Agricultural holding AFK Sistema is preparing to increase exports of confectionery products

In conditions of saturation of a number of segments of the Russian confectionery market, sweet manufacturers are looking for new sales opportunities. Thus, the Steppe agricultural holding, part of AFK Sistema, decided to modernize the Mishkino factory that produces halva, focusing it on the markets of China and other Asian countries. However, it is difficult to guess the taste preferences of consumers in China and it will be necessary to find good sales channels, experts emphasize.

The Steppe agricultural holding, part of AFK Sistema, plans to modernize the Mishkino confectionery factory to enter the markets of China and other Asian countries, a source familiar with the project told Kommersant. According to him, production volume should increase to 1 thousand tons per month, almost all products will be exported.

The assortment should include halvicha sweets, nougat, halva under the Mishkino brand with 25 flavors, including wasabi, lemon, green tea and ginger. Another line is planned for the Russian market, Kommersant’s interlocutor added. According to him, the factory is expected to reach full capacity in mid-2024. Steppe declined to comment.

“Steppe” grows grains, legumes, oilseeds, is engaged in milk production, gardening, and food trading. In the first half of 2023, the agricultural holding’s revenue increased by 40.5%, to 41.3 billion rubles, year-on-year due to the development of grain exports and the effective sale of residues from the last harvest, the company reported.

The Mishkino factory was founded in the Rostov region in 2013 by Sergei Ryzenko, the former general director and ex-co-owner of the large packaging manufacturer Atlantis-Pak, part of the Agrocom group of Ivan Savvidi. The factory produced oriental sweets under the brands “Mishkino Happiness” and “Medvegan”. The production capacity exceeded 60 thousand tons of products per year. A few years later, the business began to experience difficulties; in 2021, the company managing Mishkino was declared bankrupt, and the Steppe structure bought the company at auction.

Managing Partner of Walnut Capital Artem Motorny notes that the previous owner of Mishkino launched the factory when other large halva producers were already operating, and today this segment is closed in Russia and does not allow for sufficient profitability. According to the NielsenIQ retail audit, in the year to October 2023, sales of all confectionery products in Russia decreased by 1.9% year-on-year in volume terms. A noticeable increase in natural sales was observed in the category of chocolate bars (by 7%), sponge cakes (by 18%) and chocolate wafers (by 44.4%).

The Association of Confectionery Industry Enterprises “Askond” calls China the second largest consumer of Russian confectionery products after Kazakhstan. According to Askond, in the first seven months of 2023, about 12 thousand tons of sweets were exported to China from the Russian Federation, supplies of chocolate products year-on-year increased by 2.8 times, and sugar products by 64%.

President and co-owner of the Moscow Pobeda confectionery factory Vitaly Muravyov says that the Chinese market may be interesting, especially if the manufacturer’s portfolio already includes products that are popular in China. According to him, Pobeda sales to China more than quadrupled in 2023, but largely due to the low base of 2022, when the Chinese market was closed for a long time due to the COVID-19 pandemic.

The United Confectioners holding (factories Krasny Oktyabr, Babaevsky, Rot Front) also say that they continue to increase the volume of supplies to China and expand the range, but note difficulties with long and expensive logistics.

As Artem Motorny says, China seems to be a large market, but it is not easy to guess the taste preferences of local consumers, so a wide assortment matrix is ​​needed, as well as good sales channels. According to him, reaching shipments of 1 thousand tons per month to China seems to be a difficult task.

Anatoly Kostyrev