Russia’s largest meat producer, Cherkizovo, has purchased another agricultural holding, Russian Grain, and a group of companies, Zdorovaya Ferma, aimed to strengthen its positions in the poultry market of Volga and Ural parts of the country.
Cherkizovo spent 10.4 billion roubles (US$180 million) to acquire Russian Grain consisting of farms with a capacity of 65,000 tonnes of broiler meat, 750 million eggs, and 240,000 tonnes of feed per year. The Russian meat giant also expanded its land bank by 18,000 ha and acquired new meat-processing capacities.
The acquisition will push Cherkizovo’s poultry production to 900,000 tonnes per year, the Cherkizovo’s press office said.
The purchase of the new assets is intended to strengthen the holding’s leading position in the Russian poultry meat market and also gives the company the opportunity to increase sales in the regions of the Volga and Ural federal districts, the company said. Plans are underway to modernise the acquired facilities “to upgrade and expand production capacities”.
On the other hand, the prospects of the Bashkirskaya egg poultry farm, a part of Russian Grain, remain vague. Russian newspaper, Agroinvestor, reported citing sources close to the deal the holding would most likely decide to get rid of the asset since Cherkizovo didn’t have the experience and infrastructure to sell eggs.
Bashkirskaya is described as a stable and profitable asset, “so there should not be difficulties in terms of sales and work with the new owner.”
Cherkizovo also purchased another poultry producer, Zdorovaya Ferma, for 4.03 billion roubles (US$80 million), further expanding its production by 120,000 tonnes of poultry meat, 18,000 tonnes of processed meat and 240,000 tonnes of feed per year. The company used to be an important player in the broiler meat market of the Ural federal district.
The new takeovers are another chapter of the consolidation trend taking place in the Russian meat and poultry industry in the past few years. “This purchase was generally expected,” Ilya Shumov, a local analyst, told Agroinvestor. “All complex agricultural markets [in Russia] are now at the consolidation stage, and there really are not so many real contenders for such a large asset as an entire agricultural holding.”
Another source told the publication that given the size of the new assets, Cherkizovo would definitely face difficulties integrating them into its business structure.
Over the last 5 years, Cherkizovo spent around US$470 million on various M&A deals. In 2022, the company purchased Russia’s third-largest turkey producer, Krasnobor, and fastfood business, Sibilla Rus.