Magnit to launch production of private label coffee

KRASNODAR. March 28 (Interfax) - The Magnit retail chain plans to organize a coffee roasting and packing operation at its enterprise in Tver in the fall of 2022, thus meeting 22% of the company's demand for coffee in all 67 regions where it is located, the retailer said in a statement.

The production volume will be 550 tonnes per year, and raw materials will be imported from major suppliers Brazil and Vietnam, the statement said.

Eight different roasts of whole bean and ground coffee and eight different package types will be offered under company brands My Price in the first price bracket, Magnit in the midrange price bracket, and Gusto di Roma in the midrange and above price segment.

"According to analysts, coffee consumption in Russia increases by around 2.8% per annum. Magnit's coffee sales grew by 7% in 2021 versus 2020," the statement said. Launching coffee production at an existing facility in Tver will allow the company to optimize capital expenditures and reduce the payback period, it said.

"For whole bean coffee, Magnit's specialists will use a hybrid roasting technology that combines the best features of both conduction and convection," the statement said. For ground coffee, cold grinding will be used, during which the bean is not heated, it said.

"The Russian coffee market is demonstrating a sustained growth trend. Moreover, on the back of the announcements of major global players about their exit from the Russian market, we see opportunities for our company in developing this category. We are ready to offer our customers competitive products on par with what they are used to in terms of quality and consumer properties. We plan to have this new assortment on our shelves by the end of this year," Director of Commercial Procurement and Category Management Support Ekaterina Lobanova said.

Magnit has its own food production facilities. The company owns 17 enterprises in Russia's regions, producing around 500 different foodstuffs.

Magnit is the largest retailer in Russia in terms of number of stores and the second largest in terms of revenue. It had 26,077 stores at the end of December and increased its revenue 19.5% to 1.856 billion rubles in 2021.