The Russians were warned about the reduction in the production of juices: suffering from a lack of raw materials

When to expect a price increase

In 2022, the juice market in Russia may lose a tenth of its volume. This was stated by the head of the Union of Producers of Juices, Water and Drinks (“Soyuznapitki”) Maxim Novikov. The decrease will occur due to the impact of a group of factors: producers will have to adapt to the loss of Russian interest in juices, which always happens during a crisis, and problems may arise in the industry itself due to the almost complete dependence on the supply of components for imported equipment used in production and difficulties with delivery of ingredients.

According to Novikov, in 2021, about 8.5 billion liters of packaged water, 7 billion liters of soft drinks, 2.5 billion liters of juices and about 300 million liters of vegetable drinks were produced in Russia. By now, the lag in production rates is already noticeable and by the end of 2022 it may be 10%. This decline is due to a combination of reasons. Thus, according to the head of Soyuznapitkov, the sector is afraid of a possible failure in the supply of components, because the share of imported equipment used by Russian producers in the manufacture of juices exceeds 90%.

It is curious that the share of imported ingredients in the juice production itself is about 2-4%, but this hardly changes the situation, since the entire process largely depends on the supply of imported raw materials – concentrates, various types of fruit and berry purees, pulp, etc. . Import substitution in this area is difficult to achieve due to climatic conditions, the lack of implementation of state programs and sanctions. “Firstly, many of the popular juices contain citrus and tropical flavors from fruits that we do not grow in sufficient quantities (orange, mango, pineapple, pomegranate, banana), – says Dmitry Vostrikov. – Secondly, the state investment program for the development of horticulture was launched only a few years ago and has not reached the planned production volumes. Thirdly, the main difficulties in the Juice category now arise with packaging due to the sanctions restrictions of a number of suppliers.”

In addition, there are difficulties with the supply of ingredients due to logistical problems, transportation restrictions, and calculation difficulties. “In particular, supplies of orange concentrate from the US and the EU are being reduced under the influence of sanctions,” notes Mark Goykhman, chief analyst at TeleTrade. “According to Soyuznapitki, before the crisis, the share of packaged orange juice was about 20%. In the worst case, this product may be completely withdrawn from sale. Producers are looking for alternative opportunities, for example, negotiations are underway with Uzbekistan on the purchase of raw materials for the production of grape juice, but it is already clear that a full replacement from this side should not be expected.

Meanwhile, representatives of the juice production sector, despite all the difficulties, are not yet afraid of a shortage. The point is not only that Russia will eventually be able to collect the necessary goods bit by bit in Uzbekistan, Armenia or other CIS countries. The main problem of the market is demand from the population. “The fact is that traditionally, during periods of a noticeable decline in people’s incomes, the demand for juices also drops significantly,” Goykhman notes. “This is a relatively expensive non-essential item that is easy to replace in consumption.” Novikov also points to the same reason. According to him, the most “fatal crisis” was in 2008, when juice consumption halved and has not yet recovered.

Since everything rests on the incomes of the population, then, obviously, there will not be a significant rise in prices in general for this group of products. In turn, it will be possible to count on a full restoration of production in the future for several years. Our country will be able to reach the previous levels only after the normalization of the situation in the economy, changes in integration ties, the emergence of new suppliers and the debugging of logistics schemes, experts believe.

Published in the newspaper “Moskovsky Komsomolets” No. 28838 dated August 3, 2022

Newspaper headline:
All the juices will be squeezed out of the Russians