Russian food & drink market update September 2018

We’re serving you another plateful of fresh news from the Russian food and drink industry this September. This month, we look at increased the fight to combat fake dairy, and upcoming store closures from a retail market leader.

Let WorldFood Moscow guide you through Russia’s food industry this month. Read on to learn more.

Russia food & drink news round up

The fight against fake dairy continues in Russia
Russia’s Federal Service for Supervision of Consumer Rights Protection and Human Well-Being (RPN) and the National Union of Milk Producers (Soyuzmoloko) are getting serious about the nation’s fake dairy problem.
At the Eastern Economic Forum in September, the two organisations signed a new cooperation agreement. Under this new deal, RPN and Soyuzmoloko have committed to combating low-quality, poorly labelled, and falsified dairy products.
Both parties will now jointly carry out testing and monitoring of milk and cheese to “protect consumer rights, create equal conditions for dairy producers on the consumer market, and implement measures preventing dairy product falsification.”
“Each step taken is in the interests of consumers,” said Solyuzmoloko Chairman Anna Popova. “This is a significant step for RPB, whose top priority is to protect the health of citizens and protect customers.”
As much as a quarter of all dairy products currently for sale in Russia are considered fake, i.e. do not use actual milk.

X5 retail to close stores thanks to huge market share
X5 Retail, amongst Russia’s largest supermarket chains, may have to close some its stores in the Leningrad region. This isn’t due to economic difficulties – far from it. Instead, X5 simply has too big a regional market share!
Currently, the chain controls 25% of the food retail market in 11 of Leningrad’s 18 districts. In some cases, it’s as high as 33%. Under current trade laws, once a retail network reaches 25% of a region’s market share, that business can no longer rent or buy new store locations.
It seems there are just too many X5-run Pyaterochok convenience stores across Leningrad.
Despite this, X5’s national market share only floats around 9.5% - but that still nets the company billions of dollars a year in revenues from food and drink sales.
26,000 tons of sanctioned foodstuffs destroyed since 2014
According to food safety watchdog Rosselkhoznadzor, 26,000 tons of sanctioned products have been banned since 2014.
Meat, fish, fruits and vegetables makes up the bulk of the condemned merchandise. Imports sourced from the US, EU, Norway, Australia and Canada are off limits in Russia, and have been since 2013.
Initially, meat and meat products, seafood, and agricultural products like fruit and vegetables were off the table, the ban has been extended since then to cover salt and chilled or frozen foods from the aforementioned countries.
Unfortunately, there is no end in sight. Russia’s embargo on imported goods from the EU and its key allies will remain in place until at least 2019.
While the forecast is bleak in the big categories, there are still lots of routes to the Russian market for food exporters operating in sanctioned countries. From baked goods to confectionery and alcoholic drinks, billions in revenues are still at their fingertips – so it’s not all doom and gloom!