During recent four years Russian market of fruit and vegetables juice* demonstrated moderate growth of production volume after significant decline in 2011 (by 24.8%). In 2012 Russian manufacturers increased production of the review category by 9.2% in comparison to previous year. In 2013 this category saw 2.5% year-to-year increase of production volume. Last year production volume reached 2.6 billion of conditional cans which is a little more than in 2013.
In the beginning of 2015 dynamics of production changed significantly. In the context of declining consumer purchasing power and increasingly unfriendly business environment with instability of currency market and high cost of loans production of fruit and vegetables juices in Russia in Q1 2015 declined by 18.1% against January–March 2015 and went down to 513 million of conditional cans. It should be mentioned that large manufacturers mainly use imported juice concentrates for juice production, so fluctuations on currency market in the end of 2014 – beginning of 2015 seriously affected performance of Russian companies. For instance, in December 2014 “Sady Pridonya (Gardens of Pridonye)” OJSC (Volgograd Region) even had to suspend supply to retail for several days in order to clarify their pricing strategy under new conditions.
According to Russian Union of Juice Producers (RSPS), share of fruits and vegetables of domestic origin in total volume of raw materials used for juice production constitutes just about 15%. Ban laid upon import of fruits and vegetables from EU and some Western countries forced Russian manufacturers extend their planting areas for fruits, berries and vegetables in the frames of import displacement program. In the future this would certainly boost the share of domestic raw materials used for juice production. State Program for Development of Agriculture and Regulation of Agricultural Commodity Markets for 2013–2020 implied planting perennial fruit trees and berries on the area of 6.4 thousand hectares in 2014. Actual area of planted fruit gardens and berry plantations was 8 thousand hectares (with consideration of Republic of Crimea and Sevastopol). In the period from this year to 2020 it is planned to extend total planting area by 8 to 11.5 thousand ha every year. However, it should be noted that the planted gardens will yield the first large scale harvest of apples and other fruits only in 5 years minimum. Till that time processing companies will have to switch to suppliers from other countries.
The largest segments of Russian juice production are apple, tomato, orange juices and also juices of tropical and subtropical fruits. In particular, in 2014 share of apple juice in total production volume constituted over 38%. Shares of tomato and orange juice constituted respectively 13.9 and 8.3%. Production of apple juice saw 3.9% year-to-year increase of production volume in 2014; same index for tomato juice constituted 8%.
Today four large companies control about 70% of domestic production volume: “Multon” CJSC (Moscow, Saint Petersburg), “WBD Beverages” OJSC (Moscow Region), “Sady Pridonya (Gardens of Pridonye)” OJSC (Volgograd Region) and “Lebedyansky” LLC (Lipetsk Region).
In terms of federal subjects the largest share of juice production volume is provided by Moscow Region – 58.7% in 2014. In comparison to 2013 Moscow Region saw 8.6% decline of production volume; in Q1 2015 year-to-year decline in this region constituted 30.4%. In 2014 share of Moscow Region in production of apple juice constituted 46%, of tomato juice – 65%, of orange juice – 83%, of juice of tropical and subtropical juices – 92%.
Other important suppliers of fruit and vegetable juices in 2014 in Russia were Samara Region and Krasnodar Territory. In comparison to 2013 production volume of juice in the said federal subjects increased respectively by 21.2 and 54.7%. On the background of general decline of juice production in Russia in Q1 2015 Samara Region demonstrated 35.2% year-to-year increase of production volume.
Import of juices to Russia in 2014 constituted 239.1 thousand tons with 2.3% year-to-year decline in volume. In Q1 2015 import saw 42.5% decline against same period of 2014 and constituted 32.7 thousand tons**.
The largest segments of juice import to Russia in 2014 were apple juice (45.6% in volume) and orange juice (20.4%). Grape juice and apple juice saw increase of import volume last year, respectively by 11.8% and 3.8%. In Q1 2015 all kinds of juice saw decline of import volume***.
In 2014 most important suppliers of juice to Russia were China (27.9% of import volume), Netherlands (12.5%) and Brazil (8.5%). In comparison to 2013 import from China increased by one third in 2014, from Netherlands – by 15%. In January–March 2015 Brazil became the leader of juice import to Russia with 26.4% of import volume. Russian importers increased purchases of Brazilian juices by one quarter in Q1 2015 over Q1 2014.
Share of China in juice import to Russia in Q1 2015 constituted just 1.7%, supplies from this country declined by 94.8% against Q1 2014. Significant decline of import from China and increase of supplies from Brazil could be related to pricing strategies followed by manufacturers of these countries. Besides, this dynamics could be determined by switch of Russian consumers to less expensive and domestic products and general decline of consumer purchasing power in Russia. However, violent fluctuations like these cannot be related to this or that factor for sure.
Increased share of Poland in juice import to Russia in Q1 2015 among other reasons was related to the ban laid upon import of fresh fruits from the country. In comparison to Q1 2014 Poland saw 2.8 times growth of juice supplies to Russia in Q1 2015.
Unlike import, export of fruit and vegetable juices from Russia increased in 2014 by 3.7% in volume and reached 65.2 thousand tons. In Q1 2015 export of fruit juices from Russia saw 36.7% year-to-year growth and constituted 11.5 thousand tons.
Main destination markets for Russian juices are Customs Union countries. Shares of Byelorussia and Kazakhstan in Russian export of fruit and vegetable juices in 2014 constituted respectively 45.1% and 31.9%. Third large destination market was Ukraine with 6.7% of export volume. However, in comparison to 2013 export to Ukraine declined by 18.6% while Byelorussian and Kazakhstan companies increased purchase of Russian juices respectively by 9.1 and 3.5%. In January-March 2015 export to Byelorussia increased by 2.1 times in volume against Q1 2014, to Kazakhstan – by 13.7%.
In Q1 2015 export of juice from Russia to Ukraine declined by 12.8% in volume against same period previous year. Share of Ukraine in total export volume in Q1 2014 constituted 12.5%. Thus, share f Ukraine in total export volume reduced by 4.5% in Q1 2015 against Q1 2014. Most probably, by the end of 2015 share of Ukraine in export volume of juice from Russia declines.
In 2014 visible capacity of Russian market of fruit and vegetable juices constituted 1.2 billion tons****, with more than 85% of market volume provided by domestic products. Export constituted about 6.2% of domestic production in volume. In 2015 production of juice in Russia is expected to reduce, this trend is already traced in Q1 2015 when 18% year-to-year decline of production volume was observed. Decline can go faster in Q3 2015 as in the beginning of 2015 “Coca-Cola” and “PepsiCo” announced closing of their production facilities in Nizhniy Novgorod and Moscow Region.
In mid-term perspective systematic increase of domestic production by 3-5% in volume annually can be expected provided economic situation balances. This dynamics will be determined by growth of inner demand due to natural increase of population and also increase of population because of annexation of Crimea by Russia. Crimea is a large center for tourism where the review category will surely enjoy high demand. Besides, increase of export of fruit and vegetable juices from Russia can be expected during several coming years because devaluation of Russian ruble makes Russian products more competitive on foreign markets. At the same time development of Russian juice market is restrained by declining consumer purchasing power though this factor can stimulate sales of inexpensive brands and cause decline of sales of expensive and premium products.
* Analysis of production volume was made for product categories under OKPD code “15.32.10 – Fruit and Vegetable Juices”. Foreign trade analysis was made for TN VED code “2009 – Fruit Juices (Including Grape Must) and Vegetable Juices Non-Fermented and Free from Ethanol, With or Without Sugar or Other Sweeteners”.
** Foreign Trade of Customs Union countries considered.
*** Foreign Trade of Customs Union countries not considered.
**** Production volume was converted from conditional cans into tons using RosStat method.