Despite the short-term positive effect, the ban on sausage imports from a number of countries may have negative consequences for the Russian market in the long term. This would be caused by weakened competition and thus a reduction in the product range and increasing prices. It is important to note that sanctions are also negatively affecting the raw material base for sausage production, the market of pork and beef.
The Russian market of sausage products, delicacies and semi-finished products is vast and includes many aspects: a large group of manufacturers is involved, and the product range of major factories often exceeds 300 items.
Sausage products typically include various sausages, meat delicacies and pate, semi-finished meat products, ham and others. Said products are socially significant to Russian citizens, and occupy a special position in the range of everyday product consumption, along with products such as fruit, vegetables, dairy products and bread.
One of the features of the modern Russian sausage market is that its main volume is provided by domestic producers. Volumes of imports and exports account for a low share of the market.
According to the Unified Interdepartmental Statistical Information System (UISIS), the volume of sausage production in Russia amounted to 2,445,080.1 tons in 2015, which is 1.2% lower than in 2014 and 0.3% higher than in 2010. According to estimations by experts at “AnalyticResearchGroup”, the level of production in said category in 2016 grew by 0.1% and equaled 2,447,259.6 tons.
In 2015, over half of all sausages produced in Russia (815,439.4 tons) were cooked sausages. Second place, with a significant gap, was held by semi-smoked sausages – in 2015, 313,193.2 tons thereof were produced, which is 21.5% of the total production volume. The lowest production volume fell on dry-cured sausages – only 698.6 tons, or less than 0.1% in the overall structure.
According to the UISIS, the volume of cooked sausage production in Russia equaled 815,439.4 tons in 2015 – this is 2.6% lower than in 2014 and 5.2% lower than in 2010. According to experts at “AnalyticResearchGroup”, the level of production of the goods in question grew by 0.8% in 2016, amounting to 822,265.5 tons.
Regarding prices, from the first quarter of 2014 to the third quarter of 2016, all in all, positive quarterly dynamics in the average consumer price for cooked sausages were observed. As estimated by “AnalyticResearchGroup”, in the fourth quarter of 2016 the price increased by 1.5% to the third quarter. In 2017 the average consumer price for the product in question will continue to grow – up to 415.3 rubles per kilogram in the fourth quarter (+18.4% compared to the fourth quarter of 2016). The substantial price increase has to do with a decrease in imports of raw materials for sausage production as well as domestic raw materials having become more expensive.
Quarterly dynamics of the average manufacturer’s suggested retail price for cooked sausages from the first quarter of 2014 to the third quarter of 2016 were mainly positive with episodic downturns. According to experts at “AnalyticResearchGroup”, in the fourth quarter of 2016, the price dropped by 6% against the third quarter. In 2017, the average consumer price for the product in question will continue to grow and will reach up to 223.3 rubles per kilogram in the fourth quarter (+10.4% to the fourth quarter of 2016).
From September 2014 to September 2016, positive monthly dynamics in average consumer prices for semi-smoked and cooked smoked sausages were recorded. In September 2016, the price for a kilogram of semi-smoked or cooked smoked sausages equaled 422.3 rubles (+3.2% compared to September 2015).
Monthly dynamics of average consumer prices for wieners and small sausages in September 2014 – September 2016 follow a similar trend. In September 2016, the price for a kilogram of small sausages and wieners equaled 328.2 rubles (+2.2% to September 2015). Monthly dynamics of average manufacturer prices for wieners and small sausages from September 2014 to September 2016 has a more or less even trend with a slight decline after February 2016.
The sausage market is characterized by a rather narrow specialization by product groups, and each group has its own target audience and specifics of development. The typical distinction includes products of ‘everyday demand’ (wieners, cooked sausages and other sausage products) and products of ‘occasional consumption’, demand for which tends to increase on public holidays (delicacies).
Speaking of the structure of demand in the Russian sausage market, it is important to note dominance of cheaper products. Experts expect a strengthening of said tendencies this year due to decreasing real incomes.
Another important point is that the biggest part of the market is occupied by domestic companies. The share of imports in the overall volume of domestic production remains insignificant.
The volume of sausage product imports* into Russia in 2015 amounted to 28,939 tons in physical terms (-43% to 2014), valued at $ 56,460.7 thousand (-67.7% to 2014). During the first eight months of 2016, 22,941.6 tons of sausage products were imported into Russia, which is 16% higher than the figure of the similar period in 2015 – their monetary volume equaled $ 45,302.7 thousand, having increased by $ 9,111.9 thousand.
Among the federal districts, the Central Federal District was leading in sausage product exports in 2015, accounting for 32.1 and 43% in value and volume terms respectively. The Volga Federal District was second, with 22.3 and 16.2% of the overall export volume respectively.
The reduction in the share of expensive products by European manufacturers today gives the consumer an opportunity to take a different look at the quality of domestic products. It turned out that Russian manufacturers are capable of producing decent, quality premium products.
In Soviet times sausages were a form of indication of stability and wealth. Therefore during the years the new Russian economy was forming, sausage production facilities started to be created in the Russian Federation. Today, only those that managed to achieve the image of a reliable manufacturer have stayed afloat. To many Russian consumers, sausages remain one of the main meat products in the diet.
* This includes information for products under the code TN-VED 1601 – Sausages and similar products made from meat, offal or blood, and food products manufactured from them.