Russia Food and Drink Report Q1 2009
Business Monitor International, January 2009, Pages: 91
Russia Food Drink Report provides independent forecasts and competitive intelligence on Russia's food and drink industry.
Russia is again found fourth overall in the Q109 Business Environment Ratings (BER) index, illustrating the resilience of the Russian marketplace in the face of severe - but probably shorter-term - difficulties. However, the country’s score is markedly lower than in the previous period, hampered by the negative trade balance and modest per capita GDP levels. Additionally, red tape and corruption remain major barriers to investment, while the stalled World Trade Organization (WTO) negotiations indicate unresolved political and economic issues with Russia’s trading partners. Moreover, we have slashed our growth forecasts for Russia to take into account a rapidly decelerating global economy, falling oil prices and tightening credit conditions in the domestic banking sector. While a robust H108 performance will ensure that full-year growth in 2008 remains relatively strong at 5.9%, economic expansion is expected to fall markedly further to an 11-year low of 3.6% in 2009. Recovery can be expected in 2010, though we stress that a return to the 2007 high of 8.1% growth is unlikely for the foreseeable future, with the annual increase in real GDP forecast to average 5.9% during 2010-2013.
In the meantime, Belgian brewing giant InBev reported a mixed set of results for Q208, while Danish brewer Carlsberg cut its 2008 growth forecasts for Russia, its largest market, despite gaining full control of Baltic Beverages Holding (BBH), previously a joint venture with UK brewer Scottish & Newcastle (S&N), following its takeover of the UK company. The slowdown in sales is attributed to a combination of bad weather, rising prices and global financial uncertainty, with fears that the Russian beer market is reaching saturation levels in terms of volumes. The country’s mass grocery retail (MGR) sector is also facing tough times ahead, with companies expecting some consolidation as 10 of Russia's leading MGR operators asked for state bank loans. Nevertheless, the country’s large population, and in particular the affluent urban population of the capital Moscow, should provide a solid base for expansion of food and drink values over the shorter term, while the unexplored rural areas of the country indicate a substantial room for further, longer-term growth. Unfazed by the economic woes, Norwegian dairy major Arla Foods prioritized Russia as one of the ‘special growth area’ countries, while leading consumer goods firm Unilever, Finnish Fazer Group, South Korean Lotte Confectionery Co. and Italian confectionery firm Ferrero Group announced plans to construct local production facilities. Similarly, Wine Intelligence branded Russia as ‘probably the most exciting new wine market to emerge in the past five years’, following a major survey of consumers of imported wines. In order to explore this trend, Constellation Brands, a leading international producer and marketer of alcoholic drinks in the wine, spirits and imported beer categories, is to open a subsidiary in Russia.
Executive Summary
Business Environment
SWOT Analysis
Food
Russia Food Industry SWOT
Drink
Russia Drink Industry SWOT
Mass Grocery Retail
Russia Mass Grocery Retail SWOT
CEE Food & Drink Business Environment Ratings
Table: Regional Food & Drink Business Environment Ratings
Russia’s Food & Drink Business Environment Rating
Macroeconomic Outlook
Table: Russia – Economic Activity
Food
Industry Forecast Scenario
Food Consumption
Table: Russia Food Consumption Indicators – Historical Data & Forecasts
Confectionery
Table: Russia Value/Volume Sales of Confectionery (US$mn, unless otherwise stated) – Historical Data & Forecasts
Canned Food
Trade
Table: Russia Food, Drink & Tobacco Trade Indicators (US$mn) – Historical Data & Forecasts
Industry Developments
Market Overview
Food Processing
Leading Players
Dairy
Cereals & Baked Goods
Confectionery
Snacks
Trade
Agriculture
Drink
Industry Forecast Scenario
Alcoholic Drinks
Table: Russia Alcoholic Drinks Sector Production and Value/Volume Sales – Historical Data & Forecasts
Soft Drinks
Table: Russia Soft Drinks Sector Value Sales (US$mn) – Historical Data And Forecasts
Hot Drinks
Table: Russia Hot Drinks Sector Value Sales (US$mn) – Historical Data & Forecasts
Industry Developments
Market Overview
Alcoholic Drinks
Beer
Wine
Spirits
Soft Drinks
Hot Drinks
Mass Grocery Retail
Industry Forecast Scenario
Table: Russia MGR Value Sales By Format (US$bn) – Historical Data And Forecasts
Table: Russia Grocery Retail Sales By Format (%)
Industry Developments
Market Overview
Leading Players
Table: Russia Structure Of The Mass Retail Grocery Market By Estimated Number Of Outlets
Table: Russia Annual Average Value Of Sales By Format (US$mn)
Competitive Landscape
Key Players
Food And Drink
Table: Key Players in Russia’s Food & Drink Sector – 2007
Mass Grocery Retail
Table: Key Players in Russia’s Mass Grocery Retail Sector (Includes Non-Food Sales) – 2007
Company Analysis
Food
Wimm-Bill-Dann Foods
Kraft Foods
Drink
Baltika
Mass Grocery Retail
Sedmoi Kontinent
X5 Retail
Paterson
Appendix: Agricultural Commodity Prices
Food & Drink Business Environment Ratings
Ratings Methodology .
Ratings Overview .
Ratings System
Indicators
Limits Of Potential Returns
Risks To Realisation Of Potential Returns
Weighting
Weighting
BMI Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
Country Snapshot: Russia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2006
Food & Drink Forecasting & Sourcing
How We Generate Our Industry Forecasts
Sourcing
- Wimm-Bill-Dann Foods
- Kraft Foods
- Baltika
- Sedmoi Kontinent
- X5 Retail
- Paterson
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