WEAKNESS IS STRENGTH?
According to the Executive Director of Soyuzmoloko Artem Belov, a weak national currency is a chance for the Russian dairy industry to start developing exports. "In my opinion, a weak ruble is an opportunity for export. What are the potential markets? Countries of МЕNА, Southeast Asia, China. If we want to export something, we should start doing," said Artem Belov, during the session of the IV International agroindustrial dairy forum.
Lyudmila Manitskaya, Executive Director of the Dairy Union of Russia said that Russia exports about 700 thousand tons of dairy products (mostly ice cream). "But we need to be prepared to export. In particular, we need to fight against leukemia, 80% of the herd in Russia is infected", - said the Head of the Russian Union of dairy industry enterprises.
Generally speaking, market participants are positive about the possibilities for export of dairy products noting, however, that before getting seriously engaged in export, it is necessary to restore order in the domestic market. The Rosselkhoznadzor makes the similar statements.
THAT’S THE LIMIT
The proportion of milk containing and analog products in Russia is increasing, at the same time the market observes a decline in consumption. The experts of the company Nielsen said that in annual terms the price of dairy products in Russia increased by 9%, while sales decreased by almost 5%. Among the top 7 categories of dairy products during the study period, the most notable decline in sales is noted in the categories of kefir (-8.4% in real terms and -0.4% in monetary terms). Sales of pasteurized milk decreased by 2.5% in real terms, yogurt — by 5.8%, cottage cheese — by 5%, sour cream — by 4.2%, drinking yoghurt – by 3.6%.
"In the structure of consumption of cheese and cheese products the share of cheese products, according to our estimates, has increased from 15% to 25%. On the world market there is a clear trend of increased consumption of milk and dairy products. Over the next 10-12 years, the growth rate of this category is unlikely to be less than 2-3% on average. Although it is clear that in developed countries the rate will be lower while in developing countries it will be higher", - said Artem Belov.
The Director of the Russian Dairy Research Center (RDRC) Mikhail Mishchenko stressed that according to the International Dairy Federation in 2016 for the first time during many years in the world the consumption of dairy products has decreased by almost 3 million tons. The consumption has decreased from 111.5 up to 111.1 kg per capita.
"Large TNCs and cooperatives have expressed concern in this regard. Market leaders are changing their strategies in accordance with changing consumer preferences. Young consumers under 36 years old perceive dairy products otherwise. Myths about milk and dairy products are often global and the trend of decline in consumption is also global. Many dairy companies believe now that the market must take action to convince the younger generation to consume dairy products. In Russia this trend is unfortunately compounded by a number of factors. In particular, it is an unhealthy attitude towards milk market from a number of state services, for example from the Rosselkhoznadzor, that has creates a "List of the honest" meaning that all the rest are not honest. The second factor is unhealthy initiatives that bring confusion to the market, and causes misunderstanding and mistrust for the consumer. As a result, the consumer goes to the store and replaces milk with turkey, which also has protein and fat," - said Mikhail Mishchenko.
Artem Belov also stressed the negative impact of myths about dairy products on the consumption.
"What we see in the public space, on TV, on the public channels, in social media has a very negative impact on the development of the category; we see a completely clear negative trend in relation to dairy products. And it gives rise to negative myths," said Executive Director of Soyuzmoloko.
According to Mikhail Mishchenko, today in Russia the niche of lower price segment is sated, which makes the buyer look for a higher quality and more expensive product.
The expert noted that Russia is a deficit country with a shortage of five million tons of milk.
"Speaking of ice cream export, it is worth remembering that we are importing dry milk, making ice cream out of it and export it. Talking about exporting, it is necessary to understand clearly what kind of products we want to export. Today, import substitution is realized not so much due to the increase in production but due to falling consumption. The main products that we can export are cheese products; the main market for us is countries of the former Soviet Union. Speaking strategically, Russia has the largest export potential, but it is necessary to reduce the price of raw milk. One can definitely say: what we drink cannot be exported", - summed up the Director of the RDRC.
THE GOAL IS THE CONSUMER
To learn and understand the consumer today is the goal for many dairy companies. In this sense, the Russian market practically does not fall behind the world. In Russia today, the consumer asks the questions that nobody was interested in five or six years ago.
The representative of Danone Eugenia Falkova noted that the first issue in the export of dairy products is quality.
"We see the trend for healthy eating, healthy lifestyle that becomes the guiding star for any business. We will achieve this sooner or later anyway. Our consumer expects not only traceability, which the dairy market, unfortunately, can't provide through electronic veterinary certification. The consumer wants to understand what kind of people are working for this company, what is the company’s attitude to the environment and its employees, how the cows that give milk for the company's products are doing," said Eugenia Falkova, talking about the company's strategy in terms of interaction with the consumer.
Denis Zaveryaev, Director of the plant Valio in Russia also noted the importance of quality issue.
"In my opinion, it is necessary to develop culture of consumption of dairy products and cheeses. We implement rather a large program, informing consumers about the production. We have a separate Department, including experts from Finland, providing support to farmers, transferring knowledge accumulated over decades of work. I really like the phrase we can often hear in research centers Valio in Finland: the quality of milk cannot be improved, it can be only maintained at all stages of production," - said the expert.
It has to be noted that the Vladimir Kazeko, Head of information technology Department of the Rosselkhoznadzor said that "there are all the conditions available for the exports of dairy products".
"There is one moment – it is necessary to restore order within the country. This is the question regarding figures of falsification and that no one knows them. Often, companies do not show the state, we need to use the infrastructure and generate traceability," concluded Vladimir Kazeko.
In General, according to market participants, in the coming years the dairy market of Russia is going to face some changes, factors of which will act as consumer preferences and regional characteristics of the Russian market.
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