Review of Russian Cheese Market
Cheese consumption in a country is determined by more than just consumers' welfare; such factor as traditions of national cuisine shaped by years also matters. For instance, traditional Italian meals like pizza, lasagna, pasty and others cannot be cooked without cheese. Meanwhile in Russia cheese (not quark) is a highly rare ingredient of national meals. Maybe major reason of relatively low demand for cheese in Russia is that national hard drink here is vodka and it does not go well with cheese as accompaniment: at the same time in France and Italy cheese and wine are part of cooking and eating culture.
Peculiarity of cheese consumption in Russia is perception of cheese not as independent meal but as ingredient of sandwiches served among other cold appetizers. Result is lower cheese consumption in Russia in comparison to European countries despite the fact that cheese as a product category exists in Russia for several hundreds years. Leaders of cheese consumption in Europe are Denmark, Greece, Iceland and France where annual per capita consumption rate exceeds 24 kg and thus is almost by 4 times higher in comparison to Russia. So, growth potential of Russian cheese market is great.
By now Russian cheese market has entered the stage of vibrant de-velopment and consumption is expected to grow year by year. Market consolidation is close to zero; production range is dominated by generic cheeses. All this means that domestic companies have all chances to grow vibrantly. Today Russia counts about 150 cheese making plants; top ten manufacturers provide just about 30% of production volume.
Russian cheese market demonstrates higher growth rate than the average growth rate of food market in general; this business is one of the most promising and attractive ones on Russian food market. Annual growth rate of Russian cheese industry is about 10-20% both in value and volume. It should be highlighted that cheese is a certain detector of changes in Russian economy: the more affluent Russian consumers are the more they are inclined to perceive cheese as a category of daily demand.
Domestic production grows along with the market. For instance, in 2012 domestic production of cheeses in Russia increased by about 4.3%. However, this positive dynamics did not continue in 2013 - according to preliminary data, in H1 2013 cheese production in Russia saw 5% decline in volume.
The largest production volume of cheeses and quark in Russia is reg-istered in Central Federal District - about 44% of domestic production. Central FD remains the leader in production of cheeses and quark in Russia for six years already. This region also provides almost half of sales volume - the largest share. Second large share of sales volume on Russian cheese market belongs to Privolzhsky FD.
In 2012 sales of full-fat cheeses in Russia increased by about 11%. In 2013 this trend continued and sales in this category saw 9.3% year-to-year growth during 10 months of 2013. Most promising categories are hard and processed cheese with long shelf life, especially in terms of sales expansion to distant regions.
Russia manufacturers hard, soft, processed, brined, smoked and other cheeses. Till 2012 domestic production of cheeses in Russia was dominated by processed cheeses, this category provided about 30% of domestic production in volume. Meanwhile in 2012 semi hard cheeses (Rossijsky (Russian), Gollandsky (Dutch), Poshekhonsky, Kostromskoy) grew to become the largest segment of domestic production with about 25% in volume.
In terms of federal subjects the largest supplier of cheeses in Russia is Altai Territory, but in 2013 production volume there reduced almost by 5%. In 2013 Altai Territory provided about 15% of domestic production of cheese in volume. Moscow Region, Voronezh Region and Bryansk Region provided respectively 12%, 9% and 5% of domestic production of cheese in volume. Shares of other federal subjects did not exceed 5% each.
Moscow Region is the leader in production of processed cheeses. Significant shares in production of this category also belong to Voronezh Region and Ryazan Region. The largest manufacturer of processed cheeses in Russia is "Yantar (Amber)" CJSC (Voronezh).
Share of import on Russian cheese market is large. According to "Global Reach Consulting", imported cheeses control 45% to 50% of total sales. Russian cheese market highly depends on import both in terms of raw materials and ready product. More than 30 countries supply cheeses to Russia today. Imported cheeses are traditionally competitive both in price and quality and mam industry experts consider this to be one of the factors hampering development of Russian cheese industry.
According to preliminary data of 2013, import of cheese to Russia increased by 2% in volume. Cheese import to Russia has been demonstrating positive dynamics during recent 5 years. Import growth is mainly driven by growing consumer demand - Russians tend to buy more cheese. According to Rosstat, the average per capita consumption of cheese and cheese products in Russia constitutes 6.4 kg. Recommended consumption norm is 6.5 kg per person annually.
Byelorussia is one of the largest suppliers of cheese to Russia - it controls almost one third of import volume in cheeses and quark. Other important supplying countries are Germany (16%) and Ukraine (12%). Smaller shares of import volume - 8% to 2% - are controlled by Lithuania, Netherlands, Finland, Poland, Denmark and France.
Recent trends of Russian cheese market are influenced by two problems. First is price competition, provided reduction of import tariffs would indeed result in price decline. Second, Russia's membership in WTO will help foreign manufacturers and retailers come to Russian market and this can further accelerate competitive fight. Despite high diversity of cheeses offered by Russian market, there are actually no brands. This is especially true for domestic products. Meanwhile further expansion of West to Russia can bring branded cheeses to Russia, especially from such "cheese" countries as Netherlands and Switzerland.
Growing demand for expensive cheeses in Russia can be referred to factors with positive influence upon development of Russian cheese market. In this context the categories of elite or exotic cheeses look very promising.
"РОССИЙСКИЙ ПРОДОВОЛЬСТВЕННЫЙ РЫНОК"
Рекламный специализированный информационно-аналитический журнал. 2014 №2 (142)