What do you need to know about Azerbaijan’s food industry?
Published on 24/08/2016
Azerbaijan’s food industry continues to perform well with exports on the rise and a continued excellent agriculture atmosphere. For international brands seeking to invest and import to the Azerbaijan market, the prospects are good.
The Central Asian state is a key agricultural producer, with good geographical conditions, a comparatively huge labour force and a favourable location. Statistics from Azpromo, Azerbaijan’s Export and Investment Promotion Foundation, reveal that the nation indulged in foreign trade worth $31 billion in 2014. According to the Azerbaijan State Statistics Service, food imports accounted for $8.8 billion of trade alongside $3.1 billion in food exports.
Agriculture remains one of Azerbaijan’s critical industries. Over 37% of the nation’s workforce, 4.7 million people, are employed in the sector. Consumption of agricultural goods has increased by more than 50% over the last decade, with some products exceeding 200%, according to Azpromo. However, domestic production levels have lowered, meaning there are some great opportunities for international suppliers seeking to break into the Azerbaijan market.
So what is shaping the Azerbaijan food industry in 2016 and beyond? A number of advances, in agro-exports, investment and packaged food, are occurring across the sector.
Azerbaijan agriproducts heading to new markets
Despite the fact that the nation could impose food export restrictions, as announced in January 2016 by Agriculture Minister Heydar Asadov, new markets are enjoying Azerbaijan food products. The EU, still gripped in ongoing embargos with Russia, is on the lookout for produce from new markets. Azerbaijan has been identified as one new food supplier.
Malena Mard, Azerbaijan’s EU Ambassador, believes the 500 million plus members of the EU would be glad to see Azerbaijan products in supermarkets, restaurants and tables in homes across Europe. Indeed, the EU and Azerbaijan have already collaborated on increasing food safety standards, which has led to the creation of the Stocking and Supply of Food Products OJSC organisation in April 2016. With updated food security protocols highly influenced by European standards, Azerbaijan suppliers are laying the ground work for further international expansion.
Bordering nations, such as Russia, Kazakhstan and Middle Eastern countries are also turning to Azerbaijan to supply fruits and vegetables as traditional trade partnerships change.
Azerbaijani packaged food market grows in value
According to a Euromonitor report, Azerbaijan’s packaged food market is gaining in popularity and market value. A slew of new offerings from international and local brands, alongside shifts in consumption habits, is driving demand for pre-packaged food. Historically, Azerbaijani consumers preferred, fresh unpackaged food to readymade alternatives, but this trend is starting to change.
In 2015, currency fluctuations affected the prices of packaged food, as consumer’s price sensitivity and intensifying competition meant price increases were kept to a minimum.
Perhaps this rise in packaged food is related to the changing shape of Azerbaijani food retailing. While traditional, independent grocers still hold the largest market share, a growing taste for super and hypermarket food shopping has been noticed by Euromonitor. 1-stop shopping, competitive prices and in-store promotions are fuelling interest and growth in this food retailing market sector.
Euromonitor has high hopes for packaged food in the near future. Prices are expected to stay low, thus consumers will be more able to afford a variety of products, leading to an overall increase in consumption of packaged food. Volume growth will be attributed to expected improvements in the Azerbaijani economy, expected growth in consumers’ disposable incomes and further development of the trend from unpackaged and unprocessed food to packaged food.
Fruit, fruit and more fruit for Azerbaijan
Since 2005, Azerbaijan has doubled its fresh fruit and berry production. Fruit-inform.com reported that the nation is capable of producing around 1 million tons annually. Certain fruits have shown huge production increases. Stone fruits in particular have enjoyed significant growth. Apricot levels have risen over 300% over the past decade, alongside a 250% increase in the production of peaches and nectarines in the same period.
Other fruit verities have seen less-intense development rates, but have still expanded rapidly. Apples and pears showed 100% and 50% production increases respectively. Berry producers also posted similar increases.
What is driving this growth? Besides favourable geographical conditions, an increase in exports has been noted as the prevailing factor. As mentioned above, the EU, Russia and regional markets are seeing an increased demand for Azerbaijani produce. Azerbaijan exports over half of its stone fruit crop each year.
Investors needed in Azerbaijan's Agriculture Sector
Azpromo has identified investment opportunities across the nation’s varied agriculture sectors including dairy, wine making and fruit and vegetables. Opportunities for international firms, as well as supplying packaged food, include:
• Investment in food processing facilities
• Infrastructure requirements including cold storage, green housing, agricultural equipment and packaging/labelling facilities.
• Horticulture, floriculture, poultry and cattle farming, tea growing and so on.
Essentially, all aspects of the agricultural sector are open to investment. Political stability, a strategic location and an attractive investment climate ensure Azerbaijan should be a major consideration for food producers, suppliers and distributors.
Trade shows, such as WorldFood Azerbaijan which opens on the May 19 2016 in Baku, gives international food industry players unprecedented access to Azerbaijan suppliers, producers and distributors. Likewise, the show provides Azerbaijani companies a space to get their products seen by a global audience.
Learn more about the show or register online today to make sure you don’t miss out on the opportunities this amazing market holds.