RUSSIA – Swedish manufacturer of value-adding specialty vegetable fats and oils, AAK has acquired 75% of NPO Margaron, a producer of margarines, spreads, and bakery and confectionery fats, based in St. Petersburg, Russia.

Margaron has been AAK’s long-term partners in the Russian market, and a toll manufacturer to AAK for more than a decade.

Aside from entering a market with great potential, AAK said that the acquisition will enable the company to move closer to many of its global strategic accounts who have established themselves in Russia.

“Russia and the CIS countries have a population of more than 200 million people and is a highly attractive market for AAK”, said Johan Westman, President and CEO of AAK.

“It is also one of the world’s largest chocolate and confectionery markets with strong potential for our Special Nutrition, Bakery, and Dairy segments as well.”

With and average per capita consumption of 2.7 kg, the Russian chocolate confectionery segment is expected to generate US$3.862 bn in 2020 and projected to grow annually by 3.8% (CAGR 2020-2023).

“By strengthening our local footprint, we will have an opportunity to expand our product portfolio and unique customer co-development approach to the Russian market,” Westman added.

The acquisition, which is subject to approval from local authorities, is expected to be finalized during the second quarter 2020.

Subject to certain long-term targets being met, AAK said that there is a put/call option under which AAK could acquire the full ownership of Margaron.

“AAK’s sales team in Russia has together with Margaron delivered strong regional growth over recent years”, said Jan Lenferink, President AAK Europe.

“This acquisition will enhance our customer proximity, increase our business opportunities, and further grow our market share in the region.”

Chocolate & Confectionery Fats is one of the stronghold business areas for AAK, having reported double-digit profit growth in Q4 of the 2019 financial year, driven by favourable spot business opportunities in the quarter as well as an improved product mix.

While presenting the company’s annual financials, Westman revealed that AAK has also reviewed its market and capabilities to define the company’s strategic direction going forward.

“The strategic direction will be focused on the opportunities within the specific industries we serve as well as sustainability, health and nutrition,” he said.

The company now plans to step up its focus and investments within plant-based foods and develop a health & nutrition platform as well as continue invetsing in special nutrition and chocolate & confectionery fats while focusing on optimizing performance within bakery and dairy.

“We are well positioned with our offer of plant-based, healthy, high value-adding oils and fats solutions, using our customer co-development approach. We continue to see favorable underlying trends in our markets and we remain prudently optimistic about the future,” Westman said.