A lot of cheese?

Источник: The DairyNews
Large cheese-making enterprises faced overstocking and a decrease in consumer demand. Meanwhile, craft dairies feel comfortable in the market despite the fact that not everyone is able to get to the mass shelf across the country, and not everyone wants to. The situation in the cheese market is difficult and it will remain tense for several months due to overstocking and problems with consumption, expressed their opinion market experts in an interview with the DairyNews. These problems need to be addressed together.
According to Rosstat, in January this year, enterprises of the Russian Federation made 36.3 thousand tons of cheese. This is 6.5% less than a month earlier, but 14% more than during the same period in 2017. Market participants admit that in Russia there has been formed overproduction in all categories of dairy products, with the most tense situation in the segments of powdered dairy products, cheeses and butter. This, experts say, has become one of the key factors of reducing prices for raw materials. In 2017, according to Rosstat, sales of rich cream cheese in Russia decreased by 1.1%. At the same time, 3.6% of this product was sold at markets and fairs. Sales of rich cream cheeses decreased almost by 27% in January this year compared to December 2017. 

TO BRING ONESELF INTO A TRAP

Manufacturers of delicious and craft cheeses surveyed by The DairyNews, emphasize that they don’t have any problems with product sales, which always finds a buyer. "The consumer wants high-quality and tasty product", say the cheese-makers. Oleg Sirota, the owner of the Istrian cheese factory "Russian Parmesan" in an interview with the correspondent of the Agency also stressed that there is no decrease in demand for products. However, this segment, despite the active development after the embargo in 2014, is still not enough represented in the country to ensure the population, and the price range for the products of such dairies, admit market participants, is not yet affortable to all citizens of the Russian Federation.

According to the data announced by representatives of Rosstat yesterday, in January 2018, the real income of Russians decreased by 7%.

"In general, there is a negative trend in the form of falling consumption of such dairy products as cheese and butter. Import substitution is observed due to the growth of raw milk production and the fall in consumption. At the same time, the consumer in the Russian Federation consumes more products in terms of raw milk than produced within the country", - said Director of the Russian Dairy Research Center Mikhail Mishchenko at the III forum of dairy analysts. 

Separately, the expert touched upon the issue of supplies of cheese-like products. In 2014, he said, in Russia there were imported 51 thousand tons of cheese-like products. The largest supplier was Ukraine, then Belarus, Poland and other countries. After the embargo, this figure fell to 15 thousand tons, but by the end of 2017 the figure exceeded 87 thousand tons. At the same time, Belarus made almost 100% of deliveries of cheese-like products.

"What does that mean? Ukraine and Poland, continue to supply these products as they did before," - Mikhail Mishchenko says. The surplus was formed due to the fact that the country imports cheese-like products and produces cheese products. 

"The consumer is swamped with the cheapest product. These volumes also affect the pricing and purchase of raw milk. At the same time, we do not produce enough cheese, we have an excess of cheese-like products. The reference point of producers of the Russian Federation on the cheapest segment is that trap in which we drive ourselves. We face trade networks that require the lowest possible price, competing with each other, and manufacturers, starting from the statements of different analysts, change the benchmark to the cheapest," the expert stressed. 

Ulrich Marshner, Director on strategic projects and business development of "Hochland Russland" also notes the reduction in income of the population that leads to a redistribution of consumption towards cheaper products.

"Purchasing power began to decline. People have less money. There is redistribution from higher-quality cheese towards cheaper and lower-quality cheeses. Now, if we talk about the prospects – we believe in this market, we did not play with the quality. But the recovery period will be longer than in 2008-2009. I am afraid that what we see now will lead to a decrease in the reputation of cheeses. There are a lot of processed products, not cheese. If the reputation is lost, one can have fun, but it is worth money and time to restore the reputation of the product. We see that the consumer wants quality and is willing to pay, but in general the situation will raise a lot of questions. This is one of the great threats," concluded Mr. Marshner. 

I WOULD LOVE CHEESE, BUT THE INCOME WILL NOT ALLOW

Despite the decline in real incomes, the population wants quality, state representatives of cheese-making enterprises.

"Mainly, the situation with consumption is influenced by the high cost and the lack of a budget for the purchase of dairy products. Unfortunately, no matter what we are told about the recovery of the economy in terms of consumption we still see fairly negative trends. In my opinion, the consumer even with a limited budget, today chooses quite carefully what he consumes. That is, he does not buy only because of the low price. He is certainly very selective. From this point of view, there is an improvement in consumer culture, consumer education", - commented the General Director of "Foodland" Maxim Polyakov. 

According to the expert, the cheese product does not dominate sales; it only occupies a niche that is in demand.

A completely different side of the question is falsification that is cheese and cheese-like product delivered on the shelf and sold as genuine cheese.
"The buyers today do not see on the shelf, what kind of product and of whose production they buy. There is a product that attracts by a price, a taste, but there are no recognizable brands in our retail chains. Overstocked enterprises today are being forced to drop the price significantly - up to 20% and this greatly disturbs farmers", - said Oleg Maknakov, the Director of LLC "RIKON". 

Since January 15 this year Belarus has banned the transit supplies of cheese-like products to Russia. The Russian authorities, in turn, are taking measures to "protect" the domestic market – limiting (or at least trying) the supply of raw milk from Belarus (we will remind that the ban has been postponed by the Rosselkhoznadzor for the second time – for March 15). Currently, quite a large number of Belarusian enterprises are already under various restrictions – from enhanced control to a ban on supplies. However, such measures are only temporary and do not give a long-term effect to the development of the industry. Problems need to be solved together: from the level of efficiency of raw milk production till access of falsified products to the shelf of retailers. Today, industry participants and lobbyists are actively discussing the increase of fines for the production of falsified products, but emphasize that the network, as a demand-forming member of the chain, should be subjected to such measures. Analysts still predict the growth of real incomes by the end of the year, but with the experience gained, the buyer has already significantly reduced the level of confidence in domestic products, which will be necessary to restore.

Meanwhile, the cheese market has attracted large investors – both foreign and domestic. Arla Foods, Valio, Hochland, DMK actively invested in the development of Russia; at the end of last year Savencia entered the Russian market, having acquired a controlling stake of Belebeevsky dairy plant.

"Molvest" plans to invest 3 million euros in the production line and packaging of cheese. And in the summer Agrocomplex named after Tkachev intends to launch a large-scale production of cheese.

Read full article in Russian on DairyNews.ru
30.01.2024
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