Breaking News on Global Meat Trading and Processing

Headlines > Retail

Read more breaking news



Russian sausage producers wage war on discounts

Post a comment
Oscar Rousseau

By Oscar Rousseau+


Russia's sausage market is feeling deep cuts thank to long-running supermarket discounts
Russia's sausage market is feeling deep cuts thank to long-running supermarket discounts

Russia’s largest sausage manufacturers are urging retailers to drop discount promotions as they look to halt a three-year fall in sales, the Gorbatov’s All-Russian Meat Research Institute (VNIIMP) claims.

In total, 38% of all sausage manufacturers claim they will refuse discounts as they struggle for better profitability in 2017. Currently, nearly 18% of sausages in Russia are sold through various discount campaigns and almost all retail chains use such tactics to attract customers, VNIIMP claim.

According to consultancy GfK Rus, the rate of discounts on sausage production ranges between 13% and 50%. A VNIIMP study described the impact of price cuts on sausages as “extremely negative”, but expressed doubts that sausage manufacturers would be able to urge retailers to cancel discount campaigns.

‘Driving forces’

Time will tell if sausage producers will find a way to reduce the depth of discounts,” said Olga Kaytyalidi, head of VNIIMP. “Still, retail chains remain the main driving force in this issue. At the same time, the retail segment is fighting for the consumer, whose income continues to fall, using the easiest and proven tool – discounts.

The basic price of uncooked smoked sausage in Russia is currently RUB900 ($14.6) per kg, semi-smoked and ready-cooked smoked sausages are RUB440 ($7.14) and cooked sausages are RUB340 ($5.52), according to VNIIMP estimates.

Sales drop may deepen

Sausage sales in Russia have fallen for almost three years, showing the strongest decline in sales at the country’s meat markets.

According to information from the Russian State Statistical Service, 2.49 million tonnes of sausages were sold in Russia in 2014, while in 2015 this figure amounted to 2.46 million tonnes.

However, VNIIMP indicated a stronger decline, estimating that in the period from August 2015 to July 2016 sales of sausages in Russia’s largest federal retail chains dropped 11.1% year on year.

Daniil Kirikov, head of Russian consulting agency Kirikov Group, expressed doubts that retail chains would agree to cancel promotions on the request of manufacturers. Stopping discounts in the context of weak consumer demand could result in a serious worsening of the financial performance of retail chains, he explained.

A spokesperson for Russian retail chain X5 Retail Group told GlobalMeatNews that sausage manufacturers actively participated in discount campaigns.

A slight cut in the discounts seems possible, but we are definitely not talking about stopping discounts,” he said. “Such a step may contribute to a further drop in demand and this is something neither retail chains, nor sausage producers desire.

According to Russian State Statistical Service, real disposable household income in Russia has fallen throughout 2016. Incomes were down 6% in November compared to the same month in 2015 with people now spending, on average, 40% of their income on food, including 10% on meat.

Post a comment

Comment title *
Your comment *
Your name *
Your email *

We will not publish your email on the site

I agree to Terms and Conditions

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Related products

Related suppliers