BLOG

Bakery products market of Azerbaijan

10 February 20206 min reading

According to the State Statistics Committee, the volume of bread and bakery products increased by 1.7% in 2019 and reached 209,4 thousand tons. Wheat imports and sales and wheat bread production and sales are all exempt from tax since 2016 in the country with a population of 10 million. This exemption was extended for 3 years in 2017.

Azerbaijan, a country in Eurasia, is the largest state in Southern Caucasia. Azerbaijan is surrounded by the Caspian Sea to the east, Russia Federation to the north, Georgia to the north-west, Armenia to the east and Iran to the south. Nearly 7 percent of Azerbaijani land can be cultivated and those areas are concentrated near Kura and Aras rivers. Agriculture of Azerbaijan mostly depends on irrigation. Grains, fruits, cotton, tea, tobacco, and grapes are among the most grown crops.

Azerbaijani cuisine is affected by other cultures, particularly from Russian, Iranian and Turkish cuisines because this region came under the domination of various empires in history. The oldest dishes of Azerbaijani cuisine are pastries and meat dishes. Hasil, umac, hengel, düsbere, and eriste are among these dishes. There are more than ten varieties of eriste (noodle). The world's first bread museum was opened in Agdam town of Nagorno Karabakh, a region that is currently under Armenian occupation. All bread types like tandir, lavash, yufka, kulce, kulfe, and kumbe can be seen there

NATIONAL PRODUCERS DOMINATE THE MARKET According to the State Statistics Committee, the volume of bread and bakery products increased by 1.7% in 2019 and reached 209,4 thousand tons. Azerbaijan has a population of 10 million. Wheat imports, wheat flour, and bread production and sale are all exempt from tax since 2016. This exemption was extended for 3 years in 2017.

According to a Euromonitor poll, consumers increasingly demand packaged food in Azerbaijan which is a developing economy. Basic food products are mostly supplied by local producers. Modern shopping methods are becoming more popular like packaged food. As disposable income increases, packaged food will be more relevant for consumers. Bakery goods consist of bread, cake, and pastries in Azerbaijan and the most consumed food item is bread. The government subsidizes bread producers with tax exemptions and other means since the bread is a staple food for people.

LOW PRICE POLICY Bakeries are leading the production of artisan bread which is consumed regularly. Artisan bread is the most consumed baked food. The government supports packaged bread consumption and applies tight quality controls.

Statistics show that Azerbaijan has the lowest bread price among the Commonwealth of Independent States. The cost of 1 kg of bread is approximately 0,80 manat. This low price became possible as a result of measures like VAT exemption for flour and production, wheat imports and sale. In addition to this, the number of various bread types in Azerbaijan is incredibly high and this contributes to the quality of bread.

Azerbaijan has a wide variety of bread and baked food range. Fresh and aromatic pastries are the traditional tastes of Azerbaijan. The most popular bread roll of Azerbaijani cuisine is called 'zavod choreyi' (factory bread).

COMPETITION WILL BE STRONG FOR PACKAGED BREAD Modern retail chains have been growing rapidly throughout the country in recent years. Traditional shops and SMEs are losing their market share. Changing shopping habits enable modern retailers like supermarkets, hypermarkets and discount store chains.

In recent years, the bakery products market is shaped by packaged flatbread and packaged yeast bread. But non-packaged artisan bread varieties are still the most consumed baked goods.

Gilan Holding produces packaged and non-packaged flat and yeast bread in Azerbaijan. The holding increased bread sales in 2019.

National brands are still dominant in bread sales in the country. International brands are not so popular among consumers because of concerns about extended shelf life and non-organic additives with imported food products. In addition to this, local brands have better relations with both modern and conventional retailers as well as local suppliers and distribution channels.

Pasta and noodle industry also grow in 2019 in terms of both value and volume. Rice consumption is still strong among local people while pasta and noodle consumption increased thanks to stronger tourism activities and the effect of world cuisine and international food trends. There are nearly 10 pasta manufacturers in Azerbaijan. These companies prefer Kazakhstan wheat instead of local wheat for pasta production.

FLOUR PRICES INCREASED BY 10 PERCENT Azerbaijan had a record-breaking year for grain harvest in 2018. The country obtained 3,3 million tons of grains in 2018. Suitable weather conditions during growth phases of crops and increased cultivation areas enabled better wheat yields. Wheat production exceeded 2 million tons which was the highest in the last 9 years. Barley and corn productions were 942 thousand tons and 248 thousand tons respectively.

Thanks to higher grain yields, import need decreased by 12 percent to 1,4 million tons. The amount of wheat and wheat flour imports was 1,3 million tons. Decreased imports and increased local production limited price hikes. Nevertheless, imported wheat prices from the main suppliers of the country, namely the Russia Federation and Kazakhstan increased. Therefore, flour prices went up by 10 percent in the country.

According to the Law on Protecting Consumer Rights of the Republic of Azerbaijan, selling and using products without certificates (Document of Standards) are not allowed. To import products to Azerbaijan; national certificates, documents of standards and testing protocols should be submitted to Azerdövletstandard (http://www.azstand.goy.az/index.shtml) and these products should be tested within the national certification systems. But documents of standardization institutions of Commonwealth of Independent States and Turkish Standards Institutes are also accepted.

Thanks to the protocol between the Turkish Standards Institute and Azerdövletstandard, Turkish products with TSE certificates have more advantages than products from other countries in the Azerbaijan market. The same distributor may market various products from Turkey, Russia or the United Kingdom. Since the market is sensitive to prices, working with local distributors and making promotions are crucial. In addition to this, making a detailed agreement with the distributor is important.

The marketing system of the private sector of Azerbaijan is still developing. Private companies incorporated after independence are gradually replacing centralized procurement systems. Now, small shops can finance themselves. Public companies cannot market consumer goods because of financial problems. Azerbaijan's economy is a kind of cash economy. There are small shops selling food, garment, and small tools. Imported electronic goods are also easily available.

TURKISH BISCUITS AND WAFERS DOMINATE AZERBAIJANI MARKET According to the Turkish Trade Ministry figures of the year 2018, Turkish products dominate Azerbaijan's biscuits and wafers market despite higher tariffs. Azerbaijan applies zero tariffs for Russian and Ukrainian products but average customs duty for Turkish products is 15%. Azerbaijan paid 57 million dollars for biscuits and wafers imports in 2018 and 41% of this was paid to Turkish companies. Azerbaijan also paid 97 million dollars for chocolate and confectionery products and nearly 13 percent of those products were imported from Turkey.

Articles in Manşet Category
08 June 20202 min reading

Turkish Grain Board will buy bread wheat for 1650 liras

Turkish President Recep Tayyip Erdogan told the good news about buying prices for wheat and barle...

09 February 20218 min reading

Covid-19 increases interest in non-genetically modified ancient wheat flour

Yusuf Okur Chairman of the Board “In the pandemic period, people show more interest in healthy an...

23 November 20202 min reading

New allergen identified in common wheat apart from gluten

Altınbaş University and Germany Potsdam University are researching 'Allergenic Proteins in Bread'....