Russia food & drink market: February update

We continue our journey through Russia’s massive food and drink industry with a roundup of the latest news stories coming from the Russian market.

Magnit scoops up a record harvest

Magnit, amongst Russia’s chief supermarket retailers, is one of the few chains in the country to operate its own farms – and 2017 was a record-breaking year for Magnit’s own agricultural projects. 48,000 tons of vegetables were harvested from Magnit’s “Green Line” greenhouse complex in Russia’s agricultural heartland Krasnodar. This is two thousand tons more than the volumes produced in 2016.

At Green Line, Magnit produces cucumbers, tomatoes, and salad greens, which are then sold across Russia under the “Rural Fair” brand. Green Line is also one of Europe’s biggest such operations, covering an area of 85 hectares.

Russian agricultural exports grow 15 times

In 2017, Russia’s agricultural exports reached a new post-Soviet high of $21 billion – highlighting that such shipments had increased 15 times over since the turn of the millennium. Over the past 17 years, more Russian produce has reached international markets across the globe. Grains, in particular wheat, makes up the lion’s share of Russian agricultural exports, with shipments regularly exceeding 45-47 million tons.

Russia is also emerging a major supplier of key raw materials. In 2017, for instance, Russia exported 28% more sunflower oil, eight times more sugar, and 40% more poultry meat. Minister of Agriculture Alexander Tkachev is not content to stop here though, after speaking at a Federation Council meeting in January 2018: “We are developing new markets. We already have more than 130 importing countries, and in this regard, we need to move on.” In the next five to ten years, agriproduct exports could earn Russia $40-50 billion annually, Mr Tkachev also stated.

X5 promotes milk & dairy

X5, one of Magnit’s biggest supermarket competitors, has partnered with Soyuzmoloko, the National Union of Milk Producers, to promote milk and dairy consumption across Russia. According to both partners, Russians are consuming 1.5 less dairy than is recommended by the Ministry of Health – a trend backed up by X5’s declining dairy sales. This has subsequently created a calcium deficit in millions of Russians nationwide.

Starting with promotion via X5’s Perekrestok online store, X5 and Soyuzmoloko will be promoting a “Three dairy products a day” philosophy. The partners claim this is enough to cover 80% of an adult’s daily calcium intake. Promotion will also move in-store at X5’s physical locations. “Together with manufacturers and authorities, trade networks need to take measures to restore demand for dairy products, using their finaincial, marketing, and information tools,” Vladimir Sorokin, General Director of Perekrestok, said. “A full diet is the basis of the nation’s health.”