Industry leaders 71.7 347 Ranking newcomers 91 | 3 34.41 place BN KZT bn kzt 1.APK-Invest Corporation Central Asian Sugar BN KZT 44.6% total sector Corporation• The company completed its first contract earnings 2. 227 | 6 with China’s food monopoly COFCO. TNS-Export 14.0 17.1%• Launch of MEZ-SKO subsidiary that will 3. BN KZT manufacture refined oils and fats. Abi-Zher 462 | 172 place 60.1 4. 5.61KazAgro Arystan PK BN KZT BN KZT 17.0% 488 | 18 5.1• Chairman of the Executive Board Dulat Aidzhanov was removed from office. BN KZT• A deal to supply 20,000 tons of wheat was signed fSoecrt2o0r1’s4key figures with China’s COFCO Corporation. • Investments in fixed assets increased by• A $100 mln loan was received from HSBC on special 14.4%. terms, plus a $100 mln loan from RBS. • In 2014, for the first time in 20 years,3 place 34.4 1.1% Kazakhstan exported 12,300 tons of meatCentral Asian Sugar and meat products.Corporation BN KZT 26,360 • Total cereal grains and pulses crop reached• Koksu Sugar Plant was launched after an bn kzt 17.2 mln tons with wheat making up 75.7%. overhaul with the first shipment of sugar beet. total earnings iSnec2t0o1r5’s main events• Import duties on raw sugar were removed to of companies support local producers. in the ranking • Kazakhstan joined the WTO. • The total cost of projects with foreigncSoecmtpoarn’siefsastest-growing 9.4 61.0%Agrofirma TNK 52.2% participation exceeded $1 bn.Astana-Nan BN KZT 44.2% • The law “On agricultural cooperation”Aksai bakery 8.1 was approved and shall become effective as of 2016. BN KZT • A new system of subsidies was developed: it will be tested in the crop farming sector 10.5 in 2016. BN KZTrevenue – annual revenue growth – annual revenue fall ranking place | sectorial ranking place BN KZT 49 CONTENT
N B 5 0 0 R A N K I N G | AG R I CULT U R ESectorial ranking 2015 Ranking 2014 Ranking Company Subsidiary companies Sector Revenue, mln USD Revenue, mln KZT Net profit, mln KZT Assets at the beginning of the year, mln KZT Assets at the end of the year, mln KZT Equity at the beginning of the year, mln KZT Equity at the end of the year, mln KZT ROS, % ROA, % ROE, %1 APK-Invest Corporation* Production of cereal grains 400.3 71,723 2,928 208,275 163,981 72,452 75,379 4.08 1.57 3.96 335.5 60,112 6,114 694,828 946,108 314,975 344,164 10.17 0.75 1.862 53 60 Kazagro Agriculture 307.8 55,151 1,895 183,465 161,826 60,702 66,119 3.44 1.10 2.99 21.1 3,781 Food Contract Corporation Agriculture 191.8 34,360 223 18,189 21,355 14,581 16,347 5.91 1.13 1.45 KazAgroProduct Agriculture3 92 Central Asian Sugar Corporation Sugar production Production of cereals and4 116 55 Kazexportastyk Holding oilseeds 155.5 27,864 -27,799 149,572 119,882 42,825 15,164 -99.77 -20.63 -95.88 Holding5 120 99 Ivolga-Holding Silo 149.0 26,700 Production and processing 78.1 14,0026 227 TNS-Export of grains Eating and hatching eggs,7 Tsesna-Astyk Concern** poultry 64.9 11,630 -707 10,819 12,990 2,773 2,107 -6.08 -5.94 -28.98 Bakery production8 279 275 Alel-Agro 62.9 11,275 3,276 8,805 10,263 5,936 8,693 29.06 34.36 44.79 Production of cereal grains9 296 325 Aksai bakery plant 58.4 10,470 Agricultural holding10 321 389 TNK Agrofirm 52.6 9,420 Transport11 357 358 Atameken Agro 45.5 8,144 -2,790 24,473 34,249 -1,344 -4,475 -34.25 -9.50 95.88 Agriculture12 397 294 Selprom 39.4 7,060 Production of flour and fodder13 410 332 AsiaAgroFood 38.3 6,856 466 7,849 8,136 1,760 2,071 6.80 5.84 24.35 Poultry farm14 433 343 East Kazakhstan Grain and Feed Mill 35.8 6,413 -26 6,697 7,699 357 327 -0.41 -0.36 -7.59 Crop farming15 462 454 Alatau-Kus 31.6 5,670 Production of cereal grains16 468 Abi-Zher 31.3 5,61017 500 Arystan PK 28,5 5 105* Subsidiary of Alibi Holding ** Subsidiary of Medet Holding projects in the added-value sector during the for crop farming, private farms account for 45.7% first 5-year plan of Accelerated Industrial and of the sector. This being said, 40% of farmers Innovation Development (AIID) and they plan have less than 10 hectares of farmland each. to expand their presence in Kazakhstan. With farm sizes so small, increased production based on modern technologies is hardly possible. Subsidies in exchange for consolidation Similarly, investors, credit institutions and banks Dominated by small farms, the sector cannot are unwilling to deal with small entities. adopt an intensive growth platform. While The government says it will support small grain manufacturers are more or less integrated farms by providing subsidies and loans, yet into large holdings and have long-term partner it insists that the market must become more relationships with them, the situation in livestock consolidated. It is expected that the situation farming is different. As of 2015, there were will begin to change in 2016, once the Law “On 191,500 farming businesses and 1.6 million agricultural cooperation” becomes effective. A farming estates in Kazakhstan. Private farms new system of subsidies for farmers is expected make up 95.8% of the sector, with only 7,991 to be introduced next year: subsidies on a per- large farming businesses. hectare basis will be redirected to finance the purchase of machinery, equipment, seeds, Small farming estates and private farms herbicides and fertilizers, as well the introduction account for 45.2% and 31.1% of gross agricultural of technology. The government says that even output respectively. Farming estates make up greater support will be provided. 71.6% of the livestock farming sector’s output. As5 0 National Business, №12 (21) 2015 CONTENT
Focus on exports Kazakhstan Last year, APK-Invest, the main production In 2014, the gross output of large crop became a net asset of Alibi Holding, had revenues of $400.3 importer of mln vs. $850.7 mln in 2013. In 2014, cerealfarming businesses was worth KZT 418 bn. Russian grain, grain sales fell 50% which is equivalent to 1.5According to the statistics, the total output of the with 500,000 mln tons. The company says the main causeentire crop farming sector in 2014 reached KZT tons delivered was a decline in sales on the domestic market,1.33 trillion, hence large companies account by trucks and where shipments dropped by almost 1 mlnfor no more than 31%. Large agricultural rail. tons. Approximately 40% of cereal grains isholdings continue to focus on cereal grains, exported: in 2014, Azerbaijan, Iran and Russiawhich account for 71.5% of their gross output, accounted for 22%, 8% and 5% of Kazakhstan’salthough their cropland area is still declining, export revenues respectively. Annual revenuesas cereal grains are being replaced by oilseeds fell by 45% to KZT 71.7 bn. Financial expensesand forage crops whose cropland areas last year increased by KZT 13.9 bn, since net losses soaredincreased 22% and 7.8% respectively. Due to by KZT 12.8 bn as a result of the devaluation ofthe high profitability of oilseed and vegetable the tenge.farming, private farms are following the sametrend. Government-owned KazAgro holding came second in the ranking, together with its In 2014, Kazakhstan produced 17.16 mln tons cereal grains subsidiary “NC “Food Contractof cereal grains and pulses, including 13 mln Corporation”, which focuses on procurement,tons of wheat. This is 7% less than in 2013. The storage, transport and sale of state grain andlow quality of Kazakh crops as a result of bad grain products. The company owns three grainweather conditions caused a decline in exports. terminals and a flour mill on the Caspian Sea,In the 2014/2015 marketing year, only 6.6 as well as a network of grain handling facilitiesmln tons were exported instead of the planned in the grain-producing regions. In 2014, Food8-9 mln tons. Moreover, for the first time, Corporation made a profit of KZT 1.9 bn andKazakhstan became a net importer of Russian exported 483,600 tons, which was more thangrain, with 500,000 tons delivered by trucks three times its exports in 2013.and rail. Revenues of most major producers felldue to these factors and economic uncertainty, During the same period, foreign currencybut they still remained at the top of the sector revenues increased 3.5 times, rising from KZTranking. 6.6 bn to KZT 23.1 bn. In fact, the companyFigure 1. Kazakhstan’s cereal grains and flour exports in 2014 14% 32% 72% 27%2%8% Flour 1% Cereal grains8% 21%15% Central Asia Russia Central Asia and Afghanistan Turkey Afghanistan Caucasus China Other markets Other markets IranThe average for the past 5 years, according to the Statistics Committee of the Ministry of National EconomyCONTENT 51
N B 5 0 0 R A N K I N G | AG R I CULT U R Eperformed very well, as its commercial grain Only about ranking, is most surprising. The company’sstock had been growing since 2011 and it 5% of raw revenues last year totaled KZT 34.4 bn,was selling it effectively throughout last year. materials although Kazakhstan produces very little sugarUnfortunately, for the first nine months of 2015 that sugar beet. Moreover, during the past several years,alone, the corporation posted a net loss of KZT manufacturers the sugar beet cropland area has contracted2.7 bn vs. a net profit of more than KZT 2.3 bn need are rapidly, from 18,200 ha in 2011 to 2,700 ha infor the same period of 2014. Gross profit fell by produced 2013 and 1,200 ha in 2014. The gross harvest4.5 times from KZT 19.4 bn to KZT 4.3 bn, and locally, with fell by 8.5 times from 200,400 tons in 2011sales revenues for the period between January the rest covered to 23,900 tons in 2014. Only about 5% of theand September of 2015 dropped by 2.2 times by imports. raw materials the company needs is producedfrom KZT 47.1 bn to KZT 21.1 bn. locally, with the rest covered by imports of 11% raw cane sugar from Brazil ($127.4 million, or For the first nine months of 2015, wheat 51% in 2014) and sugar beet from countriesand barley exports declined by more than of the Customs Union and Poland ($26.3 mln30% compared with the same period in 2014. and $24.5 mln, respectively). CASC prefers toWheat and barley shipments decreased by import raw materials, as sugar is a lot cheaper28% and 49.4% respectively. In January- to make from raw sugar cane than from sugarSeptember, Kazakhstan sold 235,800 tons of beet, in addition to which the excess supplybarley, shipping 80% of it to Iran. This is 25% of cane sugar on the market has been drivingless than last year. Only rice growers recorded down prices for some time now.positive growth: Uzbekistan shipped 23,000tons (an increase of 35 times), while Russia But the government intends to increase theand Kyrgyzstan increased their shipments by production of local raw materials, and we will12,000 tons and 6,500 tons respectively. see the first results of these efforts in 2016. Generous subsidy programs for beet farmersFigure 2. Raw sugar imports in 2014, % have been launched in Almaty and Zhambyl Regions, where beet has been a common crop 22% for years, resulting in increased cropland areas and yields.6% Growing big KazAgroProduct, a subsidiary of KazAgro 10% 51% national holding, was the only livestock Customs Union Poland Other farming company that made it into the NB500 Brazil Cuba countries ranking. Starting with a modest income of KZT 2.3 bn in 2013, the company has increased itsSource: Statistics Committee of the Ministry of National Economy revenues by 38.4% to KZT 3.8 bn. Compared with the major producers, KazAgroProduct is aSugar illusion small business, but the fact that it has managed With the ongoing financial turmoil, the fact to grow is an important one. The government’s considerable efforts aimed at promotingthat Central Asian Sugar Corporation (CASC), commercial livestock farming are beginning toKazakhstan’s only sugar producer, has become show results.the industry leader at #3 in the sectorial The past year was a turning point for meat exports. In 2014, for the first time in 20 years, Kazakhstan exported meat and meat products, shipping a total of 12,300 tons. Red meat shipments totaled 7,500 tons, including 6,300 tons of beef. Exports of chilled beef to the CIS countries increased more than six times compared with 2013. And although export targets were not fully achieved due to the situation on the Russian market, the Ministry of Agriculture is taking measures to further boost the export potential of the meat industry.52 National Business, №12 (21) 2015 CONTENT
Figure 3. Major livestock farming products6,0005,0004,0003,0002,0001,0000 2010 2011 2012 2013 2014 Milk, thou. tons Wool (physical weight), thou. tons Meat (live weight), thou. tons Meat (slaughter weight), thou. tons Eggs, mln piecesSource: Statistics Committee of the Ministry of National EconomyLivestock farmers have begun to export frozen Figure 4. Breakdown of pedigree cattle herd by type of product, 2014beef, which is something that was virtuallynever exported in the past. 19% At the end of 2014, Kazakhstan had 6 23% 58%million heads of cattle (+3%), 17.9 millionsheep and goats (+2%), 1.9 million horses Meat Dairy Dairy and meat(+8%) and 35 million chickens (+2.3%). Pignumbers continued to fall, reaching 884.7 Source: Ministry of Agriculture of the Republic of Kazakhstan thousand (–4.1%). Milk and egg productionincreased by 3% and 6.8% respectively. In2014, government subsidies to the livestockfarming sector totaled KZT 50 bn instead ofthe planned KZT 41.6 bn. Agricultural importsdropped 6% (to KZT 4.2 bn). At the beginning of the year, the pedigreecattle herd reached 585,200 animals, withbeef, dairy and beef-dairy specializationsaccounting for 58%, 23% and 19% respectively.Pedigree cattle made up 10% of the total cattleherd. Almaty, Kostanay, East Kazakhstan andAkmola regions are the biggest producers ofpedigree cattle.CONTENT 53
NB 500 RANKING | FMCG FEEDING 17 MILLION PEOPLEPrices for imported products are going up in proportion to the decrease in the value of the tenge.Imports from other countries are declining, Kazakh producers have a real chance to fill theniche and try to regain Soviet-era levels of industrial output of food products. Philip Morris Kazakhstan has been the one pack of cigarettes. In 2014, tax revenues from the consumable commodities industry (FMCG) companies reached KZT 100 bn, or 42% more than in leader for the past three years. In 2014, the 2013. At the same time, the number of cigarettes sold company’s revenues reached KZT 90.3 bn, increasing dropped by 3 bn. 9% and 43% vs. 2013 and 2012 respectively. Another tobacco company, Japan Tobacco International, is one In September 2015, Jamila Sadykova, leader of of the top 3 among industry’s leaders in the NB500 the national coalition “For Smoke Free Kazakhstan,” ranking, with annual revenues of KZT 48.8 bn in 2014, said: “We suggest that excise duties should make up or 2.2% less than previous year. Both companies have 49% of the price of a pack of cigarettes. The average to deal with constantly growing excise duties, which pack price would then be KZT 400, while excise taxes currently make up approximately 25% of the price of would increase to KZT 184 bn, i.e. almost 2.5 times more than the government currently receives. But5 4 National Business, №12 (21) 2015 CONTENT
Industry leaders Ranking newcomers1 place 90.3 633 1. 228 | 14Philip Morris Bizhan meat 14.0Kazakhstan BN KZT bn kzt processing plant BN KZT• The company has a 45% share of 9.0% total sector Kazakhstan’s tobacco market. earnings 2. 314 | 22• Agribusiness Center was created to teach 6.0% Ust-Kamenogorsk 9.8 farmers new technologies. Poultry Factory 1.1% BN KZT2 place 53.9 26,360 3. 472 | 30Coca-Cola Ricks LTD 5.6Almaty Bottlers BN KZT bn kzt BN KZT• Construction of a new plant in Astana 28.8% total earnings was completed. of companies in the ranking• The company increased revenues by 73.4% vs. 2012. 74.2% 49.3%3 place 48.8 28.8% fSoecrt2o0r1’s4key figuresJTI Kazakhstan BN KZT • Food production increased by 14% in• The company has a 42% share of monetary terms. Kazakhstan’s tobacco market. 2.2% • The national currency lost 19% of its• Revenue growth slid from 19% to value. –2.2%. • Annual inflation rate of 7.4%.cSoecmtpoarn’siefsastest-growing Sinec2t0o1r5’s main eventsBecker and Co. 8.5Agroproduct • Falling consumer demand due to theCoca-Cola Almaty Bottlers млрд тенге transition to a free floating exchange rate for tenge. 16.6 • The import of alcoholic and non-alcoholic млрд тенге beverages in the first three quarters dropped by 63%. 53.9 • The National Champions – Leaders of млрд тенге Competitiveness initiative has been launched, which will help companies from the added- value sector to grow significantly.revenue – annual revenue growth – annual revenue fall ranking place | sectorial ranking place BN KZT 55 CONTENT
NB 500 RANKING | FMCGthe most important thing is that the lives of 54,000 tobacco products so that by 2020 the EEU countriesKazakhstani people will be saved. The number of have the same excise duties on cigarettes basedsmokers will drop by 2%.” Tobacco companies argue on purchasing power parity, will help to preventthat the excise tax in Kyrgyzstan is only half that of and eliminate the smuggling of tobacco productsKazakhstan, so higher taxes will result in increased between the EEU countries.imports from the neighboring country: the current40% share of imports will increase further and Coca-Cola finished in second place for the firstmanufacturers will face some serious issues. time in the history of the ranking. Coca-Cola Almaty Bottlers earned KZT 53.8 bn in revenues, i.e. 28.8% The situation regarding and 73.4% more than in 2013 and 2012 respectively. excise tax will depend on The company produces soft drinks under the Coca- the decisions of the Board Cola, Fanta, Sprite and BonAqua brands, as well as of the Eurasian Economic Piko juices, Fuse tea drinks and the Burn energy Commission, which plans to drink. According to the management, the company build a consistent alcohol has an annual production level of 500 million liters: and tobacco market across “Coca-Cola makes up more than half of this amount. the EEU countries over the With our production line, we can introduce new next 4 years. flavors and packaging. We do not need a new line to do this, we can simply adjust the one we already In any event, the situation regarding excise tax have. As of today, we have 10-11 operational lines.”will depend on the decisions of the Board of the In 2013, the Turkish-Kazakh joint venture startedEurasian Economic Commission, which plans to building a second plant in Astana which is scheduledbuild a consistent alcohol and tobacco market across to start production in December 2015. This willthe EEU countries over the next 4 years. This will help to improve the supply chain and access to thehelp to balance Kazakhstan’s domestic market and country’s northern regions.protect it from illegal imports. Efes, the Turkish brewing company, reclaimed the Maksim Litvin, General Director of BAT KT fourth place in the NB500 ranking. With revenues of(British American Tobacco), said: “In our view, KZT 40.7 bn, Kazakhstan’s largest brewer showedthe agreement on leveling the excise duty rates on virtually no growth versus the previous year. Yet Serkan Eris, CEO of Efes Kazakhstan sinceFigure 1. FMCG industrial output by sector, 2014 February 2012, still made the National Business’ list of Kazakhstan’s top 10 managers, because Efes’s EBITDA was 23.5% higher than the FMCG sector average1. Total output of the beer industry was 5,000 liters, or 10,000 bottles, below the 2010 level of 495,000 0.56% 5.95% 92.23% 1.26%Other industrial goods BeveragesFood products Tobacco products5 6 National Business, №12 (21) 2015 1 “Top-10 best CEO of Kazakhstan”. National Business #9-10 (19), 2015 CONTENT
Sectorial ranking 2015 Ranking 2014 Ranking Company Sector Revenue, mln USD Revenue, mln KZT Net profit, mln KZT Assets at the beginning of the year, mln KZT Assets at the end of the year, mln KZT Equity at the beginning of the year, mln KZT Equity at the end of the year, mln KZT ROS, % ROA, % ROE, %1 39 42 Philip Morris Kazakhstan Tobacco products 503.9 90,290 Non-alcoholic beverages2 58 78 Coca-Cola Almaty Bottlers Tobacco products 300.6 53,870 Beer brewing3 66 66 JTI Kazakhstan Non-alcoholic beverages 272.5 48,830 Confectionery4 77 75 Efes Kazakhstan Oil and fat products 227.1 40,700 6,413 27,817 26,811 21,654 21,562 15.76 23.48 29.68 Milk, dairy products5 80 83 RG Brands Confectionery 222.8 39,931 1,302 30,046 31,907 8,474 9,283 3.26 4.20 14.66 Milk, dairy products6 84 94 Rakhat Holding 201.9 36,178 1,930 19,825 21,665 17,366 19,287 5.33 9.30 10.53 FMCG7 91 65 Eurasian Foods Corporation Dairy products 191.8 34,365 1,256 7,967 9,764 493 493 3.65 14.16 254.52 Beer brewing8 109 Foodmaster Meat products 164.8 29,538 386 10,012 11,247 1,328 1,714 1.31 3.63 25.39 Alcoholic and non-alcoholic9 163 153 Bayan Sulu beverages 109.1 19,547 471 17,835 19,356 13,345 13,408 2.41 2.53 3.52 Oil and fat products10 190 Agroprodukt FMCG 92.7 16,610 Food sales11 197 135 Raimbek-Group Oil and fat products 89.7 16,071 -4,774 18,482 14,554 356 -4,430 -29.70 -28.90 234.30 Oil and fat products12 205 151 Dizzy Eggs and poultry production 85.7 15,360 Meat and sausage products13 211 208 Danone Berkut Malt production 83.3 14,920 FMCG14 220 222 Carlsberg Kazakhstan Beer brewing 80.8 14,480 Food production15 228 Bizhan meat processing plant Beer brewing 78.1 13,990 Confectionery16 249 200 Kokshetau Mineral Water Alcoholic beverages 71.0 12,723 1,819 9,818 10,197 8,395 8,381 14.29 18.17 21.68 Non-alcoholic beverages17 254 217 Maslo-Del Production of diary products 69.9 12,530 Non-alcoholic beverages18 292 195 Dalprodukt Milk, dairy products 59.3 10,62019 298 199 A.P. Milland 58.2 10,42020 300 256 Mai 57.6 10,324 320 9,728 8,725 5,642 5,791 3.10 3.47 5.6121 310 267 Shymkentmai 55.6 9,960 256 7,503 8,216 3,508 3,714 2.57 3.26 7.1022 314 Ust-Kamenogorsk Poultry Factory 54.6 9,784 4,696 11,196 14,336 7,972 11,570 48.00 36.79 48.0623 345 445 Becker and Co 47.2 8,466 848 6,744 7,610 3,569 4,050 10.02 11.82 22.2724 414 395 Souffle Kazakhstan Malt Factory 37.9 6,795 521 6,034 5,738 773 1,293 7.66 8.85 50.4125 417 405 Kublei 37.3 6,69026 445 374 Shymkentpivo 33.6 6,02027 449 377 Raduga 32.9 5,89028 459 444 Arasan Firm 32.1 5,76029 465 411 Hamle Company Ltd 31.5 5,64030 472 Rics LTD 31.1 5,57031 483 367 Caspian Beverage Holding 30.3 5,434 -202 4,212 3,701 1,887 1,624 -3.72 -5.11 -11.5132 488 443 Sut 29.3 5,253 962 2,141 3,084 1,626 2,587 18.31 36.82 45.6633 495 296 Galanz Bottlers 28.8 5,16034 496 297 DEP 28.8 5,160CONTENT 57
NB 500 RANKING | FMCG liters. For comparison, 425,000 liters of beer were enterprises were quickly shut down, as the previously produced in 2011. established economic ties no longer existed, and household purchasing power dropped. With the RG Brands came in fifth position, posting revenues of KZT 39.9 bln, or 11% more than the Strange as it may seem, only previous year. Today, the company produces tea, juices, vegetable oil, flour, juices, water, carbonated soft drinks, milk and sugar, pasta, cognac, beer potato chips. It also exports its products to Russia, and cigarettes have reached Tajikistan, Turkmenistan and Kyrgyzstan. Exports 1990 output levels amongst account for 10% of the company’s revenue. For the Kazakhstan’s extensive rage Central Asian markets, RG Brands produces Pepsi, of food products. Seven-up, Mirinda and Lipton Ice Tea. In 2015, the company was included in the National Champions meltdown of the local food industry between 1990 – Leaders of Competitiveness list in the added-value and 1995, the market began to rapidly fill up with sector, selected by the government and McKinsey imported goods from well established brands with & Company for funding and consultations with a strong marketing support. Today, Kazakhstan’s view of further evolvement. It is likely that company food manufacturers have learned how to apply will succeed in the future, as its revenue, operating advanced methods of marketing and salesmanship. profit and net profit increased in the 1st half of 2015. Which is fortuitous, as they can now benefit from Besides, Kairat Mazhibaev and his team are actively the weaker tenge, whose declining value over the expanding into the markets of Siberia and the Ural. past two years is making imports more expensive and impacting real household incomes. People in Only juices, vegetable oil, flour, sugar, pasta, Kazakhstan are buying more domestic products, cognac, beer and cigarettes have reached their 1990 with the Kazakhstanda Zhasalghan (“Made in production levels amongst Kazakhstan’s extensive Kazakhstan”) mark now very popular. rage of food products, which is particularly strange given the fact that Kazakhstan’s population has increased from 16.4 million to 17.4 million since 1990. All other products, with either growing or declining production, lag far behind the Soviet-era figures. There is, however, a rational explanation for this: after the collapse of the Soviet Union, manyFigure 2. Production dynamics of certain product groups in Kazakhstan in real terms, thous. tons1,800 Fresh bread1,600 Processed liquid milk and cream1,400 Raw sugar or refined sugar, cane or beet sugar; molasses1,200 Meat and food by-products1,000 Sausages and similar products made of meat or animal subproducts 800 Butter6004002000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20145 8 National Business, №12 (21) 2015 CONTENT
Table 1. Main indicators for some product groups in the FMCG sector, January-September 2015, mln $Meat and meat products Production Production vs. the Exports Imports Imports vs. the sameMilk and cream same period of 2014 period of 2014Wheat or meslin flour 565 15 147 -5.2Beverages (alcoholic and non-alcoholic) 705.5 -1.9 0 80 -50.9 -2.7 348 0 844 0.6 0 68 -63 904 -2 In future Kazakhstani manufacturers will have This is the moment for Kazakhstan’s foodto face the growing competition of importers from producers to start thinking seriously aboutother EEU countries. These sparring partners increasing their presence in sectors with high levelare a great fit for Kazakhstan, however, because of imports. Producers of meat and meat productsthe situation on the markets of Russia, Belarus, have a potential niche worth $200 mln which isArmenia and Kyrgyzstan was quite similar. At least, now filled by imports. Considering the growth ratesthe obstacles they had to overcome at the beginning of the meat industry (4% in 2014 and 12% in 2013),were more or less the same. In fact, Kazakhstan can this goal is achievable. For sure, many businessessatisfy most of its product needs, and today FMCG will contract in monetary terms in 2015, but formanufacturers have a real chance to grow their importers the picture will be much bleaker.Table 2. Imports of certain products in KazakhstanProduct name 2014 thou. $ 2013/2014, % thou. $ Number 243,788.5 by number -19.6Meat and by-products (fresh, frozen and chilled), thou. tons 206,633.3 10.3Milk and cream, tons 191.5 131,383.2 -12.6 -9.2Vegetable oils and fats, thou. tons 101,890.2 3.2 -10.0Sugar confectionery (including white chocolate) not 78,315.5 -5.6containing cocoa, tons 125.2 -2.8 -12Drinks (alcoholic and nonalcoholic), thou. liters 35,038.4 166.4 -19.0 88,893.0business faster. Of course, there are many problems, Today, opportunities are emerging for investorslogistics being one of them, but importers also have and active producers in various segmentsto deal with these challenges. where import substitution is required. Window of opportunities is illustrated in statistics for If we look at the statistics for the first three certain product groups where imports began toquarters of 2015 vs. the same period of the previous fall back in 2014, let alone 2015. The differenceyear, we see that imports in the main product between the two periods is down to how much ofgroups have fallen substantially. Imports of drinks, its previous value the tenge lost: following a 19%including alcohol, dropped by 63%, in 2014 decline slide in 2014, the tenge had lost 68% of its valuewas 12% in monetary terms and 19% in volume at the beginning of the year by December 2015.terms. Not only due to a decline in buying power, Imports of milk and milk products, for example,but also because local manufacturers have become declined by 50.9% in the first three quarters ofmore competitive, with revenues down only 2%. 2015, but in 2014 they increased 10.3%. Actually,Similar trends can be seen in milk and cream: sales this is the only product group in which importsby Kazakhstani producers fell by only 2.7%, while increased in 2014.importers have suffered a 51% drop in revenue.CONTENT 59
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