28th International Food Exhibition
24–27 September 2019 • Crocus Expo, Moscow, Russia

The Russian food & drink sector: 5 trends to watch in 2018

News
Another year goes by and Russia’s food and drink industry is still as intriguing as ever. Its $25 billion import market continues to hold plenty of potential for international producers to exploit, so let’s see what’s on the menu for 2018.
The Russian food & drink sector: 5 trends to watch in 2018

Sanctions remain in place, create new export niches

 
In July 2017, Russia announced it was extending its import ban on EU produce, and doing the same for food and drink items from the US, Australia, Norway, and Canada. Those ever-present sanctions, in place since 2014, will now run until at least December 31st 2018.
 
For producers in embargoed states, not much has changed. Crucially, however, there are some highly lucrative sectors that those countries can export – and export them in substantial volumes too.
 
For instance, wine is a product group that is not subject to Russian import bans – and a group worth over $720 million a year in exports for international manufacturers. So big wine nations, like France, Germany, and Italy, can still ship their vintages to Russian buyers.
 
And, for those 200 or so nations free from Russia’s restrictions, you’ve got near freedom to export all major food and drink categories. That includes big sellers like fruits and vegetables, meat and poultry, and milk and dairy items.
 
 

Healthy food comes into focus

 
Organic food is making a reputation for itself amongst Russian consumers. Sales are expected to hit $250 million by the end of 2017, as Russians begin to turn away from processed foodstuffs. At present, roughly 3% of the Russian population regularly buys health foods and organic produce – a market of 4.5 million hungry mouths.
 
Fruit and vegetable consumption is increasing nationwide. Across 2016, Russians ate 62kg worth of fruits and berries per person – a rise of 1.6% against 2015’s stats. Vegetable consumption grew 0.9% in the same period. 
 
Of course, not all of fruit and veg consumed will have been produced organically, but it indicates a growing desire to eat fresh produce across Russia.
 
In terms of sales, organic food has been growing 4% annually since the turn of the decade, with packaged foodstuffs noted as a rapidly expanding sub-sector. Best performing products include teas and coffees, baby food, and packaged sauces.
 

Coffee consumption to rise

 
Tea and Russia are inseparable. The nation is the biggest importer, and the fourth largest consumer, in the world. 94% of Russians drink regularly quaff a cup with tea drinking as a daily occurrence. It’s heavily ingrained in Russian culture, but coffee could be quickly over take over as Russia’s hot drink of choice.
 
Since 2000, coffee consumption has doubled throughout the Russian Federation. It now stands at 1.7kg per person. What’s more, imports are rising too. From countries like Vietnam, Brazil, and Italy (an EU country under sanction, remember), Russia imported coffee products worth $517m in 2016 – a rise of 7.4%.
 
This trend follows Russia’s newly health-conscious eating and drinking philosophy. Organic coffee, and tea, are amongst the top sellers, in terms of organic goods, throughout Russia. Collectively, tea and coffee is worth in excess of $1 billion a year in Russian imports.
 
 

Russian economy out of recession – food spending to rise?

 
Apart from the food embargo, the biggest issue facing Russia’s food and drink industry in recent years has been a slowdown of the naitonal economy. Happily, the financial news from Moscow is good, and getting better.

In 2017, the World Bank declared Russia out of recession and back into growth mode.
 
In part, this is down to a stabilisation and a resurgence in the global oil price. Prices rose to a two year high earlier in 2017, essentially helping soothe Russia’s troubled economy, and push its finances back into the black.

Now, the World Bank is predicting growth of 1.7% for 2018, with the IMF suggesting a healthy 1.6% growth rate.
 
For the general population, that likely means more cash in their pockets – and more money to spend on imported or luxury items. Food retail sales have been expanding in recent years, with top retailers like Dixie, X5 and Lenta posting double-digit growth rates across 2017, suggesting that increased consumer confidence is fuelling higher grocery sales.
 

Food retail faces a shake up

 
Western-style mass grocery retail models are spreading steadily across Russia – and it is likely their emerging dominance will continue into 2018. As of 2017, 68% of all Russian grocery outlets follow modern retail operational standards. 
 
Traditional street markets are rapidly losing ground. For the Russian consumer, this can only be a good thing. Supermarkets and convenience stores offer an enormous range of goods at competitive prices. And while Russians’ purse strings can now get a little loser with the recovery in the nation’s economy, being given the choice of products for lower costs is a top buying motivator amongst Russian consumers.
 
At present, the soft discounters, i.e. chains who run convenience stores with deep product ranges, account for 22% of modern retail outlets and are the fastest growing food retail segment in Russia. The nation has 112 soft-discount stores per million people – giving it the third highest such density in Europe.
 
Major players like X5 Retail are going to be pushing the convenience format further in the coming months, with thousands of store openings in the pipeline, which again, ties in with Russia’s emerging appetite for fresh produce.
 
WorldFood Moscow also allows exporters to meet and network with Russia’s top retail chains via its unique Retail Centre. Click here to learn more.
 

WorldFood Moscow: gateway to Russia’s food & drink industry

 
Want to experience these five trends, uncover more opportunities, and network with Russia’s key food and drink buyers in person? Be at WorldFood Moscow 2018.
 
As Russia’s leading food and drink exhibition, the show welcomes over 1,400 companies alongside more than 28,000 visitors from 89 countries. It is the perfect place to meet new and existing clients and grow your sales in Russia’s enormous food and drink market.
 
Book your stand here, or get in touch to find out how you can get involved.