Marr Russia responds to McDonald’s demand

By Vladislav Vorotnikov

- Last updated on GMT

Marr Russia's expansion to be supported by tax breaks from Vladimir Putin's government
Marr Russia's expansion to be supported by tax breaks from Vladimir Putin's government

Related tags Meat Livestock Beef Pork Poultry

By 2018 Russian-Italian firm Marr Russia plans to invest RUB1.5 billion (US$20m) in the construction of a new production and logistics centre in Moscow Oblast, increasing its existing production capacity, according to a statement from deputy head of the regional government Denis Butsaev. 

Along with Miratorg, Marr Russia is believed to be the largest supplier of meat to the Russian division of McDonald’s and expansion of its production capacity may be connected to the fast food chain’s intention to shift fully across to Russia-produced meat for its local outlets.

New frozen beef products will be produced at the existing plant, while a warehouse for frozen and chilled products will be built at the new site,​” revealed Butsaev.

Meanwhile, Russia’s Ministry of Regional Development has reported that it is looking at supporting the project in the form of tax breaks. Details of the investment project were not disclosed, but it has been reported that the authorities in Moscow Oblast have offered the investor the opportunity to construct a cattle farm as well.

The regional Ministry of Agriculture offered Marr Russia the chance to construct a livestock farm in the region as part of its new project, in order to produce raw beef, rather than purchase it from the third parties,​” said a spokesperson for the regional government.

Marr Russia spokesperson Tatiana Bahtina confirmed plans to expand the firm’s production capacity, adding that this was mainly connected to the company’s aim of increasing its range of processed meat supplied to the domestic market. The company supplies meat patties to McDonald's.

We have also heard about McDonald’s plans to further increase the use of Russian-produced meats and we would be happy to offer them some new products,​” added Bahtina, who declined to comment on the details of the project.

Localisation of McDonald’s meat

McDonald’s had announced earlier that it intended to fully localise meat production for its restaurants in Russia. The company’s president for Russia and Central Europe Khamzat Khasbulatov has said this should happen within the next two years.

We aim to fully replace chicken and beef products by 2018 and shift to domestic potatoes in 2017,​” he said. “This decision was scheduled a long time ago and is not connected to the ​[recent] sanctions, even though the sanction has affected the company’s business in Russia​”.

Khasbulatov added that, in response to the crisis, McDonald’s has had to raise prices ahead of inflation in the Russian market. Nevertheless, last year, the fast food chain managed to increase turnover, he added, without specifying detailed figures.

Company officials also disclosed that McDonald’s already purchases 85% of all its products locally from Russian companies, so further local sourcing will not change the business significantly.

McDonald’s faced a significant challenge in 2014, when Russian sanitary body Rospotrebnadzor organised large-scale inspections of its restaurants across the country and even closed some of them after finding serious violations. Many market observers link administrative pressure to the fast food chain’s decision to exit Crimea after its annexation by Russia in 2014.

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