After completion, the company will strengthen its inroads into the 22 trillion won Russian confectionary market and expand the market to Central Asia
Orion held an investment agreement ceremony on Sept. 9 (local time) at the site of its new plant in Tver, Russia.
Orion plans to invest 5.127 billion rubles (some 80 billion won) over the next three years. Orion plans to select local companies in Tver as a designer and a contractor and contribute to regional economic development through the creation of jobs for Russian locals.
The Tver state government is very active, promising to provide various utilities and supports for smooth licensing. It will also provide Orion with various benefits, including corporate tax cuts, asset tax cuts and two-lane road support, and the establishment of bus stops and overpasses for the convenience of factory workers.
Orion is planning to build a new plant with a business site of 152,252 square meters (about 46,056 pyeong) and a total floor area of 42,467 square meters (about 12,846 pyeong) in Tver to expand sales in the Russian market.
Construction began in July with the aim of completing the project in 2022. Choco Pie, six lines of biscuits and two lines of snack will be installed. At the time of completion of the new plant, the company will relocate and install the existing Tver plant line.
Orion announced a plan to build a new plant in Russia in 2017. In the pre-construction phase of the plant, the site will be changed to Tver in consideration of the site's scalability, logistics infrastructure, and convenience of hiring local workers in the country.
The current plant, which signed the investment agreement, is more than four times larger than the existing Tver plant, and is expected to expand production value to 10 billion rubles (about 150 billion won).
Orion entered Russia in 1993 by exporting Choco Pie. Since the establishment of the Tver plant in 2006, the company has also built an additional production plant in Novo in 2008.
While Choco Pie and Choco Song-e are gaining huge popularity, biscuit products such as new Choco Pie products and Gosomi, which were introduced to local consumers, have been hit, with sales rising 26.5% and operating profit growing 105.4% in the first half of this year alone.
After the completion of the new plant, the company plans to expand the supply of Choco Pie to more than 1 billion units a year and secure a biscuit lineup that can produce various products to target the Russian and Central Asian markets.
An Orion official said, "Recently, Russian corporate sales have been growing rapidly to the point where the production capacity of two Russian factories is saturated," adding, "We will expand the market to Central Asia as well as target the 22 trillion won worth of Russian confectionery market through the construction of a new plant."
