Major mayonnaise producers plan price indexation by 5-12%
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As it became known to Kommersant, major mayonnaise producers plan to index prices by 5-12% due to the increase in the cost of the main ingredients. Consumption of the product is stable and a rise in price by an average of 10% does not pose a risk to demand, analysts say. The Ministry of Agriculture claims that the authorities have tools to curb food inflation.
Kommersant has obtained a letter by which Essen Production AG, a major sauce manufacturer (Maheev brand), notifies retailers of a 5–10% increase in prices for mayonnaise and some other sauces from August 21 due to an increase in the cost of the main ingredients. Price indexation by 8–10% should also affect products for the restaurant market, including portioned sauces in a 10 g package.
Receipt of a notification from Essen Production AG was confirmed by two interlocutors of Kommersant in large retail chains. According to one of them, Efko Group of Companies (Sloboda) also applied for a 10% increase in selling prices, and NMGK (Ryaba, Astoria) announced an indexation of 12%. Essen Production AG, Efko, NMZhK, Rusagro Group of Companies (Moskovsky Provensal, Mechta Mistress) and Nefis Group of Companies (Mr. Ricco) did not provide comments. These five companies, according to the Rusagro report, account for 75% of mayonnaise sales in Russia.
According to the analytical agency OleoScope, about 60% of the cost structure of mayonnaise is sunflower oil, and another 20–25% is chicken eggs and packaging.
According to Sovecon, only in the first week of August, the average prices for sunflower oil increased by 2.85 thousand rubles, up to 79.02 thousand rubles. per ton including VAT, while export quotations increased by $30 to $940 per ton (FOB). Sunflower rose on average by 1.5 thousand rubles, up to 27.85 thousand rubles. per ton. As of August 10, 2022, oil cost an average of 73.6 thousand rubles. per ton, sunflower – 25.7 thousand rubles. per ton.
At the same time, the director of Sovecon, Andrey Sizov, believes that the increase in the cost of mayonnaise may be more related not to oil prices, but to the rise in the cost of packaging and other materials for production, which depend on exchange rates and logistics. Director General of the Institute for Agricultural Market Studies Dmitry Rylko confirms that “prices for sunflower oil in Russia remain stable.”
Meanwhile, Rusagro reports say that back in 2022, producer prices for the main categories of consumer oil and fat products were growing due to accelerated inflation, a reduction in promo and rising prices for vegetable oil. Thus, selling prices for mayonnaise increased by 21% on average in 2022, to 117.7 rubles. per 1 kg without VAT. The output of mayonnaise and sauces based on it for 2022 decreased by 4%, to 817 thousand tons, imports – by 49%, to 3 thousand tons, the report says. In 2018–2021, the volume of mayonnaise production in the Russian Federation was in the range of 828–860 thousand tons.
According to NielsenIQ, in January-June 2023, mayonnaise sales in physical terms decreased by 2.1% year-on-year, and other table sauces — by 2.5%. In money terms, category sales increased by 0.1% and 10.2%, respectively. According to OleoScope analyst Kirill Lozovoy, a 10% increase in prices “is unlikely to affect the demand for mayonnaise”. Consumption of this product remains stable, and, unlike, for example, butter, which has a more affordable analogue of margarine, mayonnaise has no such alternatives, he emphasizes.
Kommersant’s source in the market believes that “inflation will remain the main problem for market participants and regulators for the next few months.” According to him, a repeat of the situation in 2014 is likely, when food prices grew at a double-digit pace. Recently it has become known about the impending increase in prices for soft drinks and juices, meat products, tea, coffee and sweets. As the interlocutor of Kommersant notes, the zeroing of duties on the import of raw materials, the solution of problems with the growth of tariffs for transportation, including the lack of drivers, etc., could curb the rise in prices.
On August 11, the Ministry of Agriculture did not answer Kommersant. Earlier, the head of the Ministry of Agriculture, Dmitry Patrushev, reported that food inflation in Russia is insignificant and the government has many tools to contain it.
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