The new factory is also expected to cut costs as it will combine the company's two current facilities into one, said spokeswoman Rita Voronkova.
The facility's designing and construction costs are estimated at 4 million lats ($6.6 million) while investment in equipment is planned to reach 2.5 million lats. The designing and construction works are expected to be completed over a two year period.
Laima Board Chairman Ivars Kalviskis said previously the new production facility and equipment was needed to ensure the competitiveness of the company's products on the Western market and in response to general changes in market demand as consumers are demanding cheaper products with longer shelf life.
To produce products meeting the European standards Laima is set to install new equipment. "We could not do it with the old equipment," said Kalviskis.
In the new facility the production process will be fully certified in line with the European Union requirements and will obtain a HACCP certificate for securing food safety and good manufacturing practice.
The production capacity is planned at a level to meet the Baltic states and European market demand.
Kalviskis said Laima will launch production of new products after the new equipment is installed.
Presently Laima is producing over 150 products - chocolate, sweets, marmelades and others.
Laima launched the modernization project on Feb. 1. The winner of the tender to construct the facility was to be announced at the ground breaking ceremony later.
The new facility is also expected to help Laima meet growing competition. Iceland's leading confectionery company, Noi Sirius, last week officially opened a factory at Olaine on the outskirts of Riga.
In 1999 Laima had an audited profit of 250,000 lats on a net turnover of 14.77 million lats.
Laima's profit target for this year is 325,000 lats while the net turnover target is 17.7 million lats.
Laima is a company of the New Technology and Business Development group (former Ave Lat Grupa).