The food industry is one of the most rapidly developing branches of Ukrainian industry. Not only is there a constant increase in production, but the quality of food products and their range is also increasing. There positive changes are occuring due to the country’s economic development as well as due to the substantial foreign and domestic investments in food industry, implementation of foreign experience, technology of production and new food ingredients.

Over the past 2-3 years, the net incomes and expenditures of Ukrainians increased by approximately 20% annually, which definitely contributed to the development of Ukrainian food industry. Additionally, the influence of the Western market has substantially modified the consumption preferences of Ukrainians. The consumption of enriched products, convenience foods, chilled fruits and vegetables, yoghurts and other innovative milk products, non-traditional spirits etc. is gradually growing.

The market of food supplements and ingredients is one of the most dynamic and rapidly developing in the international food industry. Presently, the production of food supplements and ingredients substantially surpasses the production of ordinary food products per capita. Due to the low trade barriers in the market of food supplements and ingredients the Ukrainian companies are under serious competition pressure of foreign companies which in fact dominate in Ukraine. The major exporters are British, Belgian, French, German, Danish, Dutch and Russian companies. Generally, the food supplements and ingredients market may be regarded as quickly developing and one of the most attractive for foreign as well as domestic investors.

Konnov & Sozanovsky's lawyers advise on the following food industry related issues: business start-ups and business activity peculiarities in Ukraine, business optimization schemes; drafting of the agreements and negotiation of the terms and conditions thereof; due diligence of sales, services, lease, loan, investments, franchising, leasing agreements; product liability; customs clearance, customs duties optimization; optimizing business in view of business risks and applicable taxes; drafting of loan agreements to be entered into with foreign lenders, registration of loans with the National Bank of Ukraine.

Currently, the food and processing industry of the country (gustatory, meat, milk, fish, flour-and-cereals industry and feed mill industry) is a strategic sector of the Russian economy that comprises 30 branches with more than 60 segments of industry and types of production, and embraces more than 22 thousand enterprises of different patterns of ownership and capacity (their number during the last 10 years increased several times) with the general number of the labor force about 1.4 million persons. The share of the food and processing industry in the general industrial production amounts to 15%.

For the leading companies of the sector, competition reached a new level. If earlier it was enough to increase the assets, then now other, more sophisticated factors of competitiveness have emerged – optimization of logistics, bringing of the business processes to a single corporate standard across diverse production areas, and branding.

The central progress trends of the Russian food market today are continuing concentration of the property, reduction of the small- and middle-sized enterprises’ share and strengthening of the large-scale consolidated companies’ positions. These tendencies boost price and assortment monopoly of several major companies which complicates the state regulation of the market. Such are the conclusions of recent research into the sector, conducted by several research institutes and agencies.

Food industry of Russia due to its dimensions and availability of the enormous marketing outlets is becoming more and more attractive for foreign investors. At present, examples of the successful activity of the enterprises with the foreign capital already exist, the most obvious cases of which are Danon and Mars.

Konnov & Sozanovsky’s lawyers render different types of the legal services to their clients, working in the food industry sector, including:

• advising on issues of the trade business conducted within the territory of Russia by non-residents, terms and conditions, as well as peculiarities of such activity; support in the conclusion of such commercial transactions by the enterprises of the food industry sector and signing of the agreements on profitable for the client conditions with the observance of his interests;
• implementation of the legal expertise of the foreign economic contracts, including contracts, regarding import of the industrial equipment on the terms and conditions of leasing;
• advising on issues of product quality liability;
• advising on questions of the customs duties optimization, customs regulations, export-import transactions pursuance;
• development of schemes of taxation optimization, investing plans;
• preparation of the foreign economic loan agreements with the non-residents;
• implementation of the legal pre-sale due diligence of the enterprises, with respect to potential foreign investors’ interests;
• fulfillment of the legal entities’ reorganization and optimization of the relations between companies’ groups of the food industry;
• opening of the enterprises with the foreign investments, support of the joint ventures.

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