Industry Insights
The Russia dairy market was estimated at USD 19.97 billion in 2017 and is anticipated to grow further over the forecast period. Increasing production of dairy products due to rising consumer disposable income and awareness about health benefits of these products are some of the major factors driving market growth.
Russia dairy market revenue split, by distribution channel, 2017 (% share)
Growing number of producers and farms are likely to result in reduced prices of these products, which may boost demand. Moreover, increasing investments in dairy farm infrastructure and various government initiatives are likely to provide domestic producers with potential growth opportunities. All these factors are projected to help generate higher revenues in the next few years.
High prices of diary products as a result of Russia’s ban on imports has highly affected consumption levels, tehreby hampering market growth. Factors such as long investment cycles in dairy cattle, shortage of raw materials, and rise in production costs of milk and other products may have a negative impact on the market. Moreover, low purchasing power and level of profitability in the industry, along with decresasing number of existing enterprises, may hinder market growth.
However, the Russian government’s import tariff structure is encouraging investments in the local dairy sector. This is expected to spur domestic production in the country. In addition, expected decline in prices of dairy products is slated to increase market demand.
Segmentation by Product, 2015 - 2025 (USD Billion)
• Cheese
• Milk
• Butter & spreadable fats
• Others
On the basis of product, the dairy industry in Russia is segregated into cheese, milk, butter and spreadable fats, and other products such as yogurt and cream. Owing to the import ban, the cheese and curd segment registered a sluggish growth rate in 2016 compared to previous years. Butter and milk consumption declined by 3.0% and 10.0%, respectively. Domestic production of these categories, however, rose substantially.
Segmentation by Distribution Channel, 2015 - 2025 (USD Billion)
• Hyper & supermarket and convenience stores
• Specialist retailers
• Others
On the basis of distribution channel, the market is segmented into hyper and supermarket and convenience stores, specialty retailers, and others. The hyper and supermarket and convenience stores segment held the largest market share. Convenience stores are the most preferred channel for most family shoppers in both urban and rural areas of the country.
Presence of local retail giants is intensifying the consumer base for dairy products. Entry of new retail brands and progress of retail distribution channels in these localities are projected to contribute to market development. The offline channel led the market with the presence of various retailers farms across the country.
Competitive Landscape
Increasing investments and improving infrastructure in the Russian dairy sector is expected to provide many growth opportunities to new players. Furthermore, ban on industry imports is helping domestic companies expand their footprint.
The Russian dairy market includes many small- and large-scale firms. Some of these are Nestle, Wimm-Bill-Dann Foods, The Lactalis Group, FrieslandCampina Russia, and EkoNiva-APK Holding. These players have been undertaking M&A activities as part of their business expansion strategy.
