Over the first eight months of 2022, ice cream production decreased by 7% in Kazakhstan. However, in July-August, Kazakhstani ice cream producers were able to increase their output (11,945 tons) over the same period last year (10,690). This allowed them to partially mitigate shocks in the first half of the year when the production plunged by 17%.
Several factors might explain this decrease. First of all, in January there were logistical problems at the border with China. Then ice cream producers lost another large supplier of ingredients – Russia. After the Russian invasion of Ukraine, the vast majority of foreign companies decided to stop their cooperation with this country. Among those companies were key suppliers of chocolate and icing.
“There is a large producer of industrial chocolate and icing in Ireland. This company used to send its products to Moscow and we just bought what we wanted there,” said Dmitry Dokin, chairman of the board of Shin-Line, a large producer of ice cream in Kazakhstan. “They stopped working with Russia and as they have never worked with Kazakhstan directly, they didn’t know how to transport these products to us,” he added.
Given that Russian producers of packaging have been banned from acquiring ink colors, lacquers and printing machine details from Western companies, they can’t satisfy the demand from Kazakhstan.
“The entire market has plunged because many producers haven’t found alternative suppliers yet,” Dokin said. On the other hand, companies that figured out how to solve difficulties with logistics and raw materials have taken advantage of the situation. For instance, Shin-Line has ramped up its output by 7% in terms of products and by 42% in terms of money compared to last year.
The company has also beefed up its market share (40.5% according to Euromonitor) thanks to Shin-Line’s ability to sharply increase its capacity when other companies were forced to cut their production due to shortages of raw materials.
The Russian company Inmarko, which belongs to British Unilever, used to be third in terms of market share in Kazakhstan. However, the company was forced to stop exporting ice cream from Russia. Currently, the company exports its ice cream to Kazakhstan from Turkey, where it runs a large manufacturing site. As a result, Golden Standard, the most popular ice cream by Inmarko, is no longer available in Kazakhstan. At the same time, there aren’t any Turkish equivalents even close.
“Turkey doesn’t produce premium full ice cream because locals prefer different types of ice cream. You won’t find prepackaged ice cream cones in Turkey and it makes a difference. The third-ranked seller left the market but its Turkish substitute has no well-known brands or products,” says Dmitry Dokin.
This niche wasn’t empty for too long though. Shin-Line and its premium full ice-cream Bear at the Pole have occupied it across the entire country. In Astana, premium full ice cream sales increased by 67% while in other regions of the country they have doubled.