Patrick Ryan, Moscow Office, Bord Bia - Irish Food Board
It is well known that the Russian embargo on import of EU food has hit Irish dairy exports to the country hard. However, the Irish dairy industry is not fully aware of the new opportunities that are arising.
The Russian government has put in place a 2020 plan to improve national dairy infrastructure and develop manufacturing, with the goal of becoming fully independent in terms of its milk needs. Demand for quality breeding stock has risen sharply, mainly being met by French and Dutch breeders.
The protectionist climate that has been created has not made life easy for local dairy processors and cheesemakers, however. According to Rossselkhoznadzor, in spite of a 10% drop in consumer purchasing power, prices for cheese rose by 23% in 2015. Whole and skimmed milk powder in Russia is heavily overpriced due to undersupply and less efficient local processing. April data put figures at almost double the Global Dairy Trade averages.
To meet consumer demand for lower-cost cheeses, many manufacturers are turning to processed slices and spreadable cheese. Production of soft mozzarella-style cheeses has also increased. This creates new opportunities for Irish exporters of casein, volumes of which doubled for Q1 2016 vs. Q1 2015. There are opportunities to grow this further by targeting traders and local cheese manufacturers.
Elsewhere, the Sports Nutrition and Infant Formula markets remain open, and both show potential for significant growth over coming years in line with the emerging health & functional food trends and the improving birth rate.
According to Euromonitor (2016) the size of the Russian infant formula market is set to grow from €635 mn (2015) to €1.2 bn by 2020.
Meanwhile, economising consumers are in search of cheaper options in sports nutrition, which has led to a rise in the popularity of locally packed protein products, usually imported in bulk from the EU.
For more information please contact Alla Barinova of the Bord Bia Moscow office.
Alla.barinova@bordbia.ie