Overview of Russian seafood market uncovers good opportunities for domestic and foreign suppliers

In 2006 seafood consumption on the Russian market increased by 15% to RUB400 billion ($15.5 billion) accounting for 8% of the total turnover of foodstuffs. In retail trade the share of processed fish amounted to 30% or RUB 120 billion ($4.6 billion), head of analytical group of Norge-Fish Ltd Timur Mitupov writes for http://www.fishnet-russia.com/ (https://www.fishnet.ru/).

Some 30% of fish products are sold in street markets and booths, while fish sales in small nearby shops account for 45% of the total sales. Retail chains contribute 25% to the nation's total fish sales.

In the wholesale sector the strongest demand from retailers is observed for freshfrozen fish such as herring (27%), Alaska pollock (26%), non-finfish sea products (shellfish/mollusks/seaweed) 20%, mackerel (18%) and salmon and trout (10%).

Within Russian stores, whole round fish, processed fish, convenient and ready-to-eat products, and canned and preserved products each have a 20% share of sales, fillets have 15% and others 5%.

The structure of Russia's retail fish sales includes the following product groups:

• Fresh frozen finfish, shellfish/mollusks occupying a share of 30%, of which fresh frozen finfish accounts for 6%, frozen shellfish/mollusks for 20%, fish products for 4%;
• Fish gastronomy group occupying a share of 29% including 11% of smoked, fried and baked fish, 8% of salted salmon and trout, 4% of cold smoked fish, 3% of seasoned and dry-cured fish, 2% of beer snacks and sliced fish and 1% of minced fish meat;
• Caviar & roe delicatessen products accounting for 11%;
• Canned fish accounting for 10%;
• Marinated fish preserves occupying 9%;
• Salads and cookery accounting for 7%;
• Fresh and chilled fish accounting for 4%, of which chilled fish occupies 3% and live fish occupies 1%.

In the structure of the Russian fish market fresh, chilled and fresh frozen fish account for 10%, 25% and 65% respectively.

Live fish has been enjoying the strongest demand among customers, but due to the complicated nature of keeping live fish in stores and marketplaces it is usually on sale in the supermarkets. Supermarket sales are dominated by carp and sturgeons (80%), while in the marketplaces a combined share 90% of sales is contributed by silver carp Hypophthalmichthys molitrix and crucian carp Carassius carassius.

Chilled fish is also highly appreciated. This product group is represented not only by Russian fish, but also by fish imported from Norway, Finland, Denmark and France. Along with people, the group's main consumers include restaurants and sushi-pubs (HoReCa sector). According to Norge-Fish, the number of chilled fish consumers has a growing trend because the products are perceived as much healthier than frozen products. Leading species in the group are pike-perch with a share of 18%, perch - 14%, trout - 13%, salmon - 9%, pike - 8%, whitefish and cod - 3%.

Frozen fish has been dominating in the consumption structure all over Russia. Frozen fish of the Russian origin is mostly delivered from Murmansk, Kaliningrad and Russian Far East. The most popular species among the customers are herring winning a share of 25%, Alaska pollock - 15%, cod - 10%, pink salmon - 6%, blue whiting - 7%, hake - 5%, catfish - 4%, mackerel - 6%, flounder - 3%, salmon and trout winning a combined share of 3%.

In the shellfish/mollusks category the strongest demand is observed for such imported products as Danish shrimp and shrimp/mussel mixes, squid from South East Asia, Chilean mussels, French scallops, octopus and cuttlefish from Vietnam and American lobsters. The latest novelties in the sector are snails and frog legs in sauce.

Subgroups within the Fish Gastronomy structure include:

• Hot smoked, fried and baked fish with hot smoked sturgeon dominating with its 42% share, pink salmon winning 9% and catfish accounting for 8%. Novelties include hot smoked Norwegian salmon steaks and pink salmon rolls.
• Salted and lightly-salted fish products led by lightly-salted salmon with a share of 45% followed by lightly-salted trout with 42% and herring with 12 %. Sprats emerge as another novelty product in the subgroup.
• Cold smoked fish subgroup dominated by mackerel occupying a share of 28%, followed by trout with 23%, salmon with 13% and halibut with 11%. Novelties are Baikal arctic cisco, Baltic herring and Chum balyk.
• Finfish and non-finfish sea products (shellfish/mollusks/seaweed) seasoned and dried led by dried squid with a share of 41% and dried Caspian roach with a share of 28%. Novelties include dried laminaria and shrimps peeled and grilled.

In the category Fish Delicacies, Roe & Caviar, salmon roe dominates with a 73% market share, while sturgeon caviar has 7% and starred sturgeon caviar has 4%.

In the category Snacks for Beer and Sliced Fish the largest sales volumes are contributed by sliced trout (21%), sliced salmons (20%), stripped squid (11%), sliced sturgeon (10%) and Caspian roach (7%).

Not many Russian canneries can produce seafood of the same high quality as in Western Europe and most of the packers actually produce canned items very similar to those produced during the time of the USSR. That is why the category Canned Fish contains a considerable proportion of imported products such as Latvian sprats, Icelandic marinated herring in wine sauce, pink salmon in broth, cod liver and saury in broth. Recently some types of canned products such as fish blanched in oil have disappeared from the market making way to novelties such as lightly-salted Chilean mackerel, salted Norwegian salmon and Russian canned smelt.

In the group Preserved Fish the bulk of sales is contributed by herring (58%), salmons and trout (15%) and sturgeon (10%).

Sales dynamics among Russian consumers normally reflect seasonal fluctuations as well as holidays and vacations. Traditionally the demand for fish products peak in November-January, while from March to June sales of fish products tend to decrease and at last from August to September sales usually grow up to the February level.

Buyers' priorities and the consumption structure depend directly on their families' incomes. Customers with monthly incomes of ca.RUB10000 ($380) prefer cheap fish species such as blue whiting, wachna cod, hake and Alaska pollock, while customers with incomes of up to RUB20000 ($765) choose fish species from the medium-price segment such as herring, pink salmon and mackerel. When the monthly incomes exceed RUB30000 ($1145), consumers can afford a wider range of fish, including more expensive species such as North Atlantic salmon, sturgeon, shellfish/mollusks, tuna and value-added products. In the recent months market analysts have been reporting a growing demand for oysters, other shellfish species and laminaria.

A survey into the seafood buying habits of consumers was recently conducted by Norge-Fish. Five-hundred Russians, between the ages of 25 and 60, were polled by the group's analysts.

According to the poll, 56% out of 500 respondents prefer frozen fish, 38% prefer live and chilled fish, while 6% of the respondents do not fish at all. Among these consumers, 20% purchase shellfish/mollusks/seaweed (e.g. squid), 39% of them buy canned and preserved fish, 65% buy salted fish, 25% buy pickled fish, 37% buy smoked fish, and 5% prefer fish burgers and crab sticks.

Surprisingly, 7% of consumers from the European part of Russia, including such big cities as Moscow and Saint-Petersburg, say that they do not eat fish at all, though, among those who do consume it, people prefer pickled and smoked fish (35%) and shellfish/mollusks/seaweed (35%). Total sales in the European Russia are traditionally dominated by frozen fish with a stable share of 40%, unlike in the Russian Far East Basin (namely in Sakhalin and Kamchatka) where fresh fish takes 68% twice as much as the country's average. Canned and salted fish are also popular among Far East and Siberian (Novosibirsk and Krasnoyarsk) customers while their demand for prepared fish products (gastronomy and fillets) is not strong.

Due to comparatively low family incomes in these regions and the severe climate conditions, people prefer to consume meat and poultry. As for fish, they traditionally use fresh marine and freshwater species in their home cooking, including salting, drying and smoking. In Siberia, 50% of the respondents consume mostly dried and salted fish, 45% use frozen fish and 35% use canned fish.

The rural population of Russia prefers fresh fish (40%) and canned and salted fish (30%). Among the population of large cities, except for mega cities, the most popular category is fresh fish (46%), while other kinds of fish (salted, smoked, frozen and canned) take about 38%. In towns with populations up to 100,000 people fillets are in the 5th place after round frozen fish, salted fish, smoked and canned fish, while in towns with populations up to 500,000 people fillets consumption is in the 3rd place. Approximately 65% of wealthy consumers prefer fresh fish and only 25% of consumers with smaller incomes prefer fresh fish.

The wealthy respondents with monthly incomes of more than RUB25000 ($950) give the second place to processed and ready-to-use fish production. As earnings decline, the popularity of fillets, pickled and smoked fish goes down, and respectively the popularity of canned and salted fish grows.

As the welfare of Russian consumers has been improving, fish consumption has been growing even faster by more than 15% and the strongest growth is now expected for consumption of fish and other sea products and value-added fish products such as fillets, smoked and dry-cured fish. At the same time, the annual consumption of 16 kilos of fish and related products per capita still remains twice lower than meat consumption.

When comparing the production facilities of the fish processing plants and volumes produced, consumers tend to prefer high quality processed fish. Based on consumer surveys and trade statistics, Norge-Fish forecasts that in the near future the Russian fish processing factories will not be able to satisfy the consumer demand for pickled, smoked, lightly-salted fish products and fillets.

These segments of the Russian retail already greatly depend on imports. The share of imported fish already exceeds 30% of Russia's total fish consumption. The main suppliers of imported fish products are Norway, Denmark, Chile, Great Britain, Mauritania, Iceland, China and Vietnam.

Norge-Fish points out that Russian consumers are trying to include the most important types of finfish and other sea products into their diet in a drive to consume natural and healthy foods. This is am important signal about the challenges to be dealt with in the future both by domestic and foreign suppliers.