Russia remains highly dependent on food imports and the U.S. was the fifth largest supplier to Russia last year by value of agricultural, fish and forestry products.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: RSATO1204
Opportunities for Future Growth
Deanna Ayala, ATO Director
Olga Kolchevnikova, Marketing Specialist
With Alla Putiy, Oksana Lubentsova, Marketing Specialists
In 2011, the Russian economy returned to its pre-crisis level, buoyed by domestic demand and as
always heavily influenced by the price of oil. Russia remains highly dependent on food imports and the
U.S. was the fifth largest supplier to Russia last year by value of agricultural, fish and forestry products.
The consumer oriented sector, including red meats, poultry, fruit, tree nuts, etc., accounted for 71
percent of total agricultural imports from the United States, worth more than $1 billion according to
Russian customs statistics. With growing demand, Russia is increasingly dependent on imports of retail
and packaged food products, and this presents opportunities for U.S. suppliers, particularly suppliers of
red meats, poultry, fish and seafood products, tree nuts, fresh and dried fruits, food preparations/ingredients
and pet foods. Russia remains a complicated market in terms of regulatory environment, financial structure,
and in terms of its market size and diversity. Post recommends that U.S. Exporters review this guide and
other reports, e.g. FAIRS Report, from FAS Russia prior to entering the market.
SECTION I. MARKET OVERVIEW
Russia is one of the fastest growing economies in Europe with approximately 143 million consumers
who have developed a strong appetite for quality, Western food products in recent years. Rising
incomes and a growing middle class have particularly fueled demand for packaged food, as well as
more casual dining options in the foodservice industry. These trends ultimately present great
opportunities for U.S. food and beverage exporters looking to enter the large and increasingly
advantageous Russian marketplace.
After the notable slowdown in 2009, in 2011 the Russian economy finally reached its pre-crisis level.
Gross domestic product (GDP) in 2011 totaled $1,860 billion. This is 4.3 percent growth from 2010 and
0.3 percent growth compared to pre-crisis 2008. The main economic driver for GDP growth in 2011
was increased domestic demand. For example, consumer expenditure per capita totaled $6,447 in 2011
and is forecast to grow by 5 percent in 2012. According to the Ministry of Economic Development
(MED), the GDP is forecast to grow by 3.7 percent in 2012, by 4 percent in 2013, and by 4.6 percent in
While macroeconomic and consumer expenditure indicators are positive, the indicators for average
income are less glowing, and thus presents a challenge to businesses trying to sell to middle-income
consumers. In 2011, retail sales amounted to $654 billion or up 7 percent year-on-year, according to the
Russian Federal Statistics Service (Rosstat). Food service sales grew by 6.2 percent and totaled $31 bn.
The share of food products in total retail sales in 2011 was 47.8 percent versus 48.6 percent in 2010.
Meanwhile real disposable income growth was a mere 0.8 percent despite an increase in real wages of
3.5 percent. Disposable income per capita totaled $7,273 in 2011 and is forecast to rise by 4.4 percent in
2012, according to Euromonitor International. The minimum monthly wage in 2011 stood at US$148
(RUB 4,330). The poverty rate in Russia increased by 0.2 percent and amounted to 12.8 percent of the
total population. Although the middle-class has grown substantially, the number is still matched by
those living in poverty (please see Appendix Statistics, Table A). The income differentiation gap
between the top 10 percent and bottom 10 percent of earners at the end of 2011 was estimated to be
approximately 16 times. Unemployment was 6.6 percent in 2011, slightly higher than during the pre-
crisis period when unemployment was 5.7 percent (2007). In addition, Russia's savings ratio has been
falling in recent years. In 2011, savings amounted to 10.4 percent of disposable income but that is
expected to fall to 9.9 percent in 2012.
The Russian government continues to focus on fundamental changes in the country’s economic
structure over the long term. The economy remains heavily dependent on oil and natural gas exports,
which account for two-thirds of export revenues. Their goal is to reduce the economy’s dependence on
the energy sector.
Russia is also taking a huge step toward joining the global economic trading community. The Russian
Federation is due to accede to the World Trade Organization (WTO) in 2012. As part of its WTO
accession agreement, Russia has committed to reducing and binding import tariffs to all agricultural
goods, thereby providing more predictability on its duties once Russia joins WTO. The average tariff
for agricultural products will be reduced from current 13.2 percent to 10.8 percent. For more
information on market opportunities please see the following report:
European Russia, geographically west of the Urals, Is home to over 75 percent of the total population
(143 million people). 74 percent of Russians in 2011 lived in urban areas and over 8 percent of the total
population lived in either Moscow (11.6 million people) or St. Petersburg (4.9 million people). There
are twelve cities in Russia (e.g. Novosibirsk, Yekaterinburg, Nizhniy Novgorod, etc.) with a population
of more than one million people. These Russian metropolitan areas also represent the largest retail and
Hotel/Restaurant/Institutional (HRI) markets in the country.
Table 1. Russia – Economic Activity, 2007-2011
2007 2008 2009 2010 2011
Nominal GDP, billion rubles 33,246 41,277 38,807 45,173 54,586
Nominal GDP, billion dollars 1,354 1,410 1,293 1,474 1,860
Real GDP growth, % change y-o-y 8.5 5.2 -7.9 4.0 4.3
GDP per capita, US$ 8,813 11,304 8,682 10,315 16,700
Population, millions 142.1 142 141.9 141.9 142.96
Unemployment, % 5.7 7 8.2 7.5 6.6
Inflation, % 11.9 13.3 8.8 8.8 6.1
Exchange rate (per $1) 25.58 24.85 31.76 30.36 29.35
Source: Federal State Statistics Service
The Ruble is still weak against the Dollar and Euro compared to pre-crisis exchange rates and imported
food prices have risen respectively. The Central Bank of Russia allows the Ruble to float within a
certain band to adjust to market conditions. Figure 1 and 2 below show the exchange rate of U.S. Dollar
to Russian Ruble in 2011.
Figure 1. Russia’s Central Bank’s exchange rate of $1 USD to Ruble from January 2011 to
Source: The Central Bank of the Russian Federation
Consumer price inflation was the lowest since 1991 and reached 6.1 percent in 2011 (down from 8.8
percent in 2010). However, during the first two months of 2012 inflation reached 0.9 percent. Russian
government estimates are that the rate will reach 5-6 percent by the end of the year.
Figure 2. Consumer price inflation, %, 1991-2011
Russia's consumer markets are vast and still fairly undeveloped compared to Western markets, creating
numerous opportunities for investors, despite the low disposable incomes and the concentration of
wealth in major cities. In the past 15 years, investors in Russia’s consumer markets focused almost
exclusively on Moscow and St. Petersburg, as the two cities offered a very high concentration of well-
off consumers, while the rest of the country was relatively poor. However, as consumer markets in
Moscow and St. Petersburg have become increasingly competitive and the population in other important
cities, such as Yekaterinburg and Nizhniy Novgorod, has also experienced a notable increase in
disposable incomes, more investors are looking into opportunities for investment outside the two main
Consumer spending on food has steadily increased from 2006 through 2011 by 114 percent with an
annual growth rate of 17 percent. Approximately 31 percent of consumer expenditure in 2011 was
allocated to the purchase of food and non-alcoholic beverages (compared to approximately 12.7% in the
United States in 2010), totaling about $280 billion. Figure 2 shows Russian consumers’ expenditures by
sector in 2011.
Figure 3. Russia. Consumer Expenditure by Sector in 2011, %
Source: Euromonitor International
In 2011, Russian exports and imports reached record volumes which were growing at about the same
pace. Export sales increased by 31.5 percent (versus 32.0 percent in 2010) and imports - by 30.0 percent
(versus 29.7 percent in 2010).
Figure 4. Russian Foreign Trade Data, 2002-2011
Source: Russian Ministry of Economic Development, Rosstat
Imports of agricultural products to Russia increased by 19.6 percent compared to 2010 and totaled $36.3
billion, according to Rosstat. In total, Russia’s imports have grown 148 percent since 2005, and demand
for imports exceeded pre-crisis level in 2011. This indicates an opportunity for future growth,
suggesting U.S. exporters can benefit from further increasing Russian import demand.
Table 2. Import of Agricultural, Fish and Forestry Products to Russia, 2007-2011
2007 2008 2009 2010 2011
Agricultural Imports, billion dollars 26.6 34.3 28.3 33.7 40.3
Growth Year on Year, % 28.5 28.9 -17.5 19.1 19.6
5-Year Average Annual Growth Rate, % 15.7
Source: Global Trade Atlas
The U.S. and Russia maintain strong trade relations and cooperate through trade and investment,
energy, development and governance, and educational and cultural partnerships. The U.S. is Russia’s 5th
largest import source, and its 10th largest export market. U.S. - Russia bilateral trade totaled $35 billion
in 2011, a 25 percent increase from the 2010 total of $21.6 billion.
Table 3. The U.S. – Russia Bilateral Trade, 2011
Russian Total Trade $822 billion
Exports $516 billion
Imports $306 billion
Trade Balance $210 billion
The U.S.-Russia Trade $27 billion
Exports from Russia to U.S. $12 billion
Imports to Russia from U.S. $15 billion
Trade Balance $3 billion
The U.S.-Russia Ag. Trade* $1.8 billion
Exports from Russia to U.S. $0.2 billion
Imports to Russia from U.S. $1.6 billion
Trade Balance $1.4 billion
Source: Rosstat, Global Trade Atlas
*Note: Agricultural, Fish and Forestry Products
Russia is among the top export destinations for U.S. agricultural products. Based on U.S. official export
data, the U.S. share of agricultural, fish and forestry products in 2011 increased by 8 percent and
exceeded $1.3 billion. Note: these figures are understated due to transshipments via Europe.
According to Russian customs statistics U.S. agricultural imports in 2011 accounted for $1.6 billion – a
figure that is up by 23 percent compared to 2010. The U.S. remains the fifth largest supplier to Russia
(by value of agricultural, fish and forestry products) with 3.5 percent of Russia’s agricultural imports
behind Brazil, EU, China, and others (please see Appendix Statistics, Table C). The U.S.’s top
agricultural exports to Russia in 2011 include red meat, poultry, food preparations, nuts (almonds and
pistachios), prunes, fresh fruit, fish and seafood, and other products.
Total U.S. - Russia agricultural trade, approximately $1.4 billion, represents about 5 percent of total
trade between the two countries.
Figure 5. Value of U.S. Exports of Agricultural, Fish & Forestry Products to the Russian
Federation (in millions of dollars), 2006-2011
Source: Global Trade Atlas. Note: These figures are based on U.S. Customs
export data, and will differ from Global Trade Atlas data on Russian imports
from the U.S., which are based on Russian Customs import data.
U.S. suppliers of a wide variety of products and services are active in the Russian market. The Russian
chapter of the American Chamber of Commerce includes more than 850 members successfully
operating in Russia. Among them are such American companies as Kraft, Mars, DuPont, Wrigley,
Cargill, PepsiCo and many others. According to PMR research, a number of leading international
brands have entered or returned to the Russian market in 2011, including Berghaus, Diesel, DKNY
Jeans, Jaeger, Victoria’s Secret, La Senza, Jimmy Choo and many others.
Moscow has been ranked as the third most attractive city for international retailers after London and
Paris, according to a survey of 150 leading international retailers in 55 countries in Europe conducted by
Jones Lang LaSalle. Ten retailers are planning to launch in Moscow in 2012 including Debenhams,
Noodle House, Seattle’s Best Coffee, MuzzBuzz, Brisket Express, Krispy Kreme, Peek & Cloppenburg
and Abercrombie & Fitch.
Successful U.S. businesses operating in Russia should not rest on their laurels. Russian companies are
raising their game in order to compete for customers. For many staple products, domestic production
meets demand. Certain imported food and agricultural products have difficulty competing with domestic
products due to the high cost of foreign exchange, high import duties and/or difficult regulatory
framework and generally efficient production of unsophisticated food products. Successful imports tend
to be those that add to the variety of foods available on the market and those that are either not grown in
the country or for which domestic production is insufficient to meet domestic demand.
Exporters should review some of the advantages and challenges of the Russian market (please see Table
4 below) when considering their marketing strategy.
Table 4. Russia: Advantages and Challenges for U.S. Exporters
Population of 143 million people who are potential The relatively low purchasing power of many
consumers. The U.S. is the fifth largest importer in Russian consumers, particularly in the
Russia (by value) of food and agricultural products. regions and the consequently lower demand
for durable goods, premium grocery, and
Russia’s retail sector is growing, which creates a Economic vulnerability, dependence on oil
number of opportunities for prospective U.S. and mineral extraction for most wealth.
exporters. The ongoing development of the mass Substitution of imports for domestic products
grocery retail industry will allow producers to route as part of the Russian Government’s policy of
products to the market more efficiently. self-sufficiency. Distance is one if the major
barriers complicating logistics for the retail
In general retailers are open to new products in Strong competition with suppliers of similar
order to attract customers. products from Russia and European Union.
Significant number of consumers can afford Per capita spending in the regions outside
purchasing high-quality food products. Moscow and St. Petersburg remains quite
Urban lifestyle changes increase demand for semi- Rapid development of local manufacturers of
finished and ready-to-cook products. ready-to-cook products and Government
Strategy to modernize food processing sector
creates tough competition for similar
American-made food and drinks are still new for Growing number of domestically produced
the majority of the population, and popular among products; lack of knowledge of American
the younger generation. products.
Existence of large importers experienced in Language remains an obvious barrier for
importing food products to Russia. many entrepreneurs from both small and
large companies. Despite improvements in
English language competency of many
Russians it’s still to be expected that many
firms will not communicate effectively in
Paying in dollars is advantageous for exporting to Russian government bureaucracy and
Russia compared to Europe due to the lower cost of corruption. Contradictory and overlapping
the dollar relative to the euro. regulations. Official government opposition
to growth in food imports.
Russian trade and investment policy is converging Current presence of non-tariff barriers such as
with international standards. unscientific sanitary and phytosanitary
Investors are building more efficient storage Despite huge potential, regional markets
facilities, improve infrastructure and logistics. require substantial up-front investment in
infrastructure and facilities, and
transportation infrastructure between cities
and regions remains extremely poor.
The Russian government has committed to Lack of reform in the Russian agricultural
spending billions on infrastructure over the next 10 sector has led to high raw-material costs and
years, particularly on railroads and highways, shortages for processors.
which should translate to better logistics for
Russia’s accession to the WTO is expected by the Competition with food products imported
end of 2012. Russia will be obligated to bind its from EU and other countries may rise.
agricultural tariffs, adding more predictability to the
trading relationship and opening export
opportunities for the U.S. agricultural industry.
WTO membership will also require Russia to abide
by science-based sanitary and phytosanitary
standards that will help facilitate U.S. farmers’
access to the market.
Russia’s proposed accession to World Trade Organization (WTO) is expected to create changes that will
provide more obtainable access for foreign companies to the market as well as much healthier
competitive environment domestically. Through commitment to WTO rules and norms, the investment
in and expansion into the Russian market will become more predictable thus reducing the “risk cost” of
the entry ticket onto the market. Russia’s accession is expected to take place in 2012.
To get more information on the market access changes for each key food products that will occur with
WTO accession for the U.S. suppliers please see the report:
SECTION II. EXPORTER BUSINESS TIPS
General Consumer Tastes and Preferences
As Russian consumers’ incomes rise and the country’s middle-class gradually expands, demand for
better quality food is increasing. There are two distinct trends in Russia in terms of spending on food: a
trend towards health-conscious eating and a trend towards convenience foods.
Healthy meals are becoming increasingly popular, particularly among younger consumers who are more
conscious of their fitness and appearance and more aware of the risks of heart disease and similar diet-
related illnesses. Thus, spending on foods such as yogurt, muesli and low-fat alternatives has grown
faster than the overall food category. Overall spending on fish, seafood, poultry products and fresh
produce is also increasing. Per capita consumption of fresh fruit and vegetables has risen considerably,
largely due to greater availability of such products, as well as public campaigns promoting the benefits
of a healthier lifestyle. Russian consumers also generally dislike artificial flavors and additives, and
prefer to purchase products with natural colors, flavors and other natural ingredients. Non-GMO
products are also becoming more important for the Russian consumer, although understanding of
agricultural biotechnology is extremely low.
The demand for eco-brands and organic products is growing, whilst there is a lack of regulation in
Russia concerning eco-brands, and any company can name its products “bio” or “eco”. This is the
reason why Russian consumers do not trust the quality of so-called eco-brands, and they are not ready to
pay extra for them. For more information on Russian organic market please see Russian Organic Market
Russian consumers are increasingly time-poor and, as a result, they are demanding more convenience
products, frozen processed food and ready-to-eat meals. Time dedicated to traditional food preparation
and dining at home with family is commonly shifting to consumption of prepared meals or those at
restaurants. Busier lifestyles and health-and-wellness trends are expected to boost the development of
healthy fast food e.g. fresh fruit and vegetable salads, therefore the consumption of naturally healthy
snacks will grow.
In most Russian households, women have the responsibility for grocery shopping. Generally, long-
lasting foodstuffs such as rice, pasta, coffee and tea are bought in large quantities a couple of times a
month, while fresh products are bought on a daily basis, usually on the way home from work.
When shopping for food, most Russian consumers are looking in three directions. First, they are giving
preference to well known brands, rather than experimenting with the new ones. According to “GfK
Russia” research, about 40 percent of Russian customers firstly pay attention to their favorite brands’
offers. And about 70 percent believe that branded products are of better quality than others. Therefore
they prefer quality brands which offer value-for-money. Secondly, Russian customers are very exposed
to various discounts, promotions and sell-offs and as a result don’t like to pay full price when they know
they can find a bargain. And thirdly, consumers are looking for colorful, attention-grabbing and more
unusual goods. They are open-minded to brands which are novel, provided that the story around them is
modern and attractive. This is good opportunity for a wide range of U.S. packaged products.
Packaged Food Sales
Russia’s packaged food market is amongst the fastest growing in the world reaching $100 billion by
some estimates. In 2011 the market was boosted by steady growth in almost all categories of packaged
food. Sales in this sector increased by 16 percent in 2011 supported by rising incomes as well as the
availability of imported products on the market.
Moscow is a priority market for many packaged food players. Global brands and imported products
have a higher share of value sales in Moscow than they do nationally. This is largely due to the city’s
higher income level and Muscovites’ Western-looking attitudes being affected by European lifestyle
trends and brands. In addition, the higher share of imported products in Moscow is due to generally
higher prices in the city. This reduces the price gap between domestic and imported goods. Many
products are often launched in Moscow long before they are launched nationwide. As a result, Moscow
accounted about 14 percent share of overall packaged food sales in 2011 and saw stronger growth than
Russia as a whole (according to Euromonitor).
In 2011, Russian packaged food manufacturers quickly reacted to the healthy eating trend and launched
a number of products targeting that niche. Light (or low-fat) products appeared in many categories of
packaged food, including low-fat yogurt, sauces, light savory snacks (such as croutons by Kirieshki
Light) and frozen yogurt. In sweet and savory snacks, the consumption of naturally healthy nuts and
fruit snacks grew 8 and 24 percent respectively in current value terms in 2011. Fruit bars showed the
strongest growth rate of 24 percent in the snack bar category.
The popularity of fortified products in Russia is also growing. Various types of noodles, dairy products,
soup, and baby food products fortified with vitamins (omega 3, vitamins A, B1, B2) were launched in
the market in 2011. Producers emphasize the new health and wellness features of their products
(reduced-fat or vitamins added) on the packaging of their products (for more information on food
package labeling please see FAIRS report:
With growing demand, Russia is increasingly dependent on imports of retail and packaged food
products, and this presents opportunities for U.S. suppliers. In 2011, the most dynamic growth of U.S.
products in the high-value sector was food preparations, pastry and cakes, vinegar and soy sauces, pasta,
tomato ketchup and other tomato sauces, mustard, and nonalcoholic beverages such as waters (including
Figure 6. Packaged Food Sales through Retail Stores in Russia (2010/2011 % growth, $US
millions in y-o-y exchange rate)
Source: Euromonitor International
Significant market opportunities exist for U.S. exporters of non-alcoholic beverages and many of these
are already experiencing strong growth in Russia. According to Euromonitor, in 2011 the sales of sport
and energy drinks reached record volumes with 27 percent growth year-on-year. Ready-to-drink tea
increased by 26 percent followed by bottled water (23 percent), concentrates (22 percent), and fruit and
vegetable juice (nearly 20 percent). Significant growth in sports and energy drinks sales was due to
novelty of the products on the market as well as the active promotion in media. In 2010 there was a
spike in bottles water sales due to the record-setting temperatures. The habit that was formed that
summer has persisted for many Russians.
Figure 7. Drink & Beverages Sales through Retail Stores in Russia (2010/2011 % growth, $US
millions in y-o-y exchange rate)
Source: Euromonitor International
* Note: RTD - ready-to-drink
Table 5 below shows retail value sales of packaged food in 2007-2011.
Table 5. Packaged Food Sales through Retail Stores in Russia, 2007-2011, $US millions
2007 2008 2009 2010 2011
Packaged Food 62,127 74,625 65,313 75,545 87,445 15.8
Baby Food 1,028 1,415 1,349 1,675 2,128 27.0
Bakery 10,097 11,578 9,791 10,762 11,830 9.9
Canned/Preserved Food 3,631 4,384 3,793 4,379 5,021 14.7
Chilled Processed Food 4,659 5,417 4,873 5,552 6,343 14.2
Confectionery 8,783 10,305 8,861 10,195 11,765 15.4
Dairy 12,545 15,724 14,629 17,796 21,192 19.1
Dried Processed Food 2,463 3,127 2,833 3,161 3,544 12.1
Frozen Processed Food 5,514 6,574 5,722 6,680 7,940 18.9
Ice Cream 1,775 1,998 1,767 2,132 2,478 16.2
Noodles 468 555 503 557 616 10.5
Oils and Fats 4,668 5,867 4,757 5,331 6,202 16.3
Pasta 955 1,313 1,211 1,422 1,615 13.6
Ready Meals 3,243 3,740 3,250 3,726 4,373 17.4
Sauces, Dressings and
Condiments 3,422 4,082 3,508 4,002 4,612 15.3
Snack Bars 8 10 9 11 14 26.9
Soup 382 462 414 506 624 23.2
Spreads 351 419 370 442 528 19.5
Sweet and Savory Snacks 3,146 3,683 3,018 3,396 3,820 12.5
Source: Euromonitor International
Starting Business with Russia
The World Bank's Ease of Doing Business 2012 report ranked Russia 111th out of 183 countries, a
measurable improvement compared to the 2011 ranking of 120th. However, the conditions for starting a
business have deteriorated significantly since 2009 when Russia ranked 88th out of 183 countries. This
is due to the lack of reform in terms of the time and number of procedures required for setting up a
business in the country. While many countries have simplified and streamlined the process, it takes 9.0
procedures and 30.0 days in Russia to open a business. This compares unfavorably to an OECD
(Organization for Economic Co-operation and Development) average of 5.7 procedures and 13.0
days. However, the cost of starting a business in Russia is low: only 2.7 percent of per capita income,
compared to an average of 8.3 percent of per capita income in the Eastern Europe and Central Asia
Exporters can request a brief market assessment for their products and/or a list of Russian importers
from ATO Moscow, St. Petersburg and Vladivostok. Additionally, ATO Moscow offers the following
recommendations to help exporters select the best approach for their firm:
A prospective entrant is advised to estimate market prospects for their product with respect to
consumer preferences and incomes, local competition and sales channels (marketing research
from a specialized consulting firm may be required). A thorough review of Russian regulations
is also advised including a review of any changes to the tariff post WTO-accession.
Attend Promotional Events: One of the main challenges to exporters entering the Russian
market is product promotion. A cost-effective way exporters can promote their products is to
participate in one of the largest general food and beverage trade shows in Russia, World Food
Moscow, held annually in September. If exporters are targeting specific regions within Russia,
the Moscow ATO recommends participating in regional exhibitions. Participation fees for
regional exhibitions are lower, and are aimed at local consumers and retail food chains. The
Russian retail market is competitive; exporters should allocate time to visit Russia and earmark
funds in their sales plans for promotional support.
Work with a Russian Importer: Selecting the right trade partner is one of the most important
decisions for exporters developing their business in Russia. Working with a local partner in
Russia significantly expands business opportunities, and minimizes the need for exporters to
establish direct contact with multiple retail chains. A local Russian partner familiar with market
conditions and the regulatory environment can help exporters navigate the Russian retail market,
resolve issues, and increase the likelihood of success.
In order to make the first delivery, usually a large local import company is chosen. The company
should have a good reputation and experience in customs clearance, and must have storage facilities and
a developed distribution network. Make sure the company has experience working with Western
suppliers and has experience in arranging regular supplies of food products. Western companies that
strive to supply directly, circumventing Russian middle men, often sustain losses due to lack of local
market knowledge. A large domestic import company is usually better adjusted to local conditions,
with established trade ties and contacts in state structures.
Exporters representing U.S. companies may contact the Moscow ATO for assistance in locating
importer list. Performing due diligence is critically important, such as verifying banking and supplier
references of potential importers, and local and U.S.-based organizations in Russia can provide helpful
information to exporters. However, credit reporting is a relatively new practice in Russia, and credit-
reporting agencies may not have complete information on potential Russian business partners. Retail
chains may be another valuable source for exporters collecting information on importers.
Provide Sales Support: Exporters must help market the products they sell in Russia. Russian
importers and wholesalers expect exporters to participate in the sales process, either by
providing event marketing support, advertising assistance, training, packaging/handling advice,
or point of sales materials.
Establish a Representative Office: Once a company has established firm contacts and has a solid
prospect for sales, one of the best ways to conduct business in Russia is to open a representative
office. Depending on the product and target market, an office might be situated in Moscow, a
city that hosts a large concentration of retailers and representative offices; St. Petersburg, the
port city through which the largest volume of sea-borne freight passes; or Vladivostok, the
principal transpacific gateway to the Russian Far East.
Trade Shows in Russia
Participation in one of several established trade shows in Russia allows exporters to take a first-hand
look at the local market, to meet potential importers, and to gauge the competitiveness of their products
compared to similar products promoted at the show.
World Food Moscow
September 17-20, 2012
World Food Moscow is a USDA-supported show, and is essentially the “main event” for U.S. exporters
interested in market opportunities in Russia. ATO Moscow and the Office of Trade Programs (in
Washington) organize American pavilions in the grocery, fruit, and seafood sections offering “turn-key”
service. USDA industry organizations (aka Cooperators) typically organize a pavilion in the meat hall. In
2011, this 4-day show drew 1,420 exhibitors from 64 countries and attracted more than 26,000
importers, wholesalers, retailers, and processors from all parts of Russia and from many neighboring
PIR Hospitality Industry
Moscow, Crocus Expo Center
September 25-28, 2012
The PIR Hospitality Industry exhibition is the leading show for the hotel, restaurant, and industrial
catering sector (HRI) and is affiliated with the Restaurateurs and Hoteliers Federation of Russia.
In 2011, more than 600 exhibitors from 24 countries participated in the PIR show. The PIR show
attracted approximately 40,000 visitors from the Russian hospitality industry including: 51 percent -
restaurants, cafes; 24 percent - trade companies, distributors, producers; 11 percent - hotels; 6 percent -
catering; 4 percent - mass media, regional government, educational centers; 1 percent - others.
Moscow, All-Russian Exhibition Centre (VVC)
March 12-15, 2013
Ingredients Russia is a specialized trade show for suppliers and buyers of ingredients worldwide. In
2011, more than 300 companies and organizations from 25 countries exhibited at the show. More than
10,000 specialists visited the show last year searching for new contacts and different kinds of
ingredients for food processing (e.g. confectionery, meat, fish, dairy, etc.).
Moscow, All-Russian Exhibition Center (VVC)
October, 9-12, 2012
The Golden Autumn trade show is organized by the Russian Ministry of Agriculture, and is the
largest Russian trade show for production agriculture. In 2011, more than 2,500 companies and
organizations from 58 Russian regions and 32 foreign countries exhibited at the show. Golden
Autumn occupied over 90,000 meters of space, including open grounds, displaying over 700 items of
agricultural equipment, both Russian and foreign. More than 100,000 visitors attended the event,
most of who are involved in farming and livestock production, food processing, agri-business,
research, or business financing. At this annual trade show, the USDA pavilion displays animal and
plant genetics, high-grade feeds, animal nutrients, and feed additives.
February 11-15, 2013
Prodexpo is Moscow’s largest international trade show highlighting foodstuffs manufactured in Russia
and Eastern Europe. In 2011, Prodexpo hosted more than 2,000 exhibitors from 55 countries and
attracted 52,868 visitors.
Logistics and Transportation
Imported products arrive in Russia via land, sea, or air freight into ports or customs warehouses for
clearance before proceeding to the next destination. The transportation system for shipping U.S. high
value food products into Russia via St. Petersburg and Moscow is well established. Most consumer-
oriented food and beverage products including those from the U.S. enter through St. Petersburg or
Moscow for customs clearance. Most American products are delivered to the Russian Federation in
containers by sea and around 90 percent enter via the Port in St. Petersburg. MAERSK LINE, APL,
OOCL, Hapag Lloyd, Evergreen, CMA-CGM shipping lines deliver cargos from the United States to
Rotterdam, Hamburg, or Bremerhaven in Northern Europe. The transatlantic shipment can take from 17
to 30 days depending of the departure port and number of ports the vessel calling on the way to Europe.
In Northern European ports, the containers are reloaded onto feeder vessels and travel an additional five
days to St. Petersburg. It then takes an additional four days shipping time for final delivery by rail or
truck to Moscow.
Outside of Russia, imports are also delivered to Baltic ports and then shipped by truck or rail to St.
Petersburg or Moscow. Baltic and Finnish ports had offered greater efficiency, fewer problems with loss
or damage, and lower port fees. However, changes in Russian import requirements have largely
redirected these shipments to Russian ports: St. Petersburg, Ust-Luga, Vysotsk, Kronshtadt,
Novorossiysk and Vladivostok.
The cleared products are then shipped further into the interior via truck or rail to Moscow,
Yekaterinburg, Novosibirsk, Rostov-on-Don, Kazan, Samara, Ufa, and other major population centers
in Russia, the main markets for the high end products.
Products destined for the Russian Far East (RFE) enter through the ports of Vladivostok, Vostochnyy,
Vanino, Nakhodka and Magadan. Although Vostochnyy is the region’s largest port by volume, the
majority of U.S. food exports to the RFE enter through Vladivostok.
Currently several forwarders make shipments from the U.S. west coast to Vladivostok: Hyundai
Merchant Marine, MAERSK LINE, APL, and Hapac Loyd. Average transit time from the U.S. west
coast to Vladivostok takes 18 days: ocean vessels bring containerized goods to the Korean Port of Pusan
(it takes 9 to 13 days), then, feeders transfer them to the Port of Vladivostok (it takes 4 to 7 days).
MAERSK LINE has the longer transit time, because it goes though Japan first, and then delivers goods
to Korea (Pusan). In 2008, FESCO launched a direct line from Everett, Washington to RFE ports
(Vladivostok, Korsakov, Petropavlovsk, and Magadan). Direct voyages are scheduled approximately
once per month and the average transit time is 14 days. From Vladivostok food products are shipped to
the other cities in the RFE and Siberia by truck or rail.
Imported food products for Russian retail chains and food service establishments come through
importers, distributors, and wholesalers. Large suppliers are typically also importers.
Figure 8. Russia: Distribution channel for food retail chains, import of transatlantic products via
the Port of Greater St. Petersburg
Figure 9. Russia: Distribution channel for food retail chains, delivery from U.S. to the Russian
Most hotels and restaurants choose to purchase the majority of products through food service
importers/distributors in the hotel, restaurant, and industrial (HRI) sector, both large and small.
Credit and Payment Terms
The Russian banking system continues to make strides towards complying with international standards,
and many banks that are authorized to open foreign currency accounts also have general licenses
enabling them to undertake a full range of foreign currency transactions. Many of these banks have
correspondent banks in the United States. Further, several American and foreign banks such as Citibank,
Raffeissenbank, Societe Generale, and Credit Suisse are licensed to operate in Russia. Securing credit
can be costly, however, and there can be obstacles to securing credit in Russia if the company is 100
percent foreign-owned. Russian bank fees are often high, and it can take much longer to open letters of
credit or transfer funds than is common in the United States.
In 2011, consumption was supported by recovering consumer credit. Pre-crisis, the volume of consumer
loans was growing at over 50 percent a year, however in 2009-2010 the credit business came to a
standstill and Russians spent their time repaying their old loans. However, by 2011 credit to consumers
resumed and increased 35.9 percent on year, according to the Central Bank. Retail credit was growing at
15 percent in the second half of 2011 and is expected to grow at 20 percent in 2012, according to
Prospective borrowers should expect Russian banks to request a package of documents, including a
balance sheet showing profits for the last three quarters and proof of assets to mitigate the bank’s risk.
Interest rates on credit became lower in 2011 after a significant rise in 2009-2010 (up to 13.9 percent)
making credit more available for Russian businesses.
Table 6. Average Interest Rates on credits to non-financial institutions in 2011, %
Jan Feb Mar Apr Ma Jun Jul Aug Sent Oct Nov Dec
. . . . y e y . . . . .
Credit to 8.6 8.7 8.7 8.3 8.0 8.6 7.9 7.9 8.0 8.6 8.8 9.3
to One Year
Source: Central Bank of Russian Federation
Regarding payment terms, many U.S. exporters require 100 percent up-front payment especially for
new trading partners. Russian importers may not be accustomed to making a 100 percent pre-payment
prior to shipment and moreover may struggle to finance it. As the business relationship develops,
Russian importers may eventually expect exporters to ship on credit, with payment due upon arrival in
the Russian port. The importer may alternatively make a pre-payment and pay the balance when the
product arrives to the importer’s storage facility.
In established business relationships, bank transfers are sometimes made on the basis of payment–on-
delivery, or payment after an agreed number of days. A letter of credit (LC) may be used when required
by the foreign supplier, but Russian importers consider LCs expensive and difficult to arrange.
Document Collections work relatively well at ports, and importers are accustomed to these procedures.
Nevertheless, until exporters and importers build relationships and reach a level of trust, exporters may
find letters of credit worthwhile.
The GSM credit guarantee program offered through the United States Department of Agriculture
(USDA) provides credit guarantees to encourage financing of commercial exports of U.S. agricultural
products. The GSM Credit Guarantee allocation for Russia for FY 2012 (October 2011 – September
2012) is $100 million. The GSM-102 program is in great demand due to the difficult financial
environment and lack of financing available commercially in Russia. GSM-102 reduces risk to the U.S.
exporter’s bank and facilitates shipments of U.S. commodities to markets that may not be able to import
these same products without the guarantee offered by the Commodities Credit Corporation.
The list of approved participating foreign banks in the GSM-102 program is available at FAS web-site:
http://www.fas.usda.gov/excredits/foreignbanks.html#RUSSIA. The list is regularly updated upon the
review of incoming financial information and applications from banks that desire to participate in the
GSM-102. For further information on these programs, please visit the FAS website:
Food Standards and Regulations
Russia has complex food import regulations. Exporters should carefully question importers regarding
certification and documentation requirements, as well as procedures for clearance of shipments into the
Russian Federation. Upon WTO accession many of the rules and regulations governing food and
beverage imports will change so please continue to check the FAS website for updates.
In February 2010, compulsory certification for food products and cosmetics was cancelled. The
Government of the Russian Federation (GOR) now requires only a declaration of conformity with the
product safety regulations, instead of an obligatory certificate. At the same time, the authorities are
planning to impose heavy fines on the manufacturers of unsafe products. Sanitary norms and technical
regulations were not cancelled and continue to regulate the production process. For more detailed
information on certification, customs procedures, documentation, tariffs, and labeling requirements
please see the following GAIN reports:
1) Food and Agricultural Import Regulations and Standards report:
RS1168 Food and Agricultural Import Regulations and Standards - Narrative
2) RS1015 Declaration of Conformity Replaces Certification for Many Products
On January 1, 2010, Russia, Belarus and Kazakhstan launched a Customs Union, which has since
included the introduction of new rules and regulations for food products exported to the Union. The
unification of sanitary norms and technical regulations is still ongoing, and reforms affecting food
standards and regulations may last for quite some time. At the same time, the Union provides greater
access to the markets of the participating states and simplifies the distribution of packaged food within
the Union but for the following exception: U.S. animal products exported to Kazakhstan and
accompanied by health certificates will not be allowed for consumption in Russia or Belarus. Please
check the Customs Union Ag Times in the FAS GAIN system for regular updates on the Customs
Retail prices in Russia can vary significantly; however pricing has become more competitive as large
retail chains increase their aggregate market share. On the regulatory side, exporters should consider the
effect of the Russian tax regime when making pricing and margin decisions. Again, please continue to
monitor GOR tariffs and other duties as WTO accession moves forward. Some of the taxes assessed
import duties are applied to most goods and typically range from 5 to 20 percent of products’
customs values. However, some agricultural products are subject to specific tariffs that are
calculated by volume, weight or quantity. Excise taxes, depending on the commodity exported,
apply to goods such as alcohol and tobacco products. For checking excise taxes rates please
contact ATO Moscow.
Russia typically levies an 18 percent Value Added Tax (VAT) on imported goods; however,
some food products (e.g. sugar, salt, milk, bread, pasta, vegetables, baby food, end etc.) are
subject to a reduced rate of 10 percent
customs clearance charges add about 1.25 percent. The wholesale mark-up is typically 12 to15
percent, while retail mark-up runs 35 percent or more, depending on the product and the retailer;
a 39 percent profit tax is assessed on gross margin.
SECTION III. MARKET SECTOR STRUCTURE AND TRENDS
Retail Food Sector
Among the consumer-oriented sectors in Russia, retail is strong and significant. Monthly retail sales in
Russia average about $55 billion and the industry recorded revenues of $654 billion in 2011, which is 7
percent growth from 2010 in comparable prices, according to Rosstat. This growth was more or less
comparable to that of 2010, when retail sales turnover increased by 6.3 percent year-on-year, and was
valued at $564 bn. Food retailers contributed 47.8 percent (versus 48.6 percent in 2010) to total retail
market turnover with $311 billion in sales.
In 2011, 88 percent of Russian trade turnover could be attributed to modern retail formats such as
hypermarkets, supermarkets, and discounters. Open-air markets and older Soviet-style stores, including
wet markets, are declining in popularity and losing market share to modern retail formats. Street market
sales decreased by 2.2 percent in 2011, amounting to about 12 percent of retail sales in Russia in 2011,
according to Rosstat. Traditional retail has the weakest position in Moscow and St. Petersburg.
Russian food retail continues to be led by large domestic retailers with annual turnover exceeding $2
billion. Russian retail giants such as the X5 Retail Group, Magnit, Seventh Continent and Dixie chains
are still among the top Russian retail players. That said, in addition to domestic companies, the French
Auchan Group, German Metro AG and others have earned significant market share during the last
decade. Nationwide, retail chains occupy about 18 percent of total Russian trade sales, but with higher
concentrations in major urban centers. Nevertheless, the Russian retail market is still highly fragmented
with the 11 largest retailers (by revenue) controlling only 18 percent of the market, versus 80 percent for
the 10 largest retailers in the U.S.
In 2011, the X5 Retail Group, which operates the Pyaterochka, Perekrestok and Karusel grocery stores,
remained the leading retailer in terms of revenues in Russia. The Tander Group (Magnit), a grocery
retailer, occupied second place among the largest retailers, and is followed by the Auchan Group.
Russian retailers opened 100 new hypermarkets in 2011, the maximum amount of openings ever in the
country for this format, according to Vedomosti. Currently, retail operators are branching out to regions
and cities with a population of under 500,000 people – which was also named as the trend of 2011.
Experts expect further growth in the number of Russian hypermarkets, predicting a minimum 800 of
openings in this format during the next five years. In addition, it is expected that some 300,000 m² of
new retail facilities will be opened in Moscow in 2012.
In 2011, over 25 shopping centers were completed in Russia. Moscow and St. Petersburg still account
for the highest number of malls in Russia. At the end of 2011, approximately 45 percent of all shopping
centers in the country were in these two cities. However, the 11 Russian cities with populations over 1
million accounted for more than 110 of the 370 malls operating on the Russian market at the end of
2011. Over 100 shopping centers are to start operations in Russia in 2012, according to the research of
the InfoLine research agency.
Retailers demand consistent quality and adherence to contract specifications and penalize suppliers for
failure to meet requirements. As a result, foreign suppliers continue to be competitive in the Russian
market as they are more accustomed to meeting such strict specifications than Russian agricultural
Please see the “Retail Foods Annual 2011” report for more information on the retail sector in Russia:
Legislation Regulating Retail Trade
The Russian Federal Law on Trade came into force on February 1, 2010. The Law is aimed at creating
transparent conditions of cooperation between domestic suppliers and retailers and boosting competition
in the retail sector. The Law contains strict antimonopoly regulations, such as capping store openings
once a retailer reaches a 25 percent market share threshold within a city or municipal region, a 10
percent limit on bonuses paid to retailers by suppliers, and payment terms regulating how fast a retailer
has to pay for goods with a certain shelf life, among others. The Law stipulates that the terms and
conditions of food product supply contracts shall be brought into accord with requirements of the Law
within one hundred eighty days from the effective date.
Please see the “Russian Trade Law” report for further information on the legislation regulating retail
trade in Russia:
In 2011, the Federal Antimonopoly Service (FAS) monitored adherence to the 2010 regulations
monthly. In total, FAS checked 464 retail chains in 2011, and found 5,695 infractions of the statute,
according to Euromonitor. The retail chains which broke the law paid fines or in some cases were
closed. The cost to retailers of the 2010 regulations and their enforcement has increased considerably
and has affected consumer prices.
Retailers continue to suggest amendments to the legislation regarding retailing. Business representatives
suggested increasing the market share cap from 25 to 35 percent in Russian towns where the population
is less than 100,000 citizens. Retailers also suggested changes in tax regulations. For example, they
suggested writing the expenses related to theft in supermarkets (no more than 2 percent of total
revenues) from the balance sheets of the retail chains. The amendments to this legislation were partly
approved by some authorities, whilst official changes in the legislation were not made.
Hotel, Restaurant, and Institutional (HRI) Sector
HRI sales grew by a respectable 11.2 percent in 2011, on par with pre-crisis sales growth of 10 to 12
percent (2005 to 2008). One bright spot is in the fast food segment, which saw positive current value
growth in 2011. Growth was driven by the generally rising popularity of fast food due to busier
lifestyles and the emergence of more outlets in new locations. In addition, for U.S. exports the HRI
sector remains a strong growth sector for products like marbled meat, spirits, and seafood. The
development of mid-range restaurants such as U.S. chain Chili’s is expanding to fill the gap that
currently exists in this category.
Table 7. Food Service Industry Sales in Russia
2007 2008 2009 2010 2011
RUR, billion 306.1 343.1 334.2 362.3 403.2
Growth Year on Year, % 12.1 -3 8.4 11.2
US Dollars, billion 12 13.81 10.53 11.9 13.74
Average exchange rate 25.49 24.84 31.72 30.48 29.35
Source: Euromonitor International
The number of cafes, restaurants, and other food outlets in Russia currently stands at about 60,000.
Although Moscow and St. Petersburg are still by far the largest restaurant cities in Russia, leading
foodservice operators have begun regional expansion into other wealthy cities.
There are currently more than 340 restaurant chains operating in Russia, each of which manages
between 2 to 400 outlets. McDonald’s, Rosinter Restaurant Holding, Arkadiy Novikov Restaurants,
Ginza Project, Markon, Shokoladnitsa and Coffee House are the largest restaurant chains in different
foodservice segments in Russia.
Russia's largest casual dining chain operator Rosinter, estimates the country's dining market value
at 550 million rubles ($17.64 million), with Moscow's and St. Petersburg’s share at 40 percent of the
The popularity of fast food in Russia has grown dramatically. Fast food has shown positive growth in
2009-2011 and the volume of the quick restaurant category in Russia reached $ 5.6 billion. The fast-
food sector is the fastest-growing restaurant category in Russia with an annual growth rate of 20 to 30
percent. McDonald’s, which entered Russia in 1990 and created two generations of fast food eaters has
remained the absolute leader with a 43 percent value share of fast-food chain sales. On April 2012
McDonald’s gave one of Russia's largest multi-concept restaurant operators Rosinter Restaurant
Holding subsidiary right to develop chain in Moscow and St. Petersburg transport hubs. Subway, the
world’s largest sandwich chain, is one of the most rapidly developing fast food chains in Russia opened
155 new restaurants in Russia in 2011, twice as many as in 2010. At the end of 2011 the company
operated 322 Russian restaurants in all regions except the Far Eastern Federal District. In turn, about
210 new outlets are to appear in the country in 2012. In St. Petersburg, the popularity of the Subway
brand is underscored by the fact that, from May to July 2010, one local Subway restaurant had the
highest sales turnover out of 31,000 Subway restaurants worldwide. Subway has an ambitious plan of
expansion and had caught up to McDonald’s in terms of number of outlets in 2011.
Franchising models dominate in fast food. As of now more than 90 percent of fast food chains in Russia
work under various franchise agreements. Fast-food is an increasingly attractive market for overseas
investors and many famous American fast-service operators have appeared in Russia since 2009. Most
of the international companies which decide to enter consumer foodservice in Russia open their first
outlets in Moscow. Burger King, one of the largest fast food corporations in the world, has established a
presence in Russia by opening its first restaurant in Moscow on January 2010. Currently, Burger King’s
franchisees operate 54 restaurants in Moscow and in St. Petersburg and intend to open several hundred
Burger King restaurants in Russia over the next few years. Dunkin' Donuts, the U.S. doughnut eatery
chain that left Russia after a three-year stint in 1999, returned to Moscow in 2010 with big plans for
rapid expansion. The Russian company Donuts Project received exclusive franchising rights for
development of the chain in Russia and the Ukraine. Dunkin’ Donuts opened its first outlet in May 2010
and currently has seventeen restaurants in Moscow. Wendy's/Arby's Group, one of the world's leading
fast food operators entered the Russian market in 2011 and will open 180 restaurants there over the next
10 years. Last year the company signed a franchising agreement with Russia's Food Service Capital
group and currently operates 7 outlets in Moscow. Regional expansion through sub franchising will start
The coffeehouse business in Russia boomed in the early 2000s. Today, there is an increasingly high
concentration of the leading chains, including Shokoladnitsa, Coffee House, McCafé, Starbucks, and
Costa Coffee, in Moscow and St. Petersburg, so in the short term many coffeehouse chains plan to
expand to the Russian provinces. The world leader, Starbucks Coffee Company, opened its first outlet in
Moscow in September 2007 and currently is number three by coffee sales after Shokoladnitsa and
Coffee House. As of December 2011, Starbucks operates 51 coffee shops in the capital.
Baskin Robbins, the world's largest chain of ice cream specialty shops, entered Russia in 1990.
Baskin Robbins Production International opened 69 new ice cream salons in Russia in 2011 expanding
its chain 40%. As of January 2012 Baskin-Robbins' network in Russia consists of 239 outlets in 82
cities, most of them franchises.
Many restaurants import the vast majority of their ingredients, creating opportunities for U.S. exporters
of meat, seafood, wine, and specialty foods.
Please see the “HRI Food Service Sector” 2011 report for further information on the HRI sector in
Food Processing Sector
Russia's food processing industry is one of the most dynamic sectors in the Russian economy.
In 2011, Russia’s food processing sector clocked growth of 13.3 percent with value of food production
equal to 3,555 billion Rubles (USD 121 billion  ) and it is expected to continue growing in 2012-13,
supported by rising disposable incomes, increasing real wages and declining unemployment. Among the
growth leaders are: meat products (including pork, poultry, sausages and semi-finished meat), dairy
products, confectionary, dry baby food and dietary products with cereal.
Currently, the food processing industry is made up of foreign and domestic manufacturers with the latter
dominating number wise. The biggest Russian food manufacturers are: Baltika Brewery Company,
Unimilk, “United Confectionaries”, “Cherkizovo”, “Efko” Groups of Companies. Among the most
well-known foreign food manufacturers in Russia are Kraft Foods and PepsiCo which invested heavily
in WimmBill Dann in 2010-2011 These foreign investors are strengthening their positions with
investments and marketing activities that overshadow domestic companies. That said, many Russian
manufacturers are investing in modernization and expansion in order to strengthen their position in the
market. The leaders in this market are focused on consolidation and expansion into regions outside of
Moscow and St. Petersburg.
Demand for higher-quality ingredients is increasing as more local food processors strive to meet
international quality standards. That demand will lead to increased imports given that around 40 percent
of the products used by the Russian food industry are imported. More than a half of the meat and milk
products in big Russian cities are provided by import suppliers. 70 percent of the raw materials in meat
processing plants are imported. And specialized ingredients for bakery, confectionery and juice
manufacturers are also widely imported. The majority of food ingredients are imported from: Denmark,
Belgium, France, Germany, Austria, Great Britain, China and the United States.
Perhaps in response to this current situation, on April 17, 2012 the Russian Government announced its
Strategy for Food Processing Industry Development. In it, they target public and private sector
investments into the sector at more than 777 billion rubles (USD 24.9 b) for the period of 2013-2020.
The strategy is aimed at modernizing production facilities and increasing their capacity through
innovation and technologies providing more advanced processing. As a result, the sector would be able
to manufacture more competitive products, decrease power consumption and be more environmentally
friendly. The strategy is supposed to increase production of flour, grains, bakery products, sugar, dairy
products, butter, cheese and cheese products, fruit and vegetable preserves, oil, confectionary products,
fish and fish preserves. One of the strategy’s targets is to develop infrastructure and logistics for food
products distribution system. This is clearly an ambitious strategy and Post will monitor its
The FAS Russia “Food Processing Annual 2011” report can be found at
Companies are entering the online channel in search of high potential sales and annual growth rates.
Even during the recession of 2009, when consumer demand decreased considerably, e-commerce in
Russia recorded considerable sales growth. The main reasons for growth are: stronger presence and
competition, discount prices, the development of broadband connections in Russia’s regions, and the
desire of Russian consumers to make savings.
According to Data Insight research, internet sales in Russia grew by 30 percent to reach $11 billion in
2011. More than 50 percent of people who buy goods online live in Moscow or St. Petersburg. The
average bill is $296. Experts estimate the number of online shoppers in Russia will increase by 25
percent in 2012, while sales turnover will grow by 22 percent to reach $13 billion.
Russian consumers mainly shop online for non-grocery products. In 2011, online grocery market in
Russia was worth $545 million and accounted 5 percent of total internet sales. People are not used to
shopping for groceries online, and they have difficulty using the technology for this purpose. It is still
perceived to be less stress and less time consuming to visit the local supermarket than to shop for
groceries online. However, significant annual growth in Internet sales in recent years shows that online
grocery retailing has great potential.
In March 2012, Utkonos, one of the largest online grocery retailers in Russia, started selling grocery
goods using the online retail platform Wikimart, which is supposed to grow Utkonos' turnover by 3-5
percent, according to the Company’s management. In 2011, Utkonos’ online sales reached
approximately $300 million. Currently, the Company handles about 10,000 orders per day.
One of the obstacles to the faster development of internet retailers is the underdeveloped system o