Russian Dairy Products Market
Current analysis, trends and development prospects of the domestic market for milk and dairy products
Global raw milk production reached 569 million tons by the end of 2023, representing a 2% increase over 2022. The EU states, the USA, and India led the market with 143 million tons, 104 million tons, and 99 million tons, respectively. The market growth trend that began in 2022 has continued. However, some analysts believe that a number of foreign countries will experience either stagnation or a decline in milk production in 2024 due to a reduction in the number of cows.
A study by Statista reveals that global per capita consumption of dairy products will reach 56.4 kg in 2024. Low-income countries, such as India, Pakistan and some African countries, will see the greatest growth in demand.
Following a downturn at the end of 2023, dairy prices in key producing regions are expected to recover and gradually increase throughout 2024. However, according to the latest data from Rabobank, the recovery in global milk prices is slower than previously forecast.
What is happening to the Russian market?
In 2023, Russia produced 33.5 million tons of milk, representing a 3.6% increase compared to the previous year. In general, the last five years have seen an increase in raw milk production in the country, with the indicator increasing by 3.2 million tons over this period. This was influenced by the growth of cow productivity, the creation of new livestock breeding and production complexes, and the modernisation of existing complexes. Last year also saw an increase in the production of cream (+21%), cheese (+16%), ice cream (+12%), butter (+2%), fermented milk products (+5%), in particular kefir (+2.9%), yoghurt (+4.2%), ryazhenka and jam (+7.2%).
However, for example, the production of cottage cheese decreased by 3.9% compared to 2022. The output of products in which milk fats are replaced by vegetable fats also saw a decline: margarines and spreads (-10%), cheese products (-7%). This is due to a reorientation of consumer demand towards more expensive and natural dairy products.
Former Minister of Agriculture Dmitry Patrushev has stated that the level of self-sufficiency in dairy products in Russia exceeds 85%. This brings the Russian market close to the 90% target set by the Food Security Doctrine. If we also consider supplies from Belarus, the level of self-sufficiency is almost 100%.
The import of dairy products from Belarus accounts for 94% of all dairy imports. This represents a 5% increase on the 5.5 million tons imported from Belarus in 2022. In general, the volume of imports, which accounted for less than 15% at the end of 2023, remained approximately at the level of 2022. At that time, the country imported approximately 877 thousand tons of dairy products. Nevertheless, in a number of milk-intensive categories (e.g. butter, cheese), the share of imports remains significant. According to Artem Belov, General Director of the National Milk Union (Soyuzmoloko), dairy imports are expected to remain relatively stable in 2024.
In terms of exports, there was an 18% increase compared to 2022, with approximately 1 million tons shipped. The most significant increase in exports was observed in the case of skimmed milk powder, which increased by almost six times. Whey powder is the next most exported product, with volumes increasing almost threefold. In 2023, domestic dairy products were exported to over 60 countries. Russia's principal export markets include China, Kazakhstan, Armenia, Belarus, Uzbekistan and Azerbaijan. By the end of 2024, the number of countries to which Russian dairy products are exported is likely to increase, as new markets in North Africa (Tunisia, Algeria) and South-East Asia (Malaysia, Philippines) are now opening up for Russian producers. Artem Belov anticipates that exports will grow by 20% over the next year.
The Milknews analytical centre and Soyuzmoloko experts have reported that the average per capita consumption of milk and dairy products in Russia increased by 3% in 2023, reaching 249 kg. This represents a record figure for the last 28 years. The growth in dairy product consumption in the country has been observed since 2019, when the figure was 234 kg per person. In 2020, consumption increased to 240 kg, in 2021 to 241 kg, and in 2022 to 241 kg. There has been an increase in consumption of almost all types of dairy products, including those that are milk-intensive. Various estimates suggest that the consumption of milk and dairy products in Russia will continue to grow by 2-5% per year. Ilya Bereznyuk, Managing Partner of Agro & Food Communications, states that dairy products typically represent at least 10% of the consumer's food basket, and it is unlikely that this figure will decrease in 2024.
Analysts attribute the growth in consumption to an increase in the real disposable income of the population, which, according to Rosstat data, grew by 5.4% in 2023. Furthermore, dairy products became more affordable due to an increase in local production, a reduction in imported assortment and low prices from producers. Export difficulties were also a contributing factor. In 2022, due to the geopolitical situation, Russian exporters had to reorient themselves towards Africa, Asia and the Middle East, which proved to be a more expensive route than transportation to Europe. This resulted in a rise in supply on the domestic market, which kept prices down. According to Soyuzmoloko, the retail price of dairy products in December 2023 was only 0.5% higher than in the same month of 2022. The average retail cost of pasteurised milk in the fourth quarter of 2023 was 74 rubles per 1 kg, while ultra-pasteurised milk cost 79 rubles on average. According to Artem Belov, retail prices for dairy products were on average 2.6% higher than in 2022 last year, which helped to keep food inflation in check.
Dairy industry trends in 2024
One of the most relevant trends in the Russian dairy market is the creation of products aimed at maintaining a healthy lifestyle and focused on functional nutrition. Manufacturers produce dairy products for dietary therapeutic and preventive nutrition, which also serve as an additional source of vitamins, minerals, dietary fibre, amino acids and probiotic microorganisms. Such products typically do not contain added sugar, artificial colours or flavours and can be used for nutritional correction in various diseases.
The popularity of alternative dairy products is on the rise. Today, it is not only vegans or people with lactose intolerance who are choosing plant-based drinks, but also consumers who simply prefer the taste of plant-based alternatives. According to the INFOLine Group, the Russian market is dominated by dairy alternatives, with over 50% of the market share. Conversely, plant-based milk still accounts for less than 2% of total milk sales. The results of a joint study by INFOLine Group and DairyTech Connect, conducted in early 2024, indicate that only a quarter of surveyed milk and dairy product producers perceive competition from plant-based drinks. The majority of respondents (67%) do not perceive any competition, while 9% already produce or plan to produce plant-based alternatives.
Another noteworthy trend in the market for milk and dairy products is the growing popularity of family packaging. The family format is used for milk, kefir, butter and cottage cheese. Manufacturers employ the concept of family packaging in their marketing activities, highlighting to customers that the larger format allows for the purchase of goods for the entire family at an optimal price point. It is also well-suited for those who prefer to buy dairy products in advance.
Dairy Products and Cheese at WorldFood Moscow
The Dairy Products and Cheese section at WorldFood Moscow is one of the most popular. Among the 20,115 retailers, purchasing managers of wholesale trade companies, representatives of catering and food manufacturers who visited WorldFood Moscow 2023, 25% (5,029 people) expressed interest in the products of the Dairy Products and Cheese section.
The sector will present a range of dairy products, including milk and cream, butter, cottage cheese, curd, curd and sour milk products, yoghurt (including frozen), dairy preserves, ice cream, dairy desserts and snacks, cheese and other dairy products at the exhibition. In 2023, 61 companies showcased their products in the Dairy Products and Cheese section.
Your company can also present its dairy products to an interested audience of visitors by becoming an exhibitor at WorldFood Moscow 2024. The exhibition offers a valuable opportunity to promote your company and engage with potential customers and partners from across Russia. With over 80 regions represented, the event provides a unique platform to expand your customer base and explore business opportunities in Russia.
WorldFood Moscow 2024 will be held on September 17-20 at Crocus Expo IEC (pavilion 3).
BOOK A STAND* Sources: tass.ru, vedomosti.ru, dairytech-expo.ru, dairynews.today, milknews.ru, agroinvestor.ru, foodmarket.spb.ru, meat-milk.ru