Russian confectioners intent on restoring chocolate export volumes to China - Association

MOSCOW. Aug 30 (Interfax) - Russia's confectionery enterprises intend to restore exports of chocolate to China, which decreased last year. To do so, they need to more actively use state support to compensate some of the costs of promoting their products in foreign markets, Vyacheslav Lashmankin, executive director of the Association of Confectionery Industry Enterprises, said.

"Based on 2021 results, Russia became the No. 1 supplier of chocolate to the Chinese market. However, in 2022, due to all its difficulties, certain adjustments were made, and we lost almost 56% of the export shipments to the Chinese market. These are significant volumes that need to be restored in 2023 and beyond. And here a promotion program will play one of the key roles in restoring our positions," Lashmankin said at the "Measures to Increase the Competitiveness of Russian Exporters of Agricultural Products" conference on Wednesday in Moscow.

He recalled that the possibility to compensate part of the costs of promoting products in foreign markets is provided for by a government decree, which was adopted on February 26, 2022 (No. 255). "So far, unfortunately, this measure of state support has not become widespread, but there are great hopes for restoring the volume of export shipments of products, for example, from the confectionery industry. This measure would be in great demand in order to restore our export shipments to China," the head of the association said.

Moreover, he noted, it will contribute not only to the restoration of volumes, but also to an increase in the pricing of products. So far, Russian confectionery products are represented on the Chinese market mainly in the cheap segment. "Unfortunately, we are not getting to the premium yet. And there is a purely subjective reason," he said. "It turns out that consumers in China eat Russian chocolate more often than Italian, Swiss, etc., but Russian chocolate isn't looked at by them as imported. The Chinese consumer is ready to pay much more for imported chocolate. And the repositioning of Russian chocolate to the imported segment will allow our producers to move from lower price segments to higher ones."

Lashmankin noted that product promotion support programs operate in many exporting countries. He referred to the experience of Switzerland, Belgium and Denmark, where they run programs to promote Swiss and Belgian chocolate, as well as Danish biscuits. In 2021, the Agroexport Center, with the support of the industry, prepared a concept for promoting confectionery products to the Chinese market, which will also contribute to the restoration of Russian exports.

Moreover, confectionery products are products with the highest level of added value, the export of which "is of interest to any country in terms of increasing income," he said. The export of a tonne of finished confectionery products is 8.3 times more expensive than the export of a tonne of unprocessed grain, and a tonne of flour-based confectionery product is six times more expensive, Lashmankin said.

"In 2022, the Russian Federation exported almost 800,000 tonnes of confectionery products. In terms of sugar, about 350 thousand tonnes of sugar were exported in confectionery products," he said, noting that this is comparable to the annual export volumes of sugar alone. "Through the export of confectionery products, we stimulate the export not only of finished products, but of raw ingredients too," he said.

Every year, the industry uses 1.5 million tonnes of sugar (38% of confectionery products' raw material composition), 1.1 million tonnes of flour (28%), 650,000 tonnes of cocoa products (16%), 230,000 tonnes of starch syrup, and 150,000 tonnes of dairy products.

Confectionery export revenue in 2022 was $1.63 billion compared to $1.64 billion in 2021. By the end of 2024, the export could reach $2.1-2.2 billion, the presentation said.