Overview of the pasta market in Russia
I analyzed some indicators of the pasta market in Russia: the size of the pasta market (Fig.1), average monthly prices per pack (Fig.2), profit from sales (Fig.3) and profitability rate (Fig.4) of pasta production according to data taken from https://fedstat.ru/. The Russian Federation ranks 4th in the production of pasta in the world: exports exceed imports. Most of the products of Russian exporters are bought by Kazakhstan (more than 21 %); the largest buyer is CAPITAL T LLC (2.1 %), as well as to Belarus and Georgia. Russia ranks 10th in the world in terms of consumption of pasta. The leading supplier of pasta is ZHAOYUAN SANJIA LTD (2.4 %); imported products are mainly from Italy, China and Kazakhstan, Ukraine.
As we can see from figure 1 the pasta market in Russia has shrunk since 2017. We explain this by the fact that many foreign companies left the market due to sanctions and a principled position. The main share of the Russian pasta market is occupied by figured pasta, horns and vermicelli. A decrease in exports and imports has been observed since 2018 due to a decrease in the purchasing power of Russians, a ban on the import of food products from a number of countries, as well as an increase in the cost of imported products against the background of the depreciated ruble.
Then, according to figure 2 average monthly price per pasta pack has been increasing every year after a little down in 2018. Today people on average pay about 77 rubles or about 1 $ per pack.
That is not a secret that we have risen trend of monthly prices for pasta in Russia per pack during 2010–2020 despite the fact that capacity really has decreased. Moreover, profit from sales from the production of pasta in Russia (2018) has risen significantly from decrease in 2016. Many consumers of a foreign brand have switched to the consumption of domestic products.
However, thanks to capacity decrease during 2017–2018, profit from pasta sales has also decreased but not of the essence. That internally influenced the profitability of production of pasta sold.
That it is that during decrease 2017–2018 wholesale producers practically did not lose profitability, which was mainly due to retail. By the way, I also considered forecasting the volume of the pasta market (Fig.5) and forecasting the profitability of pasta production in Russia (Fig.6) considering tendency described above. Chosen model has describes as a liner function:
Market capacity = 358215329.5 -72542087 × World GDP growth rate -15452499.6 × t,
where t is a time factor (𝑅^2 = 87.39 %; p = 0.02; F = 13.9; significance of coefficients with independent factors at 10 % level (p = 0.9)). World GDP growth rate data prediction were taken from International Monetary Fund database.
I expect to see the capacity of the pasta market in Russia in 2022 at 23 279 198,2 (thousand rubles) which is less than its level in current 2020.
Profitability (wholesale of flour and pasta) = 7.44–0.000000025×Market capacity *,
𝑅 ^ 2 = 92.4 %; p = 0.01; F = 36.2; the significance of the coefficients with independent factors at the 5 % level (p = 0.95).
With a Market capacity * of 23 279 198 thousand rubles in 2022, the profitability of the wholesale of flour and pasta will be about 6.9 % which is less than its level in current 2020 (7.5 %).
Against this background, within the framework of the base period, a relatively stable growth in consumption of pasta in Russian domestic market is expected with a drop in production. Among the brands in demand in the middle price category are Makfa, Ameria, Shebekinskiye, Macrona, Rollton. Production concentration factor in the interval 2010–2018 increased from 58 to 74, i.e. the market is similar to monopolistic competition among TOP-5 players. So, in other words, I see that pasta market will be not so profitable in end of 2022 as expected. Furthermore, I see that due to strong TOP-5 monopolistic competition the real profit could gain only new big players with own competitive advantages in price-production and logistics niches.
