Greek food & drink in Russia: the big market opportunities

As a member of the EU, Greece is restricted in what it can and can’t export to Russia. Even so, there are some massive sectors that still need filling in Russia’s colossal food and drink market.

Exports of meat and dairy, fish and seafood, and fruits and vegetables, are under Russian embargo. For Greek exporters, however, that leaves import groups such as oils and fats, tea and coffee, alcoholic drinks, baked goods, and confectionery. Together these sectors represent billions in annual, sanction-free, imports. Let’s examine Greece’s current food trade relationship with Russia, how it has evolved over the past few years, and what great prospects the market holds for Greek firms.

Greek food in Russia: small presence but room to grow

With agriculture being worth around 4.1% of Greece’s GDP, and food and drink exports valued at a third of total shipments at around $9 billion a year, Greece is a major player in global and European food supplies. However, Russia as a market remains underexplored right now for Greek firms. Of course, a big component of this is Russia’s ongoing ban on EU-sourced produce.

However, as mentioned above, only certain categories are off limits to Greek exporters. According to data from the World Bank’s World Integrated Trade Database, Russia imported $35 million worth of foodstuffs from Greece in 2016. This represented 14.7% of Greece’s total Russian exports that year. Despite this relatively low level, Greece’s 750 food and beverage manufacturers are partly behind the nation’s recent export boom – and the growing Russian import market is where they can expand further. Russian food and drink imports actually increased for the first time in three years in 2017, reaching $27.9 billion. Russia’s appetite is growing – and it is reliant on foreign produce to fill key market gaps.

Olive oil: a major sector for Greek exporters in Russia

Let’s start with possibly the biggest export hope for Greek producers in Russia: olive oil. Across the 21st century, Russian imports of this vital cooking and dressing ingredient have skyrocketed. From 2005 onwards, Russian imports of olive oil have risen at a CAGR of roughly 7.5%. In 2005, they totalled 11,000 tons a year. Flash forward to 2016, and the volume jumped to 25,000 tons – including 4% growth over 2015’s imports. In value terms, Russia’s olive oil imports, including virgin, extra virgin, and pure products, amount to $133.5m. As of 2011, Greek manufacturers held a 9% import volume, and 11% value, share of the market behind other European rivals. Spain controls over half the import segment, whereas Italy’s share is roughly a quarter of the total. Even so, Greek brand Terra Creta alone holds 6% of the total market, demonstrating the value of Greek olive oil to Russian buyers.

There is also another card Greek olive oil producers can play: authenticity. As much as 80% of Italian and Spanish olive oil available on the market is mislabelled or packaged as other varieties regular olive oil labelled as extra olive oil for instance). Russians are becoming ever more aware of the provenance of their food – and they expect quality and strong labelling. Fake foods are a real problem in Russia in Russia right now, so oils that have been tested and awarded for their authenticity are top prospects. As Greek olive oil is perceived as purer, or at least more authentic than products from its European contemporaries, this gives it an innate advantage in Russia.

Wine: a key route for Greek exporters to explore in Russia

Russians enjoy a drink, but their tastes are moving away from simple vodka shots. The modern Russian is well versed in international cuisines – you can’t move for sushi, Italian, and yes, Greek, restaurants in Moscow – and their choice of alcoholic beverages is changing to reflect this.

Take wine. As a $693 million import market, one that is growing year-on-year, it is full of potential for Greek exporters. Russian consumption of the drink is expected to hit 1.1 billion litres annually by 2020 – backed by growing import volumes and sales. Russian imports of both sparkling and table wine rose around 4.5% across 2016, hitting 174.73 million litres and 34.85 million litres respectively.

C Dixie, one of Russia’s top supermarket chains, noted a 5% rise in sales of imported wines over 2016, too. Whether it’s a beautiful blend of Assyrikto and Athiri grapes from Santorini, or a full-blooded Agiorgitkio-squeezed red from Neméa, Greek wines have a place in Russian inventories.

Cater to Russia’s sweet tooth with confectionery exports

Russian consumption, and subsequent imports, of confectioneries and candies returned to growth in 2017. Russians ate an average of 24/kg worth of chocolates, sugar confections, and sweet baked goods during 2017, reflecting a 25% rise in imports. For Greek confectioners, this is a resurgent sector that needs supplies. Confectionery in Russia is an import market worth over $480 million.

What are importers after? Chocolate products, especially high-end or added-value items, are the hot trend right now. Russians are buying chocolates with increased cocoa content, or products that have been fused with new flavours, such as tropical fruits, apples and pears, cumin, and even black pepper. European producers account for the bulk of Russia’s candy imports, dominating almost all market sectors. See their market shares below:

• 65% of chocolate and chocolate products
• 55% of baked or flour-based confections (waffles, biscuits, cakes, etc.)
• 25% of sugar candies

European sweet treats have a very high reputation in Russia – something that Greek suppliers can happily build upon.