Analysts assessed the impact of quarantine on meat consumption in Russia

The rating agency of the NKR in the review "The MEAT market in RUSSIA in the context of a pandemic" (available from RBC) predicted the development of the situation in this market.

The baseline scenario assumes that most of the quarantine measures will last until the end of the first half of the year, and then the fall in Russia's GDP by the end of 2020 could be 5-6%, and household incomes will decrease by 7-8%. In this case, the demand for meat may begin to recover as early as July-August this year. Consumption will remain at the 2019 level of 77 kg per person per year for all types of meat, but consumers will choose cheaper products.

According to the crisis scenario, quarantine measures in most regions will continue in the second half of the year, and in the fourth quarter a second wave of the pandemic may begin, which will last until early 2021. In this case, Russia's GDP in 2020 may decline by 7–8%, while household incomes will fall by 10–12% and begin to recover only in the first half of 2021.

In such a scenario, NKR analysts expect a reduction in domestic consumption, but the preservation of EXPORT potential. The cost of production will increase due to an increase in the cost of feed, which has a large share of imported ingredients, while the possibility of increasing retail prices for meat will be limited, since this product is included in the list of socially important essential goods. As a result, the revenue of the largest domestic meat producers will not grow, and the margins of companies from the top ten will be negative.