Following the announcement of the PepsiCo acquisition of Wimm-Bill-Dann there has been much talk about the strong growth prospects offered by Russian dairy.
And there is little doubt that the market has a good recent record – it expanding some 22 per cent in 2007/2008 according to Euromonitor.
But an analyst from cheese market research firm Proteus Insight said Russia may not be the promised land that some predict.
Russia and Eastern Europe have been something of a vacuum for Western European cheese exports in recent times but both regions have been hit hard by the global recession.
The Proteus cheese analyst said growth in these markets has therefore slowed over the last 12 months and is unlikely to pick up to pre-crisis levels any time soon. He said Western brands will have to adapt their strategy to the new economic situation and offer more value products.
Demographic concerns in Russia
Even once the recession has washed through the economy, the analyst remains unconvinced by the long term growth prospects in Russia for demographic reasons.
The Russian population has been falling since the end of communism and some analysts suggest that the decline could continue for many years to come. A recent UN report indicated that the country could lose another 11 million by 2025 from its current level of around 141.9 million.
With the sheer number of stomachs being an important factor when considering growth potential in a food market, the Proteus analyst said population size could prove to be an obstacle to growth for the likes of PepsiCo in Russia.
Apart from Russia, Asia is the other much talked about destination for food companies but in the case of cheese this is not really the case. Cheese is very much a new product in Asia and does not seem to fit well with the local taste palette.
Nevertheless some growth is expected from an emerging niche for spreadable, processed cheese and demand from an expanding community of expat Westerners.
Other emerging markets
Much more significant emerging cheese markets are North Africa and the Middle East and South America.
Crumbly white cheese dominates in the North African and Middle Eastern markets although processed cheese is growing at a faster rate and some traditional cheeses are making an appearance.
And in South America, the Proteus spokesperson said Argentina is emerging as a global dairy power and Brazil also has a lot of potential, although it is not such a big cheese eating country.
For the future, he said Africa is a market to watch as big cities look set to develop over the coming years, bringing with them higher demand for processed foods. In addition, the continent does not have the market acceptance problems that is restricting cheese sales in Asia.