IDM | Markets changed, partly due to the research of the Russian veterinary watchdog Rosselhoznadzor as well as other government sanitary bodies. These findings showed a significant content of palm oil in these dairy products at an amount that poses direct threat to the cardiovascular system of consumers. Alongside with cheese, yogurts turn to be one of the mostly faked types of dairy products. In 2016, new research found that the scale of fraud in the yogurt segment was not going down but even increased and this probably will contribute to a further reducion of yogurt’s popularity. Fraud reaches unprecedented limits Russian authorities admit that after 2014 the quality of yogurts in grocery shelves has worsened. European production is now allowed for import, while falsification of domestic dairy products grew to an unprecedented scale. According to experts, the typical fraud of yogurts is conducted with the use of milk fat supplements such cheap palm, coconut and soybean oils. Alexei Alexeenko, assistant of the head of watchdog Rosselhoznadzor is quoted as having said: "The purpose of falsification is to make illegal profits by reducing the cost of production as a result of unauthorized replacement of qualitative biologically valuable raw material by less valuable." In June 2016, the Russian Center for Research of the Confectionery Market issued a report indicating the volume of import of palm oil destined for use in the food industry grew by 39.6% to 246,000 tonnes. Negotiations by Russian President Vladimir Putin to pose an excise rate of 20% on imported palm oil have failed, Russiana are afraid to purchase yogurts amid the recent scandals 10 · 9 2016 | international-dairy.com so compared to last year the price of palm oil reduced by 31%, making it even more attractive for dairy producers. In addition, according to the deputy head of Rosselhoznadzor, Nikolai Vlasov, the newest study of the veterinary service conducted in June indicated that problems of falsification became much deeper, as nearly a dozen of new illegal substances were found which dairy manufacturers started to use in production of yogurts and some other types of dairy products. "Manufacturers are adding such things as chalk, starch and soda, lime, boric or salicylic acid and even plaster," Vlasov said, adding that in general since the beginning of 2016 700 cases of dairy production falsification at nearly 300 companies were identfied. "There are also no differences on scale between companies producing ‘clean’ products and those who produce counterfeit. There are small manufacturers who make products without illegal substances, and large market players who were been found conducting fraud." Alexandr Kirillov, spokesperson of Russian Consumer Protecting Organization, explained that at the moment Russia faces serious problems in the yogurts market, since new studies of Rosselhoznadzor promise to ruin demand for this type of product. "The consumer is keeping away from dairy shelves in supermarkets, since over the past two years a new stereotype eas created that almost all Russian yogurts and some other dairy products are faked and only pose danger to health. New studies probably will make this tendency much stronger, especially since Rosselhoznadzor refuse from publishing of black list of yogurts producers caught on fraud, so the shadow falls on all manufacturers." The Russian Union of Dairy Producers (Soyuzmoloko) reported at the end of June that with reduced purchasing power a reorientation of consumer demand for traditional, relatively inexpensive whole-milk products – milk, sour cream and kefir – traditional Russian fermented milk production has started. Price increase pressures consumption Despite problems with quality, Russian yogurts continue to strongly grow in price and this factor should be considered as another one which constrains demand for this type of dairy production, according to Sergei Glamazda, head of food market department of the Nielsen Group. According to his estimations drinking yogurts at the moment occupy a share of 6% of the Russian dairy market, but last year experienced a fall of demand by 4%. At the same time, consumption of set yoghurt among Russians rose by 2%. A study of Nielsen Group names the rise in price as one of the main reasons for the overall fall of demand for yogurts, since drinking yogurts last year got more expensive by 11%, while fine yogurts increased by 15% in price. The overall price growth of Russian dairy products amounted to 9.7% last year. Experts of Soyuzmoloko at the same time indicate the shift of consumers towards cheaper products. The situa tion in yogurts market, according to them, is much similar to the situation of cheese consumption. In the first quarter of 2016, the overall increase of production cost for the cheapest types of cheese amount to 9.2%, while the overall rise of cheese production was equal at only 1.8%. In general, in a period of crisis Russian citizens’ shift to cheaper alternatives of dairy products, as yogurts is replaced with more conventional sour cream and kefir. "Sour cream and milk are the basic products which are often used in cooking and work in combination with coffee, tea, dry breakfasts and other things, so more dynamic growth in sales of categories of this dairy products compared to other FMCG categories in times of crisis is quite expected" – Glamazda explained. Meanwhile, the difference in price of yogurts also connected with the geographical factor. According to official information, the main manufacturers of yogurts are located in the Central Federal Distric which accounts for 72.4% of total
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