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5/2018


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DRINKS
Development Prospects of the Wine Industry in Russia
Research by the Center for Investigations of Federal and Regional Alcohol Markets
Review of the Russian Beer Market
Research by Credinform Information Agency
TEA & COFFEE
Review of the Global Coffee Capsules Market
Research by the Company Euromonitor International
CONFECTIONERY
Review of the Russian Cookies Market
Research by the Company IndexBox
MEAT
Review of the Russian Market for Meat Products
Research by the Company GfK Rus
OILS & FATS
Branding in the Russian Market for Bottled Sunflower Oil
Research by the Branding Company Labelmen
DAIRY PRODUCTS
Review of the Russian Dairy Market
Research by the Company Laboratoriya Trendov
FAST FOOD
Review of the Russian Market for Non-Sweet Snack Foods
Research by the Company NeoAnalytics
INGREDIENTS
Review of the Russian Market for Starch Products
Research by the Company ID Marketing
CANNED/PRESERVED FOOD
Review of the Russian Market for Canned Meat
Research by the Company AnalyticResearchGroup
EQUIPMENT & MACHINERY
Review of the Russian Market for Non-Cultivated Crop Processing Equipment
Research by the Company Eventus Consulting
RETAIL
Review of the Russian Food Retail Market
Research by INFOLine Information Agency
PACKAGING
Review of the Russian Market of Packaging for Liquid and Viscous Foods
Research by Experts
TRADE SHOWS
23rd International Specialized Exhibition RosUpak-2018
FOODSERVICE
Review of the Russian Market for Public Catering
Research by the Company NPD


Review of the Russian Meat Market

Research by Credinform Information Agency
CONSUMPTION
Meat plays an important role in the human diet. Consumption of meat ensures that the human body gets the necessary amino acids and vitamins.
In JanuaryOctober 2017, meat consumption in Russia reached 75 kilograms per capita, which is its maximum value that was observed in 1990 and 2013 as well such substantial growth in consumption was achieved through development of domestic production and an increase in purchasing power among Russian citizens compared with the 1990s. During the 1998 financial crisis, for instance, consumption of meat in the country dropped to 45 kilograms per capita per year.

OUTPUT VOLUME AND MARKET STRUCTURE
One of the trends currently observed in Russia is the increase in volumes of pork and poultry meat output. In 2017, poultry was accounting for the largest share in the overall production volume 62.28%. Pork production was second with the share of 33.9%, whereas the remaining shares fell on beef and mutton 3.71 and 0.1% respectively.
Russia has a specific, historically formed gastronomic culture based on three meat varieties pork, beef and poultry. Mutton is most commonly consumed in Muslim regions of the country, which is related to the religious context of said territories.

PRODUCTION DYNAMICS IN THE MAIN SEGMENTS
The volume of poultry meat output in 2017 declined to 4.2 million tons.
In 2017, the bulk of meat produced 68% was occupied by fresh, cooled and chilled poultry meat, whereas the remaining 32% fell on frozen poultry.
Pork production reached 2.3 million tons in 2017, which is 2.8 times higher than the level demonstrated in 2010. It is obvious that domestic producers managed to benefit from the current favourable external environment and to rapidly increase output of domestic products; until recently Russia was almost completely dependent on imports in this segment.
91% of Russias total production volume in 2017 was occupied by fresh, cooled and chilled pork, and 9% were accounted for by frozen pork.
The volume of beef production in 2017 equalled 253 thousand tons, having declined to 2010 by 3.5%.
In the structure of Russian production in 2017, 79% of the beef market was accounted for by fresh, cooled and chilled meat, 21% being occupied by frozen goods.
The volume of mutton output in 2016 amounted to 6.5 thousand tons, and the indicators within this segment have been declining as well: compared with 2010, mutton production decreased by 9.9%. In 2017 about 7.0 thousand tons of mutton were produced in Russia, at that 97% of this was fresh, cooled and chilled meat, and the remaining 3% fell on frozen meat.

AVERAGE RETAIL PRICES IN THE MEAT MARKET
Let us examine average retail prices for meat in Russia in 2017. Having analysed the data presented, we would like to note that throughout the whole time period in question, prices for different meat varieties were mostly remaining at the same level, which goes hand in hand with the record low inflation rate observed by economists in 2017.
Among all Russian federal districts, the highest average annual prices for meat in 2017 were recorded in the Far Eastern and Central Federal Districts, whereas the lowest prices were demonstrated by the North Caucasian Federal District. Prices for meat have increased dramatically in the Northwestern Federal District prices within each segment in the region grew by 1011 rubles on average against 2016.

FOREIGN TRADE TURNOVER
The Russian poultry market is the most developed segment of the local meat industry. Production of this meat variety decreased by 4% in 2017. At the moment Russian farmers are primarily oriented towards domestic consumption, which is fully met. The share of imports is only 5.3%, whereas the share of exports equals 3.8%. The main purchasers of Russian goods in the segment are Ukraine, Vietnam and Kazakhstan, and together they receive 77% of all exports.
Domestic production of pork is also developed in Russia. Supplies of pork from Brazil dropped by 13% the Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) banned pork and beef imports from Brazil as of December 1, 2017, due to breach of contract. Russia is not planning to purchase the missing meat volume due to rapid development of domestic production. Exports of pork from Russia are oriented towards countries of the CIS namely Ukraine and Belarus. The volume of meat exports amounts to 20 thousand tons. Since 2016 Ukraine has remained the main purchaser, and in 2017 its share in exports of Russian pork equalled 59%.
Foreign trade turnover in the beef market has not been in favour of Russia a negative trade balance can be observed, and the market appears fully dependent on imported goods.
It should be noted that the volume of beef imported in 2017 decreased to 358.6 thousand tons but has still remained higher than the volume of domestic production.
The volume of beef supplied from Brazil dropped by 1.5 times in 2017. The Russian Federation is planning to substitute Brazilian meat with increased volumes of Paraguayan or Argentinian beef.
Beef exports from Russia are rather low and amount to 2 thousand tons. Just like earlier, the main purchasers of Russian beef are Kazakhstan, Belarus, the Republic of Korea, Hong Kong, and Ukraine, the total share of which in Russian exports equals 94%.
The state of things regarding foreign trade turnover in the beef market has also been unfavourable for Russia there is a negative trade balance, and the market is highly dependent on imports.
In 2016, 3 thousand tons of mutton valued at $ 16.8 million were supplied to Russia, whereas Russias total mutton exports barely exceeded 0.1 thousand tons, or $ 0.67 million.
The share of imports in the structure of the Russian mutton market amounted to 32% in 20162017.
The volume of mutton imported from Iceland plummeted by 5 times compared with 2016. Exports of mutton from Russia are low and only reach 186 tons. The key target markets are Kazakhstan and Belarus. In 2017 a large share of mutton purchases from Russia 66% was accounted for by Iran.

MAJOR PRODUCERS
With the help of the information analytical system Globas by information agency Credinform, a rating of Russias top 10 companies with highest revenue was formed. The leading player in the meat market in the Russian Federation in 2016 was Svinokompleks (Intensive Pig Farm) Korocha CJSC (Belgorod region), part of Miratorg Group.
In conclusion, we would like to highlight high dependence of our country upon imports in the segment of beef. The ban on supplies from Brazil imposed by Rosselkhoznadzor may provoke a shortage of this product type as well as a significant increase in prices. Therefore searching for alternatives or gradually establishing domestic production becomes essential. The segments of poultry and pork have been characterised by a considerable rate of import substitution, which virtually superseded foreign players in the Russian market.

Evgeny Nasirov,
Analyst
Credinform Information Agency




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