current issue

¹1/2017

CONTENT

DRINKS
The Problem of Growth in the Minimum Retail Price for Vodka
Research by the Center for Investigations of Federal and Regional Alcohol Markets (“CIFFRA”)

Review of the Russian Beer Market
Research of the Company “IndexBox”


CONFECTIONERY
Branding in the Russian Market of Confectionery Products
Research by the Branding Company “Labelmen”


MEAT
Review of the Russian Mutton Market
Research of the Company “IndexBox”


FISH & SEAFOOD
Review of the Russian Fish Market
Research by the Company “I-Marketing”


DAIRY PRODUCTS
Review of the Russian Cheese Market
Research by the Company “Global Reach Consulting”

Review of the Russian Ice Cream Market*
Research by the Russian Union of Ice Cream Producers


INGREDIENTS
Review of the Russian Market of Malt
Research by the Company “ID-Marketing”


FRUIT & VEGETABlES
Review of the Russian Foreign Trade Market of Nuts and Dried Fruits
Research of the Information-Analytical Company “VVS”


RETAIL
Review of the FMCG Retail Market
Research of the Company “RBC.research”


TRADE SHOWS
The 3rd exhibition “Anufood China 2016”



FINANCE & LOANS
Leasing Market in Russia in the First 9 Months of 2016
Research by the Rating Agency “RAEX” (“Expert RA”)





Review of the Russian Ice Cream Market*
Research by the Russian Union of Ice Cream Producers

The past years can be considered one of the best ones for Russian ice cream makers. The latest statistical data indicate a 10.5% growth in production of this cold delicacy. Only 2010 was better, with its abnormal heat.
In 2016, the most significant increase in ice cream production compared to the previous year was observed in the Ural Federal District (23.8%), which has been experiencing a ‘bad harvest’ over the last few years. For example, companies in Sverdlovsk region demonstrated a 20% increase. The Far Eastern Federal District is not lagging behind, having demonstrated growth of 20.3%. In the Southern Federal District with growth of 21.4% the best figures were observed in Krasnodar Krai – 32.3%, and the best results in the Volga Federal District (13.9% growth) were observed in Tatarstan (20.9%). In the Northwestern and Central Federal Districts, production growth equaled 7.3 and 9.5% respectively, reaching 18.6% in Moscow region. During the analyzed period 392 thousand tons of ice cream total were produced. Therefore there are reasons to believe that overall production of ice cream in Russia will exceed 400 thousand tons in 2016.
In the second quarter of 2016, the lowest manufacturer price for ice cream was recorded in the Southern and Central Federal Districts – 166 and 214 rubles per kilogram respectively. The highest consumer price was recorded in the Northwestern Federal District – 408.4 rubles per kilogram. The average consumer price for ice cream in Russia in the second quarter of 2016 equaled 348.7 rubles per kilogram.
The structure of Russian exports by dairy product types is rather stable: the largest shares in monetary terms fall on fermented milk products (29%), cheeses and quark (22%) and ice cream (13%).
The weakening of the ruble against the US dollar and the euro turns out to be favorable for Russian exporters, as Russian products become more competitive. During the first half of 2016 the volumes of dairy product exports increased by 28% compared to the similar period of 2015 – primarily:
* whole milk products – by 2 times;
* butter – by 88%;
* ice cream – by 42% (10 thousand tons of the product exported, valued at $ 22 million).
During the first 7 months of 2016, 12.8 thousand tons of ice cream at $ 28 million were sold. After the well-known story with ice cream being gifted to the leader of the PRC by President Putin, the subject of supplies to China faced a real boom and the volume of supplies increased by several times. Chinese partners purchased 1,400 tons of ice cream from “Lipetskiy Khladokombinat (Lipetsk Cold Storage Facility)” OJSC alone.
However, not everything is rosy in regards to these supplies, since the Chinese market is new to Russia and thus there are more than enough problems at the moment. The management of the Russian Union of Ice Cream Producers aims to assist in establishing partnerships with Chinese entrepreneurs. Communications are being established and developed with the Russian Exports Center and departments of the Ministry of Agriculture of the Russian Federation, which may provide consulting and practical support in organizing exports.
The volume of dairy product supplies into Russia in January–August 2016 grew by 11%, primarily in powdered milk and whey. Supplies of butter and whole milk products remained at the same level. All in all, compared to 2014, supplies decreased by 24%.
When it comes to ice cream, the following should be noted: this dairy product was not affected by the sanctions, and this was meant to be used. In this regard Belgium, Italy and Spain are worthy of mention.
Italy supplies significant volumes of ice cream to Russia. During the first 9 months of 2016 Russia purchased as much Italian ice cream as it purchased over the whole previous year – over 256 tons. The peak of supplies, however, took place in 2014 with 790 tons. A year earlier, in 2013, according to public data by the Federal Customs Service of Russia, Italy exported 501 tons of the product to our country.
Poland, on the other hand, decreased exports of ice cream to Russia – in January–September 2016 only 29 tons of ice cream were delivered from Poland, whereas in 2015 the figure equaled 141 tons. A year earlier the volume of supplies was 5 times higher (725 tons).
Germany decreased its share in the Russian market even more. From 2013 to 2015 supplies of German ice cream to Russia dropped by 7 times, from 564 to 79 tons. In 2016 less than one ton of ice cream was delivered from Germany.
Supplies were also decreased by Estonia – in 2013–2014 exports were at the level of 180-190 tons per year, whereas in 2015 it dropped to 34 tons. In January–September 2016 only 5 tons of Estonian ice cream were supplied to the Russian market.
The volume of ice cream supplies from Belgium has been remaining at a high level despite having decreased over the recent years. During the first 9 months of 2016, 478 tons were imported, whereas the volume over the whole previous year amounted to 550 tons. It is possible that there will be an increase this year.
Latvia turned out to be the most ‘grasping’ among the EU countries. Supplies of Latvian ice cream to Russia have been growing: since the beginning of 2016, 566 tons have been imported, whereas the volume of imports for the whole 2015 was 470 tons. Admittedly, these figures are incomparable with the volumes before the sanctions (1.3 and 1.6 thousand tons in 2013 and 2014 respectively), but they are still high.
By today’s standards, Spain also provides significant supplies: over the first 9 months of 2016 it exported 332 tons of ice cream to Russia, the total volume for 2015 having been 434 tons. Two years earlier it was exporting almost 820 tons.
Russian consumers traditionally give a high rating to the quality of Lithuanian cheese, but according to the FCS, Lithuanian ice cream is also familiar to them. During 2016 that is not yet over, around 103 tons of this product have been imported into Russia so far; in 2015 the figure was 275 tons, in 2014 and 2013 – 442 and 310 tons respectively.
It should be noted that apart from the EU countries, significant volumes of ice cream are supplied to Russia by Switzerland, Ukraine and Belarus.
Most ice cream comes from Belarus, and there was a huge increase in 2016. During the first 9 months of 2.5 thousand tons of ice cream were imported into Russia from Belarus. For comparison, supplies for the whole 2015 amounted to 1.6 thousand tons.
Ukrainian ice cream was not lagging behind. In January–September 2016 2.2 thousand tons of Ukrainian ice cream were supplied to Russia, whereas the total volume for 2015 was 2.1 thousand tons.
By the way, China exports ice cream into Russia as well, even though the volumes are relatively low. Since the beginning of 2016, only 113 tons of Chinese ice cream have been imported into Russia; the volume for the whole 2015 was 151 tons, and two years earlier it was approximately 200 tons.
As one can see, many countries of the European Union did not cease their ice cream supplies, even though they did not increase the volumes either. The factor that does not let Europeans fully use the opportunity is the crashed ruble. Due to the currency jump imported products became too expensive for Russian consumers. Ice cream from Latvia, Poland, Italy, Lithuania and other European countries mainly gets to stores of the premium segment, as it is unaffordable to buyers at regular retail networks. Almost all supplies thereof go to Moscow and Saint Petersburg. If the total volume of imports of ice cream from the countries in question is evaluated, it amounts to less than 7 thousand tons.
Regarding problems in the Russian market of ice cream, first and foremost it is important to note that it is extremely problematic for ice cream factories to operate in the conditions of shortage, instability and increasing prices for basic raw materials.
In 2016 prices for sugar increased substantially, and so did prices for imported ingredients and packaging. Growth in prices for butter was especially sharp over the past few months. In addition, according to the Russian Union of Refrigeration Industry Enterprises, over the past two decades the country’s refrigeration sector has become virtually fully dependent on foreign supplies of equipment and components. At least 70% of refrigeration equipment is constructed using imported components, around 20% falls on imports of finished equipment and only 10% is domestic products. Technological equipment for ice cream production, refrigerated transport and refrigeration equipment for trade all face a similar situation.
In these conditions, it is important to make maximum use of the capabilities and offers of Russian companies in import substitution and improvement of production efficiency.
The Belarusian Commodity Exchange, which signed a cooperation agreement with the Russian Union of Ice Cream Producers, may assist in dairy product supplies. The commodity exchange provides interesting conditions for guaranteed supply, transportation and storage of products and may also sell ice cream of Russian companies.
In the field of innovation activities, cooperation with the Center for Complex Examination of Innovative Projects at the Ministry of Education and Science may be beneficial.
The problems that can be observed in other industries along with the ice cream sector include the excessive pressure on business and numerous administrative barriers. And while laws that pass several readings in the Duma may be known in advance, Government resolutions as well as orders by ministries and agencies are often completely unexpected.
Against these conditions, the management of the Russian Union of Ice Cream Producers, often together with other unions and associations, has repeatedly appealed to the Government in regards to cancellation or correction of decisions having negative consequences for the enterprise economy.
Clearly, not all proposals end up being supported. However, firstly, appeals are no longer unanswered, and secondly, some of them result in positive decisions. For instance:
* the Ministry of Finance will not impose excise duties on palm oil;
* the initiative in implementing RFID tags for products of the dairy industry has been suspended;
* a moratorium is in place on the application of rules of cold water supply and drainage;
* the cancellation of Russian classifiers for activities and products has been suspended;
* even though slowly, the position of the Ministry of Industry and Trade in relation to retail trade, kiosks and counters has been changing.
The latest appeal to the Ministry of Agriculture of the Russian Federation that has been prepared involves including sorbet ice cream in the Technical Regulations ‘On safety of milk and dairy products’ of the Customs Union.
This year has already brought new issues: environmental measures for companies activities of which are related to food production are being tightened. This implies the development of best available technologies (BAT) and the preparation thereof for timely implementation in companies’ production and business processes. By June 2017, companies are to have put all their objects having a negative environmental impact (NEI) on state account.
Objects of the first category will be under a very close control by the state, and a special method of standardization is in place for them, which involves obtaining an integrated environmental permit (IEP). A lack of this permit with the first level of NEI will lead to a hundredfold increase in the coefficient for NEI charges.
Information provided by ice cream factory managers, our own observations and research data by marketing companies allow us to make several conclusions regarding the state of the Russian ice cream market and its trends.
1. The ice cream market is stable, highly competitive, rather difficult for assessment, and often unpredictable. Per capita ice cream consumption has been remaining at practically the same level. Local changes in demand are caused by weather conditions and seasonal factors.
2. Against the high level of competition, manufacturers have to look for innovative solutions to promote their product. This causes the constant appearance of refinements in the range, which face the conservatism of the majority of consumers, who traditionally prefer the classic plombir, chocolate ice cream and fruit ice cream.
3. Attempts to lower the price often lead to manufacturers not following the recipe, and falsification. In turn, buyers pay more and more attention to the product composition, giving preference to natural ingredients.
4. Ice cream is still associated with desserts (that are far from being necessary for consumption) rather than with nutritious food products.
5. ‘Functional’ ice cream (with a lower fat and sugar content, with pro- and prebiotics, bifidobacteria, as well as yogurt varieties etc.) presented as a healthy product has been gaining popularity. It includes low-calorie ice cream products that are made with sugar substitutes (erythritol, stevia), unsaturated fats and dietary fiber (polydextrose).
6. In crisis one can observe growth in consumption of the most popular type of product – ice cream cones, which have been getting more and more diverse and sophisticated in fillers and flavors.

* Data by “RBK Market Researches”, “GuideMarket”, “GoodsMatrix”, “Nielsen” and G. Litvinova is used.

Valery Elkhov,
General Director
Russian Union of Ice Cream Producers

rosupack
interpack
wf moscow
belagro
winevodka_2017
fiera di rimini
 
ßíäåêñ.Ìåòðèêà