Mondelez Will Spend $110 Million on New Snack Factory in Russia

Mondelez International Inc. (MDLZ), the U.S. company that makes everything from Oreo cookies to Trident gum, plans to spend $110 million on a new factory in Russia, navigating an increasingly tense geopolitical climate.

The company’s Russian unit will build the plant in the Novosibirsk region, adding enough capacity to produce 50,000 tons of snacks annually, spokesman Michael Mitchell said today in a statement. The factory, which will be Mondelez’s most advanced facility in Russia, is expected to create 180 jobs.

Mondelez, formerly Kraft Foods Group Inc.’s snack business, is pushing ahead with expansion in the country even as political tensions create headwinds for American companies operating in the region. The U.S. and Europe are threatening to step up economic sanctions against Russia following President Vladimir Putin’s move to annex Crimea from Ukraine last month.

Mondelez’s move is part of a previously announced effort to improve its supply chain. The company is trying to save $1.5 billion in net productivity and increase cash flow by $1 billion over the next three years, Mitchell said. The new plant will produce Jubilee, TUC and Barni biscuits, as well as Alpen Gold, Milka and Vozdushnyy chocolate.

The Deerfield, Illinois-based company is adopting “a number of initiatives around the world to capitalize on growing demand in emerging markets, while also aggressively reducing costs and improving productivity,” Mitchell said in the statement.

Last week, McDonald’s Corp. said it was closing its three locations in Crimea, citing the loss of “necessary financial and banking services.”

“It is important to note that this is strictly a business decision which has nothing to do with politics,” the Oak Brook, Illinois-based restaurant chain said in a statement. “We are taking numerous steps to support our employees during this time. We hope to reopen our restaurants soon so we can welcome back our loyal customers.”

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net

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