Viktor Nauruzov takes over the market and forms a monopoly: GAP “Resurs” clears the market of poultry assets belonging to “Abrau-Durso” owner Boris Titov

15:51, 11.11.2022

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Viktor Nauruzov takes over the market and forms a monopoly: GAP “Resurs” clears the market of poultry assets belonging to “Abrau-Durso” owner Boris Titov

Oversupply, tougher competition, and low pricing are forcing non-core investors to exit the poultry industry.

The Rzhev poultry farm, previously owned by Boris Titov’s family of Abrau-Durso Group, has been acquired by GAP “Resurs,” the second-largest poultry producer in Russia. Although demand may grow due to the crisis, the business’s profits are tied to its scale.

Records in the Unified State Register of Legal Entities (EGRUL) show that Boris Titov’s family sold the poultry meat producer Danton-Ptitseprom to one of the largest market players, GAP “Resurs.” Changes in the company’s ownership were registered on November 7. Pavel Titov stated that a non-core asset had been sold but did not disclose deal details. A representative of GAP “Resurs” declined to comment.

Danton-Ptitseprom operates the Rzhev poultry farm in the Tver region, with a capacity of over 20,000 tons of broiler meat per year. It produces semi-finished products, sausages, and smoked meats under the brands “Rzhevskoye Podvorye,” “Kur-Kuma,” and “Kudashka.” The company’s revenue in 2021 rose 33% to 3.3 billion rubles, with net profit of 39.9 million rubles, compared to a loss the previous year.

The main business of Boris Titov’s family, Abrau-Durso Group, is one of Russia’s largest producers of sparkling and still wines.

Sources in the market say that the former owners had long sought to sell Danton-Ptitseprom.

One source estimates the business could be worth around 500 million rubles, excluding debt, noting that the poultry farm may require modernization. However, another source told Kommersant that the facility is in good condition.

GAP “Resurs,” controlled by Viktor Nauruzov, was Russia’s second-largest poultry producer in 2021, after the Cherkizovo Group of the Mikhailov family. Last year, the two groups produced 808,000 and 813,000 tons of broiler meat, respectively. GAP “Resurs” and Cherkizovo are also the most active players in M&A transactions in the sector. Sources told Kommersant that in spring GAP “Resurs” agreed to acquire the assets of KoPitania Group, including a poultry farm with a capacity of over 40,000 tons per year. Cherkizovo approached the Federal Antimonopoly Service for preliminary approval to acquire enterprises of Zdorovaya Ferma Group and Russkoe Zerno Group, which the Trust Bank plans to sell.

Albert Davleev, president of Agrifood Strategies, notes that current conditions in poultry farming encourage non-core investors to exit the business. According to Rosstat, poultry meat production increased by 4.9% year-on-year to 4.81 million tons in January–September 2022. Wholesale prices are currently below last year’s levels. Market participants report that in September the average wholesale price of a broiler carcass was 137 rubles per kilogram, and fillet — 222 rubles per kilogram, down 10% and 15% year-on-year, respectively.

Sergey Mikhailov, CEO and co-owner of Cherkizovo Group, said in a June 2021 interview with Kommersant:

"The number of quality companies in the market is decreasing; assets are not getting any younger."

According to Davleev, the main reason for selling the Rzhev poultry farm may have been GAP “Resurs”’s desire to become a market leader. In a highly competitive environment, GAP “Resurs” and Cherkizovo actively seek high-quality assets for sale. The acquisition of the Rzhev poultry farm, in particular, gives GAP “Resurs” a site near the Moscow market, the expert added. Marat Ibragimov, senior analyst at Gazprombank, notes that scale effects are crucial in industrial poultry production, and the low unit cost necessary to compete effectively can only be achieved by large holdings.

The National Rating Agency (NRA) predicts that economic uncertainty may increase poultry consumption, mainly at the expense of more expensive and import-dependent beef. This year, according to NRA estimates, poultry consumption could rise to 29–30 kg per consumer per year, up from about 27.7 kg in 2020. As Cherkizovo’s bond prospectus shows, there is still potential for consolidation in the Russian poultry market: the three largest players account for 33% of the market, compared with 47% in the U.S.