Russia’s food & drink market update May 2020

The global situation continues to influence the way Russians buy and consume food & drink products.

WorldFood Moscow’s April round up of Russian food news brings us increased online sales for confectionery, a restructured store opening plan for one of the country’s biggest retailers, and steady activity for Moscow’s catering sector.

Russian food & drink market round up

X5 Retail to open 20% fewer stores in 2020

X5 Retail will open fewer stores throughout Russia in 2020.

Russia’s lockdown and restricted travel measures means supermarket giant X5 Retail will reduce planned new store openings by 20% in 2020.

Initially 2,000 new stores were due to be opened this calendar year, according to X5 Retail Finance Director Svetlana Demyashkevich.

X5 is one of Russia’s largest retailers, operating the Pyaterochka, Perekrestok and Karusel brands.

As of March 31, 2020, the total number of X5 retail outlets came to 16,658, of which:

• 15,739 were Pyaterochka stores
• 846 were Perekrestok stores
• 73 were Karusel hypermarkets

The total sales area of X5 stores on March 31 this year amounted to 7.3 million square metres.

X5's Q1 revenues in the first quarter of this year increased by 15.6% compared to the same period last year and amounted to 468.9 billion roubles ($6.2bn)

Despite this, the company's net profit in Q1 of this year decreased by 12.1% - from 9.3 billion roubles ($123.4m) for the same period last year to 8.2 billion roubles ($108.8m).

The likelihood is that, while Russians remain in lockdown, they will continue to do their grocery shopping online. 

Threefold increase in online demand for confectionery throughout Russia

Russians have increased demand for confectionery from online retailers threefold.

Russia’s top online retailers have reported demand for confectionery items has tripled in April 2020.

The figures come from top outlets Wildberries and Ozon.

“From the very beginning of the lockdown, Russians have decided to treat themselves to sweet treats and snacks in order to relieve stress and get their usual gastronomic entertainment at home that they would normally get from cafes, restaurants, and sweetshops,” a Wildberries representative said.

Among the most popular sweets for Russian stay-at-home buyers are:

• Liquid caramel – 229% demand growth
• Muffins – 228% demand growth
• Kozinaki (Georgian caramelised nuts) – 201% demand growth
• Fruit pastilles – 198% demand growth
• Marshmallows – 137% demand growth
• Waffles – 120% demand growth
• Ready-made cream desserts – 107% demand growth
• Chocolate bars – 76% demand growth

According to Ozon, Russians also wanted healthier sweets. Demand for sugar-free confectioneries, such as dark chocolate, has risen 235% in the review period.

So, it seems Russians still want to indulge their sweet tooth but are also looking at “healthier” ways to do it. 

The key takeaway here is that Russians are increasingly turning to internet retailers to secure the foodstuffs they desire. Establishing supply lines with companies like Wildberries and Ozon could result in some short-term wins, potentially longer term if shopping habits change drastically due to Covid.

30% of HoReCa outlets still operating in Moscow

30%25 of Moscow's HoReCa outlets are open for delivery or takeaway.

Despite the Russia-wide shut down, about a third of restaurants, cafes, and takeaways across Moscow are still operating.

Over 1,700 businesses continue to be open, employing about 9,000 Muscovites.

Restaurants, etc. have turned their operations over to takeaway and delivery services, rather than in-venue dining.
According to Minister of Agriculture and Food for Moscow Region, Andrei Razin, about 40% of catering organizations continuing to work carry offer home delivery. The remaining about 60% is for takeaway only.

About 6,200 restaurants, cafes, canteens, buffets, bars, snack bars and other catering establishments are located in Moscow. Those not offering delivery or take out will remain closed until May 11 at the earliest.