Russian chocolate retailer French Kiss is mulling a move into mainstream retail outlets, its new private-equity owner, VIY Management, has told just-food.

French Kiss, which has 16 stores in Moscow and 18 franchises in other parts of the country, was sold to VIYM for an undisclosed sum by majority shareholder and CEO Hussein Yamaniylmaz.

Funds from the acquisition will be used to implement French Kiss's ambition to become Russia's "leading premium hand-made chocolate and confectionery firm by 2017" measured by production and retail outlets, VIYM said.

French Kiss has set a target of "significantly" increasing its production capacity and double its number of stores.

A spokesperson for VIYM told just-food today (9 September) French Kiss "is considering co-operation with retail chains in due course". The spokesperson said the retailers would be chains with a "similar premium philosophy to French Kiss".

Announcing the acquisition, Dmitry Schuetzle, VIYM's managing director, said: "French Kiss is a stable growing company with a developed retail chain and own unique high quality production. The business is growing quickly, at about 40% per year, and we expect this trend to continue. As the company realises its investment programme over the coming years, we expect it to increase further its level of efficiency, through economies of scale, improved  business operations and reduced costs".

Vladimir Mathias, managing director for Russia of Goetzpartners GmbH, financial consultant on this transaction, added: "Working closely with VIYM, we intend to consolidate French Kiss' leading position in the Russian market, and to transform the business into a transparent and attractive business both for domestic and international investors."

Yamaniylmaz said the deal was "an important milestone for our company". He added: "I am confident that they will add considerable value to our business, and that together we should be able to ensure our continued profitable growth."

Show the press release

VIY Management (VIYM), a leading independent private equity advisor managing funds on behalf of a wide range of private and institutional investors, is pleased to announce that it has completed the acquisition on their behalf of a stake in French Kiss, a leading premium-segment chocolate producer in Russia. Funds raised from the acquisition will be used to finance the Company's investment programme through 2017.
    
French Kiss - one of the leading producers and distributors in Russia's fast-growing premium chocolate and confectionary market. Founded in 2003, the Company has 16 boutique stores in Moscow, and more than 18 franchises in key regions across Russia.  The Company's production and warehouse facilities are based in and around Moscow.

French Kiss aims to become the number one player in Russia in the premium hand-made chocolate and confectionary space by 2017, in terms of sales, production volumes and number of retail outlets.  To this end, the Company intends to significantly increase its production capacity as well as to double the number of its stores. 

Dmitry Schuetzle, VIYM Managing Director, said:

“French Kiss is a stable growing company with a developed retail chain and own unique high quality production. The business is growing quickly, at about 40% per year, and we expect this trend to continue.  As the Company realises its investment programme over the coming years, we expect it to increase further its level of efficiency, through economies of scale, improved  business operations and reduced costs.  We are extremely pleased now to be a part of this business and look forward to making an active contribution to its continued development.”

Vladimir Mathias, Managing Director for Russia of Goetzpartners GmbH, financial consultant on this transaction, said:

“The premium chocolate market in Russia has been growing rapidly in recent years.  French Kiss gives us the perfect platform from which to build a Moscow-based chocolate company with nationwide coverage.  Working closely with VIYM, we intend to consolidate French Kiss’ leading position in the Russian market, and to transform the business into a transparent and attractive business both for domestic and international investors.”

Hussein Yamaniylmaz, CEO and majority shareholder of French Kiss, added:  

“We are grateful to VIYM for its interest and belief in our business, and view our cooperation as an important milestone for our company.  I am confident that they will add considerable value to our business, and that together we should be able to ensure our continued profitable growth.” 


About the confectionary market in Russia:

As of today, the Russian confectionary market produces about three million tonnes per year, of which chocolate accounts for 0.5 million tonnes.  According to Euromonitor International, in 2013 the Russian chocolate market was worth about USD 6.6 billion, representing as much as 5.8% of the world’s chocolate industry.  

Chocolate consumption in Russia remains relatively low by world standards, at about 4 kgs per person per year.  By comparison, the European average is about 8 kgs.  

In Russia, the premium chocolate segment made up about 5% of the total chocolate market, and according to KPMG forecasts this percentage will continue to increase.  By 2016, the total market is expected to grow by 45%, reaching a monetary value of approximately USD 9.6 billion, representing 7.5% of the world’s chocolate industry. 


About French Kiss

French Kiss is one of the most notable examples of “elite” chocolate brands in Russia. Only the finest natural ingredients and elite chocolate are used in its manufacturing process. The French Kiss trademark is registered in Russia, Europe, China and in other countries. 

About VIY Management

VIYM - an independent partnership dedicated solely to exclusive private equity services for international investors with PE growth capital and RE investment strategies in the Greater Europe, with focus on the emerging economies of Russia and the other FSU markets

About Goetzpartners GmbH 

Goetzpartners GmbH - an independent European advisory firm. It has a unique integrated service offering that combines corporate finance and management consulting under one roof. Goetzpartners has a European footprint with 12 offices in 9 countries and a global reach based on a network of partnerships with first-class advisory firms. 

Original source: VIY Management