Food production demonstrated positive dynamics last year, despite a slight decline in the rate of agricultural production. According to research by INFOLine, the total revenue of the ten largest companies in the food industry for 2023 increased by 13.4% and amounted to 2.3 trillion rubles. This indicates that the largest players in the industry are demonstrating higher growth rates compared to the market as a whole.

During the discussion at the WorldFood Moscow 2024 exhibition, food and beverage producers and representatives of the agricultural industry discussed the results of the past year with food industry leaders, successful strategies, joint projects with retail and catering, export potential and personnel issues.

To set the topics for dialogue, Svetlana Silenina , head of the Consumer Market department of the information and consulting agency INFOLine , presented analytics on the food industry.

The food industry continues to grow after a slight decline in 2022, production does not stop. There are problems with the raw material base, but according to the Doctrine of Food Security, our country is provided with all basic categories of products.

However, the industry faces a number of challenges, the key one being the personnel problem.

The leaders in growth rates are vertically integrated holdings, whose growth rates significantly exceed the overall growth of agriculture. Investment activity of companies also continues. Investment activity has decreased due to the rise in the cost of loans, but has not stopped. The situation in 2022 has outlined a new trend: many large companies have begun to invest in production facilities in other countries.

2022–2023 have seen a large number of M&A transactions and their number will continue to increase.

The volume of exports in monetary terms is growing, but in physical terms there is no growth in some categories. This is due to difficulties arising in logistics and in making payments. The strategic partner for Russia now is China.

The survey revealed three of the most negative factors affecting the industry:

// 40% - decrease in purchasing power
// 37% - purchase prices for raw materials
// 36% - increase in production costs

The producers identified the following as positive factors:

// 51% - departure of foreign brands and reduction of competition
// 29% - development of new categories, introduction of new consumption habits
// 25% - development of technologies, growth of digitalization of production

Dmitry Kozlov , CEO of BKH Kolomenskiy , spoke about the results of the merger and acquisition deal carried out in the company, and noted that the acquisition of new assets in itself did not make the company a leader. The company had become number one on the market before that. Thanks to the purchase of Fazer assets, it was possible to show a 35-fold increase in revenue over 10 years.

Now the company's strategic goal for 7 years is to enter all regions of the European part of Russia. Therefore, there are also further plans to absorb regional players.

The acquisition of Fazer allowed the company to enter a new category - frozen food, which the company is now actively developing. The second direction that the company plans to develop is fresh confectionery.

Natalia Zhestareva , Marketing Director of the Siberian Collection brand (Shchelkovsky MPC), shared the results of internal research on changes in consumer behavior. Buyers have become more conscious, choosing products more carefully based on price-quality ratio. This inevitably leads to growth in the "average minus" category. There is a huge demand for private labels, and this is now the main driver for a company that wants to grow. As for branded products, due to the inability to freely move around the world, consumers are now looking for a variety of tastes and combinations in products. Demand for products in the "treat yourself" category is also growing.

Tatyana Smirnova , Director of the Marketing and Sales Department of Tambovsky Bacon LLC (RUSAGRO Group), the company that was the first to receive the opportunity to export its products to China, shared the first results. Tatyana noted that consumer preferences in Russia and China are complementary: if in Russia they mainly eat the neck, ham, loin, ribs of pork, then in Asia the ears, legs, tails, and skins are a delicacy. Income received from deliveries to China allows companies to invest more in production, in technology, thereby improving the domestic product.

By the end of this half-year, the company expects to make about 5% of its revenue on the Chinese market, and in the future to increase it to 10%.

Maria Petrova , vice president of sales for Health & Nutrition (formerly Danone), shared how, in her words, the company had to “move from a sustainable development strategy to a strategy of sudden survival” after the events of early 2022. The company had to find alternatives for more than 4,000 ingredients, 73,000 unique spare parts, and work out changes with hundreds of suppliers in a short time.

The dairy category is growing right now, and H&N is driving that growth.

Maria also touched upon the personnel problem, dividing it into two parts: the problem with line personnel and the management team. The shortage is felt precisely in the line personnel, while the management team has practically not changed.

Dmitry Kozlov also agreed with the problem of line personnel turnover. He named salary growth as one of the solutions, which amounted to 45-50% over two years. He named the problem of equipment for production as an equally important problem: the pool of suppliers has decreased, and equipment delivery times have increased significantly.

Tatyana Smirnova noted that investments in digitalization and automation of production are precisely the answer to the problem of shortage of line personnel. Solving the problem with the ruble alone is a dead-end path that will drive the industry into the impossibility of further investments. Therefore, HR departments are now forced to look for ways to retain employees.

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