World meat industry news

Agriculture in Russia often develops in an inertial way, and changes in the agro-industrial sector do not occur as quickly as in the field of IT or telecommunications. However, the development of more advanced industries has an impact—although not rapid—on agriculture.

Sometimes an opinion can be heard that, if an enterprise grows traditional crops or produces meat and milk, then its main task are high quality and safety of its products. And at the same time, it can allegedly increase production volumes without taking into account consumer trends. This has not been the case for a long time. Let us look at what factors have already significantly influenced numerous agricultural markets, and what trends businesses need to pay attention to, even if they operate in the B2B segment and the goods they produce do not interact with the end customer.

INFLUENCING FACTORS

Network operators are now both partners and competitors
Large chains continue to develop their own food production, releasing it under their own private labels. Considering more favorable prices for the buyer and product quality control, chains become not only partners, but also serious competitors in the production of various categories of goods. For example, Magnit retail chain is one of the largest producers of cultivated champignons, has three agricultural complexes for growing vegetables and salads, and also develops 13 industrial production directions (confectionery, cereals and pasta, vinegar and syrups, frozen semi-finished products and fish, food fast food, nuts and spices). Azbuka Vkusa plans to expand its production of premium segment dairy products, including cheeses, and its own culinary, baking and confectionery production, as well as farming in Kaluga region.
It would seem that, if you grow grain or oilseeds, why would any of this concern you? The fact is that chains have their own production sites and sales networks, and therefore, with the help of brands and price advantages and through the influence on the consumer, they will actively dictate price conditions to all suppliers of raw materials. For this reason, it is necessary to establish partnerships with companies that go into new, more profitable niches; but for them, raw materials must also be high quality, which means that you will have to change. 
Borders Closed. But Not Completely…
In some sectors, despite the food embargo introduction and the active development of import substitution, permitted imports continue to exert significant price pressure, and the share of imported products remains high. It is worth noting a large share of imports for milk-intensive products, such as butter (27%), milk powder (38%), whey powder (20%) and cheese (33%), as well as for beef (25%), apples (44%), cucumbers (12%), and tomatoes (30%). 
Due to the fact that the state was actively restraining retail prices, in 2021 sugar imports from Belarus were allowed for the first time. Conversely, export duties were introduced for grain and oilseeds. Thus, having started export-oriented businesses, Russian manufacturers faced state regulation. This significantly impacted the structure of production and forced a number of industries to take a step back. Therefore, it is necessary to understand that, even despite the countries closed for import, the Russian agro-industrial sector is experiencing certain difficulties.
COVID Impacts Everyone
The coronavirus infection pandemic has already been going on for two years, and at the moment Russia is on the verge of the 5th coronavirus wave, which, of course, affects the entire Russian agriculture. The hybrid lockdown, when services are shut down, affect supplies, changes cost structures, and reduces buying activities. All this together leads to economic difficulties and has a negatively influence on purchasing power.
Agricultural Holdings Make a Move—and Win!
Agricultural holding companies will be developing dynamically in related agricultural sectors. For example, companies not previously represented in dairy farming are investing and launching large dairy projects. With the advent of agricultural holdings, industries will begin to develop through state support, since it is much easier for large enterprises to attract financing than it is for small and medium-sized companies. If SMEs fail to transform and become more efficient, it will be very difficult for them to compete with agricultural holdings.
M&A Deals
The previous factor logically leads to the following one—growth of mergers and acquisitions (M&A) of companies, and consolidation of assets around competitive and strong market players. In a situation where a company is unable to cope with the difficulties that have arisen and there is no opportunity for active further development, it is prepared for sale with the range and brands developed.
Online and QR-ization
Online communication is becoming essential for work not with the younger generation in particular, but with consumers of all ages. The pandemic has moved most consumers online and instilled the skills of online ordering. Therefore, to all manufacturers it is critical to develop their own delivery and actively work with online stores. 
The coming years will be the era of “QR-ization.” This applies to both goods (mineral water, milk and dairy products) and the movement of people. While the introduction of digital labeling will lead to small and (part of) medium-sized businesses being unable to implement the system, COVID-related QR codes will lead to restrictions on movement, tourism, visits to cafés and restaurants, and the use of public transport. And all this will result in a reduction of entrepreneurial activity and in the number of SMEs.
Certainly, the ongoing pandemic has not only exacerbated the existing economic difficulties in the country, but also changed the behavior of customers, provoking explosive growth in grocery delivery and a decline in traffic at offline stores. The hybrid quarantine will be further boosting sales of individually packaged products, and packaged products in general.

TRENDS

The ongoing economic crisis, the impact of the pandemic and the new generation of consumers, whose share has already exceeded 20%, are all leading to changes in the market structure and the emergence of new consumer trends.
Fall in Real Household Incomes
Amid falling real household incomes, polarization of demand can be observed. Under the influence of the deteriorating economic situation and reduced incomes, some consumers have been oriented toward cheaper products within categories. They switch to competitors’ products that are lower in prices and volumes, actively respond to deep discounts, or switch to retailers’ private label goods. 
At the same time, there remains a group of consumers with medium+ and above incomes, who, during the pandemic, could not lead an active lifestyle, limited in their choices of travel and meetings with friends and relatives, and they compensate for this with gastronomic pleasures by choosing a variety of brands, experimenting and being willing to pay for high quality ingredients, well-known brands and original flavors. Food thus becomes a substitute for entertainment and travel. 
Mandatory Health and Wellness
The trend toward healthy living and the desire for minimum calories are becoming even more significant in the pandemic. There is a growing demand for products “without,” or with a reduced content of, fat, salt, and sugar (e.g. chocolate with honey, which does not reduce calories, but corresponds to the trend of healthy nutrition). If earlier gluten-free products were perceived as products for people with gluten intolerance (celiac disease), today many nutritionists and fitness coaches recommend consuming products that contain no gluten. 
Reduction of calories per 100 grams is another trend that has been actively developing over the past three years. It is worth recognizing that earlier some low-calorie foods differed significantly in taste from high-calorie ones, but today, with the help of natural and artificial ingredients combined, they are closer in taste to the familiar tastes, while the calorie content is two or more times lower.
In addition, the health and wellness trend implies not only eating the most beneficial products, but also having a comfortable state of mind. Many consumers believe that it is possible to consume all foods, but in small quantities. Therefore, more and more products in mini formats are appearing on the shelves. The market is sensitive to the needs of buyers, calculating the calorie content for them and offering them single servings, which can prevent overeating.
Eco Trend
The environmental trend is perceived by consumers in numerous ways: it implies not only environmentally friendly products and safe raw materials, but also eco packaging, reduction of plastic per packaging unit, and conscious consumption. That being the case, the audience supporting health and wellness overlaps by 70% with the audience supporting the eco trend. The trend in question is actively supported by the state: new laws are being adopted, including an environmental tax in the event that the manufacturer cannot independently collect, and dispose of, the packaging. What decisions are companies making to reduce the amount of plastic in packaging? PepsiCo has abandoned the use of plastic lids for Imunele fermented milk products, whereas NEVA MILK has developed a packaging for Legkiy [Light] cheese, which decomposes faster than usual.
Buying What’s Convenient
The trend toward convenience of consumption, storage, opening and disposal of packaging is primarily connected to the fact that consumers today do several things at once and are constantly busy with their smartphones; therefore, it is important for them to easily open the package with one hand, eat, and then hermetically close or discard the package. 
Private Label Growth 
For more than 10 years, retail chains have been actively increasing the share of their own brands across all food categories. Today, private labels are not produced as “first price” goods of low quality, but are instead segmented, positioned correctly, have brands in different price segments and a budget for promotion, and are also placed on priority shelves at eye level as well as offered at deep discounts. 
The demand for such products is growing annually, and the share of private labels in a number of categories exceeds 50%. For numerous manufacturers, this trend is important to consider in their strategy: to cooperate with chains in private labels or to compete? If a manufacturer decides for the latter, it is important for them to develop new niches and new flavors as well as to promote the brand as much as possible. If the manufacturer decides to cooperate in terms of private labels, then they need to carefully monitor the share of private labels in their sales structure.
To Go
The “to go” trend has become noticeable since 2018, but if before the pandemic growth fell on the segment of coffee shops, small catering outlets and culinary shops, then following the lockdown the segment of food delivery, as well as cooking kits, inexpensive ready-to-eat food kits and vending machines has been the one growing.
In retail chains, aisles with ready-to-eat food, including that of restaurant quality, are also expanding. The pandemic has boosted household consumption, and cooking kits help prepare delicious recipes with specific ingredients. Care for family health triggered by the coronavirus contributed to caring for loved ones through cooking and joy of eating together. At the moment the niche of prepared foods and cooking kits is promising and profitable, but it requires special skills to operate in.
One needs to understand that businesses in a pandemic will have to cope largely on their own. It is also important to focus on the buyer: know them, study them, communicate with them, and explore additional areas for growth. 
Remember that trending is meeting consumer expectations, which shift and transform. Sometimes these trends are contradictory—even within the same consumer group. Among other things, one should take into account the ongoing crisis and phenomena in the economy, and seek balance in the assortment strategy, releasing both products of mass demand, and niche products demand for which is just beginning to form.