Russia re-vamping its meat sector

Mikoyan, under the guidance of Russian parent firm Exima, is a rapidly rising company in Russia having increased its income by around 40 per cent over the last three years.

A fragmented domestic market means that the company's market share only stood at six per cent for the Moscow region in 2003, yet half of Moscow's inhabitants claimed to by Mikoyan products regularly and another 20 per cent said they bought them at least once every three months, according to a recent report by Capital Research Group.​

The firm processes around 350 types of sausage and delicacies and its investment in modernising production means its main Moscow factory is now one of the biggest in Europe, making more than 400 tons of products every day.

But, Serghei Ryjov, Mikoyan's vice director, said the firm's early success had been hard fought in a domestic meat industry undergoing a series of readjustments.

"The year of 2004 was rather difficult for the entire meat industry in Russia. Meat prices increased 100 per cent compared to a 30 per cent rise the year before,"​ said Ryjov.

"This market situation prevented the sector from developing and we really felt it. The market problems, which happened because of meat raw material deficit, meant we could not fulfill our potential. But, notwithstanding this fact, we kept on moving."​

Mikoyan has attempted to stay ahead in the sector by moving investing heavily in innovation and has subsequently built up good relations with ingredients producers. "We have 10 ingredients suppliers and all of them are well-known,"​ said Ryjov.

"We select them thoroughly. Christian Hansen is one of the companies and in collaboration we created Delicacy frankfurters, Zernistyi and Sovetskiy sausages, Madera and Gaudi salami and semi-smoked sausage Alekseevskaya."​

Ryjov added that quality was not always enough on the Russian meat market anymore and that consumers are increasingly demanding new and unique products.

He said he thought health and fitness were destined to become major consumer trends in the sector, especially for sausage production. He cited a recent survey that claimed 200,000 Moscow inhabitants said they would buy low-calorie sausages and ham.

Chr Hansen has already offered Mikoyan a range of low-calorie products made with turkey meat as well as ham containing pineapple, apricot and asparagus and special whey for sausage. The company said it was currently studying demand for these products.

Despite the difficulties in Russia's meat sector, a government social and economic development plan offers new opportunities by attempting to increase average consumer meat consumption from 50kg per person up to 78-80Kg.

The government hopes to achieve this by enhancing Russian farming with modern technologies and making Russia more self-sufficient in meat by ensuring the level of meat imports into Russia does not impede domestic growth.

As the Russian food industry progresses, however, a major challenge for producers will be how they cope with the emergence of multiple retailers.

The relationship between manufacturers and shops is already changing in large cities. Shops dictate new conditions, even prices to the manufacturer and have also increased their requirements packaging types for products including meat, which are sold in hypermarkets.

The benefit of this is of course that companies meeting these requirements will move closer to achieving internationally recognised quality standards.

Mikoyan believes it can progress in this environment by emphasising both innovation and heritage.

The original Mikoyan meat factory was founded back in 1798 and the current factory now sits on a famous slaughterhouse site in Moscow. During the Soviet era, the firm became a standard-bearer for quality production, supplying the Kremlin and other state authorities.

The Mikoyan brand was re-launched in 2000 and since then has been taken over by Russia's third largest meat producer, Exima, which has begun producing Mikoyan products in three factories and given the firm greater access to domestic suppliers.