Buyers are looking for local suppliers to meet European demand
European demand for instant noodles, an Asian staple food, is growing, while the COVID 19 pandemic has disrupted many supply chains. As many European buyers of instant food, such as supermarket chains, are currently looking for local producers, the Lithuanian producer of instant food is investing €20 million in a new local production facility. This is the company's second production facility in Lithuania.
The global market for instant noodles is growing despite the Corona crisis, according to a new report, and is estimated to have reached USD 32.1 billion by 2027. Until now, most instant food has been produced in various Asian countries and imported from there to Europe.
However, the coronavirus pandemic affects the market for this Asian staple food, among many others. Since the pandemic, many companies have wanted to change their supply chains to be less dependent on Asia, especially China. They are therefore looking into possibilities for local production. Exclusive dependence on Asian suppliers has proven to be a disadvantage, as supply chains were interrupted or unreliable during the pandemic.
To meet the demand for instant noodles and porridge in the European FMCG retail sector, including Germany, KG Group, one of the largest Baltic agri-food groups, is commissioning a modern production plant for instant noodles in Alytus, Lithuania, in which €20 million has been invested.
The latest technologies will not only increase production capacity, but will also allow for a greater variety of products and speed up the production process by a factor of 4 to 5. KG Group's current production capacity of forty million units of instant food in cups will be increased up to 180 million units per year.
The KG Group is already active in Germany, producing instant noodles, porridge, mashed potatoes and pasta for the German market. KG Group's products, both private label products and the Asian instant noodles of the Sun Yan brand, can be found in most major German supermarket chains. It is expected that the new production plant will be able to meet a significant part of the demand for instant noodles in Germany and reduce the country's dependence on Asian suppliers.
"We are pleased to be able to meet the increased demand from local buyers, including many European supermarket chains, in the future. The new production plant in Alytus is our response to the ever increasing demand and changes in global supply chains," says Tautvydas Barštys, Chairman of the Management Board of KG Group. He added that the city of Alytus is favourable from a logistical point of view, as the KG Group exports 95 percent of its instant food products.
The new plant is an important addition to the KG Group's production chain. In order to ensure the highest quality standards, the company controls all production processes and is responsible for everything from the field to the dining table. KG Group sources its grain from Lithuanian farmers, selects it carefully and uses the company's own mill to ensure the high quality of the flour. The new local facility will expand the existing production capacity while maintaining the level of quality control.
The 6,500 square metre production facility houses state-of-the-art equipment which the company has purchased from leading German, French, Swiss and other European manufacturers, and which meets the latest quality standards (the highest level AA according to BRC Global Standards Version 8).
The commercial assortment of instant food products produced by KG Group includes instant noodles and porridge in cups and sachets labelled with brands known in Lithuania and abroad such as Sun Yan, Activus, Dorea and Just Inn. More than forty large foreign companies, including large supermarket chains, entrust the production of their private labels to KG Group.
The various functions of the production plant help to make more effective use of the skills and knowledge of the R&D department when launching new products. KG Group produces entirely new instant products in cups such as pasta, cereal mixes, muesli mixes and couscous. Private label services are also offered.