Russian bakery industry goes through pandemic crises
In the last week of March, Modern Bakery Moscow, an international trade fair for bakery and confectionery, took place in the capital of Russia. It is considered the main event in the bakery and confectionery industry, and this year, despite all the circumstances, it was not an exception hosting around 200 exponents. The Netherlands companies, which are the front-runners in the bakery industry, also exhibited there. The trade fair demonstrated the steady development of the Russian bakery industry in spite of a corona pandemic crisis.
Small factories dominate
Over the past 20 years, there has been a final transition of the bakery market from large bakeries to domination of small and medium-sized businesses, which more flexibly meet the needs of bakery products buyers.
Small factories located in the immediate vicinity of the consumer, gain an undeniable competitive advantage in local markets, supplementing and sometimes replacing the products of industrial production, providing the population with fresh products, as well as maintaining the stability of prices for bread and bakery products.
Prices
According to Russian Statistics Committee, for the period January-August 2020, the average consumer prices for bread and bakery products made from premium wheat flour grew by 3.5%, for bread and bakery products made of wheat flour of the 1st and 2nd grades increased by 4.0%, for bread made of rye flour and from a mixture of rye and wheat flour - by 4.8%.
The highest average consumer prices for bakery products made of rye flour and a mixture of rye and wheat flour are recorded in the Far Eastern Federal District, the Northwestern Federal District and the Ural Federal District which exceed the average Russian prices by 48%.
Changes in the price of grain by 10% affects change bread prices by 1.9%, and the change in the price of flour by 10% leads to a change of bakery products prices by an average of 2.5%. At the same time, the average prices for bread are quite stable, their annual growth is 5-7%.
Preferences of consumers
In October 2020, Laboratory of Trends conducted a survey of consumers of baked goods to find out how their preferences have changed. Regardless of age, gender and place of residence, rye and rye-wheat bread are weekly present in the diet of the majority of respondents (70.5% of respondents). Wheat bread lags far behind (26%), yielding the second position in popularity to bakery products (loaves, cakes, braids, etc.), which are regularly consumed by 34.9% of respondents. The fourth place is occupied by lavash (25.3%), which has taken root in the Russian market. Closing the rating of the most popular positions are piece pastries and puff products (sweet and savory) and various pies suitable for a raid snack or consumption with tea or coffee. Most often they are bought by people living alone (mainly young people) and families with children.
13.3% of the respondents do not consume bread at all. The reasons why people refuse to consume bread are doctor's recommendations (harmful to health) and health problems, the lack of tasty bread (this reason is often coupled with memories of how it used to be), and high calories of the product.
The respondents are interested in fitness breads, while some of them, during in-depth interviews, complained that the breads on sale are not "light", but are only positioned as a healthy lifestyle through marketing. Almost 1/4 of the respondents cannot find the bread they like, despite the widest choice of packaged bread or assortment offered by bakeries.
People are gradually moving away from the usual for Russia consumption of bread with soup (54.8%), second courses (22.6%), salads and snacks (35.6%). Such situations of consumption remain in families, but are most often observed among older family members or are passed down from generation to generation, but break down on younger people. The main consumption of bread now is various types of sandwiches.
Impact of the coronavirus pandemic
Bread and most bakery products belong to the group of inexpensive and at the same time high-calorie products. During the pandemic period when the welfare level of the population decreased, the demand for such production increased. It has led to an increase in the consumption of bread, primarily of mass and affordable varieties.
At the same time the industry representatives complain about a decrease in the number of buyers, which is often explained by the location of trade and production areas, which, for example, are located in shopping centers which were closed for the period of restrictive measures, others were focused on personnel of nearby office buildings, markets and other objects that also turned out to be closed or restricted for visiting. Decline in business activity, closing large quantities of small and micro-enterprises in the service sector, staff cuts or the transfer of office workers to remote work have made changes in the work of many bakery enterprises: decreased or dropped traffic influenced the sales negatively.
Opportunities for Dutch business
The Netherlands and Russia have a long history of cooperation in the bakery industry. Dutch companies actively work in the Russian market today. Bakery ingredients and technologies of the Netherlands origin are considered as reliable and of high quality. Mostly Russian customers are interested in complete solutions, such as equipment for dough cutting and proofing, multi-stage proofing cabinets, proofing cabinets with a cradle hearth, as well as various furnaces including industrial scale, medium-sized furnaces and rack ovens without thermal processing technology. Cooling towers with spiral air circulation are popular enough among Russian bakery producers, and this demand continues to grow. Equipment related to transportation of bread to the cooling tower are demanded as well.
Another example of the Netherlands technologies required in the Russian market is the turnkey integrated solutions for baking pizza. The demand for production lines is growing due to the fact that the consumption of instant food is also becoming a priority - this is largely influenced by a very dynamic modern lifestyle of the young generation.
Source: https://sfera.fm/