Review of the Russian Dairy MarketResearch by the Company “Market Analitika”
Import substitution policy is one of the main directions affecting the development of the dairy market in Russia. Let us look at the changes that have taken place in the Russian dairy market in recent years.
According to the Accounts Chamber of the Russian Federation, despite the positive changes that occurred in 2015–2016, self-sufficiency in terms of milk in the country has still not reached a level high enough. Experts in the industry believe that there are serious obstacles to prosperity in the dairy sector.
The analysis of production dynamics confirms growth in production of milk and several types of dairy products – cream, sour cream and cheese.
At the same time, in 2015 there was a considerable decline in volumes of whole milk product and cheese imports into Russia compared to 2014. In 2016 there was a slight increase in volumes of milk, cheese and quark imports. Compared to the similar period in 2015, the volume of whole milk product imports grew by 1.7% to 989.8 thousand tons. All in all, in 2014–2016 imports declined by 14.9% in physical terms and 38.6% in monetary terms.
The situation in the cheese market is the most interesting, with almost 30% of imports having been replaced with domestically produced goods over the 3 years. At the same time, not only did the market volume not decrease, it demonstrated slight growth due to increased output volumes. In 2016 the market size amounted to 796.1 thousand tons, which is 4% higher than in 2015 and almost 1% higher than in 2014. In 2014–2016 the market size did not demonstrate clear dynamics. Retail sales of high-fat cheeses (including bryndza) increased for the sixth year in a row in 2016 and reached yet another record of 343.3 billion rubles.
It should be noted that the structure of Russian cheese production did not undergo any serious shifts in 2010–2016, excluding growth in the segment of other cheeses and a reduction of the share of processed cheeses. The largest categories traditionally produced in Russia are hard and semi-hard cheeses as well as processed cheeses.
Strong growth in cheese production during the past two years could be observed in 6 federal districts: Central (+17.5%), Northwestern (+54%), North Caucasian (+20%), Ural (+460%), Siberian (+15%) and Far Eastern (+32%).
Comparison of production data for different regions in 2014–2016 forms a unique picture of each region, reflecting its role in increasing production of domestic dairy goods. The following three federal districts can be called the leaders: Volga, North Caucasian and Far Eastern, which increased production volumes in all product types within the category in 2016.
During the time period in question, production in the Volga Federal District grew as follows: milk – 11%, fermented dairy products – 6%, cream – 31%, sour cream – 17%, cheese and cheese products – 29%, quark – 5%.
The North Caucasian Federal District increased its milk production by 13%, fermented dairy production by 4%, cream production by 4%, sour cream – by 10%, cheese and cheese products – by 20%, quark – by 28%.
Production growth in the Far Eastern Federal District was as follows: milk – 16%, fermented dairy – 6%, cream – 1%, sour cream – 13%, cheese and cheese products – 32%, quark – 10%.
The Central Federal District increased production volumes in all segments of the dairy market: milk (+2%), cream (+19%), sour cream (+4%), cheese and cheese products (+18%), quark (+6%). Fermented dairy products were the only exception, production of which remained virtually unchanged.
The Ural Federal District increased production volumes in the following segments: cream (+9%), sour cream (+2%), cheese and cheese products (+459%) and quark (+27%). At the same time a decline took place in the segments of milk (-9%) and fermented dairy (-2%).
The Siberian Federal District demonstrated growth in production of sour cream (+2%), cheese and cheese products (+15%) and quark (+10%). Production volumes decreased in milk (-2%), fermented dairy products (-7%) and cream (-15%).
In the Northwestern Federal District growth occurred in volumes of production of milk (+3%), cheese and cheese products (+54%) and quark (+16%), but volumes decreased in the segments of fermented dairy (-5%), cream (-8%) and sour cream (-2%).
The Southern Federal District only demonstrated growth in sour cream production (+3%) and cheese production (+8%). A decline was recorded in the other segments: milk (-4%), fermented dairy (-3%), cream (-27%), quark (-27%).
For the Crimean Federal District, changes were being observed during the period from 2015 to 2016, as earlier data is not available. Growth in the region only occurred in the cream segment (31-fold, or +3,000%). Other segments demonstrated a decline in volumes produced: milk – 25%, fermented dairy – 33%, sour cream – 33%, cheeses and cheese products – 19%, quark – 9%.
The leading region in terms of the total volume of dairy goods produced in physical terms was the Central Federal District, followed by the Volga and Siberian Federal Districts. The lowest volumes were observed in the Crimean and Far Eastern Federal Districts.
The Volga Federal District was leading in milk production (1,564 thousand tons). It is followed by the Central Federal District (1,271 thousand tons). The lowest figures were demonstrated by the Far Eastern Federal District (159 thousand tons) and the Crimean Federal District (12 thousand tons).
The largest volumes of fermented dairy produced were accounted for by the Central (11,067 thousand tons) and Volga (438 thousand tons) Federal Districts, whereas the lowest volumes were produced in the North Caucasian (55 thousand tons) and Crimean (7 thousand tons) Federal Districts.
The leader in cream production was the Central Federal District with the volume of 45 thousand tons. The Crimean and North Caucasian Federal Districts were falling behind with the volumes of 0.07 thousand and 2 thousand tons respectively.
The largest volumes of sour cream produced fall on the Volga, Central and Siberian Federal Districts (129 thousand, 117 thousand and 75 thousand tons respectively), whereas the lowest volumes were accounted for by the Far Eastern and Crimean Federal Districts (17 thousand and 2 thousand tons respectively).
The Central, Volga and Northwestern Federal Districts produced the most quark (119 thousand, 98 thousand and 47 thousand tons respectively), whereas the Crimean and North Caucasian Federal Districts produced the least (2 thousand and 12 thousand tons respectively).
All things considered, one can conclude that dairy production in Russia remains concentrated in the Volga and Central regions of the country. The Siberian and Ural Federal Districts also have strong positions.