The owner of "Vkusnoteevo" - RBC: "We probably won't get to milk in cans"

The problems faced by dairy producers against the backdrop of sanctions “reach the point of absurdity,” admitted the owner of the Vkusnoteevo brand, Arkady Ponomarev. For example,

The dairy industry is more exposed to risks than other sectors of the agro-industrial complex (AIC) due to new sanctions that the West imposed against RUSSIA after the start of a special operation in Ukraine, analysts from the National Credit Ratings rating agency noted in March 2022. The risks, according to analysts, were primarily associated with dependence on imported livestock and seed material: for example, the most popular cow breed in the world for MILK production, the Holstein, is imported to Russia from Denmark and Germany.

In Russia, there are currently enough breeding animals to ensure food security for dairy products for at least a year, but one cannot help but think about what will happen next, Arkady Ponomarev, founder of Molvest, one of the largest milk processors in Russia, told RBC. The company was founded in 1992, its production facilities are located in the Voronezh region. Molvesta products are known to consumers by the brands Vkusnoteevo, Tender Age, Fruate, Ivan Poddubny, Kuban Khutorok.

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In 2020, Molvest was the third largest raw milk processor in Russia after Danone and PepsiCo: according to the Dairy Market Research Center, the company accounted for 2.6% of milk processed in the country, or 531.1 thousand tons. In terms of revenue, Molvest was the fourth largest processor in 2020 after Danone, PepsiCo and the Renna group (Korovka iz Korenovka brand). In that year, according to the rating of Milknews, Soyuzmoloko and the consulting agency Streda Consulting, Molvest's revenue amounted to 28.7 billion rubles. (for comparison: Danone earned 122 billion rubles in Russia that year).

Ponomarev is from the Voronezh region, since 2013 he has been a State Duma deputy from the United Russia faction. Now he is a member of the State Duma Committee on Ecology, Natural Resources and Environmental Protection. He told RBC what risks there are in agriculture and the dairy industry due to sanctions.

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On the departure of foreign companies

After the start of a military special operation in Ukraine, the largest manufacturer, the French Danone, suspended investments in the Russian market, although the production of dairy products and baby food itself still continues. So did the American PepsiCo, which owns the Russian dairy producer Wimm-Bill-Dann.

Finnish Valio also decided to leave Russia, but so far its business continues to operate here and the company is developing a further plan of action. The impending suspension of activities in Russia, including local production and imports, was warned in March by Danish-Swedish dairy producer Arla Foods, which since 2014 has been producing cheese under the Arla Natura brand at Molvest's facilities in the Voronezh region.

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“The dairy industry is the most competitive in the Russian agro-industrial complex. If someone falls out of it, the squad will not notice the loss of a fighter, ”the owner of Molvest is convinced. There are many dairy companies in Russia, Danone and PepsiCo are just some of the producers. “Yes, they are larger than any of the domestic companies, but not so much that if they leave the market, there will be some kind of disaster. There will be minor technical problems, but nothing more,” Ponomarev believes.

The reduction in investment by foreign companies will not lead to a decrease in the production and quality of dairy products, RBC's interlocutor is sure. The dairy industry retained many of the "old Soviet methods of quality control", while foreign companies "originally had much higher standards, they have always observed them and probably will continue to comply." Consumers will also not notice the loss of individual items from the assortment, Ponomarev reassures.

Photo: Andrey Lyubimov / RBC

As for the joint venture with Arla, the Danish company has transferred the Russian business to a distributor and has kept the Natura brand in Russia for the time being. The assets that Valio sells in Russia, the owner of Molvest, in his words, are not interested: “What they sell is more suitable for processed cheeses, this is not our specificity.”

Seven facts about Arkady Ponomarev

Born on May 16, 1956 in Voronezh. In 1978 he graduated from the Voronezh Technological Institute. In the late 1970s and early 1990s, he worked as a chief engineer at several dairy plants in the Voronezh region. In 1992, he became the general DIRECTOR of the Voronezhsky dairy plant, on the basis of which the Molvest holding was created. Since 2013 - Deputy of the State Duma, member of the United Russia faction. In 2014, by order of the Minister of Defense, he was awarded the medal "For the Return of Crimea." In 2021, he was among the top 100 civil servants with the highest incomes for the previous year according to FORBES, then ranking 76th (the total income of his family was estimated at 201 million rubles). At the end of 2021, the income of the deputy and his wife exceeded 245 million rubles.

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On the "temporary shelter" for the economy

The economy that was in Russia until February 24, 2022, and the one in which the country exists after the start of the military special operation in Ukraine, are two completely different economies, the owner of Molvest states.

It is difficult to assess the changes a month later, but Western countries began to carry out “special economic operations” in relation to Russian trade and the economy long before that: “We had sanctions all the time , and we were in a state of economic war. The actions of the Ministry of Finance and the Central Bank to strengthen the ruble provided us with temporary shelter. Now we need to answer the question of how strong this shelter is, because we are seeing an increase in economic sanctions. And the second point: how long can we ensure life in this shelter and pull up resources in order to be able to go forward, ”points Ponomarev.

The work of the Ministry of Agriculture to stimulate import substitution provided Russia, taking into account the resources of Belarus, with a sufficient amount of raw materials for the production of products, “to be in this shelter for a long time,” Ponomarev is sure. “I'm talking about the level of food security in the form of raw materials: this applies to grain, MEAT, feed needed to keep animals and get milk . They exist today, but then there are nuances that need to be worked on immediately, because in the near future this will affect us, ”the source of RBC clarifies.

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About problems with packaging for kefir

“We probably won’t get to milk in cans, although, you know, it’s better not to promise,” the owner of Molvest describes the situation with the lack of packaging. The problems, he says, "reach the point of absurdity." About 50% of the cardboard packaging for dairy products used by Molvest is produced by the Swedish company Tetra Pak at its plant in Lobnya, Moscow Region.

Ponomarev recalls that he knew Hans Rausing, the former owner of Tetra Pak, well: “He was a man who loved Russia very much, knew the Russian language. But in 1996, Hans sold his share of Tetra Pak to his brother, and when the brother died, the business was inherited by the children, and ties were broken.

“Now the transnational company Tetra Pak, which is located in Sweden, is behaving ugly towards Russia. It prohibits the plant from printing packaging for such national products as kefir and fermented baked milk. So far they have left milk, but these products have been brought out. That is, we have equipment in our country, there is a machine that can print, but they do not give the budget and permission to purchase materials so that the plant prints this packaging,” Ponomarev is indignant. In his opinion, the state should immediately intervene in this situation - we are talking about administrative management, so that factories that can produce packaging material resume work. RBC sent a request to the Tetra Pak global office.

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Due to packaging problems, kefir will not disappear from the assortment, Ponomarev reassures. “For example, Molvest is now receiving packaging from Japan, and the company has one experimental Tetra Pak machine,” adds RBC's interlocutor. Molvest has stocked enough and is already replacing supplies from Tetra Pak with products from other suppliers, he said, but there is a problem here too. Many Russian packaging plants operate on Tetra Pak equipment. In the food packaging industry, cardboard, polyethylene, paints, and aluminum foil are used, which are imported from abroad. Bleached cardboard is imported from Finland.

Tetra Pak plant in Lobnya near Moscow (Photo: Vitaly Belousov / TASS)

“In Russia, since the Soviet era, this cardboard has been produced by the Svetogorsk plant - it works, but it is owned by the Americans,” Ponomarev points out. Svetogorsk Pulp and Paper Mill, which produces, in particular, SvetoCopy office paper, is owned by the American corporation Sylvamo (in 2021, the Russian business brought the corporation 15% of its revenue). Domestic polyethylene is suitable only for outer packaging, but another layer of polyethylene, which is in the middle of the package, is imported to Russia from Germany. “Having gigantic aluminum mining capacities, we do not get aluminum foil from us,” adds Ponomarev.

Russia has the necessary raw materials for its own production of packaging, and this problem must be solved, the owner of Molvest is convinced. However, he admits that this may cause some simplification of packaging, which consumers will notice. “Perhaps the cardboard of the packaging will no longer be white, but brown, or the pattern will not be too bright. Or let's go back to the fact that there will be no protective films in the cheese packages - the heads will be cut in the store, ”says Ponomarev.

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On Soviet methods of dealing with hype

Price regulation can be provided that it is justified and does not lead to the fact that products will go off the shelf, the owner of Molvest believes. Now the authorities are proposing to limit the margin on basic products, but today the market has already established the opportunity for the consumer to buy them and better regulate non-daily products, Ponomarev believes. “It is better to regulate the markup in heavy, “milk-intensive” products - for example, cheese or butter, so that people also have the opportunity to buy it, because it is a necessary product. Oil costs, relatively speaking, 200 rubles there, retail chains charge 25-30%, and others 40%, ”explains RBC’s interlocutor.

Spot regulation of prices will “harm”, as was the case with SUGAR, for which there was a rush demand in March 2022, Ponomarev notes. “When they started making noise about it, “ordinary business” bought it up and sold it through Avito. Well, you can not create a rush demand. Pack sugar in bags of 20-30 g, no one will buy them and store them in stocks.

According to Ponomarev, such a regulatory mechanism, which involved a reduction in packaging volumes, was used in the USSR: “If something like this happened, everything was done in doses. Remove sand, transfer to refined, reduce packaging. Yes, the price will rise, because it is more technologically advanced, but there will always be goods on the shelf.”

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Another option is less consumer-friendly packaging, which has always allowed dairy products to be on the shelf. “When there was a shortage of dairy products in the Soviet Union, but milk had to be on the shelf, the solution was this: everything in the store should be in a bottle. A person will never buy six bottles of milk, and you can put as many bags as you like in a bag. This is not so convenient for the buyer, but we are back to the fact that there is an economic war going on,” adds the owner of Molvest.

Another way to reduce costs is products with shorter shelf life. “Long expiration dates were invented by the same networks in order to deal less with these goods - they put them on the shelf and forgot. For the industry, this is a real rise in the cost of the product, because it is necessary to create sterile conditions that are not needed for ordinary products, and this is always problematic, and fresh products are much more interesting for consumers,” adds the owner of Molvest. Tetra Pak multi-layer packaging, which provides long shelf life, costs, according to him, about 17 rubles. in the price of milk, if not more - the difference in cost with a bottle or single-layer packaging is about 30%.

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On Dependence on Imported Seeds and Bulls

The owner of Molvest sees danger in Russia's dependence on imported seeds of a number of crops: sugar beets, corn and alfalfa (a legume used as animal feed). “We have separate seed farms that do this, but the question is how quickly this can be done. Even if these seeds are unproductive and give less yield, they still give some. It is possible to sow more, but if there is space, the question arises: will these seeds be enough to replace all imported ones? So far, I don’t see an answer to this question, ”says Ponomarev.

Today, the government and the Ministry of Agriculture, according to the founder of Molvest, should clearly set the tasks for seed centers to solve these problems. “That's why this year, even after paying for some of the seeds in advance, we got a huge problem in order to get these seeds. Some firms refused to supply them and returned the money,” Ponomarev said. He did not specify how many foreign companies refused to supply seeds to Russia, but added that the company "simply replaced one supplier with another" and this year it "is not critical, although it ruffled the nerves."

Another risk is related to the quality of imported products. “Seeds are such a thing that they can slip anything. Let's hope it hasn't come to that yet. But if we continue to rely on Western seeds, then there are potential risks of importing genetically modified seeds here, and this could be a real problem,” Ponomarev warns.

According to the interlocutor of RBC, the issue related to seed material in animal husbandry also requires an immediate solution. Russian animal husbandry is not very dependent on the import of breeding stock: the existing animal population will ensure food security for at least a year. But for the future, according to Ponomarev, there are risks: a very large percentage of the ox semen necessary for the reproduction of livestock comes from abroad, and at the moment it is not clear whether domestic production will be able to meet all needs.

“Our state breeding centers contain some bulls that produce material. But the question is the same as for seeds: how much and what quality? That is, we do not know if we can provide for ourselves on our own. And production is a long process for a period of four to five years,” notes Ponomarev.

There are not so many centers that deal with such genetics in the world: one is in Germany, the other is in France, a few more are in the Scandinavian countries, and they exchange the best bulls. “Even if we do it ourselves, we must understand that we have fewer animals, and we won’t be able to do the same as they do, it will still be worse, because their choice is an order of magnitude and two orders of magnitude higher,” points out Ponomarev.

Cows at the dairy complex of the SHP "Novomarkovskoye" of the company "Molvest" in the Kantemirovsky district of the Voronezh region (Photo: Uliana Solovieva / RIA Novosti)

The level of domestic genetics and selection must be raised, and there must be a person in the government who will be responsible for the result, the RBC interlocutor believes. “Now we don’t even have a standard, because we will bring everything, we will buy everything. But this topic is quite dangerous, and if you do not deal with it, it can lead to very serious consequences, ranging from a decrease in livestock to a decrease in milk production,” adds the owner of Molvest.

Two years to replace imported harvesters

The situation with equipment in agriculture is difficult due to sanctions, Ponomarev admits. “There is practically no domestic equipment, and it is sad to look at bravado performances when they talk about something that is being done here. A few days ago, they showed on TV a factory where harrows are made - this is a frame with pins that is pulled by a tractor. This thread is about nothing. If we are talking about equipment, we should first of all talk about energy-saturated technology. These are tractors, combine harvesters, sprayers – things without which it is impossible to sow and harvest,” says the owner of Molvest.

Domestic harvesters are made on imported components. Heavy tractors - the basic thing in agriculture - are produced by the only domestic manufacturer, the Petersburg Tractor Plant. “As far as I know, they have our engines and our gearboxes, but such a trifle as hydraulics came from Ukraine,” says Ponomarev.

The situation with other agricultural machinery, according to him, is even more difficult, and today the business is “looking for loopholes” in the supply of spare parts. “Let's say it would be interesting to supply a number of equipment to CHINA, but whether he agrees to give a damn about sanctions is also a question. The Chinese harvester may be good, but we don’t know about it - we don’t have them on the market yet.” The current reserve, taking into account Belarusian tractors, will allow Russian farmers to hold out for some time.

To revive domestic agricultural engineering, according to Ponomarev, "there are two years."

About Imported Yogurt Starter

Molvest is one of the few domestic companies that produces dairy products on its own sourdough, says its founder. “We work on our own kefir fungi – this starter has been living with us since 1969, we cultivate it and use it. There are two or three such companies in our country, all the rest work on imported dry kefir cultures,” says Ponomarev. In the future, on the basis of kefir, you can create your own national lines of basic products, for example, yogurts.

“As for other starters, they are all imported. So far, no one has vetoed supplies, but there are risks associated with this: sourdough is a microbe that can be genetically modified, there is no control system. If this is brought in, problems may arise in the future - for example, we will suddenly not be able to cook cheese. That is, all this is possible, ”warns Ponomarev.

Arkady Ponomarev (Photo: Vkusnoteevo press service)

On the necessary support for agricultural producers

Russian agriculture has not yet felt the effect of Western sanctions, the owner of Molvest summarizes: farmers have prepared for the 2022 sowing campaign, and winter is a quiet time for agriculture, with the exception of livestock, but “something will already come out” for the next sowing season in 2023 .

A freeze on prices for fertilizers will help producers keep food prices next year, the owner of Molvest believes. At the moment, farmers do not have an urgent need for fertilizers - some have already been bought, and some have been applied. But for the fall of 2022 and the spring of 2023, it is necessary to reserve fertilizer prices at the level that was before the price increase. “The lower this price is, the lower the price of products on the shelf next year. It is necessary to allocate money, preferential loans for fertilizers, and not for a year, but for two years,” the owner of Molvest believes.

The business will survive, the owner of Molvest is sure, but he will not be able to create an industry without government intervention and support. “There must be people who understand this business and can lead this or that industry. It doesn't have to be today's managers who work from slides and spreadsheets in Excel. These should be real production workers who are able to organize a system of cooperation in agricultural engineering not on slides. We have them, ”says the interlocutor of RBC. The leading role in this process, according to him, should be borne by the state, "we need a responsible person, a program that must be implemented, deadlines and money."

“Whether the Ministry of Industry and Trade is capable of doing this, I have big doubts,” Ponomarev noted.