Russia Food and Drink Report Q1 2013
Report description
We reiterate our bullish outlook on the Russian retail sector as rising incomes combined with expansion into the east of the country will benefit companies operating in the sector. We also expect an increasing focus on convenience for shoppers in Russia's bigger cities. We highlight our favourable view on Londonlisted O'Key, whose upscale business model fits well with our view on developments in the market, as a potential alternative to discounter Magnit.
Headline Industry Data (local currency)
? 2013 per capita food consumption = +10.96%; forecast compound annual growth rate (CAGR) to 2017 = +10.51
%? 2013 alcoholic drinks sales = +8.27%; forecast CAGR to 2017 = +8.41
%? 2013 soft drinks sales = +8.23%; forecast CAGR to 2017 = +8.35
%? 2013 mass grocery retail sales = +26.78%; forecast CAGR to 2017 = +29.31
%Key Company Trends
Retail Sales Growth Slows Down: Retail sales in Russia grew by 3.8% year-on-year (y-o-y) in October 2012, the slowest pace recorded since February 2010, according to data published by the Russian federal statistics, having risen by 4.3% and 4.4% in August and September, respectively. Slowdown in consumer spending is hampering the economy, with GDP growth slowing to 2.9% in Q312 after rising by 4.5% in H112. Retail sales grew by 7.3% in H112, helping the country face the global economic slowdown.
Slowing retail sales will also impact Russian banks, which benefited from a surge in consumer lending. Nestlé Opens First Mövenpick Ice Cream Boutique in Russia: In November 2012, Swiss nutritional and consumer goods company Nestlé opened its first Movenpick ice cream boutique in Russia. The boutique will sell a variety of high end ice cream products, such as mushroom cream soup with maple walnut ice cream. Nestle opened its first Movenpick ice cream boutique in Zurich in 2004. It now has a total of three boutiques in Switzerland, as well as several in Australia and in other countries around the world.
Tengelmann Eyeing Russian Discount Retail Space: In October 2012, German retailer Tengelmann Group was reported to be planning to launch 150 new discount food stores in Russia. With an investment of EUR500mn (US$649mn), the firm will open the outlets under its Plus brand. The turnover of the stores, which will be established in collaboration with RosEvroGroup, is expected to grow to EUR1.0bn (US$1.3bn) by 2020. The firm is considering opening the first store in Moscow and the Tula, Tver, Ryazan and Nizhny Novgorod regions.
Risks to Forecasts
External Headwinds Create Downward Pressure: Russia's economic outlook has become more uncertain on account of the ongoing crisis in its main export market, Europe. An escalation of the situation in the eurozone cannot be ruled out, and risk of a eurozone exit by a larger member, such as Italy or Spain, as well as a major shake-up to banking sector stability, would have serious repercussions for Russia. The hard landing scenario we are calling for in China is the third main risk factor to our growth outlook for Russia.
Table of contents
Chapter - BMI Industry View
Chapter - SWOT Analysis
Russia Food Industry SWOT
Russia Drink Industry SWOT
Russia Mass Grocery Retail SWOT
Chapter - Business Environment
BMI's Core Global Industry Views
Table: Core Views
CEE Food & Drink Risk/Reward Ratings
Table: Central & Eastern Europe Q113 Food & Drink Risk/Reward Ratings
Table: Central & Eastern Europe Q113 Food & Drink Risk/Reward Sub-Factor Ratings (scores out of 10)
Russia Food & Drink Risk/Reward Rating
Macroeconomic Outlook
Table: Economic Activity
Chapter - Industry Forecast Scenario
Consumer Outlook
Food
Food Consumption
Table: Food Consumption Indicators – Historical Data & Forecasts, 2010-2017
Pasta
Table: Pasta Volume Sales, Production & Trade – Historical Data & Forecasts, 2010-2017
Fish
Table: Fish Volume Sales, Production & Trade – Historical Data & Forecasts, 2010-2017
Dairy
Table: Dairy Volume Sales, Production & Trade – Historical Data & Forecasts, 2010-2017
Snack Foods
Table: Snack Foods Volume Sales, Production & Trade – Historical Data & Forecasts, 2010-2017
Drink
Alcoholic Drinks
Beer
Table: Beer Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Spirits
Table: Spirits Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Wine
Table: Wine Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Soft Drinks
Fruit Juice
Table: Fruit Juice Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Carbonates
Table: Carbonates Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Bottled Water
Table: Bottled Water Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Hot Drinks
Table: Hot Drinks Value Sales – Historical Data & Forecasts, 2010-2017
Mass Grocery Retail
Table: Mass Grocery Retail Sales – Historical Data & Forecasts, 2010-2017
Table: Sales Breakdown By Retail Format Type
Trade
Table: Trade Indicators – Historical Data & Forecasts, 2010-2017
Chapter - Food
Key Industry Trends And Developments
Nestlé Opens First Mövenpick Ice Cream Boutique In Russia
Government Regulations Playing A Part Behind Industry Growth
Confectionery Consumption Set For Growth
Sector Investments Intensifying
Market Overview
Food Consumption
Food Processing
Leading Players
Confectionery
Table: Confectionery Volume Sales, Production & Trade – Historical Data & Forecasts, 2010-2017
Agriculture
Table: Frozen Fruit & Vegetables Volume Sales, Production & Trade – Historical Data & Forecasts, 2010-2017
Chapter - Drink
Key Industry Trends And Developments
Irn-Bru Trademark Battle Won By AG Barr
Beam To Expand Spirits Operations In Russia
Carlsberg Russia Business Shows Promise In H1
Russian Government Accelerating Vodka Clampdown
Market Overview
Alcoholic Drinks
Beer
Spirits
Soft Drinks
Hot Drinks
Chapter - Mass Grocery Retail
Key Industry Trends And Developments
Magnit Expands Its ‘Family Store' Format
Tengelmann Eyeing Russian Discount Retail Space
X5 Loses Another Senior Executive
O'Key To Invest US$500mn
Market Overview
Table: Food Retailing Industry Overview
Table: Structure Of The Mass Retail Grocery Market By Number Of Outlets
Table: Average Sales Value Per Retail Outlet – 2012
Chapter - Competitive Landscape
Key Players
Table: Key Players In Russia's Food Sector
Table: Key Players in Russia's Drink Sector
Table: Key Players In Russia's Mass Grocery Retail Industry
Chapter - Company Monitor
Food
Kraft Foods
Unilever (Inmarko)
Cherkizovo
Drink
Heineken
Baltika
Sun InBev
The Coca-Cola Company
PepsiCo
Mass Grocery Retail
Sedmoi Kontinent
X5 Retail
Magnit
Dixy
Chapter - Demographic Outlook
Table: Russia's Population By Age Group, 1990-2020 (‘000)
Table: Russia's Population By Age Group, 1990-2020 (% of total)
Table: Russia's Key Population Ratios, 1990-2020
Table: Russia's Rural And Urban Population, 1990-2020
Chapter - Risk/Reward Ratings Methodology
Table: Rewards
Table: Risks
Weighting
Table: Weighting
Chapter - BMI Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
Chapter - BMI Food & Drink Forecasting & Sourcing
How We Generate Our Industry Forecasts
Sourcing
Related research categories
By sector: General drinks
By market: Russian Federation (in Asia), Russian Federation (in BRICM)
The just-drinks office is currently: Closed
Office opening hours
Mon-Thursdays 9:00am-5:30pm
Fridays 9:00am-4:30pm
The office is closed during weekends.
Current time at just-drinks headquarters: 8:06am (Friday, 24 May 2013)
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