Domestic producers and retailers are reorienting to cheap food products
Thus, in the first half of April, the turnover of products sold under the retailers' own brands and traditionally cost less than analogues of other brands increased by 20%. And sales of healthy food kits in April decreased by 35-40% compared to March. The Association of retail companies (ACORT) confirmed that in the face of declining revenues, buyers are trying to choose cheaper positions in the same product group. At the same time, food production in the country is growing — in the first quarter it increased by almost 10%.
Since the coronavirus began to spread in Russia, the food production industry has been experiencing an upswing. At the same time, manufacturers are switching to cheaper products. The reason for this is that consumer preferences have changed since mid-March: demand for expensive products has fallen, while sales of low-cost analogues have increased. This is stated in the study Covid-report of the international company Unusual Concepts - experts analyzed the consequences of the development of the pandemic in the world. "Izvestia" studied the document. The analysis was based on official statistics and invoices provided by retailers.
According to the research, in the first half of April, the turnover of products that retail chains sell under their own brands increased by 20%. These products are traditionally cheaper than analogues of other brands. Stores also began to close their ready-to-eat departments, where salads were mostly sold, or reduce their assortment. The decline in volumes in this category has already reached about 80%, analysts said.
Sales of ready-to-eat healthy food packages decreased by 35-40% in April compared to March, while sales of fresh vegetables and fruits decreased by 60-65%.
In March, Russians were actively making stocks — primarily of inexpensive long-term storage goods. Buckwheat production then increased by 40% compared to the same period last year and by 45% compared to February 2020. Macaroni volumes increased by 20%. Factories also began to produce more canned fruits and vegetables (+17% compared to last year), vegetable oils and butter (+18%). There is no data for April yet, reported in Unusual Concepts.
The food industry is trying to meet the new demands of retail chains, where there has been a sharp demand for long-term storage products since spring, the company said. So, in the first half of April, sales of canned food increased by 50-60% by March 2020, and sales of cereals jumped by 120%.
Partner of the company Yuri Filatov told “Izvestia” that in the next two years, food production will only increase. By the end of the second quarter, food products may take up more than half of the entire consumer basket of Russians. Although even in the first quarter, they accounted for a fifth of it.
Consumers will primarily look at the cost of products, the company said. This will further spur the development of a line of cheap products. According to the forecast of Unusual Concepts, this situation will last until the middle of 2021, after which buyers can return to their normal consumption mode
The press service of the Ministry of agriculture told “Izvestia” that in March 2020, compared to the same period in 2019, the production of food products increased by 9.3%, and beverages - by 2.2%. The largest increase was in the production of canned meat (including products for baby food) — by 27.2%, processed and canned potatoes — by 24.3%, butter — by 16.2%. The positive dynamics is largely due to the growth of demand in the domestic and foreign markets, stressed in the Ministry. Other reasons include increased production of agricultural raw materials and government support measures.
The press service of Rosstat told “Izvestia” that food production and processing of agricultural products are still one of the drivers of growth: in the first quarter, their volumes increased by 9.9% compared to the same period last year. The high harvest of 2019 allowed to ensure the capacity utilization of the industry's enterprises over the past months, added in the statistical service.
In the face of declining incomes, Russian consumers are trying to save money and, if possible, buy cheaper products of the same product group, confirmed Ilya Vlasenko, a spokesman for the Association of retail companies, to “Izvestia”. Due to current restrictions, customers visit stores less often, although they prefer to make large purchases. And if the unit price is lower, this greatly affects the choice, he stressed.
Alexey Popovichev, Executive Director of the “RusBrand” Association, agrees that consumers tend to save in times of crisis. Usually, manufacturers of falsified products try to take advantage of this by offering falsified goods at a significant discount to average market prices, he warned.
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