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Thursday, October 20, 2016

The Russians lost interest in the Russian cheese

Cheese production in Russia falls for the past two months, although after the introduction of predamage it is gaining momentum. The Ministry of economy of the Russian Federation believe that the reason lies in the saturation of the market, there are more cheeses to the Russian consumer doesn’t need to. But is it really? Version of the Ministry seems at least debatable.

In the production of cheese and cheese products over the past two months there has been a negative trend. The production output has been falling for two consecutive months, whereas in previous months it grew. So, in July, production fell by 2.1% in August, the decline has accelerated to 3.5% compared to last year’s months. Negative dynamics could be due to saturation of the market, according to the monitoring of economic development.

“The surge in demand for cheese products was triggered by the desire to assess Russian products”

Interestingly, import of cheese and cottage cheese in seven months of this year, on the contrary, increased by 17.3%. The share of imported products increased to 13.8% from 12.9% for the same period last year.

After the introduction of bradenburg in August 2014 in Russia saw an increase in the production of milk and dairy products, and the greatest – it is for cheese and cheese products. So, in 2015, produced more than 580 thousand tons, 17.6% more than the year before.

Why two years after the embargo and the reduction of competition in the market of cheese production started to decline?

First, comparison of current indicators of the production comes from fairly high base in 2015 when, after the embargo the Russian manufacturers have seriously stepped up the production of cheese. “Production cannot continue to grow at the same rapid pace as before,” – said the newspaper VIEW, the independent expert of the dairy market Tatyana Rybalova.

And the reason for that is the reduction of cheese consumption by Russians. “Per capita consumption of cheese fell to the 2005 level Consumption of cheese is now less than 5 kg per person, while in 2014, it was 5.8 kg,” – said Rybalova.

And this is not surprising. Reducing the consumption of such a product, like cheese, is traditionally observed in Russia in times of crisis. If in 2013 the annual consumption of cheese was about 800 thousand tons, in 2015-m in a physical relation to the consumption of cheese decreased by 10-15% and amounted to 700 thousand tons. At the same time imports fell sharply because of the embargo, but increased the production of Russian cheese.

“Cheese is the product, which Russians traditionally save. It is typical for our country. If the French are cheese – a product of the first necessity, in Russia it is still not included in the list of everyday products. Its consumption is growing in good economic times and falls in the crisis that we have seen in past years”, – says Tatiana Rybalova.

“If in 2015, the idea that cheese is expensive products could trigger a smile, but now it is a reality”, – said General Director of Agroholding “M9 AGRO Kirill Morozov. “The surge in demand for cheese products was triggered by the desire to assess Russian products, however, it was in the same price range with imported products, moreover, much lower quality, with rare exceptions,” he said. This summer, the fuse apparently went missing.

Oils in fire have added also talk about the dominance of counterfeit and use of palm oil instead of milk fat for cheese production. And, of course, having tasted domestic cheeses, Russian buyer could be dissatisfied their taste. “At a time when we need to save the buyer refuses in the first place from the expensive products of dubious quality in favor of traditional dairy products: milk, yogurt and other things that he considers natural,” explains Tatiana Rybalova.

The growth of counterfeit goods on the cheese market after the introduction of predamage was quite expected. Contributed to this unmet demand and lack of competition from European producers of high quality cheese. “Competition in the market fell due to the lack of production of European cheese makers. Remained almost the only Belarusian products similar to our assortment, and taste. Following the decline has fallen and the consumption of cheese,” says Rybalova. Consumer preferences have gone into the category of cheaper products, and high-quality cheese may not be cheap.

“The real price of this cheese can not be less than 350 rubles per kilogram. Obviously, this product will contain additional impurities, including cheap vegetable fats. The real price tag of 1 kg cheese – from 600 rubles, but such a product on the shelves in stores should still try to find” – says Sergey Zvenigorodsky of “solid Management”.

Finally, the production of cheese in Russia is declining amid rising demand for imported cheese from other countries. Thus, according to the “Soyuzmoloko”, in the first quarter of 2016, the imports of cheese rose by as much as 31% compared to last year’s period. Most of the imports came from Belarus.

“The other issue, of course, is all supplied through the Belarusian border local cheeses? Milk yield and total milk production in the country is not increased, but the production of dairy products is growing doubled pace. Here the question may just as with vegetables and fruits, which imports from Belarus exceeded five times the volume of annual harvest” – does not preclude the Zvenigorod facts of re-export of European cheese through Belarus.

In this situation, the Russian cheesemakers have little to change, except to use the designated embargo time to create a quality and tasty product that they can “shoot” as soon as the Russian economy with real incomes begin to grow.

“The situation can be corrected only income growth and the increase in cheese business. On the one hand, demand will seek an adequate equilibrium point, on the other hand, it will seek price in connection with the production growth,” – says the General Director of Agroholding “M9 AGRO Kirill Morozov.

“To stop the production of counterfeit manufacturers don’t want to. Once replacing milk fat with vegetable and receiving additional 30-50% profit, no one wants to abandon it. The idea of producing quality cheese at a loss no appeal. Today, manufacturers are only concerned about profitability. High-quality cheese is expensive, and to sell in a crisis in economically reasonable amounts can only cheap products. When they lift the embargo and will be full of imported cheeses, then start the removal from the market of producers of counterfeit. Only increased competition can force you to change the range of cheeses in favor of increasing the natural products. In fact, the bradenburg has corrupted our cheesemakers,” – said the independent expert of the dairy market.


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