Condensed milk was first produced in the late 19th century. The preparation technology was patented by American inventor Gail Borden on August 19, 1856. The world’s first factory for condensed milk production was opened in the US in 1858, whereas Russia’s first condensed milk factory appeared in Orenburg in 1881.
Condensed milk is one of the main components of the state food reserve in Russia. Its main consumers are the confectionery industry and the population.
The crisis of 2014 had a significant impact on the growth dynamics in the Russian market of canned dairy: the decline in consumer purchasing power negatively affected the consumption volume, and, following 11% growth in 2013, the market plummeted by 10% in physical terms in 2014. In 2015, the reduction of apparent consumption continued and equalled 6.5%.
In 2016, one could speak of a recovery to pre-crisis levels – growth equalled 4.5%. In January–September 2017, the market increased by 1.3% to the similar period of 2016.
The largest volume in production of condensed dairy products falls on condensed milk – 56%. During the first 9 months of 2017, the volume of condensed milk output amounted to 351.9 million standard cans. Production of condensed dairy goods with various additives amounted to approximately 44% in the total volume (over the past 3 years, the share of these products has increased substantially), whereas the share of condensed cream was 0.5%.
From 2013 to 2015, production of condensed dairy goods in the country was declining. Growth continued in 2016, when the increase equalled 3.2% by the end of the year and the production volume reached 854 million standard cans. During the first 9 months of 2017, production growth equalled 4% to the similar period of 2016. The difference in consumption growth (+4.5% in 2016 against +1.3% in the first 9 months of 2017) can be explained by the fact that exports account for a significant share of the market.
Among Russian regions producing condensed dairy goods, the leader is Belgorod region, accounting for about 22–23% of the country’s total output volume. Belgorod region is represented by such major enterprises as “Alekseevskiy Molochnokonservniy Kombinat (Alekseevka Dairy Cannery)” CJSC; “Belgorodskie Molochnye Produkty (Belgorod Dairy Products)” OJSC; and “Volokonovsky Molochnokonservny Kombinat (Volokonovka Dairy Cannery)” CJSC. The leader is followed by Smolensk region with the share of 12% (“Promkonservy” LLC is located there), Omsk region with the share of 11% (“Lyubinskiy Molochnokonservny Kombinat (Lyubinskiy Dairy Cannery)” CJSC), Krasnodar Krai (“Korenovsky Molochno-Konservny Kombinat (Korenovsk Dairy Cannery)” CJSC; “Kropotkinsky Molochny Kombinat (Kropotkin Dairy Plant)” OJSC) – 11%, Oryol region (“Verkhovsky Molochno-Konservny Zavod (Verkhovye Dairy Cannery)” CJSC) – 10%, and Kursk region (“Lgovsky Molochno-Konservny Kombinat (Lgov Dairy Cannery)” OJSC; “Zheleznogorsk-Moloko (Zheleznogorsk-Milk)” LLC) – 10%.
The share of exported goods in the total volume of condensed milk output was remaining at the level of 9–10% prior to the crisis. Since the counter-sanctions were imposed by the Russian Federation in 2014, exports of Russian condensed milk have been declining year by year. At the moment the share of exports in the total market volume amounts to around 3%.
Along with other markets, the Russian market of condensed milk was affected by the crisis and counter-sanctions introduced by Russia in 2014. As a result of increased foreign currency rates and the imposition of the food embargo on imports from a number of supplying countries, imports of condensed milk into the Russian Federation dropped from 220 thousand tons in 2013 to 143.8 thousand tons in 2016.
The share of condensed milk imports in the market on the whole used to reach and even exceed 40%. For instance, the indicator equalled 41% in physical terms in 2013, whereas in 2014 it declined to 37%. Said trend has to do with the aforementioned sanctions and the crisis.
In 2016, the volume of condensed milk imports demonstrated a slight increase of 5%, amounting to 143.8 thousand tons. However, in the first 8 months of 2017 a drop in imports of almost 6% to the similar period of 2016 was observed. The share of condensed milk imports is currently about 30%.
Belarus is the main supplier of condensed dairy products to the Russian market – the country accounts for approximately 79% of all imports in volume terms. A decline in the share of Belarussian condensed milk in the total volume of imports has been recorded, which is due to reduced supplies from this country (-13% in 2017) as well as tremendous growth in imports from New Zealand (+1,130% in physical terms during the first 8 months of 2017 against the similar period of 2016) and Iran (+4,768%). Imports of condensed milk from Belarus have been decreasing for several years, although Belarus remains the main supplier of this product – in the first 8 months of 2017, the country imported 83.5 thousand tons of condensed milk into Russia, against 95.7 thousand tons in the similar period of 2016.
New Zealand’s share in imports equalled 4% in 2017, as opposed to 0.3% in 2017 – during the first 8 months of 2017, the country supplied almost 4 thousand tons of condensed milk into Russia, whereas earlier its volumes rarely exceeded 500 tons.
In 2017, Iran became another major supplier in the market in question, having increased its import volumes from 260 tons in 2016 to 1,962 tons in the first 8 months of 2017.
Turkey’s share demonstrated growth as well, having reached 6% in volume terms in January–August 2017 (an increase of 42% compared to the similar period of 2016).
The volume of supplies from Uruguay increased by 45%, and the country’s share in the overall volume of condensed milk imports equalled 4%. Argentina, on the contrary, reduced its condensed milk supplies to Russia almost twofold, from 6 to 3%.
In 2017, Switzerland, Kyrgyzstan, Armenia, Kazakhstan, Costa Rica and Moldova were also among the countries supplying condensed milk to the Russian Federation.
During the past 6 years, consumer prices for condensed milk have grown by 72.4%. The price increase peaked in 2015, when growth of 24.7% was recorded. In the first 9 months of 2017, prices increased by 3.8%, the average price for condensed milk on the shelves of Russian stores amounting to 78.4 rubles.
In the medium term, growth in the raw material base will positively affect the dynamics of dairy good production.
According to experts at “Eventus Consulting”, market dynamics will be characterised by an upward trend in the coming years, reaching pre-crisis levels in 2018–2019. According to forecasts, the market volume will amount to 485 thousand tons in 2019, against 478 thousand tons in 2017.
Experts at “Eventus Consulting”