Author Archives: CrispConsulting

Russian woes hit logistics firms

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AP Møller-Mærsk and Port of Hamburg amongst those feeling effects of the Russian slump. Shipping companies and ports working Russian routes will be severely affected by the contraction in the Russian economy in 2015 according to JOC. Russian finance minister Anton Siluanov announced recently that the economy could shrink by 4 per cent this year if oil prices remain at current levels.

Shares in Russia’s largest port company, Global Ports, fell by 81 per cent in 2014, wiping US$776m off its market value. AP Møller-Mærsk, which acquired a 37.5 per cent stake in Global Ports in 2012 through its subsidiary APM Terminals, said it would continue to operate as planned in the country in spite of the downturn, pointing out that Russia accounts for just 2-3 per cent of its total revenue.

The Port of Hamburg is also likely to struggle in the coming months as Russia is its second-largest trading partner. JOC reports that traffic in the first nine months of the year fell by 5.7 per cent to 504,000 TEUs and is expected to decrease even more sharply in the final quarter and through 2015. The port’s largest container handler, HHLA, has reported a significant fall in Russian trade over recent weeks, while traffic at its terminal in Odessa decreased by 30 per cent in the first nine months of 2014 due to the ongoing crisis in Ukraine.

www.fruitnet.com

Russia could remove temporary Restrictions on Albanian food supplies

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Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) by the end of January could remove temporary restrictions on supplies from Albania, the service’s assistant to the Head of the service Aleksey Alekseyenko said according to a report by Ekonomika Sevodniya.

“We are familiarizing ourselves with all the materials being presented to us, after which there will be the signing of a bilateral contract. I think, in reality, by the end of January we will sign it and supplies will be established,” Alekseyenko said.

He also underlined that Albania had an interest in supplying its own goods to the Russian market.

On December 8, Rosselkhoznadzor found fake Albanian phytosanitary certificates when receiving food shipments on their way to Russia. After that, the country had suspected Albania of covering supplies and granting fabricated certificates for products originating from countries of the EU.

Soon after the Ministry of Agriculture created a high degree of protection, supplies to the Russian market resumed. Rosselkhoznadzor was also given a list of facilities qualified to certify plant products.

www.fruitnews.info

Prices for products in retail increased by 20-25%

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In 2014, prices for products in retail chains increased by 20-25% on average; and, according to Andrey Karpov, executive director of the Association of Retail Companies, in the first months of 2015, price for f&b products may rise by 14.5-15%.

According to Karpov, food prices will increase both in premium and economy segments. Price growth will affect not only imported products, but also Russian goods, as the main raw material for them or ingredients are imported. However, the rise in prices will not be the same as the currency rates growth against the ruble.

According to the Federal Statistics Service, inflation rate was 8,5% since the beginning of 2014, while in  2013 it was 7.3%.

www.retailer.ru, www.argumentiru.com

Export of vegetables and fruits from China to Russia increased by almost 20%

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The volume of exports of Chinese fruits and vegetables to Russia via Manzhouli border crossing point (Northern China) in the first 11 months of 2014 in terms of value amounted to $135 million, that is 19.4% more than during the same period the last year. The volumes of exports of fruits and vegetables form China to Russia increased in annual terms by 27.2% to 318 thousand tons for 11 months. Manzhouli is the largest customs checkpoint on the Russian-Chinese border. It accounts for more than 60% of the total land land shipments between two countries. There are simplified customs procedure for export of vegetables and fruits to Russia.

China is developing its export of agricultural products to the Russian Federation. This year several special economic zones, specializing in fruit and vegetable exports, were created on the border with Russia.

www.tks.ru

Consumer market participants adopted a Memorandum on the temporary introduction of a number of rules of interaction between retailers and suppliers

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December 19 was held a session of the Working group (created earlier at the meeting of the Retail Companies Association Presidium and leading industry associations of food market) with the participation of representatives of trade networks and suppliers and producers organizations (National Meat Association, SOYUZMOLOKO, National Association of meat processors, Russian Union of baking industry, Fish Union, RusBrand, RusProdSoyuz, SPAP, Simple Company” and others.)

During the session were discussed the topical issues of the industry in the current economic conditions. Memorandum, which foresees the reduction of new prices consideration terms on all product categories by the trade networks and forwarding the response to the supplier within 14 days for the period from 22.12.2014 to 31.03.2015, was signed following the discussion.

These changes are necessary due to high volatility and difficult predictability of the ruble foreign exchange value dynamics.

I.Yakubson, Chairman of the ACORT Presidium comments:

“Retailers and producers are able to come to agreement and to demonstrate unanimity in a difficult economic situation for the second time in a short period.
Trade companies responded to the producers call to react to the challenges which circumstances put before them more flexibly without changing the retail’s mission in protection of the consumers interests, including low prices retention”.

The full text of memorandum can be downloaded here Memorandum

For the information:
The Retail Companies Association was established in 2001 upon the initiative of the market participants and in the interests of creating the necessary conditions for the formation and development of the civilized Russian retail market.
As an instrument of its members collective interests’ protection the Association allows to conduct a dialogue with state bodies, public associations, unions and associations with a maximum possible effectiveness.
Currently, the Association unites 37 largest retailers of Russia: Adamas, Azbuka Vkusa, Atack, Auchan, BILLA, Bosco di Ciliegi, Vester, Wikimart, GIPERGLOBUS, Globus Gourmet, Dixy, SELGROS, Euroset, Enter Svyaznoy, Lenta, Leroy Merlin, MAGAZIN 01, Magnet, Maria-RA, M.Video, Metro Cash & Carry, Media Markt, Obi, Obuv Rossii, O’key, Prisma, Republic, Spar, Sportmaster, Snow Queen, Tehnosila, Finn Flare, X5 Retail Group (Pyaterochka, Perekrestok, Karusel), Holiday Classic, Eldorado, Utkonos, Yuterra.

www.acort.ru

Supplies to retail chains frozen because of the collapse of the ruble

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Prices in shops cannot follow ruble devaluation: before retailers dictated terms to suppliers, now wholesalers lay down terms to retailers. If retailer do not want to increase purchase prices, deliveries of products may be suspended.

Maria Kurnosova, representative of the hypermarket chain Auchan, reported that part of the suppliers, both food and non-food categories, sent a letter that they would stop the shipment of goods, if the retailer did not increase purchase prices.

Some producers reported that a similar situation occured with Metro Cash & Carry: part of their suppliers stopped shipments or warned about this.

Anastasia Orlova, representative of the retail group “Dixy”, said that there were no breakdowns in the supplies, although some suppliers sent requests to increase purchase prices, they also refused to participate in the discount promotions.

Despite the penalties (up to 50% of the contract value), many suppliers suspended work. Small companies, unlike large multinational companies, cannot supply at a loss for so long. About 70% of the suppliers are in the process of negotiations, and if after a day or two retail chains refuse to accept reasonable prices, deliveries may stop at all, according to the head of the association “Roschaykofe” Ramaz Chanturia. “Empty shelves will cause panic among the population”, so retailers are likely to make concessions, he said.

Producer of fish and seafood “Agama” informed retailer about price increase in proportion to the increase of the dollar on Tuesday, said Yuri Alasheev, chair of the board of directors, they gave retailers a week for approval. He said, that most networks responded “quite calm”. “I think the situation will be clarified by Monday, when retailers will respond to our letter”, said Alashaev.

Wine importer Simple stopped selling wine for a while, it is not possible to order drinks on their website at the moment. Online assistance of the website confirmed that the sales were frozen because of the economic situation, and the problem would be resolved in a day or two. Anatoly Korneev, vice president and co-founder of the company, said that this was a “temporary measure”.

Andrew Agarkov, commercial director of the supplier Uvelka (buckwheat and rice) said that they continued supplies to retailers with the old purchase price and would raise prices in February according to the plan after the negotiations with retailers.

With the constantly growing currency rate there is no time for neg long negotiations on the revision of the price, although there is a rule that it should take 45 days, according to Dmitri Leonov, deputy chairman of the association “Rusprodsojuz”.

www.top.rbc.ru

Rosselkhoznadzor officially withdraws re-export allegations against Switzerland

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Following negotiations with a Swiss Ambassador, Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) announced that the service had officially withdrawn allegations against Switzerland over re-exporting food products from banned Western countries to the Russian.

Embassy representatives provided agency officials with documents confirming the legality of their deliveries.

Rosselkhoznadzor’s concerns stemmed from an increase in the amount of supplies shipped by Switzerland. Some shipments had doubled, whereas shipments of apples had increased by as much as 400 times compared to the volumes shipped from Switzerland prior to Russia’s ban.

www.fruitnews.info

Product assortment and supply of imported fruits and vegetables are reducing in Russia

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Because of the instability of exchange markets and ruble devaluation, suppliers are forced to review the assortment every day and reduce supplies of vegetables and fruits from other countries.

Last week the assortment of fruits and vegetables decreased by 20% on average. Suppliers are ready to stop importing a number of niche vegetables such as cherry tomatoes, zucchini, radishes and some kinds of cabbage.

Situation with fruits is a little better. Citrus, bananas, apples and exotic fruits remain the main fruit imports, as on the eve of New Year holidays, this product is in high demand. However, the geography of deliveries changed. Now Russian importers mainly supply relatively cheap citrus from Turkey, while a month ago the main supplier of citrus was Morocco.

www.freshmarket.ru

Price increases of up to 10% expected

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The Russian Ministry of Economic Development expects prices for food to go up by 9.5-10%. According to the ministry, the boycott is responsible for 2.5% of price increases. The decreasing value of the rouble would account for price increases of 4%. Rosstat, the Russian statistics service, calculated that prices went up by 8.5% this year. In November, prices increased by 1.3% on average. Fruit and vegetables got 8.7% more expensive.

www.freshplaza.com

 

X5 Retail Group quits online retail channel

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X5 Retail Group, the second biggest Russian food retailer, announced the cessation of active commercial operations at its E5.RU, the Company’s online retail channel, effective 1 January 2015.

The Company continues to evaluate the role technology and innovation will play in complementing the value propositions of the current “brick-and-mortar” food retail business as well as delivering better services and value to customers.

E5 will cease taking online orders as of 10 December 2014 while the Company will continue to honor any obligations the online retailer has to customers. E5.RU was launched by X5 in February 2012. The online retailer recorded net Russian Rouble sales of 502 million and 1,431 million in 2012 and 2013, respectively, or 0.1% and 0.2% of the Company’s total net retail sales for the respective periods.

www.eprretailnews.com