Unimilk, Russia's second-biggest dairy producer, said it would lower prices for its upmarket Prostokvashino brand by 10 percent, and by 15 percent to 30 percent for the middle-market brands Letni Den and Selo Lugovoe.
The reductions would take effect after the May 1 holiday and would mainly affect basic products like drinking milk, cream and kefir, Unimilk said in a statement released late Monday.
Mikhail Krasnoperov, a retailing analyst with Troika Dialog, said Tuesday that the step was logical after prices for unprocessed milk have dropped since shooting up last year.
"Milk prices rose by 45 percent in 2007, but this year they have come down quite a bit," he said, adding that they fell 10 percent in ruble terms.
Unimilk said the price cut was aimed at keeping its market share. "With declining incomes, customers more often choose cheaper goods," company spokesman Pavel Isayev said.
Krasnoperov said high retail prices had recently led to a 6 percent reduction in the overall market volume.
It was unclear whether market leader Wimm-Bill-Dann would follow Unimilk's example. Calls to the company's spokespeople were not answered Tuesday.
Both companies control about 40 percent of the national dairy market and have high bargaining power over retailers, Krasnoperov said.
He also said the country's milk producers and processors remained relatively profitable despite the crisis and the absence of subsidies typical for Western Europe.
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