Top Russian broiler producers grow in tough market
Russia’s leading poultry businesses are likely to weather difficult market conditions, gaining market share from smaller competitors.
Russian broiler production is expected to continue growing in 2017, albeit at a lower rate than in previous years, and those companies best able to cope with poorer market conditions will be Russia’s top poultry companies.
Read the entire report about Russian broiler production exclusively in the January issue of Poultry International.
For 2017, production is expected to rise by only 0.5 percent to reach 3.8 million metric tons.
Market expansion will be weak this year will for several reasons: Factors contributing to expected sluggish performance include Russia being almost self sufficient in poultry meat and the difficulties for poultry producers in accessing credit.
In this less-than-favorable scenario, it will be Russia’s largest poultry companies that are able to reap the most benefits.
Larger-scale companies are better able to cope with reduced margins. Many are thought to have seen profitability decrease last year, but to have nevertheless achieved an increase in sales.
The leading broiler producers in Russia have preferred to optimize their existing businesses rather than purchase smaller competitors.
Russia’s top poultry companies enjoy not only economy of scale but, where finance is concerned, they also represent a more secure investment than smaller, more vulnerable competitors.
Over the past couple of decades, the Russian poultry industry has attracted significant government support. However, with the country now close to self-sufficiency, the authorities are reconsidering their priorities.
Despite a difficult operating environment, Russia’s largest poultry companies are able to continue expanding and gaining market share, but this will be at the expense of the country’s smaller producers.