Review of the Russian Market of Canned MeatResearch of the Company “Step by Step”
The Russian canned meat market can be divided into 2 large segments: canned meat produced exclusively from meat, and canned products containing vegetables, grains and other botanical ingredients. The majority of canned meat goods produced and sold in Russia are meat-containing products without vegetable additives.
PRODUCTION STRUCTURE AND DYNAMICS
In 2016, volumes of production of canned meat with vegetables decreased by 10.1% – to 110 million standard cans, whereas production of canned meat-containing goods declined by 6.7% and reached 491 million standard cans. Together this led to a 7.3% reduction in canned meat production against the level of 2015, to 601 million standard cans.
A change in the situation in 2015–2016 has a lot to do with the import substitution program being implemented, thanks to which due to active state support local agriculture is demonstrating high production growth rates, primarily, of pork and poultry, in terms of which Russia is already close to full self-sufficiency. This leads to a decrease in prices for meat and, as a consequence, to a partial switch of demand from canned meat to fresh, chilled or farm meat as well as its processing products. The actively developing category of convenience meat and meat-containing products is also competing with canned meat.
All in all, canned meat repeats the trend of meat-containing canned goods, since their share amounts to over 80% of canned food in Russia. Growth in the share of canned meat with vegetables occurs due to increasing variety in manufacturers’ ranges as well as the lower price compared to meat-containing products, which is an important factor given the declining household incomes due to the crisis.
The highest volume of canned meat production falls on the Northwestern and Central Federal Districts, whereas the lowest volume is accounted for by the Far Eastern Federal District. The Crimean Federal District did not produce canned meat in 2015–2016 before becoming part of the Southern Federal District. In terms of meat-containing canned food production volumes, the leader is the Northwestern Federal District, whereas the Central Federal District leads in production of vegetable-containing canned meat products. In 2016 some structural changes took place – the Northwestern Federal District lost 5.9 pp of its structural share in meat-containing canned good production, falling behind the Volga and Central Federal Districts. At the same time the Central Federal District lost 5 pp in production of canned meat with vegetables in favor of the Ural, Volga and Southern Federal Districts.
MARKET VOLUME DYNAMICS
The dynamics of retail sales of canned meat in monetary terms are positive, which is caused by growth in consumer prices as well as volumes of domestic production until 2014. During the time period analyzed, 0.4% of the total volume of the retail market fell on canned meat.
One of the main problems in the Russian canned meat market is the prevalence of low-grade products. Very often manufacturers provide false information on the package, stating that the good was produced in accordance with a certain GOST standard, when in fact it is not true.
At the moment the following trends can be observed in the Russian market of canned meat:
* decline in production volumes of meat-containing canned food and vegetable-containing canned meat due to consumer demand shifting towards meat and meat products as well as convenience meat and meat-containing goods;
* increasing market volume in both physical and monetary terms;
* decline in product quality due to cheaper raw materials used;
* large share of adulterated products;
* import substitution and a decline in imports of canned meat;
* large share of government procurement in the volume of canned meat sales.
In the structure of foreign economic activity, imports prevail in both physical and monetary terms. Volumes of imports in 2015–2016 decreased almost 3-fold due to the imposition of sanctions and the implementation of the import substitution program.
According to the state register, over 1700 companies specializing in canned meat and poultry production are registered in Russia, around 450 of which are actively operating in the industry. Approximately 15 large players are present in the given market among producers.
The main producers in the market of canned meat include: “Gipar” LLC, “Glavprodukt” CJSC, “Yoshkar-Olinsky Myasokombinat (Yoshkar-Ola Meat Processing Plant)” CJSC, “Myasmolprod” LLC, “Ova” Agroindustrial holding, and “Ruzkom” OJSC*.
The volume of per capita canned meat consumption from 2009 to 2015 was increasing year to year and amounted to 1.1 kilograms in 2009 and 1.5 kilograms (four 350-gram cans) in 2015. In 2016, consumption dropped to 1.4 kilograms per capita due to demand having shifted toward meat and meat-containing products as well as convenience meat and meat-containing products.
The average price for canned meat in Russia has been annually increasing during the past 4 years.
The largest increase was recorded in 2015 – 34.9%, to 111.68 rubles per 350-gram can, which had to do with the transformation of the market due to the crisis and sanctions having affected manufacturers’ prices. The costs increased, one of the reasons being growth in the currency exchange, as tin cans are mainly purchased from abroad. In 2016–2017 prices stabilized, and the increase rates dropped.
Pates occupy a special place in the Russian market of canned meat – it is especially popular by consumers as a high-calorie product ready for consumption, which can serve as an alternative to meat or sausages.
In 2016 the pate market size amounted to 17,646.74 tons. At the same time domestic production reached 17,514.37 tons, whereas imports and exports amounted to 279.62 and 147.26 tons respectively. Imports accounted for 1.6% of the pate market in physical terms, and 0.8% of the market fell on exports. Therefore one may state that the market of meat pates roughly equals domestic production, i.e. Russia is practically 100 percent self-sufficient in terms of this product type. This is largely due to the Russian meat industry as a whole (including production of poultry and pork) having virtually reached self-sufficiency due to state support provided since the sanctions were imposed. Therefore, in 2016, after a decline in 2015, the Russian food industry has substantially recovered the market volume through domestic production.
In 2014–2016 changes in the geographic structure of pate production occurred. The share of the Central Federal District in the volume of pate production is growing. One of the reasons for that is increased activity by the Czech company “Hame”, which has production facilities in Russia, letting it continue sales after the sanctions were imposed.
The volume of meat pate imports in the Russian market is insignificant, the largest share of supplies in physical terms falling on Belgium – 56%, or 156.94 tons. Denmark is second in import volumes, with the share of 27% (74.98 tons), and Serbia is third, its share being 6% (15.41 tons).
Regarding exports of meat pates, the bulk of supplies fell on Ukraine (supplies within the support program for the population of Lugansk and Donetsk regions – Donetsk, Lugansk, Makeevka, Krasnyi Luch and others), Turkmenistan and Tajikistan.
Over 75% of Russian exports of canned meat pates in volume terms fall on the share of four companies: “Orelprodukt” CJSC (35.9%), “Hame Foods” CJSC (15.7%), “Kompaniya (Company) “Russkiy Myasnoy Mir (Russian Meat World)” LLC (15.3%) and “Lytkarinsky Myasopererabatyvayushy Zavod (Lytkarino Meat Processing Plant)” CJSC (8.9%).
MARKET DEVELOPMENT FORECAST
In 2017–2019 growth in canned meat production volumes at 3-5% per year on average is expected in Russia. Growth will be connected with the following factors:
* development of beef cattle farming;
* state investments in technical and technological upgrades in enterprises;
* ongoing orientation towards import substitution for meat products and resulting growth in domestic production;
* expansion of the canned meat range offered by producers.
A 2-5% annual increase in canned meat supply is forecasted for 2017-2019. By 2019 the volume of product supply is expected to reach 404.7 thousand tons. Annual growth in supply volumes will primarily occur due to increasing production volumes.
* Companies are listed in alphabetical order.
“Step by Step" Group”