Danone restructuring Russian production

By Jim Cornall

- Last updated on GMT

Two Danone plants in Russia will be closed, with production moved to other facilities
Two Danone plants in Russia will be closed, with production moved to other facilities

Related tags Russia Danone

Two Danone plants in Russia are closing as the company rearranges its capacities in both Siberia and the Volga region as part of its production optimization program.

This will lead to ceasing production at the Tomsk dairy plant and consolidating volumes at the Kemerovo and Krasnoyarsk plants in Siberia, as well as the gradual reallocation of production from the Cheboksary facility to the Samara, Saransk and Kazan plants in the Volga region.

Danone stated that the main reasons behind the decision are significant depreciation of sites, low profitability and decrease of sales volume, which are no longer compatible with the level of investments required to upgrade these facilities as per new criteria of quality, and environmental safety assurance.

The changes will impact about 300 employees.

“All released personnel will receive proper care and support, taking into account individual needs of each person. Payments made by Danone to the released employees will significantly exceed requirements established by the current Labor Code of the Russian Federation,”​ the company added.

Danone confirms Russian plans

In 2012, Danone announced its intention to invest $700m up to 2017 to upgrade its production sites in Russia. Through a number of projects that have already been implemented, dairy plants in Siberia (in Kemerovo and Krasnoyarsk) and in the Volga region (in Samara, Saransk and Kazan) have already extended their product range.

Also, Danone said they have significantly increased their production capacities as well as improved quality standards and food safety of finished products. Consolidation of production capacities aims to reinforce performance of these sites, which the company believes to have the biggest potential for development in both Siberia and the Volga regions.

Production at Tomsk and Cheboksary plants will be stopped by the end of March 2016. Danone said this will not affect the volume of raw milk purchased or of finished products supplied to neighboring regions, and within the regions of the plants’ locations.

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