Russia food & drink market update April 2020

Unprecedented times around the world means unprecedented times in Russia too.

This month sees a lockdown-influenced uptick in demand for Russian alcohol deliveries, two major Russian retailers cutting profit margins on essential products, and a potential growth in the ready-made meals market.

Russia food & drink market news round up 

Magnit & X5 Retail remove margins on essential goods

Top Russian supermarket chains have deferred profit margins on key products to help during this time.

Two of Russia’s largest supermarket chains have agreed to sell certain products at trade prices.

The move comes in order to help vulnerable Russians who have been adversely affected by the current lockdown situation.

“Many of our customers, especially low-income ones, are in a rather difficult situation,” said Jan Dunning, Magnit’s President and General Manager. “We consider it an important step to support them at this time.”

Igor Shekhterman, CEO of X5 Retail Group, added: “The current situation is prompting us to take special measures to support our customers. We hope that our initiative will be followed by other retailers and suppliers.”

While the products being sold at reduced costs have not been named, it is likely these will be the essentials, such as meat & poultry, fish & seafood, and fruits & vegetables.

Russians staying at home demand alcohol delivery services

Demand for alcoholic drink deliveries is rising in Russia from individual shoppers.

With more Russians in self-isolation, there is a growing demand for deliveries of alcoholic drinks throughout the country.

According to news outlet Kommersant, the volume of orders in the Moscow area has doubled in March 2020.

Conversely, the amount of alcohol delivered to bars, pubs, cafés and other commercial outlets has dropped significantly in the face of restrictive movement.

The heightened demand may speed through passing of a new bill allowing online alcohol sales in Russia. 

June 2021 was the proposed date to allow suppliers and manufacturers to set up full online stores to allow year-round home delivery of alcoholic drinks.

Extraordinary times call for extraordinary measures, however, so Russians looking for a little relief may be able to get a hold of their desired drinks a little earlier.

In order to circumvent the official prohibition of personal alcohol delivery, Russians are using some crafty measures to do their shopping. 

One method involves using couriers to ferry products from supplier to manufacturer, often picked up from manufacturer-owned retail outlets. 

Ready meals to see market upswing

Russia's ready meal market is poised for solid growth in these coming months.

Another sector benefiting from self-isolation will be ready meals.

With Russians only able to leave home for emergencies, and buying essential foodstuffs, it has been predicted sales of ready-to-eat meals will increase.

Research from Performance Group, conducted with Russian ready meal makers Level Kitchen, Performance Food, Easy Meal, and My Food, says the market could double in value.

Currently, the market stands at 7 billion roubles ($91.8m). If the lockdown remains in force for at least three months, Performance Group predicts a valuation of 15bn roubles ($196.6m). 
If restrictive measures are lifted, then the market growth around 12bn roubles ($157.4m).

The main driving force behind this market growth would be Russians’ limited spending power right now. Rather than buying individual ingredients, Russians can turn to ready meals to get complete dinners cheaply and easily.

If this trend continues, then this will be one of the sectors to watch for international producers going forward.