Danone said volumes from two plants were declining

Danone said volumes from two plants were declining

Danone is to end production at two of its dairy factories in Russia during the first quarter of the year.

The facilities are based in Cheboksary, a city on the Volga river 650km east of Moscow, and in Tomsk, a city in Siberia, 260km north of Novosibirsk.

A spokesperson for the French group told just-food the sites are producing "low-margin, traditional Russian dairy products of local brands". The plants were have seen sales volumes fall and were generating a low level of profitability, Danone said.

Production at Cheboksary will be "gradually reallocated" to three other sites in the Volga region in Kazan, Samara and Saransk. Volumes from the Tomsk facility will be consolidated at two plants in Siberia in Kemerovo and Krasnoyarsk.

Danone has invested in capacity and improved quality standards at these five sites and as part of a five-year US$700m programme announced in 2012. "Consolidation of production capacities aims to reinforce performance of the [five] sites, which the company believes to have the biggest potential for development in Siberia and Volga regions," the company said in a statement.

The end of production in Cheboksary and Tomsk will affect around 300 staff.