Russian government, retailers seeking ways to boost domestic demand for fish

The Russian government is working with seafood retailers and producers to seek a way to enhance domestic demand for Russian-caught seafood.

Russia has been faced with an excess supply of seafood since late 2020, when the COVID-19 pandemic led China to drastically tighten its imports of Russian seafood. Prior to the move, China accounted for 60 percent of Russia’s market for pollock.

The closure of the Chinese market has had a dramatic on Russia's seafood exports. China has been supplanted by South Korea as Russia's top export destination for seafood, and Russian authorities and fishing firms have initiated a global pollock marketing campaign called "The Russian Fish."

Domestic consumption of pollock in Russia is low – typically no more than 130,000 MT – and consumption has been falling for years, Fishery Union President Alexander Panin told news agency Regnum. Russia's per capita consumption of seafood was 20 kilograms in 2020, but Panin said that calculation was based on volume of raw materials sold, not sales. Panin said he estimates per capita consumption is just 13 kilograms, and that that figure has decreased by 27 percent in the last seven years.

The results for 2021 are likely to be even less promising, according to Panin. While the value of Russia's seafood sales rose, volume decreased in the first half of 2021 compared to 2020, according to a survey by GfK Rus. Seafood prices rose 8.9 percent in the first half of 2021 compared to 2020, reaching RUB 313 (USD 4.21, EUR 3.74) per kilogram, but the volume of sales per customers dropped 3.2 percent and total sales dropped 2.5 percent.

In the first half of 2021, Russia's seafood began issuing warnings wholesale prices would likely increase by 15 percent in the second half of 2021 due to higher raw material, packaging, and logistics costs. Norebo Deputy Director of International Affairs and Public Relations Sergey Sennikov said the cost of fishing and vessel-maintenance also became expensive, according to Kommersant.

The Russian Federal Agency for Fisheries has attempted to increase domestic consumption and relieve the pollock glut through the purchase of thousands of metric tons by the state government. However, Russian Fishery Company First Deputy General Director Savely Karpukhin said the government purchases will cover less than one-third of the surplus. He said the state purchasing programs would be more effective if they regularly purchased larger volumes of up to 100,000 MT.  

Sennikov has proposed the state buy more fish for the country's schools, which would both help offset the large supply and help foster seafood consumption at an early age. Primorye Fisheries Association President Georgiy Martynov, in an interview with the Fishnews, estimated the possible need of state institutions could be up to 700,000 MT – if the government pushes for greater domestic purchases of seafood.

Cost has long been a barrier to growing Russian seafood consumption, impeding previous efforts to increase domestic consumption. However, cost increases across all food categories in 2021 appear to be doing even more damage to the cause. Through 20 November, consumer prices rose 8 percent overall in Russia. The main driver of that inflation was food, according to government statistics. Food costs increased by 10.58 percent year-over-year, with basic products like cabbage increasing in cost by 87 percent year-over-year, potatoes by 74 percent, cucumbers by 60 percent, and tomatoes by 58 percent.

Seafood has, so far, avoided dramatic price increases, but the mounting cost of other staples may keep customers away from splurging on seafood.

Russians also appear to favor red meat and chicken over seafood. In 2021, the research company Platform conducted a survey among urban Russians regarding their consumption of seafood. Of the respondents, only 37 percent said they eat fish at least one time a week, with most preferring chicken and meat as a source of protein instead. However, the survey also found 80 percent of people surveyed felt eating fish is good for health, and that children should consume fish to have healthy lives.

“There are many more people that would like to buy fish than do now,” Platform General Director Mariya Makusheva told media agency Fishnews. However, she said, the biggest stumbling block is  price, which was mentioned as an inhibiting factor by more than 70 percent those surveyed.

Retailers, as well, are trying to sell more seafood. Sergey Ermolaev, director of the fresh food category at Magnit retail chain, said in a speech at WorldFood Moscow 2021 his company wants to increase sales in the segment by offering more high-quality products, and selling seafood under the chain’s private label – a move that will require direct contracts with processors.

“This will enable us to control pricing and mitigate seasonal hikes in costs,” he told media agency Retail.ru. Magnit has also focused on selling semi-finished or ready-to-eat products to allow consumers to save time.

Yulia Galieva, a fresh food category manager at Russian retailer Komandor, told Retail.ru the company has also begun manufacturing semi-finished seafood products at its shops. Sales in the category are up 14 percent in 2021, and the best seller has been mackerel, herring, and perch grilled in-store.

Panin said he expects the industry will shift toward more prepared products, to serve consumers who prefer the convenience and avoiding having to handle raw fish.

“In a few years, consumers will not want to spend time even on fillet. They want semi-finished or ready-to-eat products, with sauces, special additions, and flavors,” he said. However, Panin said value-added production capabilies are currently limited in Russia.

Seeking to address the growing demand for prepared fish products, Russian Fishery Company and others working to increase their value-added processing capabilities. RFC’s planned supertrawlers are intended to be more modern, with greater capacity for producing processed products like surimi and fillets.  

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