World meat industry news

Retail has returned to traditional discounts on goods. This was told to Izvestia by the leading retail chains - Metro cash & carry and Magnit. Companies began canceling them at the end of February amid rush demand, so as not to quickly sell out the goods and not be left with empty shelves. Now some producers are ready to give a significant discount to chains - for example, meat, - say the manufacturers themselves. Experts admit that the trend for the return of shares has begun, but note that discounts are still isolated.

Large federal retailers began selling groceries, meat products and dairy products at discount prices. For some manufacturers, they reach up to 30% (+5–10 percentage points compared to the previous year). This was told to Izvestia by sellers and manufacturers. As a result, prices for some items this year may even be lower than last year.

- Recently, indeed, a number of suppliers make significant discounts and promotions on goods. This mainly applies to such categories as groceries, drinks, dairy products, the Metro cash & carry press service confirmed.

The Association of Retail Trade Companies (AKORT) told Izvestia that now manufacturers are partially returning discounts, but not all and not in large volumes. This was also confirmed in Magnit, they said that suppliers are starting to return promo, but it is still far from the level of February.

According to a source from Magnit, manufacturers of confectionery products, in particular sweets, are now making serious discounts. According to him, this is due to the fact that the suppliers of these goods first raised prices and canceled promotions, the demand decreased. As a result, people did not buy goods at a high price. And since the shelf life is limited, manufacturers are forced to make a significant discount. This will allow you to sell the goods from the warehouse.

The meat processor Okraina told Izvestia about the increase in discounts. According to its co-owner Vitaliy Deledivka, the company began to increase discounts by a maximum of 10 percentage points. For example, the discount on products for the Globus retail chain is 30% instead of 25% in June 2021, in Lenta - 25% against 20%, in Auchan 25% instead of 15%. In each network, at least three items of goods are sold for a promotion, the entrepreneur specified.

“The discount has grown due to lower prices for raw materials — for example, pork has fallen in price by 8%, cardboard packaging — by 5%,” he said. — At the same time, the price of beef rose by 10%, while the cost of poultry meat remained the same. But these types of products do not affect the price so much: they are much less in the composition of products (sausage and sausages) than pork.

Izvestia requested the companies Miratorg and Cherkizovo.

Suppliers began to refuse promotions in retail since the end of February. In particular, this was announced in the X5 Group (Pyaterochka, Perekrestok and Chizhik networks), Magnit, Azbuka Vkusa and others. X5 Group told Izvestia that half of the discount positions had been canceled then. In March, the share of promo dropped to the lowest levels in the last five years, AKORT added.

At the peak, promos accounted for up to 50% of sales in money terms, says Mikhail Burmistrov, CEO of Infoline-Analytics. The volume of promotions has been reduced several times. Retailers started canceling them at the end of February amid rush demand, so as not to quickly sell out the goods and not be left with empty shelves, the expert said. Also, the reduction in shares was affected by the departure of a number of brands that were subject to promotions. In April, manufacturers again canceled discounts amid constant price fluctuations.

“Now, in the struggle for market share, manufacturers have begun to return discounts, because there is an understanding on the prices of goods,” Mikhail Burmistrov added. Due to the departed trademarks, competition has decreased, and this is also reflected in the promo. As a result, those manufacturers that can offer a discount were able to come out ahead in sales.

Typically, networks give discounts on goods under their own trademarks (PL). According to the latest research by NielsenIQ, by the beginning of May, the share of shares among private labels was halved compared to the beginning of the year. It fixed at the level of 23%. And if in January-February the share of promos in private labels showed a stable trend and mostly remained at the level of about 40%, then during the March hype it began to consistently decline and by April reached a minimum of 16% since the beginning of the year. In April-May, the share of promo in private labels bounced off the low level and began to grow, however, by the 18th week (May 2–8), its indicators remain below the average annual values: for example, from January to April 2022, the average level of promo share in private labels amounted to 31%, and a year earlier - 40% in the same period.

In this situation, most manufacturers are balancing on the verge of profitability. Discounts are ready to give and participate in promotions only those companies that, at the time of exchange rate fluctuations and a strong increase in costs, were able to agree with networks on price adjustments. That is, their shipping costs have decreased, said Dmitry Vostrikov, executive director of the Rusprodsoyuz association.

It is usually difficult to adjust selling prices, plus it takes a lot of time, so it is easier for suppliers to negotiate with networks to hold promotions with discounts, the expert added. Product categories can be completely different.