Ukraine's largest malt house is to receive more than €9 million in outside funding to double its production capacity - helping French company Soufflet to dominate the region and make the factory a stable source of income for local farmers.
The European Bank for Reconstruction and Development (EBRD) is providing the funding for Soufflet's Slavutskiy Solodoviy Zavod mill as part of a €65 million financing programme to help the company expand its malting, milling and barley collect businesses across Central and Eastern Europe.
As part of the deal, the EBRD has acquired a 24 per cent stake in the Ukrainian malt house, which will increase its production capacity to 150,000 tons of malt per year.
Soufflet has made no secret of a desire to expand its malt operations further in Central and Eastern Europe, and the EBRD funding in the Ukraine will put the company in a good position to take better advantage of the soaring Russian beer market next door.
Malt is an important ingredient in beer and Russia is currently Europe's fastest growing beer market with 18 per cent growth between 1996 and 2003. Beer consumption among young people in other Central and Eastern European countries is also on the rise.
The EBRD claims its funding for the Soufflet malt mill will also benefit local farmers: "The financing will ultimately help provide a stable source of income for local farmers, and, as a leading expert in malt processing, Soufflet will also provide farmers with know-how on barley growing and cultivation," it said.
Most mill owners prefer to get raw materials such as malt and barley from local farmers because this reduces additional transport costs which can threaten profits.
The EBRD has invested 195 million in 13 agribusiness projects in the Ukraine and 3.25 billion in more than 210 similar projects across the whole of Central and Eastern Europe and Commonwealth of Independent States.
Soufflet currently has a total malt production capacity of 1.4 million tons with plants in nine former Soviet countries. At the end of October the company acquired Serbian malt mill, Moltinex, situated 100 kilometres north-west of Belgrade and with an annual capacity of 50,000 tons.