**CONFECTIONS SECTOR OF THE UKRAINIANFOOD PROCESSING/PACKAGING INDUSTRY**

 

14 JAN 00

SOURCE US EMBASSY KIEV

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INTERNATIONAL COPYRIGHT, U.S. ANDFOREIGN COMMERCIAL

SERVICE AND U.S. DEPARTMENT OFSTATE, 1999.  ALL RIGHTS

RESERVED OUTSIDE OF THE UNITEDSTATES.

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1.  SUMMARY: THE UKRAINIAN CONFECTIONERY MARKET OFFERS

OPPORTUNITIES FOR U.S. EXPORTERS OFRAW MATERIALS AND

PRODUCERS OF EQUIPMENT AFFILIATEDWITH CONFECTION

PRODUCTION AND PACKAGING.  SINCE THE CONFECTIONERY

INDUSTRY IN UKRAINE IS A PROFITABLEBUSINESS, -SWEETS-

PRODUCERS ARE SEEKING NEWTECHNOLOGIES AND ENERGY

SAVING EQUIPMENT TO EXPAND THEIRSHARES IN THE DOMESTIC

MARKET AND TO INCREASE EXPORTS.  CONFECTIONERY OUTPUT

HAS BEEN STEADILY ON THE INCREASEFOR 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 SECTOROF THE UKRAINIAN

FOOD PROCESSING/PACKAGINGINDUSTRY.  END SUMMARY.

 

1.   28 LARGE CONFECTIONERY FIRMS REPRESENT THE

UKRAINIAN -SWEETS- INDUSTRY.  THE TOTAL PRODUCTION

CAPACITY OF THESE FIRMS AMOUNTS TO625,000 TONS PER

YEAR.  ALL OF THESE COMPANIES ARE MEMBERS OF THE

UKRKONDYTER ASSOCIATION, A CLOSEDJOINT STOCK COMPANY,

WHICH CONTROLS 76% OF THE DOMESTICMARKET.  BESIDES

CONFECTIONERIES, THEASSOCIATION/AMALGAMATES COMPRISES

OF 3 ENTERPRISES THAT PRODUCE FOODCONCENTRATES, 1

TEA-MAKING COMPANY, AND 1 MILK ACIDFACTORY. THE

CHERKASSY BISCUIT FACTORY IS THEONLY STATE OWNED

MEMBER OF THE UKRKONDYTERASSOCIATION.  LOCALLY

PRODUCED CONFECTIONERY MEETS 75-80%OF THE DEMAND.  IN

THIS SECTOR, PLANTS WITH BOTHUKRAINIAN AND FOREIGN

CAPITAL OPERATE SUCCESSFULLY, INCLUDINGJSC "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 INCREASEDBY 12% IN

COMPARISON WITH THE ENTIRE 1998FIGURE.  80% OF THE

PRODUCTION CAPACITIES IS BEINGUTILIZED.  IT IS

EXPECTED THAT THE OUTPUT OF THEUKRKONDYTER FACTORIES

WILL REACH 500,000-510,000 TONS OFSWEETENED ITEMS

THIS YEAR.

 

ASSOCIATION FACTORIES OUTPUT (INTHOUSAND TONS):

 

1996      198

1997      235

1998      302

1999      338 (JANUARY-NOVEMBER)

2000      500-510 (PROJECTED)

 

SPECIALISTS WITH UKRKONDYTERESTIMATE THAT DOMESTIC

PLANTS INCREASED CHOCOLATEPRODUCTION FOUR FOLDS.

 

3.   THE STATE STATISTICS COMMITTEE OF UKRAINE REPORTED

THAT DURING THE FIRST HALF OF 1999THE MONIES GENERATED

FROM THE SALE OF CONFECTIONERYPRODUCTS WAS

APPROXIMATELY 750 MILLION HRYVNYAS(US$ 139 MILLION),

WHICH AMOUNTS TO 9% OF ALL FOODITEMS SOLD.  MARKET

INSIDERS ESTIMATE THE ANNUAL SALE OFCONFECTIONERY

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 "FOODPRODUCTS", UKRAINIAN

CONSUMERS RATED THE FOLLOWINGDOMESTIC CONFECTIONERY

BRANDS AS THE MOST POPULAR:

 

"SVITOCH" LVIVCONFECTIONERY       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 UKRAINIANSWEETS-MAKERS.  IN 1998,

THE MARKET SHARE FOR IMPORTEDCONFECTIONS AMOUNTED TO

30%.  1999 FIGURES HAVE DECREASED THIS TO 10%, WHILE

SOME EXPERTS ESTIMATE THAT THEIMPORTS SHARE OF THE

MARKET IS ONLY 3-4%.  MOST CONFECTIONERY IMPORTS COME

FROM GERMANY, FRANCE, POLAND, TURKEYAND RUSSIA.

 

6.   ATTENTION SHOULD BE PAID TO AN UNDEVELOPED SECTOR

OF THE CONFECTIONERY INDUSTRY,PRODUCTS FOR DIABETICS.

IN UKRAINE EVERY FIFTIETH PERSONSUFFERS FROM THIS

DISEASE.

 

7.   UKRAINIAN CANDY-MAKERS ARE UPGRADING THEIR

PRODUCTION FACILITIES AND SEARCHINGFOR NEW

TECHNOLOGIES THAT WILL ENABLE THEMTO REMAIN

COMPETITIVE IN THE DOMESTIC MARKETAND ALLOW THEM TO

INCREASE EXPORTS.  U.S. COMPANIES CAN POSITION

THEMSELVES FOR THIS POTENTIAL SURGEIN DEMAND, BUT

MUST BE PREPARED TO DEAL WITH A VERYCHALLENGING

ENVIRONMENT. MOST CONFECTIONERYEQUIPMENT IS IMPORTED

FROM GERMANY, ITALY, AND EASTERNEUROPEAN COUNTRIES.

CONFECTIONERY COMPANIES ARE EQUIPPEDWITH OVENS FOR

WAFER PRODUCTION, WRAPPING MACHINES,LINES FOR CRACKER

PRODUCTION, AND CHOCOLATEPROCESSORS.  EQUIPMENT

NEEDED TO EXPAND PRODUCT ASSORTMENTAND INCREASE

QUALITY INCLUDE: CARAMEL PRODUCTIONLINES, CHEWING GUM

PRODUCTION LINES, PACKAGINGEQUIPMENT FOR WRAPPING

CHOCOLATE BARS, AND COFFEEGRANULATORS. A UKRAINIAN

PACKAGING COMPANY,"BLITZ-PAK", SUPPLIES 70% OF THE

DOMESTIC CONFECTIONERIES, INCLUDING"A.V.K." AND

"ROSHEN" CORPORATIONS OFPLANTS, CJSC "SVITOCH".

COMPANY DIRECTORS HAVE LITTLEINFORMATION ON AMERICAN

EQUIPMENT, BUT ARE INTERESTED INLEARNING MORE.

 

8.   INDUSTRY EXPERTS (MINISTRY AND STATE COMMITTEE

OFFICIALS, ENTERPRISE DIRECTORS, ANDFOREIGN ADVISORS)

IDENTIFIED THE FOLLOWING AS THE BESTSALES PROSPECTS

FOR CONFECTIONERY EQUIPMENT.  NEARLY ALL-PROSPECTIVE

END-USERS EXPRESSED AN INTEREST INRECONDITIONED (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 ASSISTANCECENTER, WITH A COPY

TO: DAVID HUNTER, CS KIEV SENIORCOMMERCIAL OFFICER;

OR IRINA LOSEVA, CS COMMERCIALASSISTANT:

 

THE COMMERCIAL SERVICE

U.S. EMBASSY KIEV

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