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Russia extends ban on western imports

Russia extends ban on western imports

Russian President Vladimir Putin has extended the country’s embargo on food products from Western countries until the end of 2021. Putin stated that the ban is in place “to defend national interests” and prohibits most food products from nations penalising Moscow. The country has been particularly hit by EU sanctions following the Ukraine crisis and Russia’s 2014 annexation of Crimea.

Last week, the EU agreed to extend economic sanctions against Russia until January 2021, citing a lack of progress on a peace process to put a stop to the conflict in eastern Ukraine. While domestic producers have benefited from the sanctions, they have had a negative effect on Russia’s economy with elevated food prices and a decrease in the quality of some products. Europe’s fresh produce sector has also felt the impact of these sanctions as exports to Russia previously accounted for a large share of sales.

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Russian state is going to support vegetables production in the Far East

Russian state is going to support vegetables production in the Far East

The government will reimburse 20% of the investments into hothouses vegetables production in Russian Far East, stated Mikhail Mishustin, Prime Minister. It is necessary to develop the production in the regions, as unlike other areas proving stable increase of hothouse vegetables production, Far East lacks behind. The Ministry of Econimic development is aware that there are currently some projects for construction and modernization of hothouse facilities in Far East, and the state financial support will be most convenient. It will also help to reduce the consumer price for local vegetables.

Actually, the rate of self-sufficiency of vegetable production is 2.4 times less in Far East than average in Russia. In most part of the region, the territories are unsuitable for horticulture, and state funding seems absolutely necessary.

The need of such a support was communicated to M. Mishustine during his business trip to Chukotka in August 2020 and his visit to a hothouse in Anadyr, the central city of the region, informed TASS Agancy. 

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Vegetables production and export from Russia, current results

Vegetables production and export from Russia, current results

By the end of October 2020, vegetables production in Russia totalled some 5.3 million tons or 6% more than by the end of October 2019, reported the Ministry of Agriculture. The crop of vegetables produced in hothouses amounted to 1.13 million tons, including 647,000 tons of cucumbers (+14.3%) and 410,000 tons of tomatoes (+18.6%). The leaders of the production of hothouses vegetables are the regions of Lipetsk, Moscow, Volgograd, Krasnodar, Novosibirsk and Kaluga.

Onion, tomatoes, cabbage and carrots are major vegetables grown in open fields. Their share in total production is 22.3%, 18.5%, 17.8% and 13.6 % respectively.
State-run assistance promotes the development of the sphere. The regions choose the priority targets themselves and obtain national investments. This, they can support local farmers.

Export of tomatoes would total 20,000 tons by the end of 2020, or 2,500 tons more than in 2019; export of cucumbers – 13,000 tons (comparing to 11,500 tons in 2019). Belorussia, Kazakhstan and Mongolia are major importers.

Source: https://mcx.gov.ru/press-service/news/proizvodstvo-ovoshchey-v-rossii-uvelichilos-na-6/

 

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Green trends in Russia

Green trends in Russia © LavkaLavka
© LavkaLavka

 

Ecologically friendly trends have become common for consumers of different countries; and although there is no business motivation initiated by government, Russian food retail business is beginning to move this way. Top managers of some Russian retail brand have been enthusiastically implementing new ideas of sustainability, considering that being “green” improves the company’s image and serves as an extra driver for the consumers.

For example, Magnit retailer installed special equipment in-store for collecting used packing. Auchan Russia hypermarkets encourage customers to weigh fruit in special reusable bags. Many retailers display non-packed fruit and vegetables in special areas for better visibility.

Besides, there are small retailers offering goods grown by local farmers; their production is being examined and confirmed by ecologic inspection. Some of them combine different formats. Such is the case of LavkaLavka, an online store with its own café and shop. The policy of this company is to sell exceptionally seasonable chemical free products grown by small farmers and controlled by clients which means if the client is not satisfied with the product quality, the shop reimburse him the cost of that product.

The analytics predict the growth of the demand for “green” products. Yet, there is a suspicion that some Russian retailers and producers follow this trend merely as the marketing policy, selling conventional goods as sustainable.

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The strategies of largest Russian retail chains during pandemic

World Food Moscow's forum of the leaders of food retail market: The strategies of largest Russian retail chains during pandemic © World Food Moscow
© World Food Moscow

 

As predicted earlier, Covid-19 keeps on threatening the health of the citizens from many countries, and to those countries’ economics consequently. The managers of all the businesses speculates over the approaches to be chosen, and schemes to be adopted.

No wonder, the World Food Moscow’s forum of the leaders of food retail market where top managers of the largest Russian retail brands spoke about their strategies during the spring’ upsurge of the pandemic, created large interest of the audience.

To provide the safety of the staff, 80 special “backup” shifts were organized by Piaterochka (part of X5 Group) in their distribution centres, said Sergey Goncharov, general manager. In case a single person of the shift got ill, the entire shift was dismissed for the confinement to be replaced by the backup team.

To support consumers, Magnit brand organised the collection
of food for people in difficult situation, encouraged its staff to volunteer in taking food to aged people confined in their homes. In every city and town, dozens and hundreds of employees contributed to these initiatives, related Ruslan Ismailov, deputy general director.

During the panics of the beginning of the pandemic, food stocks of some products were drained in no time, said Yohannes Tolay, general manager of Auchan Retail Russia. Nonetheless, company’s IT department managed to fix the delivery within the shortest period.

Thanks to the fast response to the challenges, flexibility and solidarity, our business obtained positive results, informed Martin Shumaher, general director of Metro C&C.

Operating through small stores, it was challenging to accomplish the safety requirements. However, we arranged the app delivery; by August, we have delivered some 900,000 orders, informed Evgeniy Rimskiy, purchase executive.
With the decrease of consumers’ income, Lenta redirected its offer toward cheaper assortment, said Yup Van Vreden, purchase and supplies director. We intend to be closer to our clients.

Marita Koskinene, general director of Prisma, is sure costumers’ safety becomes the basic value and the priority for the retailers. On the other hand, we realized that distance work is very efficient too, she stated.  

The Forum was held in the frame of World Food Moscow Exhibition last September.

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The impact of the pandemic crises, positive results too

The impact of the pandemic crises, positive results too
PRESS RELEASE

 

Food service sector became one of the most impacted by Covid-19 pandemic and economic depression in Russia; since March 2020, restaurants and cafes has been observing the decline of visitors’ number.

The statistics confirm the dramatic fall, especially in specific regions. Thus, the turnover of the sector decreased by 41% in Kaliningrad region, 30% in Saint Petersburg and 26% in Moscow by the end of June.

At the same time, some leaders of food retail stated that crisis was positive for them, as consumers shifted from public food services to supermarkets, and the growth of like-for-like sales reached 25 to 30% in April-June.

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The 900th store of Perekrestok supermarket

The 900th store of Perekrestok supermarket © X5 Group
© X5 Group
PRESS RELEASE

 

The retailer Perekrestok, part of X5 Retail Group (Russia), opened its 900th supermarket. It is located in Tyumen (Ural region). The design of the store comprises the departments of ready-to-eat and ready-to-go produces; there is a zone for healthy life style merchandise. Half of the supermarkets’ area is reserved for fresh category goods. The assortment includes 17,000 SKU.

Perekrestok has recently considerably expanded its penetration into Ural Federal region; 18 supermarkets were open in June and July.

By the end of June, Perekrestok was running 867 stores located in 146 cities and towns of Russia.

X5 Retail Group is the leading Russian FMCG retailer operating under several brand: Piaterochka (16,096 discounters), Perekrestok (867 supermarkets) and Karussel (62 hypermarket). The goods are consolidated on 42 distribution centers in several regions.

With the staff exceeding 307,000, the company is also one of the largest Russian employer.

Endeavouring to become the leader of digital transformation of the market, the Group uses the services of 1,500 IT and Data specialists.

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AvoBravo: an innovative project for Russian consumers

AvoBravo, an innovative project for Russian consumers

“It was a risk to launch the AvoBravo project because we did not know if Russian consumers were willing to buy read-to-eat avocado. But we took the risk, and AvoBravo brand was born,” said Daria Mironenko, import manager at Eurofrut (Russia). “We started to sell ready-to-eat avocado to restaurants and to end consumers through our website, and we found out that the demand is high: customers agree to pay more when they are sure the fruit is of high quality and ripe enough to be consumed at once.” AvoBravo carefully controls oily matter before the products are shipped. In addition, to protect its reputation, the company always exchanges fruit if clients are not satisfied with it. It took some time to gain a name in the marketplace. But now the project has been recognised, and restaurant chefs recommend the company.

“The Covid-19 pandemic has been a challenge for all businesses,” said Mironenko. “However, we did not stop ours for a single day. Before long, the restaurants resumed their service through home delivery, and the number of online purchases grew considerably. Russian consumers wanted to treat themselves to tasty healthy food, and our client numbers have risen. And they have remained loyal to us even in the post-pandemic period.”

Eurofrut supplies avocado only in Saint Petersburg for now, but plans to expand to other regions as well. The company sources its fruit from different countries, and is constantly adding new origins and looking for new suppliers. During this period in which it is impossible to travel abroad, the company is participating in virtual expositions, such as Macfrut Digital in Italy.

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WorldFood Moscow is on!

More than 30,000 trade visitors from 81 Russian regions and 96 countries attended WorldFood Moscow 2016, once again confirming the event’s importance.

 

The event will be held in Moscow on September 22-25, 2020. The Global Association of the Exhibition Industry (UFI) and the Society of Independent Show Organisers (SISO) launched a worldwide campaign to support the event called ‘This Show is Open’. WorldFood is Russia’s leading food and drink exhibition, with 1,764 manufacturers from 65 countries and 58 regions of Russia, covering 15 sectors. The fruit and vegetable section of the event is exclusive and cannot be matched by any other food exhibition in Russia. Last year’s event saw 30,768 visitors, with buyers from federal and retail chains, wholesale companies and distributors, alongside representatives of the food service sector. 

WorldFood Moscow 2020 focuses on Russian exposition and import substitution. It will feature WorldFood Organic, the first event in Russia for the leaders of the organic industry.

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Russian retail sector consolidates and goes online

Russian retail sector consolidates and goes online

The turnover of the Russian food retail industry grew by 1.4% in 2019 to reach US$223.9 billion. The sector continues to consolidate, with the share of the top ten fast-moving consumer goods (FMCG) chains in the retail food market increasing to 32.9%, led by X5 Retail Group and M&A transactions. Torgservice, which owns two popular hard discounters (Svetofor and Mayak) increased revenues by 26% and moved up to 9th place. In light of the slim profit margins, most industry observers predict continued consolidation in the retail sector. Russia’s retail chains are modernising and expanding in the provinces. Convenience is becoming one of the key priorities for consumers, which has stimulated the development of e-commerce (delivery services) and negatively affected sales in large-format shopping facilities. The discounter format is also spreading. 

With the country going through a period of sustained economic hardship, Russian consumers continue to buy rationally with minimal impulse purchases, while also looking for healthy, natural, innovative and “trendy” products at affordable prices. A GfK survey last year reported that 46% of Russians said they were looking for a way to save money and use special offers for this purpose, while 54% said they were looking for stores with low prices. Meanwhile, in a Nielsen study, over 84% stated that they had recently changed their eating habits, with 53% reducing fat intake, 65% reducing sugar consumption, and 67% increasing the share of natural and healthy foods in their diet.

Most federal retail chains have a section for healthy products. A quarter of Russians surveyed by GfK stated they were interested in farm products and 20% were interested in products marked ‘bio’, ‘eco’ or ‘organic’. In 2019, this segment of the Russian market accounted for $12.5 billion, according to Euromonitor. Similarly, online purchases are on the rise, with Euromonitor reporting that food and drink internet retailing grew by 20% in 2018, to reach $736 million, and is forecast to reach $1.8 billion by 2023.