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1/2018


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TEA & COFFEE
Review of the Russian Coffee Market
Research by the Company NeoAnalytics

CONFECTIONERY
Review of the Russian Chocolate Market
Research by the Confectionery Market Research Center

MEAT
Review of the Russian Mutton Market
Research by the Company Global Reach Consulting

Branding of Halal Products in the Poultry Market
Research by the Branding Company Labelmen

DAIRY PRODUCTS
Review of the Russian Market of Milk
Research by the Information-Analytical Company VVS

Review of the Russian Cheese Market
Research by the Company Step by Step

FAST FOOD
Review of the Russian Market of Cereal Bars
Research by the Company IndexBox

BABY FOOD
Review of the Russian Baby Food Market
Study by the Company RBC Market Research

INGREDIENTS
Review of the Russian Malt Market
Study by the Company ID-Marketing

FRUIT & VEGETABlES
Review of the Russian Fruit and Vegetable Market
Research by the Company I-Marketing

FOODSERVICE
Key Consumer Trends of the Public Catering Industry
Research by the Company NPD

HEALTHY NUTRITION
Review of the Russian Market of Healthy Foods
Research by Consulting Company Foresight 24



Review of the Russian Mutton Market

Research by the Company Global Reach Consulting
Mutton and lamb have never been the basis of the diet for residents of Central Russia. Our traditional meat would be pork, beef and chicken. However, in recent years, there has been growth in the amount of mutton available on store shelves, chilled rather than frozen and imported from Australia or New Zealand at that. Nevertheless, the lack of unity and system among farms as well as the lack of established slaughter or marketing will keep deterring civilised development of the Russian market of mutton for a long time.
Several years ago, the level of mutton consumption in Russia was not reaching a kilogram per year per capita. At the moment the indicator is about 1.41.5 kilograms. Indeed, this type of meat is not something that is consumed in every Russian family; however, all in all, mutton and lamb are not considered to be exotic by local gastronomic standards. A lot of people refrain from eating mutton because they simply cannot cook it properly, rather than because they do not like it per se. There is no established habit of consuming mutton, as it has not been sold regularly at all times in Central Russia. However, with skilful promotion and popularization, it is possible to make this meat variety demanded.
According to the Meat Union of Russia, only 3% of the overall meat consumption structure falls on mutton and lamb. However, their share will grow, contributed to by the popularity of ethnic food as well as the fashion for organic goods. This is an industry completely new to Russian agriculture. In Russia, sheep are mainly kept in personal subsidiary plots and small farms mutton is not produced on an industrial scale anywhere in the country yet. According to Rosstat, the Federal State Statistics Service, among all organisations registered under sheep farming as the main activity in Russia, almost 45% fall on microenterprises and 7% are made up by small enterprises.
Historically, sheep farming in Russia has always been an integral part of the national economy, satisfying its needs in terms of specific raw materials and foods, which is due to severe natural and weather conditions as well as socio-economic and national features of the country. The modern sheep gene pool in Russia includes: 14 fine-wooled (66.4%), 9 semi-fine-wooled (11%), 2 semi-coarse (1%) and 12 coarse (21.6%) breeds.
Since 1990, a significant reduction in the total sheep population in the country has taken place, as well as a decline in the number of breeding sheep and sheep productivity. Since 2000, as a result of measures taken on the federal and regional levels across the Russian Federation, sheep population has grown by 9.5 million, or 75%, and amounted to 21.8 million sheep by early 2011. The inclusion of sheep farming in Russias priority national project of agriculture development in 20062007 as well as the State Programme for Development of Agriculture for 20082012 had a positive impact on this trend. In 2016, the number of sheep in farms of all categories (agricultural organisations, private plots, and farms, including sole traders) was about 22,744 thousand 0.1% higher than the level of the previous year.
The largest share of the sheep population in Russia falls on private plots in 2016 the share equalled 43.4%. They are followed by farms and sole traders with the share of 38.9%. The share of agricultural organisations is the smallest and equals 17.7%.
Among regions of the Russian Federation, the largest share in the sheep population structure is occupied by Dagestan in 2016 it amounted to 22.8%. The region is followed by Kalmykia with the share of 10.6%, and Stavropol Krai with the share of 9.5%. Shares of more than 4% are also accounted for by Astrakhan region, Karachay-Cherkessia, Rostov region, and Volgograd region.
In 2016, production of mutton in Russia increased by 1.1% to the indicator of the previous year, amounting to 499.5 thousand tons.
Since the largest agro-industrial enterprises are not active in sheep farming yet, the industry lacks full cycle enterprises specialised in growing and slaughtering of sheep as well as producing final meat goods. Therefore farmers pass sheep grown to other members of the production chain, which then slaughter the animals and produce wool, leather or meat products. The large number of intermediaries in the production chain leads to high prices for mutton and lamb in stores. This, in turn, lowers consumer interest in the product increasingly often, consumers give preference to more affordable meat varieties such as pork.
The average price of agricultural producers for sheep and goats, as of the first quarter of 2017, amounted to 120,780 rubles per ton, which is 4.6% lower than the indicator of the similar period of the previous year. The highest prices for sheep and goats in live weight among Russian regions can be observed in Tatarstan. According to data for the fourth quarter of 2016, the average price per ton in the region was around 280.7 thousand rubles. According to data for the first 5 months of 2017, the average retail price for mutton equalled 340.9 rubles per kilogram, which is 4.6 rubles lower than the level of the previous year. At the same time, the highest prices can be observed in the Central Federal District, where one kilogram of this meat variety costs 422.5 rubles on average.
The resource of the mutton market in the Russian Federation is formed by domestic production and imports. Imports do not play a significant role in the market; exports are virtually non-existent and are not taken into account in the market balance. The share of imported goods in the mutton market is negligible and amounted to 1.5% in 2016.
More than 600 companies are active in Russias sheep farming industry today. However, as has been noted above, they are all small. For instance, the number of sheep at the largest sheep farming enterprise in Russia, SPK Plemzavod (Breeding Farm) Vostok (East), equals only 27 thousand. SHPK Plemzavod Vtoraya Pyatiletka (Second Five-Year Plan Breeding Farm) is second with the sheep number of 13 thousand. Plemennoy Zavod (Breeding Farm) Druzhba (Friendship) is last among the three leaders, with 8,900 sheep.
According to calculations, provided that the measures included in the target programme for industry development are taken and a number of investment projects of several major Russian agricultural enterprises are realised in the near future, by 2020, the volume of mutton and lamb production in live weight may reach almost 590 thousand tons, and then grow by 3595 thousand if projects by Miratorg Holding and other market players are successfully carried out, bringing the total volume to 685 thousand tons by 20212022.

Anna Berdysheva,
Analyst
Department of Business Planning and Marketing Research
Global Reach Consulting




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