Cherkizovo looks to deliver premium products to China
Cherkizovo wants to increase its presence in the Chinese poultry market by shipping premium products in this country. Once the Chinese market opened to Russian poultry producers in 2019, they were able to take advantage of China's domestic deficit and gain a strong foothold among the poultry exporters. At the end of 2019, Russia was the fifth largest poultry exporter to China, and by the end of the first half of 2020 it moved up to the third place. However, future performance of Russian companies may be undermined by the growth of domestic production in China and the return of other large suppliers (such as the US) to the Chinese market, as stated by Andrei Terekhin, Head of Exports at Trading Company Cherkizovo, during the online session Export of Russian Poultry Products to China: a Strategy for Success.
“This more challenging environment calls for harder effort when it comes to growing our position on the Chinese market. In particular, it would involve capturing shares in more premium, high-margin products. We need to make this leap in quality,” says the expert.
Andrei Terekhin stressed that Russia's export potential is not limited to the supply of frozen raw meat (chicken feet, thighs, wings) – in the future, Russian supplies to China may include finished higher value-added products.
“If we are serious about establishing a permanent presence in the Chinese market, the discussion needs to focus on premium products that could be sold in both retail and online stores. We consider it necessary for future exports to include higher value added products. Chicken feet, which are now supplied in bulk in 10 kg boxes, can be sold in individual packaging. The overall assortment can be expanded with finished heat-treated products, such as meat with various marinades, nuggets and cutlets that will be produced in Russia. This is a higher quality product and a whole different level of added value,” said Andrei Terekhin. He added that such production facilities in Russia would generate additional jobs and increase tax revenues to the budget.
Cherkizovo Group is ready to discuss the possibility of opening up the Chinese market for higher value-added poultry products with federal agencies (the Federal Service for Veterinary and Phytosanitary Surveillance, Ministry of Agriculture, Agroexport). The decision allowing such products access to the Chinese market requires a lot of work and may take a long time. According to Cherkizovo's representative, this matter holds a lot of promise and importance for Russian poultry producers. China is Cherkizovo Group's key export market. In 2019, the Company shipped 14 thousand tonnes of poultry to China (over 40% of Cherkizovo’s total exports in this segment). This year, Cherkizovo plans to push this amount to over 50 thousand tonnes.
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