The pet food trend in Russia changes direction

In recent years, the Russian pet food market has seen a steady growth in sales, due to the large number of pets in the country. In addition, young Russians proved to actively embrace the humanization trend, abandoning the Soviet attitude of feeding pets on the human table and gradually switching to branded pet food products.

homemade pet food

In the last 3 years, the number of pets in Russia increased by 25%. Today, Russians have 40 million cats and 23 million dogs. It is estimated that 70.4 million Russians have at least one pet. Growth prospects in the market remain ample, with recent opinion polls showing that 75% of pet owners still trust homemade pet food to some degree.

The fastest growing pet food market in Europe

In 2020, the Russian pet food market totaled 661,000 tons, or 233 billion rubles ($4.2 billion), Euromonitor International estimated. In recent years, sales have increased by more than 10% per year, making Russia the fastest growing pet food market in Europe. The current crisis is likely to derail this growth dynamic.

Logistics is a nightmare.

Western sanctions imposed on Russia wreaked havoc on inbound and outbound logistics, nearly crippling import supplies to the country.

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According to estimates by Kirill Dmitriev, president of the national pet industry association, coupled with the restrictions introduced by Russian veterinary regulator Rosselhoznadzor against pet food from North America and Europe over the past 2 years, the logistics crisis has reduced the range of products available on the market. specialized retail.

At the beginning of 2022, the average cost of shipping a pet food truck from Europe to Russia was around €3,200. Now it amounts to 11,000 euros, Dmitriev estimated.

Tatiana Kolchanova, general director of the Russian zoo-enterprise union, added that the entire flow of pet food from Europe was affected by the current crisis.

“There is no direct ban on exporting pet food to Russia, but it is impossible to supply anything. They [European countries] are ready to deliver [pet food] to any country, but not to Russia,” Kolchanova said, adding that, to a certain extent, the export is unofficially restricted by the customs services of the European Union.

Some suppliers are currently considering alternative delivery schemes, which involve shipping pet food through Serbia and Turkey, Kolchanova said.

There are no new specialty pet food stores.

The lack of imports comes at a high cost to specialty pet food retailers. Dmitriev estimated that approximately 12,000 pet food outlets were operating in the country, generating 80% of revenue from the sale of specialized, premium and medicated pet foods that are hardly produced in Russia.

Nearly 20% of Russian pets require specialized or medicated pet food, Dmitriev estimated. In recent months, some pet owners have expressed fears about the future of their pets as imports are halted, while retailers see their warehouse stocks dwindle.

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The Russian newspaper Kommersant reported that virtually no new pet food stores were opened in Russia between March and April due to a lack of specialized pet food and a combination of other factors related primarily to harsh economic conditions.

In May, sales in Moscow pet food stores plunged by a shocking 25%, a pet food industry source told Kommersant, adding that this is partly explained by a range of products becoming increasingly and customers are cutting their pet food budgets, possibly returning to a table-based diet amid growing economic uncertainty.

Big companies stay put

However, the Russian pet food market is not expected to be affected by a general shortage of products, as Mars and Nestlé have not withdrawn from the country, like hundreds of other Western companies.

In a March statement, Nestlé said it had suspended capital investment and withdrawn all advertising activity in the country, but continued to sell essential food products. Mars said he had scaled back his business in Russia and would refocus on his “essential role in feeding the Russian people and pets.” The company also added that it had suspended new investments in Russia and will not import or export products into or out of Russia.

Mars and Nestle have been dominating the Russian pet food market. According to estimates by the Russian Union of Zoo-Companies, Russia’s self-sufficiency in pet food is close to 85%, ensured mainly by the brands belonging to these companies.

Import substitution campaign

Mars and Nestlé had to suspend the construction of new capacities with a combined production output of close to 170,000 tons of pet food that they planned to put into operation in the next few years.

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With this in mind, several Russian companies implemented some plans to replace the importation of specialized and medicated pet food. Russia’s largest meat producer Miratorgfor its part, it opened a medicated pet food factory with a production output of 47,000 tons per year in March, adding that actual sales would depend on market demand.

Dmitriev warned that replacing the import of specialized pet food would require huge investments in the field of research and development.

There are several dozen pet food producers in Russia, most of which have historically focused on producing pet food for the budget segment.

Exports are in danger

In addition, Russia exported 160,000 tons of pet food worth $200 million to 30 countries in 2021, the Russian Federal Customs Service estimated. The main sales markets were the countries of the Eurasian Economic Union, with 37,000 tons of pet food worth more than $61 million sold to Belarus and 31,000 tons worth $32 million to Kazakhstan.

Russian pet food exports reportedly plummeted in May-June, fueled by the logistics crisis and the unprecedented rise in the Russian ruble exchange rate.

In early 2021, Fedor Borisov, CEO of the Russian Association of Pet Food Producers, forecast that exports would grow by 25% to 30% per year until 2025. Borisov listed the EU, Norway, Turkey, the of the CIS, Ukraine and Mongolia. among the main sales destinations, adding that work was done to start supplying the Chinese market. This forecast is unlikely to remain realistic in the new reality.