Sector: Food
We are upbeat on expansion of Russia’s largest juice producer Lebedyansky in the new instant porridge segment as part of business diversification and launching high value-added products on the market. The company could gain strong positions in the segment thanks to a developed distribution network and well-known Frutonyanya brand. However, it will be premature to expect rapid results from the new segment, since competition on this market is growing fiercer due to both Western players and domestic companies Wimm-Bill-Dann and Nidan, which plan to enter the Russian porridge market.
The Russian flagship juice maker Lebedyansky has launched baby porridge output under the Frutonyanya umbrella brand. According to company data, production began at the company’s main facility in Lebedyan (Lipetsk region) and total investments in the project are estimated at ˆ5 mln. According to the company’s PR director, the assembly line’s capacity provides for conquering 15-17% of the instant porridge market over the next year or two.
Taking into account robust growth on the baby food market on which the instant porridge segment accounts for over 16%, we are upbeat on Lebedyansky’s expansion in the new niche. However, competition on the market is fierce and such global majors as Heinz, Nestle and Nutricia hold large shares of the market. In addition, Russian majors Wimm-Bill-Dann and Nidan mull entering this segment. For this reason, we view the 15% market share announced by Lebedyansky as quite optimistic. The main positive factors that could assist in implementation of the company’s plans include a developed distribution network and strong Frutonyanya brand which holds a leadership status in terms of brand awareness in the baby juice and pureed fruit market.
Our target price for Lebedyansky is $102.40 per share.
Sergey Filchenkov
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Lebedyansky
Capitalization: $1 504 516 923,00
Common shares:
Price: $73,71
Delta week: -0,9%
Delta month: -1,4%
Delta year: -13,1%
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0.553
1.6
