Russian food & drink market update March 2020


Another set of headlines from Russia’s food & drink sector

This month, we cover a rise in garlic prices due to a global phenomenon, growth for premium alcoholic drinks in Russia, fake food woes, and a rapid rise in online grocery sales.

Russian food & drink market round up

Russian garlic prices rise thanks to coronavirus

Garlic prices have risen in Russia.

As the coronavirus continues to spread, Russians are turning to traditional folk remedies to defend themselves against possible infection.

Garlic, used for centuries in Russia to fight all sorts of ailments as a traditional medicine, has seen prices sky rocket.

In January, per-kilo garlic prices rose nearly 40%, and by February prices had risen a further 5%.

A kilo of garlic now costs 246 roubles (approx. $3.82).

Mikhail Glushkov, Executive Director of the Russia’s Fruit & Vegetable Union, said there were no objective reasons for the price rise. Analysts have instead pointed towards coronavirus’ impact to explain the price hike.

That, or coronavirus is actually transmitted by vampires, and Russians are stocking up on garlic to combat them.

Canned food most counterfeited food product in Russia

Canned food holds the highest share of counterfeit products in Russia.

Russia’s woes with counterfeit food products continue.

For context, these are mislabelled goods, made using either different ingredients than packaging suggests, or synthetic alternatives to real ingredients.

For instance, many dairy products in Russia are currently being made using oils derived from palm oil, rather than milk.

A report by Rospotbnadzor, Russia’s consumer rights watchdog, says canned foods have the largest share of falsified ingredients.
 
7% of counterfeit foods in Russia are canned foods. Milk & dairy accounts for 6%, followed by fish & seafood at 5.4%, meat & meat products at 4.1%, soft drinks at 3.7%, and poultry products with a 2.6% market share.


Online food sales outstrip traditional bricks & mortar grocery retail growth

Online food sales in Russia are outgrowing traditional retail sales.

Online sales of food & drink items grew 43% in 2019, according to a report by Russian retail monitor GfK.

Comparatively, the sale of groceries and food products in traditional retail outlets grew at 6.6%.

40% of Russians ordered FMCG goods at least once via the internet in 2019. Online stores grew their audience by 19% during this time. Frequency of purchases also rose by a third.

GfK Russia Manager Aleksey Gorbatenko attributes this growth to Russians wanting to spend less time cooking.

In terms of traditional terms, it’s hard discounters that saw the highest revenue growth. They say total revenues rise by 49%.

Diageo predicts Russian premium alcohol market growth acceleration

Diageo, the world’s largest alcohol producer, expects Russia’s premium alcoholic drinks segment to expand.

Diageo, the world’s largest alcohol producer, expects Russia’s premium alcoholic drinks segment to expand rapidly in the coming decade.

“The Russian market for premium spirits has been growing at double-digit rates over the past two years,” says Diageo Russia’s Director of Corporate Relations Dmitry Petrov. “There are several factors contributing to this: the growth of consumption culture, including bar and restaurant culture, greater awareness of different food categories, and the ways Russians consume alcohol.

“Whiskey has great potential for growth. At the moment, the difference between the market penetration of vodka and whiskey is still large, but the gap is narrowing year on year. Whiskey is the most popular amongst Millennials.”
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