Russia’s domestic market for canned meat and canned foods with added meat has been on the decline in recent years – however, in 2017, production in the segment demonstrated positive dynamics again. The analysis of canned meat product output volumes in Russia between 2010 and 2017 reveals that the peak of production fell on 2014, when domestic plants produced almost 627 million standard cans of the goods in question. The food embargo served as one of the factors contributing to growth in output volumes – increasing prices in the meat industry as well as the decline in consumer purchasing power quite expectedly led to an increase in demand for cheaper meat products.
Nevertheless, following its maximum indicator in 2014, production in the segment began to drop: in 2015, output declined by 16%; in 2016, the decrease in production volumes continued (-6.7% during the year). In 2017, total production in the category of canned meat and meat-containing foods amounted to 520.3 million standard cans. Annual growth was estimated at 5.9%. It is expected that the market will not face any significant changes in 2018 and, in accordance with the declining trend of the past few years, output may slightly decrease compared with the results achieved in 2017.
According to statistics, production of meat-containing canned foods of all varieties reached 648.1 million standard cans in 2017. The category of canned meat was prevailing with the share of 62.1% in the total volume of production. The latest available data indicate that during the first 4 months of 2018, the volume of output in the segment was at 173.2 million standard cans, of which 101.1 million fell on canned meat and 28.1 million fell on meat-containing canned foods.
The canned food industry is characterized by considerable seasonal fluctuations, which are caused by the specifics of the meat industry and its operation. To clarify, during the winter months the market offers a vast supply of fresh chilled meat, which affects production volumes in the canned food industry. For instance, January 2017 and January 2018 demonstrated the lowest output volumes for the past 16 months – 35.5 and 33.1 million standard cans respectively.
Growth in production volumes is typically observed in the spring and summer months, when Russian residents start actively purchasing canned foods for their dacha trips. The tourist season also contributes to growth in demand. In 2017, high indicators for production volumes were recorded during the autumn months as well: in September, Russian manufacturers produced 56.9 million standard cans of canned meats and meat-containing canned foods of all types (including baby food); the volume for October reached 66.3 million cans, whereas the volume in November equaled 65.6 million cans.
Canned meat is produced by a large number of companies in Russia – these include both manufacturers specializing mainly or exclusively in canned food and meat processing plants which have other activities and items in their product range. The latter include “Myasokombinat Bobrovsky (Bobrov Meat Processing Plant)” LLC (Voronezh region); “Myasokimbinat (Meat Processing Plant) “Dubki” LLC (Saratov region); “Velikonovgorodsky Myasnoy Dvor (Veliky Novgorod Butchery)” OJSC; “Yoshkar-Olinsky Myasokombinat (Yoshkar-Ola Meat Processing Plant)” CJSC; “Kurgansky Myasokombinat (Kurgan Meat Processing Plant) “Standart” LLC, and many others.
The results of the study on Russians’ favorite brands in 2017 conducted by “Online Market Intelligence” identified three brands in the category leading in terms of consumer preferences. 18.2% of respondents give their preference to the trademark “Glavprodukt” (“Glavprodukt” Holding Company), which is second in the rating for the “canned fish and meat” category*. “Sovok (Soviet)” trademark (“Konservny Kombinat (Cannery) “Baltkom” LLC, Kaliningrad region) (ranking third) is chosen by 9.8% or respondents, whereas “Baltiysky (Baltic)” (“MKK Baltiysky” LLC, Saint Petersburg) (sixth position in the rating) is preferred by 7.5%.
Consumer prices for canned meat in Russia have been demonstrating a trend for a gradual increase, almost lacking declines even during the low seasons. From April 2016 until April 2018, average prices per 350 grams of canned meat were fluctuating between 116.9 rubles (January 2016) and 126.3 rubles (March 2018). In April 2018, the consumer price for 350 grams of canned meat equaled 125.9 rubles (+2.6 over the year).
Regarding Russian regions, the most expensive goods in the category can be found in Chukotka Autonomous District, where the average price per 350 grams reached 263.8 rubles in April 2018. Magadan region was second with the price of 165.5 rubles, whereas Moscow was third with 153 rubles. The lowest prices, on the other hand, were typical for North Osetia (91.2 rubles) as well as a number of regions in Siberia and the Central Federal District.
During the past year (April 2018 against April 2017), prices for canned meat have increased the most in Chukotka (+40%), Ingushetia (+22.2%), and Astrakhan region (+10.3%), whereas the regions where they have dropped the most are as follows: Kalmykia (-7.1%), Arkhangelsk region (-6.5%), and Kamchatka (-5.5%).
Despite the ongoing import substitution program, the volume of canned meat imports into Russia has been on the increase in recent years. In 2017, imports thereof amounted to 9.9 thousand tonnes (+4.9% over the year), valued at around $ 41 million.
According to customs statistics, in 2017, the largest shares of imports among food product categories were observed in canned beef – 63.1 and 67.5% in value and volume terms respectively. Goods produced from pork ham and cuts (15.6%) were second in imports in dollars, whereas the category second in imports in tonnes was chicken products (14.6%).
At the same time, the category of canned foods from pork ham demonstrated the most pronounced positive dynamics during the year, its supply volume having grown by 25.7% compared with 2016. Canned foods from pork shoulders, on the contrary, had their volumes of imports drop the most (-47.9%). Supplies of caned turkey demonstrated substantial growth (+25.3% to 2016); supplies of goods from chicken were growing less actively (+15.3%); whereas the category of canned foods from other poultry varieties dropped in volumes dramatically (-47.7%).
Low product quality and a large number of counterfeit goods constitute a serious problem for the Russian market today. A number of inspections confirm this fact – for instance, the results of a study performed by consumer organization “Obshchestvenny Kontrol (Public Control)” (Saint Petersburg) in 2018 showed that canned foods by 9 out of 10 brands tested, labeled as GOST 32125-2013, did not in fact meet the standards in question in one or more criteria. Experts pointed out that these were the worst results obtained during the past few years: for comparison, the share of samples not meeting the GOST standards in 2017 amounted to 60%; in 2016 it equaled 40%; and in 2015 it was at 70%.
Such low quality of canned foods in the market can be explained by manufacturers aiming to reduce production costs through using cheaper raw materials – as a result, cheap meat scraps are used for this purpose instead of quality trimmed meat. Among other things, finished goods produced this way turn out to have a higher fat content than the one stated and allowed by the state standards, whereas their protein content is lower. Production is also cheapened through including various additives in the product’s composition, such as soy – or thickeners, which help ensure that low-quality canned products have the needed consistency anyway.
All in all, the market dynamics in the segment of canned meat and meat-containing canned foods demonstrate that Russian manufacturing companies have been reducing their output volumes in recent years, even though no sharp drops can be observed in the industry. In 2017, production stabilized somewhat, and no significant shifts are expected in the Russian market in the short term. Supplies have been growing in both imports and exports – in imports, a large share falls on goods from Belarus; exports, on the other hand, are mainly supplied to Kazakhstan and other countries of the CIS, as well as Ukraine.
* According to the procedure by “OMI”, the “Russians’ Favorite Brands” study involved a rating of brands sorted in accordance with the share of mentions by respondents listing one of the brands from the top 10 within their category. The overall rating observed was for the “canned meat and fish” category and included descriptions of companies active in meat production.