Food industry enterprises

The Company owns and operates a food business The food business operations generate considerable profits that are primarily re-invested in the Company’s distilled spirits business.  Profits from the food business are used to increase operating efficiencies of the distilled spirits business, stimulate faster growth and promote and market lucrative vodka brands. The Company does not currently re-invest any significant amounts into the food business. The Company's food business is divided into four main lines: meat, poultry, seafood and dairy. The production facilities in each business line are leading producers in terms of volumes in the regions in which they operate. The food products processed under each business line are marketed and sold exclusively under local brands and mostly in the regions where the relevant production facilities are located.  Distribution of food products is through direct sales.

Meat Business
The Nakhodkinsky plant's average processing capacity is 9,080 tonnes per year. For the year ended 31 December 2006, the plant produced 5,200 tonnes of meat products, which accounted for 61 per cent. of the plant's average processing capacity.

Poultry Business
The poultry products are marketed primarily in the Saratov and other regions within the Povolzhsky federal district. The poultry business operates through an integrated poultry production complex in the Saratov region that centres around the Mikhaylovsky plant, and also includes the Lysogorsky, Zorinsky and Tsaryovshchinsky plants. The business also includes the servicing company JSC "Saratov Broiler" which is responsible for the distribution of products processed at the poultry complex.  Saratov broiler also manages 15 retail stores owned by the Company.  The poultry production complex produces eggs and more than 100 varieties of high-quality poultry products.

Dairy Business
The Company's dairy products are marketed primarily in the Primorsky and the Khabarovsky regions.  The dairy business operates through two production facilities:  the Ussuriysky plant located in Ussuriysk in the Primorsky region, and the DAKGOMZ plant located in the Khabarovsky region. The two dairy plants produce more than 100 varieties of high-quality products. Soy milk represents the largest dairy product and is produced exclusively by the DAKGOMZ plant (which does not produce any other dairy products).