Let's go butt: why Russians will eat more lamb

In RUSSIA, the production of cheap pork and poultry is growing, and the production of expensive beef is falling. However, large agricultural producers are expanding their capacity to produce lamb, an even more niche product. Will the bet on sheep breeding justify - FORBES figured it out .

Rostov GAP "Resurs" owns a herd of 26,000 sheep. In the spring, the company announced that it plans to increase the number of livestock: the number of broodstock will increase to 54,000, and young stock for fattening - up to 100,000, writes the Livestock of Russia magazine. Investments in the project will amount to 1.5 billion rubles. The revenue of GAP Resource, one of the largest producers and exporters of poultry MEAT, in 2021 was about 82 billion rubles.

In September last year, another major poultry meat producer, Naum Babaev’s Damate company ( revenue in 2021 - 152 million rubles), put into operation the renovated Kavkaz-myaso plant in Cherkessk with a capacity of 25,000 tons of lamb per year. The volume of investments is 3.4 billion rubles. The project includes feedlots for 80,000 livestock places, a service company to work with farmers, says Damate's deputy general DIRECTOR for marketing and sales Daria Lashchenko.

The largest Russian meat producer Miratorg, owned by the Linnikov brothers, owns two sheep breeding complexes in the Kursk and Tula regions with a population of up to 90,000, the volume of investments made in this businesseven before the pandemic, amounted to about 3 billion rubles. In 2020, the company announced that it plans to reach 134,000 livestock by 2028.

According to Rosstat, in 2022, the total production of livestock and poultry amounted to 16.2 million tons. Over the year, the share of pork increased by 0.7 p.p., to 35.6%, the share of poultry meat increased by the same 0.7 p.p. p., up to 43.6%. But cattle in the structure of production decreased by 1.2 percentage points (17.2%), sheep and goats - by 0.1 percentage points (0.8%). According to the analytical company Agromix, in 2022, poultry production (in live weight) increased by 5.2%, pork - by 8%. But beef produced 3.5% less than a year earlier.

According to the analytical agency Emeat, the production of mutton in 2022 decreased by 2% and amounted to 205,000 tons. In the industrial sector, the fall is even greater - 3.5%, with large producers accounting for only 17,800 tons of mutton. More than half (128,000 tons) is produced "in the households of the population", that is, by private traders, the rest - for peasant farms.

Why start large investment projects in such a narrow niche?

Why lamb is not a turkey

In 2016, Russia produced a little less meat than in 2022 - about 14 million tons, 210,000 tons of which came from a niche product - turkey meat . In six years, the volume of poultry production has doubled: in 2022, according to Agrifood Strategies, it reached 414,500 tons.

Can the lamb market repeat such a breakthrough? There are several reasons why this would be difficult to do.

Firstly, even before the development of Russian production, turkey was actively imported from other countries, points out the HEAD of the National Meat Association (NMA) Sergey Yushin. That is, the consumer was accustomed to it. Secondly, the turkey initially has a special status - it is considered dietary, healthy, easily digestible meat. Plus, it is much easier to prepare, and the product line includes hundreds of items, the expert continues. While lamb is still often sold in cuts.

Thirdly, the rearing cycle of sheep is longer than turkeys, adds Albert Davleev, president of the consulting company Agrifood Strategies, and the ewes will never give the same productivity.

Finally, fourthly, all those years that turkey production grew, lamb stagnated. In 2016, the same 210,000 tons of sheep and goat meat were produced. That is, a little more than in 2022.

The economic situation now is also not the same as it was in 2016. “In conditions when many households save on food, often not even allowing themselves some dairy products, reducing the consumption of fish, vegetables, and so on, it would be strange to predict an active transition to lamb,” Yushin believes.

Without religious restrictions

Nevertheless, experts and market participants interviewed by Forbes believe that investmentsin the expansion of lamb production capacity may be justified. “We expect both production in the industrial sector and consumption of mutton to grow within two years,” Lyubov Savkina, CEO of Emeat, told Forbes . “This is possible with the implementation of the projects announced by large holdings.”

“Lamb is a niche product with great growth potential,” explains Lashchenko from Damate. “Currently, the volume of mutton production in Russia is insignificant and amounts to about 200,000 tons. This volume is not enough to meet the growing domestic demand.” Due to the expansion of the production base, Damate plans not only to satisfy the current demand, but also to increase the volume of meat consumption and send it for EXPORT .

“With the development of a culture of consumption, mutton has excellent prospects,” agrees Olga Miroshnikova, executive director of Khakasskaya Mutton (part of the Ermak agricultural holding). - While we are slaughtering 250-300 heads per shift, this is about 5 tons of meat daily, but we see the demand for products on the market. Therefore, within the framework of the holding, it is planned to expand its own herd and engage in genetics.” According to Miroshnikova, restaurants and trade enterprises willingly take lamb. Now "Khakasskaya Mutton" supplies products, chilled and frozen, not only in the Republic of Khakassia, but also to Moscow, Novosibirsk, Voronezh, and the Far East .

In 2022 Russiaproduced 11.7 million tons of meat (in slaughter weight), mutton accounted for only 2% of the total production (about 200,000 tons), but in 10 years, production could well double or more - up to 550-600,000 tons, Davleev from Agrifood Strategies is sure. And this, according to him, is not an optimistic, but a rather modest forecast. How can growth be achieved?

Demand for mutton may increase if the consumer is accustomed to it. The transition to industrial production, promotion in retail networks and geographical expansion can help.

“Now there is a structural reorganization of the industry, its modernization, the transition from the traditional way of growing and selling cuts (large pieces of meat on the bone. - Forbes) in the markets to industrial production and sale through retail chains in the format and packaging familiar to most buyers,” explains Yushin. Breaking people's habits is difficult, and perhaps not necessary. In the regions of the Caucasus, I am sure, they will continue to buy lamb from their familiar farmers at traditional fairs, where they even cut it in front of you. But the industrialization of sheep breeding will help to introduce the product to regions where lamb is still rare.”

Lyubov Savkina agrees that the geography of meat consumption can be expanded. “For residents of the North Caucasus, the Volga region, lamb is quite familiar, in the diet of many it is a priority,” the expert says. - The population of other regions will willingly try this meat if it is available, literally represented in chains like Pyaterochka and Magnit. The first purchase will be supported by stable quality and various discounts and promotions. And here it is important that manufacturers be able to convey to customers that the lamb of modern meat breeds does not have a specific smell that repelled many.

Yushin from the National Meat Association notes that in the world, mutton has become the only type of animal meat, the share of consumption of which has remained stable over the past 20 years, at 12%. Over the same period, beef consumption fell from 24% to 20%, pork - from 38% to 33%. “The stability of the segment indicates a stable demand in the global market,” the expert believes. In the countries of Central Asia, the Near and Middle East, confessional restrictions do not apply to lamb, unlike other types of meat.