSTRY, PRODUCTS FOR DIABETICS.
IN UKRAINE EVERY FIFTIETH PERSON SUFFERS FROM THIS
DISEASE.
7. UKRAINIAN CANDY-MAKERS ARE UPGRADING THEIR
PRODUCTION FACILITIES AND SEARCHING FOR NEW
TECHNOLOGIES THAT WILL ENABLE THEM TO REMAIN
COMPETITIVE IN THE DOMESTIC MARKET AND ALLOW THEM TO
INCREASE EXPORTS. U.S. COMPANIES CAN POSITION
THEMSELVES FOR THIS POTENTIAL SURGE IN DEMAND, BUT
MUST BE PREPARED TO DEAL WITH A VERY CHALLENGING
ENVIRONMENT. MOST CONFECTIONERY EQUIPMENT IS IMPORTED
FROM GERMANY, ITALY, AND EASTERN EUROPEAN COUNTRIES.
CONFECTIONERY COMPANIES ARE EQUIPPED WITH OVENS FOR
WAFER PRODUCTION, WRAPPING MACHINES, LINES FOR CRACKER
PRODUCTION, AND CHOCOLATE PROCESSORS. EQUIPMENT
NEEDED TO EXPAND PRODUCT ASSORTMENT AND INCREASE
QUALITY INCLUDE: CARAMEL PRODUCTION LINES, CHEWING GUM
PRODUCTION LINES, PACKAGING EQUIPMENT FOR WRAPPING
CHOCOLATE BARS, AND COFFEE GRANULATORS. A UKRAINIAN
PACKAGING COMPANY, "BLITZ-PAK", SUPPLIES 70% OF THE
DOMESTIC CONFECTIONERIES, INCLUDING "A.V.K." AND
"ROSHEN" CORPORATIONS OF PLANTS, CJSC "SVITOCH".
COMPANY DIRECTORS HAVE LITTLE INFORMATION ON AMERICAN
EQUIPMENT, BUT ARE INTERESTED IN LEARNING MORE.
8. INDUSTRY EXPERTS (MINISTRY AND STATE COMMITTEE
OFFICIALS, ENTERPRISE DIRECTORS, AND FOREIGN ADVISORS)
IDENTIFIED THE FOLLOWING AS THE BEST SALES PROSPECTS
FOR CONFECTIONERY EQUIPMENT. NEARLY ALL-PROSPECTIVE
END-USERS EXPRESSED AN INTEREST IN RECONDITIONED (USED)
EQUIPMENT.
8438200000 - MACHINERY FOR MANUFACTURING COCOA AND
CHOCOLATE
8422400000 - WRAPPING EQUIPMENT
8417200000 - BISCUIT OVENS
8422400000 - AUTOMATIC WRAPPING MACHINES FOR COOKIES
8422309070 - MACHINERY FOR FILLING STURDY CONTAINERS
- PACKAGING AUTOMATIC MACHINES FOR PACKING
CONFECTIONERY GOODS INTO FILM
9. FOR DETAILED INFORMATION ON UKRAINE'S FOOD
PROCESSING/PACKAGING INDUSTRY, PLEASE CONTACT YOUR
NEAREST USDOC EXPORT ASSISTANCE CENTER, WITH A COPY
TO: DAVID HUNTER, CS KIEV SENIOR COMMERCIAL OFFICER;
OR IRINA LOSEVA, CS COMMERCIAL ASSISTANT:
THE COMMERCIAL SERVICE
U.S. EMBASSY KIEV
7, KUDRIAVSKY UZVIZ
KIEV 254053, UKRAINE
TEL: (380-44) 417-1413, 417-2669
FAX: (380-44) 417-1419