COVID-19 shapes the Russian pet food market

B&M versus online

Pet food stores were among the few businesses allowed to continue operation during the nationwide lockdown between March and May. This helped brick-and-mortar stores to stay in business, but not to keep their revenues intact.

Nearly 83% of Russian pet food stores saw their revenue shrink during the lockdown. In research conducted by local company PerseiLine, 60% of them reported a

30-50% fall compared to the same period last year. For 16% of the stores, revenue was down by over 60%.

New online customers

“The lockdown hit turnover hard at brick-and-mortar stores. But online stores have significantly strengthened their positions with an inflow of new customers,” said PerseiLine director Alexander Burov.

Online pet food sales have been booming. Major Russian online retailer Ozon estimated that cat and dog food sales jumped by 249% and 265% during the lockdown compared to pre-crisis levels, according to their development director Elena Shulgina.

Russian economy dented

The ongoing pandemic has severely impacted

the Russian economy, increasing the unemployment rate and prompting citizens to tighten their belts. Surprisingly, the pet food market has not been affected. “The anticipated shift towards cheaper pet food has not happened. It seems that people are not ready to economise on their pets,” Elena Shulgina said.

“Some customers may continue to purchase pet food through online stores rather than going to brick-and-mortar stores,” said George Chkareuli, director of the Russian chain Bethowen.

Room for growth

In 2019, Euromonitor International estimated total sales of pet food in Russia at 624,500 tonnes for $3.05 billion (€2.57 billion). During the past few years, the market has been growing by an average of 8-10% per year.

The Russian association of pet food producers APK has estimated that market sales could grow by at least 50% in the next few years, reaching 1 million tonnes. The share of commercial pet food in pets’ diets in Russia is still 2-3 times lower than that in Europe, according to Ekaterina Kardakova, APK spokesperson.

Russian producers could benefit from future growth more than importers. The pandemic has caused a downward slide of the Russian rouble, making imported products more expensive and less attractive to local customers. “Quite a few pet products are imported, with prices set to rise,” George Chkareuli said.

Local sourcing

Russian pet food production has been growing at an average of 10-12% in the past decade, Ekaterina Kardakova said. This is faster than sales growth, so products from local companies are gradually replacing imports. APK members have opened eight plants in recent years.

One of these is Russian agricultural holding Miratorg, who opened a pet food plant in Kursk Oblast costing $80 million (€68 million) in 2019. The company is now considering investing another $30 million (€25 million) to expand production for export in the next few years.