World meat industry news

According to the results of last year, the assortment of the main categories of food products was reduced in Russian stores, research company NielsenIQ found out. Most of all, this affected the segment of canned vegetables, the number of commodity items of which decreased by 11.9%, sauces and oils (-10.2%), as well as baby food (-10%). To a lesser extent - ice cream (-1.8%), drinks (-4.1%) and snacks (-5.5%).

How much has the range been reduced?

The number of commodity items (SKUs) on the Russian FMCG market, according to NielsenIQ, began to decline almost immediately after the start of the special military operation. Thus, in the period from the 12th to the 17th week of 2022 (approximately the end of March - the beginning of May), the range of food products was 8.9% less than in the same period of the previous year. Then the categories of canned mushrooms (-22%), vegetable oil (-19.1%) and spoon yogurts (-20.6%) sank especially noticeably.

“Last year, more than 14,000 commodity items dropped out of the shelves of large retail chains, which were almost completely replaced with new ones. The total number of goods decreased within 1-2%, - commented Igor Karavaev, Chairman of the Presidium of the Association of Retail Companies (AKORT). — The narrowing of the assortment occurred in such categories as coffee, snacks, imported chocolate, as well as in the line of modern dairy products — yoghurts, cottage cheese desserts. At the same time, the range of goods in the category of vegetables and fruits, fresh products, goods of medium and low price segments has expanded, due, among other things, to an increase in the number of private label novelties from retail chains.”

“A reduction in the assortment today is observed in almost all categories of products, with the exception, perhaps, of confectionery. Russian consumers are accustomed to eating bad news with sweets. Thus, there are not so many growing categories: for example, confectionery products, instant noodles,” says Dmitry Vostrikov, executive director of the Rusprodsoyuz association. - These are not the most expensive and more in demand categories in the urban lifestyle. Everything is stable with regard to inexpensive products”, In an interview with Agroinvestor, he stressed that the range of goods in the middle price segment is most susceptible to reduction. According to the industry association, last year on the physical shelf the reduction in the assortment was 5-10%, but at the same time, there was an increase in the number of SKUs on the marketplaces. Therefore, Vostrikov emphasizes, it is impossible to unequivocally say that the buyer has completely lost this assortment: he, rather, has moved to new channels with a dimensionless shelf, which, among other things, is easier for the supplier to get to.

The head of the National Meat Association (NMA), Sergei Yushin, claims that the grocery shelf has not undergone any noticeable changes in the eyes of the average consumer: it still looks very attractive, and the range of products is simply huge. As for the meat shelf, its assortment, according to Yushin, has definitely not deteriorated. On the contrary, there are more and more new meat products. “Meat consumption is growing and the demand for individually packaged butchered products is not decreasing. The consumption of products that are maximally ready for final cooking is also increasing,” he said. - Until we got to the point where people began to buy exclusively whole chicken and cut it at home themselves. But we do not rule out that changes may occur, and we analyze how the assortment [of meat products] will subsequently have to change. Considering that retail prices for the main types of meat and poultry are still stable, while the retail price of pork and broiler is declining, our products remain in demand and more attractive than a number of other products of the food group. So we're doing pretty well so far."

The executive director of Rincon Management, Konstantin Korneev, claims that last year the range of food products on the Russian market was reduced, and this was dictated by the need to reduce costs. He is sure that this was largely at the initiative of retail chains, which, thanks to the simplification of the trading matrix, reduce the costs associated with processing orders, logistics, reducing the percentage of expired products, and so on. “The reduction in the assortment is done in order to leave the most popular and circulating goods on the shelves,” commented Korneev.

Director General of the National Union of Milk Producers (Soyuzmoloko) Artem Belov notes that the reduction in the range of dairy products on the Russian market was not only due to a shift in demand from expensive dairy products in favor of more affordable ones, but also due to difficulties with packaging and components, that arose after the imposition of sanctions. In this regard, some manufacturers were forced to revise the assortment in order to work more efficiently and reduce the costs of searching for and purchasing packaging or equipment, the supply of which to Russia was disrupted. “Now most of the categories that have fallen out have been replaced either by Russian suppliers or partners from friendly countries,” says Belov.

There was no reduction in the assortment, there was optimization

Food producers and retail chains that agreed to answer Agroinvestor's questions deny the reduction in the product range, report an increase in the number of SKUs and talk about optimizing the product line. “We have not reduced the range. In some categories, individual brands and suppliers dropped out (for example, in household chemicals, coffee, tea), but we managed to find alternative manufacturers and suppliers in other countries (Asia, the Middle East, China, and so on). In addition, we have strengthened the offer with goods of our own brands, ”commented the press service of the Lenta hypermarket chain.

“Of course, like other retailers, our assortment has undergone some changes. At the same time, it cannot be said that it has decreased - new brands have come to replace the departed brands, and we continue to “return” some of the departed ones to our shelves,” said Ekaterina Lomakova, Vice President for Commercial Activities at Azbuka Vkusa. She noted that in the food segment, temporary reductions were recorded in such groups as oriental cuisine, chips, breakfast cereals and muesli. This was due to the fact that these segments traditionally have a high share of imported assortment and its change took time. "Azbuka Vkusa" does not expect that this year the number of commodity items on the shelves of the retailer will decrease: the company is relying on the development of its own production and farm products.

EkoNiva expanded its product range to 80 SKUs in 2022 against 71 SKUs in 2021. The curd line was replenished with new positions, and the premium Dürr Classic cheese of three and 12 months of aging was added to the cheese category. EkoNiva is actively working on new products in its assortment and this year has already released three new products: Dürr Zeller premium cheese aged for 6 months, as well as Momente aus Schollbrunn and Momente aus Walldorf semi-hard cheeses.

Miratorg regularly invests in the development of new products, the company's press service said. In particular, the agricultural holding is expanding the range of ready-to-eat products, new lines of soups, drinks, salads, second courses, puffs, buns, bread and pizza have been launched at the kitchen factory in the Moscow region. And the assortment of the Miratorg culinary dishes plant in the Bryansk region in 2022 increased from 84 to 102 positions. Also, the company's product portfolio has expanded due to new vacuum-packed pork items for baking, a new snack line (chicken and potato nuggets, chicken popcorn and onion rings), mono-mixes of shock-frozen vegetables, sauerkraut and pickled cabbage, and its own line of pickles. The assortment of pancakes has expanded by 40% - up to 25 commodity items, this year there will be at least five more new products, the assortment of marinated poultry steaks that are most convenient in quick cooking has grown by 9%. grill season. In addition, Miratorg has optimized the current portfolio of sausages and after the start of all the new products in 2023, the range will exceed 100 items. About 10 more recipes for sausages and deli meats are being worked on by the technologists of the agricultural holding.

All brands of the Prodo group released new products in 2022, Natalia Yafizova, director of strategic marketing of the company, shared with Agroinvestor. Thus, under the Troekurovo brand (products from poultry meat), a new line of semi-finished products began to appear, and the Klinsky brand launched 15 new products in the first half of the year alone. The brand of meat delicacies "Cherny Kaban" was replenished with 11 new products, and "Omsky Bacon" - 50. "Prodo" also invested in the development of products of the "Grill" category and an increase in the capacity of meat processing plants. “Now there are no objective reasons for a noticeable reduction in the range in the near future. As, however, for its noticeable expansion. A healthy balance is what will allow market participants not only to maintain performance, but also expand their capabilities,” Yafizova said.

The meat food manufacturer Abi (brands Vyazanka, Starodvorie, etc.) had 229 SKUs in its portfolio at the beginning of 2022, and by the end of the year their number had grown by 14%. Separately, the assortment of frozen semi-finished products "Abi" increased by 47%. In addition, the company launched the Foodgital line of herbal products. Answering the question of "Agroinvestor" about a possible reduction in the product line, the representative of the company replied that "Abi" intends to increase its presence in the market, as well as to develop export deliveries. For this, 8.2 billion rubles were invested in 2022. in the construction of new production sites.

The range of Viola (the successor of the Finnish dairy producer Valio, who left Russia last year) has undergone a number of changes, but despite this, the company has retained its presence in all key categories and supplemented the portfolio with new products, the company's press service reported. The Viola range was affected by the cessation of deliveries of goods from Finland. In addition, the optimization of the product portfolio was carried out, which is generally a fairly regular practice in the market, but is especially important during a period of high volatility, when it is critical to maintain key positions, sacrificing the least profitable and promising ones. In the short term, the inability to supply imported ingredients and packaging materials, spare parts and production equipment also affected. In particular, Viola was forced to suspend the production of drinking yoghurts for several months due to the lack of suitable packaging on the market. Production was restored in the fall, when the appropriate supplier was found and approved.

“At the moment, the situation has stabilized - Viola experts have selected manufacturers of all key ingredients and packaging solutions. In addition, despite the negative trends in the market, consumers continue to be interested in tasty and high-quality products that improve their quality of life. Viola's sales dynamics in a number of categories confirms this," the manufacturer's press service notes. They added that over the past 12 months, the company's product range has been replenished with Royal Cheese Collection Parmesan hard cheese, new flavors of Laplandia creamy yogurt, and the Viola Free line of lactose-free yogurts. In 2023, Viola plans to further develop its product portfolio.

The Damate product line includes more than 400 items under the Indylight brand, over 50 items under the Ozerka brand and about 200 items under the BAZARCO brand. “Today, one of the key consumer trends is the trend towards convenience and speed of preparation, so we are actively expanding the range of ready-to-eat products from turkey, duck and lamb, chopped group and marinades,” lists Daria, Deputy General Director for Sales and Marketing of Damate Management Company Lashchenko. “At the same time, as part of regular product audits, Damate optimizes the assortment, redistributes volumes between segments and adjusts the release of the least effective and in-demand positions on the market, increases the volume and number of positions in popular product lines.”

At the same time, Lashchenko noted that the market tends to reduce the range of products to increase efficiency and competitiveness, however, a strategy of increasing the range can also be used to meet changing market needs and expand the audience. At the same time, she believes, it is most likely that within companies there will be a redistribution of the range of manufactured products towards more efficient segments and an increase in the volume of production of profitable ones.

The Samokat express delivery service says that they are constantly working on the development and expansion of the range of products offered. “Every month the brand releases different new items. Most often, these are rare and unusual products that are not found in convenience stores, as well as special limited-edition products with unusual designs that are released for the holidays. For example, on the eve of Easter, Samokat launches Easter cakes of its own brand for sale,” comments Kassandra Fadeeva, Head of the Department of Communications and Development of Private Label Brands.

Causes and consequences of reducing the range

Analysts and industry experts, however, argue that the choice of food products on the Russian market has become less diverse over the past year: the industry has focused on more popular products, removing articles that sell worse in the absence of strong demand. “The reduction in the assortment is an obvious fact, which was the result of events that have taken place in the consumer market,” says Ivan Fedyakov, general director of the Infoline information and consulting agency. He draws attention to the fact that the vast majority of retailers plan to develop the discounter format as a response to emerging challenges. However, a discounter usually has a range of goods ranging from 500 to 1 thousand SKUs, while on the shelves of a regular supermarket there are from 2.5 thousand to 4 thousand SKUs.

“At the beginning of March, we conducted a survey that shows that rising costs are a critical issue for food manufacturers and suppliers. In the past, they could pass this growth on to the consumer, but now, given the low incomes of the population and low consumer activity, this is almost impossible to do, Fedyakov says. “The way out of this situation is to reduce the assortment necessary to increase the turnover of products for the remaining positions.” He gives the following calculation: a manufacturer can sell one product with a margin of 10 rubles. or three products with a margin of 4 rubles. and in the end get 12 rubles. The second approach is preferable in the current situation, as it allows manufacturers and retailers to find appropriate niches in order to, having a critically low margin, still be profitable due to higher turnover and frequency of goods sales.

Karavaev also says that the redistribution of the assortment is also taking place within retail formats: large retailers are actively developing “hard discounters”, where only the most popular goods are sold, and the number of SKUs in such stores is 4-5 times less than in ordinary ones. At the same time, he says, omnichannel players are increasing the range of products on their online storefronts, which reduces the cost of logistics and maintenance of salesrooms and gives the buyer a wide choice.

Speaking about the consequences that accompany the reduction in the range of products in the Russian market, Korneev from Rincon Management believes that in the medium term, products from niche start-ups and products that are associated with high production costs, for example, in premium types of packaging, may disappear from the shelves. Fedyakov also expects Russian food producers to leave the market this year and next, unable to keep up with increased costs.

Vostrikov notes that the assortment on the shelf has never changed as quickly as over the past year. Previously, the assortment matrix was transformed gradually, over the years, and it was almost impossible to move a large transnational player off the shelf, because he had incomparable marketing budgets, well-coordinated business processes and the best personnel. Today everything is different. “What happens next, as always, will depend on the “reaction rate” of the business. Our members look to the future with optimism. In 2023, many predict an expansion of the range of domestic products on the shelf, they plan to increase the assortment offer and bring novelties to the market,” adds the head of Rusprodsoyuz.