by John Helmer, Moscow
Cheese goes well with warfare.
In ancient Roman times, legionaries on the march would be issued daily rations of aged hard cheese, to be eaten with bread, strips of bacon and wine. In 2014, after the European Union imposed sanctions on Russia for defending itself from NATO attack in Crimea, the Russian government imposed counter-sanctions, banning imports of French, Italian, Dutch and Finnish cheese. This not only revived domestic demand for the traditional Russian soft cheeses, but it inspired the fabrication of altogether new Russian hard cheeses never been tasted in the market before.
The rapid acceleration of production reached a million tonnes last year, making Russia the third largest producer of cheese after the European Union and the US. With consumption also accelerating to 1.2 million tonnes, growing at 10% per annum, Russia is now ranking second in the world table of cheese importers after Japan.
If you think of cheese as mozzarella melted on top of a pizza, or cheddar sliced inside a child’s sandwich, the one as tasteless as the other, you’re more American than Russian. “Last year, the industry registered not only quantitative, but also positive qualitative changes,” reported Dairy News, a Russian industry publication. “In particular, the cheese market in Russia recorded a faster growth in the production of more expensive hard and semi-hard cheeses. Customers began to buy not just more cheese, they are increasingly choosing high-quality products.”
“If the current trends continue, the volume of the cheese market in Russia will increase by 150-200 billion rubles [about $3 billion] in 2024 compared to the results of 2019. This will create conditions for the development of cheese production in the country and the transition from an import substitution strategy to the orientation of production to foreign export markets.”
Roman soldiers ate something like parmesan, originally a low-class cheese.
Oleg Sirota is the creator of the Russian parmesan, and one of the best-known cheesemakers in the country On his farm near Moscow, he has begun producing a new type of parmesan which he is calling Krasnogorskiy, after the main town of the Moscow region. “The new variety has a special taste and bright aroma, which is given to it by special bacteria brought from Germany,” Sirota has explained. Another of his new cheese varieties is called Gubernatorskiy, after Andrei Vorobyov, the Moscow region governor who is backing investment in a cluster of cheesemakers and dairy processors in the area.
Maria Koval of the Yaroslavl region, 300 kilometres to the northeast of Moscow, has adapted French Roquefort and created a distinctive new taste. This is a cheese for the Russian bourgeoisie or upper class, as the cheesemaker elaborates.
“This elite mature cheese is made from milk from Yaroslavskaya cows. Its noble blue mould is prepared by hand according to the maker’s recipe, based on old French technology. It has a special spicy pungent taste with a slight bitterness. The structure of the cheese is hard, buttery. With tart notes in the tasting, it goes well with dry red wine”. This is a Russian transformation of the blue cheese which, among the noble elites, Charlemagne (742-814) was keen on, and which received its Roquefort patent from Charles the Mad (1368-1422). Note the Russian distinctions – the thick nutty rind, the dark yellow paste. For a glossary of cheese terms, read this.
Creator of a Russian ricotta variation and many other cheeses besides, the Koval manufactory in Yaroslavl collects its milk on contract with a single dairy farmer in the area, and gathers its clientele from traditional Russian visitors to the Golden Ring, as well as eco-tourists. The effect of the coronavirus pandemic has reduced the number of visitors but increased the volume of internet sales. “We didn’t close production, and our shop has continued to work,” said one of the Koval staff. With online ordering and direct delivery into Moscow, Koval has increased her volume of sales and offset the reduction in tourists. Her ricotta, produced in small batches with added salt, milk and herbs, is tastier than the Italian original.
“The main clientele visiting us are families who are tourists in the Yaroslavl area. Their average age is in the 30s. They come for the natural products because they like the taste and value the craftsmanship. They react calmly to the price. People know what they are coming for. They know we are not an industrial producer. We are artisanal cheesemakers.”
Who are Koval’s competitors, domestic or foreign? “We are a small company. We specialize in our own cheese, and our taste and recipes are quite different from others. We formed our own niche in the market. We specialize in what we can do best – hard and semi-hard cheese. We know Oleg Sirota and other cheesemakers. We don’t disturb each other.”
Following participation in cheese fairs, she adds, there is growing demand for Koval cheeses for export westward into Austria, Germany and other EU states. For the full range of Koval cheeses currently on sale, open the catalogue.
The charts from Milknews.ru show how the Europeans, the Dutch especially, killed their Russian cheese market by their anti-Russian sanctions in 2014. To meet the Russian consumer demand for imports, there has also been a shift towards South American suppliers Argentina and Uruguay, as well as Serbia and Kazakhstan.
SOURCE OF CHEESE IMPORTS TO RUSSIA, 2013-2020
in thousand tonnes
To enlarge the image, click on source.
VOLUME OF RUSSIAN CHEESE PRODUCTION, COMPARED TO IMPORTS, 2015-2020
in thousand tonnes
TYPE OF CHEESE IMPORTS TO RUSSIA, 2012-2019
in thousand tonnes
THE TOP-20 REGIONAL SOURCES OF CHEESE IN RUSSIA
With the sudden impact of sanctions and acceleration in demand for substitutes for imported European cheese, Russian cheese capitalism has accelerated in the customary direction – concentration and takeover of existing assets as investors try to maximize their returns by reducing costs, raising prices and profits.
For the time being, the top-five Russian cheese producers account for only about 20% of the domestic output. The twelve leading producers are Hochland, Dominant, Foodland, Wimm-bill-Dann, Neva milk, TNV Starodubsky Cheese, Belebeyevsky MK, KOMOS Group, Velikoluksky MK, Sarmich, Molvest-Arla Foods, the Yugovsky dairy products combine and the Kiprino group. These are the industrial producers; their cheeses are marketed to high-volume fast-food retailers of pizza, burgers, and the like, as well as to grocery stores and supermarkets.
A study by Streda Consulting Agency found that 80% of the production of the domestic hard cheeses is provided by 15 producers; three-quarters of the market for processed cheeses is accounted for by 5 companies; and the 10 largest players in the category of young cheeses occupy 55% of the market. But the processed cheesemakers are losing in volume and profitability, while the hard cheesemakers are gaining:
“Competition is increasing, and the market is gradually consolidating and manufacturers are becoming larger. Large companies are expanding their range, producers of semi-hard and processed cheeses are starting to enter the fresh cheese segment and vice versa”, reports Alexander Startsev of Umalat.
“If we evaluate it in terms of investment attractiveness, the return on investment in cheese production is on average five to six years. In addition, seasonality and cyclicality, a shortage of high-quality raw materials, and rapidly changing market conditions have a significant impact, so there are many worthy alternatives for an entrepreneur who wants to increase his capital in the short term,” comments Natalia Chernik, deputy director for development and marketing of Turov dairy plant. “Working in the dairy market, including the cheese market, pays dividends only over a long distance and requires deep immersion and constant involvement. Not all investors are interested in this in principle. A separate problem is the faster growth rate of the market for processed cheese products in comparison with natural cheeses. A low price segment is actively developing, which is due to a drop in household income, and, accordingly, this does not promise high returns to business.” Chernik described Turov’s idea of adding unique flavour to their cheeses. Turov’s Bonfesto brand, for example, has a new dessert line of double-layer ricotta with flavours of strawberry, kiwi, cherry-chocolate, and stracciatella.
The highest competition in the Russian cheese market now is in the economy or low-price product segment, according to Taras Kozhanov, deputy director of the Senursky cheese factory, in the Mari-El Republic of the Volga region. “The struggle for a place on the shelf in the mass market is quite high. However, if you look at a more narrowly focused category of analogues of the European varieties, the external competitive environment is relatively comfortable. There are still many types of cheese that are not produced in Russia or made in very small volumes. In a word, the main thing is to find your buyer.”
“Against the background of falling incomes, Russians are unwittingly beginning to wonder how much they pay for the same calories in a particular product. If you make the appropriate calculations, it turns out that today cheeses are no longer competing with each other, but with other sources of protein, such as chicken meat. A kilogramme of chicken is much cheaper than a kilogramme of cheese. Therefore, the growth of further production rests on the lack of money for the population to buy good cheese at current prices.”
The profitability of processed or low-priced cheese, according to Kozhanov, remains at a low of between 6% to 10%. This is being forced downwards, he adds, by the combination of falling consumer incomes and the muscle of the supermarket chains in capturing more and more of the supply of processed cheese, while forcing the cheesemakers to cut their prices.
The cheese market is still large and diversified enough, however, and Russian consumer tastes sophisticated, to allow market niches for the regional and artisanal cheesemakers to thrive. Despite the fact that cheese is becoming an increasingly popular product in Russia, it is still not an independent dish, as it is in France and Italy, but rather an additional food taste, an appetizer or a snack. Per capita consumption of cheese is no more than 5 kg. By comparison, it is 16kg per head in France; 10 kg in The Netherlands. The long-term investment calculation for Russian cheese is that Russian consumers will demand a rising volume of quality cheeses, rather than processed products, in catching up to the European standard. Enforcement of tougher food labeling regulations has helped drive vegetable fat and other cheese fakes off the market, as well as product dumping of Ukrainian cheese by the Kiev regime.
Artem Belov (right) is the chief executive of the industry association, Soyuzmoloko. At an industry conference last December, he predicted that the inflow of investment will continue. “We analyzed the growth of projects in the production of raw milk that were launched last year and this year — by 2023, the total increase will be 2.5 million tons, which is quite decent.”Cheese production will increase by 180,000 tonnes within three to four years due to new projects, Soyuzmoloko estimates. New projects mean new varieties of Russian cheese.
Saturation of the cheese market is occurring already for the processed products, as well as for young, fresh cheeses of the mozzarella type, and cheeses with white mould, such as Camembert and Brie. Ingenuity and novelty at the Remma cheese plant have led to the release of black Camembert with vegetable coal, as well as analogues of French Comté and Swiss Raclette. “The demand for farm-made, unique cheeses is increasing,” commented Remma’s general director, Ekaterina Karpunina.
“I’m a farmer and cheesemaker from the Moscow region,” Sirota told President Vladimir Putin during a public discussion in October 2018. “I make cheese. Let me begin by saying on behalf of the farmers, we have been telling you this repeatedly over the last four years…I wanted to thank you for the sanctions. In fact, we had a long discussion about this with experts at our session.”
Putin replied: “You should thank the Americans, not me.”
“That is what we were debating,” Sirota responded. “who to thank, Obama, Merkel or you? Anyway, thank you for all of that. Russian agriculture is clearly thriving. Take me: I sold my flat, my car, my business, made an investment, and my cheese-making factory has been growing 300 percent a year. The agricultural breakthrough is boosted by protectionism, the sanction shield, the cheap ruble, and care, such as record subsidies.”
“[Vladimir Putin] What kind of cheese do you produce? [Oleg Sirota:]Hard and semi-hard. We are thinking about exporting them. Next year, our cheese will make Vienna, Munich and Berlin tremble. I assure you, we already have an agreement. [Vladimir Putin] Will they tremble because your product is delicious, or because it is something else?”
“Because it is delicious…Our cheese is tasty, hard and cheap thanks to the ruble rates. It is attracting investors, including international ones. Everyone has begun investing in Russia’s agriculture. We have partners from Switzerland who relocated to Russia and are building farms. I was asked repeatedly during the session about what would happen if the sanctions were cancelled. What would I do? Would it be a disaster?”
Putin: “Regarding cheese and what happens if sanctions are lifted. First of all, we are not seeing them readying to lift any sanctions so you can sleep tight.”