A look at food processing in Ukraine

Ukraine has long been called the breadbasket of Europe. 56% of its total land area is arable so Ukrainian producers are able to grow and rear a huge variety of cereal crops, fruits, vegetables, and livestock.

Such ideal conditions means, over time, Ukraine has developed into one of Central Europe’s food production and processing powerhouse. Investment levels in the sector are increasing, creating some big opportunities for production, processing, and packaging equipment and machinery manufacturers to break into a very lucrative market.

Food & drink production is a huge industry in Ukraine

In 2016, Ukraine’s total processed food and drink output totalled $15 billion – representing 21.5% of the nation’s entire industrial activity.
 
Processed food is also a key Ukranian export commodity. In 2016 again, exports of such items represented 6.7% of Ukraine’s total outbound overseas trade.
 
Even though it is a major producer of processed food, however, the nation still imports a great deal. 4.4% of 2016’s total imports were processed food and drink items. In monetary  terms, this far outstrips exports. Imports of such goods came $83.8 million in 2016, compared with $13.6 million in exports.

Most important is the growing levels of industry investment – suggesting producers are hungry to bump up their output by spending on new technologies and production solutions. $663 million was pumped into the industry during 2016, accounting for 15.6% of total industrial capital investment that year.

Altogether, there are around two thousand food processing companies across Ukraine, ranging from SMEs to multi-nationals. Indeed, many huge corporations have a presence there, such as Nestle, Danone, Carlsberg, Mondelez, and Coca-Cola.

Oils, confectionery top Ukraine’s processing output

Over 40 different sectors compose Ukraine’s food processing industry, ranging from cereal, to alcohol, sugar, canned vegetables, and beyond. Even so two main product sectors dominate the industry: vegetable and animal oils and confectionery.

Both are important export commodities for Ukrainian food processors. Animal and vegetable oils and fats, for example, account for roughly 10.9% of all Ukraine exports. Confectionery, while not quite as domineering, takes 1% of total exports.

Remember those huge tracts of arable land we mentioned earlier? Well, they allow Ukrainian farmers to grow a cornucopia of fruits and vegetables, which plays into a healthy vegetable processing industry. 

It is a top supplier tomato puree to the CIS countries (although Russia and Ukraine’s food trade is in limbo at the moment) and is one of Europe’s top five producers of apple concentrates. Additionally, Ukraine covers 6.2% of global potato production, making it a potential world leader in the potato flour and starch market.

Poultry meat is another area that is expanding rapidly, thanks to exposure to overseas markets such as China. Russia, traditionally a strong market for Ukrainian poultry, has fallen away as a market after political tensions.
 
However, demand from the Middle East and Asia is pushing the industry forward. MHP, Ukraine’s top poultry producer, grew its export sales across 2016 by 50% for example, reaching 193,680 tons in volume. 

European countries are Ukraine’s chief food processing equipment suppliers

Europe rules the roost when it comes to supplying the necessary technologies and machinery to the Ukrainian food and drink processing and packaging industry. Specifically, Germany, Italy, The Netherlands, and Poland lead the way.

Germany alone accounts for 90% of the machinery used to manufacture confectionery and 56% of all imported brewing machinery. Elsewhere, Italy and Poland account for 58% of the equipment used in wine and fruit juice preparation. Italy also supplies half of sugar manufacturing machinery imported into Ukraine.

The Netherlands, Germany, and Poland’s share of poultry processing equipment is 65%.  Italy and Austria together account for 58% of the equipment for bakery and macaroni production.
  
Outside of Europe, Turkey accounts for 28% off all Ukraine’s exports of machinery for animal and vegetable fats and oil preparation. The US also has a small presence in the supply of industry-related equipment. 8% of the machinery used to extract animal and vegetable fats is sourced from American companies.

Ukrainian opportunities on the horizon for food production machinery manufacturers

 
Similar to Turkey, Ukraine is moving its food safety laws in line with EU standards, and it is also moving towards full implementation of Hazard Analysis and Critical Control Points (HACCP), which it is expected to complete by 2020.

Additionally, expansion into overseas markets is a key driver of Ukraine’s food and drink sectors too.

What does this mean for producers of food processing and packing machinery? It simply means Ukrainian food and beverage manufacturers must look at either upgrading their machinery to meet HACCP standardisation and/or grow their operations to produce more goods for overseas markets. 

That signals a higher demand for higher quality food processing and packaging materials until at least 2020. In Ukraine, connecting with a local distributor is the best way to capitalise on these opportunities. They know the market, know who is buying, and crucially, who can afford the very best equipment.

But where can you meet the buyers who matter most?

Meet Ukraine’s key food production buyers at WorldFood Ukraine

WorldFood Ukraine is the country’s only international exhibition for the food and drink industries.

The event has become an important meeting place for the industry, enabling international suppliers to meet local buyers, including distributors and wholesalers of food processing machinery.

The event offers also offers a unique and fully comprehensive programme of business events that attracts high-quality trade visitors - 93% of them are decision makers - from every region of Ukraine.

WorldFood Ukraine 2017 takes place at Kiev’s IEC between 25-27 October. To book your stand contact our team today.

 

Related Article