Putin British food in Russian mouths: TDV Russia

Read more about TDV Russia on the Grocer magazine's blog here.

Russians are adventurous shoppers with an enormous appetite for chocolates and confectionery who spend, on average, 50% of their monthly salary on groceries.

These were just some of the conclusions of FFB’s Trade Development Visit (TDV) to Moscow and St Petersburg on 15-19 September. The Russian market is crowded with many brands present.  However, incomes are rising rapidly and there is growing opportunity for top quality premium brands.  The cost of market entry is likely to be substantially higher in future years and exporters have a “window of opportunity” over the next year or so to get established before the market consolidates.

Thirteen delegates from twelve companies spent three full days in Moscow and St Petersburg learning about the retail market through presentations from market experts, tours of a range of retailers and meetings with buyers.

Here are some comments on the Russian market collected by our delegates:

• Delegates were astonished at the huge selection of sweets, chocolate, biscuits and cakes on offer in every store. 
• Retailers stock a huge proportion of imported products.
• Russia will soon boast Europe’s largest food market. Although costs of entry are high, it is recommended to enter the market now, before it consolidates further pushing these costs higher.
• Female consumers are overtly targeted with some products such as breakfast cereals and a beer ‘only for women’ can be found in Russian ethnic store Bakhetle.
• Russian consumers habitually buy seafood and frozen fruit and vegetables by scooping a ‘pick’n’mix’ selection rather than buying sealed packets.
• Retailers in Russia range from Auchan – which in Russia is a low-cost discount store which undercuts Russian retailers by 10% - to Globus, the Harvey Nichols of Russian retail.
• Most Russians still spend 30% of their grocery spend in outdoor markets, where prices are comparable with discount retailers. 
• As a rule of thumb, UK exporters can expect retail prices to end up around three times the ex-factory level in UK. 
• Supermarkets’ mark-up profit is 10-35%.
• Most distributors now expect the supplier to be prepared to invest funds up front to help pay for initial retail listings and develop some brand awareness among consumers.
• Premium chain Azbuka Vkusa has announced an expansion of its premium chain to Ekaterinburg in the Urals region, with three new stores planned here by 2010.  This is the first time the premium chain has opened stores outside Moscow, and reflects fast-rising incomes in regional markets.
• The whole/organic foods sector is relatively underdeveloped but is expected to grow dramatically over the next few years.
• Dining on caviar, pancakes and vodka on a boat ride is a fine way to spend time in St Petersburg.
• New premium retailer Globus Gourmet was ranked 15th in The Grocer’s top 100 stores in the world.
• St Petersburg is the fastest growing retail market in Russia (and also happens to be the car manufacturing capital of Russia). 
• Delegates reported that they would never again complain about traffic congestion in London after experiencing a Moscow traffic jam.

“FFB and RED team were superb, knowledgeable, informative and encouraging.”
“Thanks for all the hard work, support and preparation for this trip to the FFB team and RED team.”
“Great job as normal."

26 September 2008