"We have decided to build this new facility near Moscow to be closer to our rapidly growing customer base in Russia," said Patrick De Maeseneire, chief executive of Barry Callebaut.
"In the whole of Europe, Russia has the largest market potential. International market intelligence provider Euromonitor forecasts that, by 2009, the chocolate consumption in Russia will be higher than in the UK.
"Russia presents a great market opportunity to us that we'd like to capture."
The plant, located 60 km from Moscow in Chekhov, Russia, is scheduled to become operational at the beginning of 2007.
The total investment is about CHF 25 million (€ 17 million). The production facility will have a capacity of more than 25,000 tonnes and employ about 70 people once it is running at full capacity.
Up to now, Barry Callebaut has been the largest importer of industrial and specialty chocolate to Russia from its plant in Poland.
"Chocolate sales for us in Russia to national and international food manufacturers as well as chocolatiers and pastry chefs nearly quadrupled between 2000 and 2005. This is what led us to build our own factory now," said Patrick De Maeseneire.
Recent figures confirm Russia as a profitable target for food and beverage makers with exports to the region rising by 34 per cent since 2000. With a 7.8 per cent share of the €45 billion food and drink export market, Russia is now the number three customer for the 25 European member states, according to Eurostat.
Barry Callebaut's investment in this profitable region comes after the chocolate giant reported a decline in sales volume in the half-year ended 28 February 2006.
The company attributed this to a late Easter and a discontinuation of unprofitable contracts in the consumer business.
"Our business is seasonal," said Barry Callebaut CEO Patrick De Maeseneire.
"With the late Easter holiday this year, some volumes are expected to shift from the second to the third quarter."