Russia says it is revelling after 2014 Western food embargo but could an end be in sight?

By Niamh Michail

- Last updated on GMT

 © iStock
© iStock

Related tags Cheese

Russia's ban of food imports from Europe has been in place since 2014 but Donald Trump's election to the White House could mean an end is in sight. We take a look at what the embargo has meant for Russian food manufacturers, foreign firms with operations there and ordinary consumers.

Russia's embargo of Western foods - imposed in 2014 as retaliation against EU sanctions following the country's involvement in Ukraine - covers fruit, vegetables, meat, poultry, fish, milk and dairy.

Now in place for over two years and due to continue until 31 December 2017, the embargo​ and sanctions were a blow for both European food manufacturers - in 2013 Russia was the second most important agri-food export destination for Europe representing around €11.6 billion - and for Russia.

But with US president elect Donald Trump set to become president Trump at inauguration ceremony in Washington D.C. tomorrow (20 January) a thaw in relations could be in sight. Trump said in an interview with the Times the sanctions could be lifted in exchange for a nuclear arms reduction deal, while state-owned Russian news agency Tass​ quoted first deputy prime

russia europe usa geopolitics Droits d'auteur Waldemarus
© iStock/Waldemarus

minister Igor Shuvalov as saying at an economic forum last week​ "perhaps it is time to understand that the sanctions will soon cease to haveeffect​”.

So what have the sanctions meant for the Russian food industry and population, and what would it mean if they come to an end?

Good news/bad news

Despite higher food prices for consumers and sourcing headaches for manufacturers, the country has increasingly positioned itself as a winner thanks to the sanctions. When agriculture minister Alexander Tkachev announced last year it would extend the embargo, he hailed it as “good news for domestic agricultural producers”.

The domestic dairy sector has been a big beneficiary of the push for autarky.

Director of public and government relations at the National Union of Milk Producers, Mariya Zhebit, told us: “Our minister of agriculture said that prolongation of the sanctions [would] be a great present to farmers and food industry, and we think it’s true.

“Russian farmers seriously welcomed the new barriers for foreign milk products. It was really difficult for them to compete on the Russian market because of the high price.”  

According to figures from the National Union of Milk Producers, the overall production of most popular dairy products increased in 2015 because of embargo. Whole milk products rose by 2.3% and butter by 2.3%, and it says cheese and analog cheeses have benefitted the most, rising 17.9%,

The National Union of Milk Producers also says the first nine months of 2016 also saw increases albeit at a smaller rate due to the devaluation of the rouble – 1.6% for whole milk and 1.8% for cheese and analogue cheese.

Russian cheese, European quality. © Mintel

According to Mintec data, the figures are lower. It records a 13% increase in cheese production for 2014/2015 and a fall of 2% for the forecasted 2015/2016 period.  

“Russian dairy production increased in 2015 after the ban was imposed, due to rising domestic prices increasing the profitability for producers. However, an increase in prices and a fall in imports from the EU has limited Russian consumption for butter and cheese,” ​says Mintec data analyst Michael Liberty.

Cheese producers became known globally for their domestic versions of traditional European cheeses be it Vitako cheddar cheese for burgers produced by a dairy in Chekhovo, Kaliningrad which boasts of its 'European quality' or Nikolaev i Synov’ya's Camembert produced in the Black Sea region.

For products which cannot be grown in Russia due to its climate, non-sanctioned countries have moved in.

Chile and the Faroe Islands have upped exports of fish and seafood while Egypt, Belarus, Argentina and Serbia have increased exports of fruit and vegetables, citrus and nuts. (Euromonitor)

But quality has been an issue. One Moscow-based correspondent for The Guardian​ carried out a taste test of some domestic offerings and likened the textures to congealed Tip-Ex with the odour of old gym​.

The mockery isn’t limited to foreign commentators. One St Petersburg retailer came up with its own tongue-in-cheek advert calling on shoppers to “stop whining and start chewing our Russian-made cheese spread”.

The quality issues also verge on the fraudulent. In October 2015, food safety agency Rosselkhoznadzor conducted its own studies and concluded 78.3% of cheese in the country is not made from milk, with palm oil and grease used to replace milk fat​.

This was disputed by the National Union of Milk Producers which told FoodNavigator another government agency for consumer rights Rospotrebnadzor had estimated the number of counterfeit dairy products to have fallen. It said the figure now sits at around 5 to 6%.  

Back to the roots

If Russian cheese producers struggle to authentically replicate French Brie, Greek Feta and Italian Parmesan, they have also responded by going back to their roots.

“The mixed reception received by these faux-European cheeses and the continuing export embargo has created opportunities for Russian producers to better promote the heritage and

One recent tvorog launch, a traditional Russian cheese. © Mintel

tradition of domestic varieties,” ​says Mintel research manager Caroline Roux.

“While the largest Russian dairies are renowned for churning out basic, inferior quality medium-hard cheeses, the country is home to some specialities. Farmers in the mountainous Siberian
province of Altai are known for making an Emmental cheese that is smaller and paler than Swiss varieties; traditional sheep cheeses are found in the Northern Caucasus; and tvorog – a sour type of cottage cheese – is widely produced throughout Russia.”

Food bloggers have also praised the ‘new wave’ of Russian cuisine with restaurants only serve traditional foods or create Russian twists on foreign favourites. Moscow's White Rabbit restaurant prides itself on sourcing regional ingredients such as Black sea oysters, rapa whelk from Yalta or Crimean truffle.

For ordinary Russians though – those not likely to be dining on caviar and truffles at high-end restaurants – the political spat and resulting sanctions have mostly meant higher food prices, especially for dairy (see Mintec graph).


There have been high profile attempts to demonstrate just how strictly the embargo is being enforced.  In 2015  Russian television showed officials dumping truckloads of foreign cheese and then driving over the contraband goods with a steamroller​. A spokeswoman for Rosselkhoznadzor said in a statement that the flattened cheese - amounting to almost nine tonnes - would be buried underground. 

Domestic diversification

Some firms have changed their business model to deal with the sourcing problems, developing vertically integrated supply chains.

Research analyst at Euromonitor International Lidia Shuktomova told us: “The embargo was among the factors that stimulated agricultural companies to consider investing to industries that are import dependant. For example, Miratorg, the large pork producer, announced plans to grow vegetables for its frozen vegetable mix under the Vitamin brand, for which around half of ingredients are imported.”

russia ruble
© iStock

Meanwhile for certain food categories, ingredient sourcing was so difficult the government actually relaxed the import restrictions. Shuktomova points out that German baby food manufacturer Hipp, which has had a manufacturing site in Russia for around 10 years, found it was able to source just 20% of the organic ingredients it needed, and announced in 2015 it may have to close its facility. That year the embargo was prolonged but eased for ingredients used in baby food production.

But just how solid are these benefits, and what would it mean for Russian food manufacturers if the embargo was suddenly lifted?

“It would be logical that those manufacturers that have already invested in [increasing] production and took credits from banks, will face the financial risks if suddenly imported products return to the market,” ​said Shuktomova, although she added that two years is too short a period for investment cycles in agriculture to change, and that most of the increase in production has come from companies using existing production capacities in full.

“At the same time, companies that depend on imported ingredients and experience issues in substituting them would benefit from embargo lift.”

Shuvalov anticipated long-term problems following an  because all the players in the market now have become accustomed to such limitations and it is very bad”.

According to Tass​, Shuvalov “did not rule out​” the possibility that the government could measures to protect domestic producers from the flood of Western products on the market should the embargo end.

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