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52 I Eastern Europe bne December 2020
supermarkets and they transport the goods throughout their nationwide chains. As Russian retail sales are increasingly going online, all the leading companies – both traditional and e-commerce – have been investing heavily into their distribution and logistics systems, which have already become very sophisticated.
Alternative meat and milk
Shifrina has been funding all this growth out of retained earnings and apart from a 14% stake she sold in 2017 to create some working capital as a buffer to the inevitable shocks an emerging market like Russia suffers from, she has taken on no bank loans or other outside investment.
“The company’s turnover has grown to RUB1.5bn ($19.4mn) with a 25% profit margin,” says Shifrina. “But actually
we experiment a lot on developing new products, so the actual profit margin is more like 15%-20%.”
Shifrina set up an R&D centre and hired technicians to develop new products in keeping with the company’s philosophy of producing extremely healthy food. The newest addition has been a line
of “alternative milks” that confusingly don't contain any milk at all. The company has also started to get into yoghurts and snack bars that contain prebiotics that induce the growth or activity of beneficial micro-organisms and need to be kept on the cold shelves in the supermarket – in other words, the bars are fresh food rather than the dried food that the original snack bars were. The company’s next big thing will
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be “alternative meats,” which of course don't contain any meat either.
“Access to the cold shelves is a game- changer, as the foot traffic there is ten-times higher than elsewhere in the store,” says Shifrina. “If you think about it, what do you buy when you go to the store? You usually go there to get fresh foods, as you can buy dried foods much less often as you can keep them at home for longer.”
The alternative milk has been especially successful and BioFoodLabs offers a range of goods that include almond milk, walnut milk and coconut milk, which it has developed itself.
Some of inputs of these new products can be sourced in Russia, but much of it has to be imported from BioFoodLabs’ partners in Spain and Germany. Russia has walnuts, but not almonds or coconuts. The “milk” part is based on
a pea protein that is Russian – Shifrina eschews soya protein as it has a poor image in Russia – and seaweed extract that is an emulsifier and stops all the ingredients from separating in the carton. If all that doesn't sound very appealing, a key part of the recipe is
to make it taste really good using only these natural, if unfamiliar, ingredients.
“Another reason I don't like soya proteins is the pea proteins are much more tasty,” says Shifrina. “If you are making alternative meat then you add some meat aroma from our German partners – they make the best aromas in the world. We let my mother try and she loved it! She says she can’t tell the difference.”
Selling health foods to Russians, who are not famous for their good diets, is actually easier than it may first appear. Despite the dacha tradition, Shifrina says that as the middle class grows people are busier and spend less time growing their own food. During the 1990s half of all potatoes grown in Russia were grown in gardens at the dacha. Now consumers are prepared to buy what they used to grow.
At the same time, Shifrina says market research shows there is a global trend
towards vegetarianism, which is also happening in Russia.
“The new young generation don't want to eat meat. They worry about the environment and it is trendy. It’s the biggest trend in the world,” says Shifrina. “A study found that by 2035 half the world’s population will be vegetarian and the same thing is going on here in Russia.”
The taste is important, as people are not abandoning meat and dairy products, but adding alternative foods to their shop- ping baskets in addition to more tradi- tional products simply because they like them, which come with the added advan- tage of being better for you. Tetrapak did a survey, which found that 60% of those customers that bought alternative milks also bought traditional milk as well.
“People buy the alternative products because they like them. They want to grow the range of food they buy,” says Shifrina.