Market News

Magnit Named One of Europe’s 50 Most Valuable Brands

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Magnit, Russia’s largest food retailer, has been named one of the 50 most valuable brands in Europe.

The brand is worth $272 million, placing it 44th on the list just after The Body Shop and before such retailers as department store Debenhams and mobile phone retailer Carphone Warehouse, according to the report Best Retail Brands 2014 by brand consultancy Interbrand.

Magnit’s earnings rose 26 percent in 2013 to $18.2 billion with a net profit of $1.1 billion. By comparison, the company’s primary competitor X5 Retail Group, owner of supermarket chains Pyatyorochka, Perekryostok and Carousel, saw earnings of $16.8 billion and a net profit of $345 million.

Magnit had more than 8,000 stores across the country in late 2013, while X5 had about 4,500 locations.

Despite its strong position in the market, Magnit cut its full-year 2014 sales growth forecast from 25 percent down to between 22 and 24 percent to account for reduced consumer confidence stemming from Russia’s weak economic growth. The IMF has predicted that Russia’s gross domestic product will grow by a mere 1.4 percent in 2014, revised from an earlier forecast of 2 percent.

www.themoscowtimes.com

X5 Retail Group Q1 retail sales up 13.9%

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X5 Retail Group N.V., a Russian food retailer, reported first-quarter retail sales of RUR 143.90 billion; an increase of 13.9% from RUR 126.30 billion, previous year. Like for like sales improved 6.3% during the quarter.

X5 Retail Group N.V. operates several retail formats: the chain of economy class stores under the Pyaterochka brand, the supermarket chain under the Perekrestok brand, the hypermarket chain under the Karusel brand, Express convenience stores under various brands and the online retail channel under the E5.RU brand. At 31 March 2014, X5 had 4,618 company-operated stores.

www.freshplaza.com

Russia: imported product prices increase by 15-20%

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Higher School of Economics (HSE) warns about a soon price increase on imported goods as well as on goods produced with imported raw materials. All details are reflected in a report called “About business climate condition in retail sector in first quarter of 2014…”.

“Retailers are expecting a further weakening of ruble. Imported goods which were bought at earlier exchange rates hold out only few more months”, – Georgy Ostapkovich, the author of the report and the director of HSE Centre of Market research, explained his predictions in the interview to RBC Daily.

Retailers are now seeking for a possibility to substitute imported products to domestic ones to neutralize the price increase.
By HSE estimates, Russia is strongly depending on imports: in average 33% of goods sold through both networked and non-networked retailers are imported. Moreover, the share of imported goods is pretty stable during the last few years, as Georgy Ostapkovich added. That means the prices on goods which can’t be replaced by domestic equivalents will increase by the end of the second quarter of 2014.

Ruble has started to weaken since the middle of February 2014, but expected price increase has not been recorded by Rosstat yet. A main rule for suppliers is that a supplier must inform a retailer about release price increase in a period of 30 days.

In fact, the price raising is step by step overtaking retail networks. For example, in “Dixie” a price increase on foreign fruit and vegetables is about 10-25%, on dairy products – 7-15%, sugar – about 8%. Meat products suppliers are going to raise prices by 10% or even more.

In “O’kay” a general price increase of 15-20% is detected. Retail prices on fish have grown up by 20%, on chocolate and nuts – by about 15%. The price increase on dairy products is the same as in “Dixie” – about 15%.
Furthermore, release prices on non-food range of products are also rising by 10%. Especially prices on cloths (90% of imported items), household appliances (80% of imported items), sport goods, office supplies and toys (70 % of imported items) are growing up dramatically.

According to Rosstat, the inflation in March was 1%, since the beginning of 2014 – 2.3%.

www.newsru.com

US: Apple holdings down 3%

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About 48 million bushels of U.S.-grown fresh-market apples had yet to be shipped as of April 1, 3% less than last year at the same time.

The April total was, however, 8% higher than the five-year average, according to the April Market News report from the Vienna, Va.-based U.S. Apple Association.

Washington accounted for 41.7 million bushels of the U.S. total, Michigan 2.8 million bushels and New York 2.5 million bushels.

Holdings of red delicious, galas, golden delicious and fujis were down from last year.

Red delicious holdings fell from 20 million to 17.5 million bushels; galas from 7.1 million to 6.7 million bushels; golden delicious from 6.1 million to 5.4 million bushels; and fujis from 7.4 million to 4.6 million bushels.

Granny smith holdings increased from 5.3 million to 7 million bushels and Pink Lady from 1.33 million to 1.38 million bushels.

www.thepacker.com

Russia: cold spell does not affect apple orchards

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Air temperature in the majority of regions of Krasnodar Krai decreased to 4-5 degrees below zero on the night of March 30th/31st.

On the previous day the Press Service of Southern Regional Center of the Ministry of the Russian Federation for Civil Defense, Emergencies and Elimination of Consequences of Natural Disasters said about probability of emergency situations connected with damages and losses of agricultural crops (flowers and sets of early stonefruit and pomaceous fruit crops, potato plants) as well as heat-loving plants.

According to Fruit-Inform data, such a sharp fall in temperature negatively affected stonefruit plantations in Krasnodar Krai, but had almost no impact on apple orchards. Local growers say of apples to start blossoming at least in a week. Before that, a cold spell does not constitute a serious danger for apples, as a decrease in temperature is critical during the periods of budding and blossoming.

www.fruit-inform.com

Ukraine banned sweets, fish and cheese from Russia

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Ukrainian Government Consumer Inspection banned a range of Russian products such as: confectionary by “Krasny Oktyabr”, “Rot Front”, “Russky Shokolad”, and “Babayevsky”, herring and canned fish from Kaliningrad region by “Vichunay-Rus” and “Roskon”, and cheese products by “Laktalis Istra”.

Now these products are being removed from sale due to their incompliance with Ukrainian law. According to the results of the inspection it emerged that Russian products are being sold in contrary to the Ukrainian law “About safety and quality of food products” (section 38), the law “About the protection of consumers’ rights” (sections 15, 19) and the Rules of food products marking.

“Currently Ukrainian Government Consumer Inspection takes all measures to remove pointed out Russian products from hypermarkets and major chains of supermarkets”, – it is said in the official web-page of Ukrainian Government Consumer Inspection.

www.ria.ru

Cental Bank’s forecasts

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Russian Central Bank is anticipating a decrease of GDP growth by less than 1% in 2014.

“Right now we think that the realization of our economic growth forecast for 2014, which was made last year, is hardly probable. We had expected the growth to be 1.5-1.8%. Now, in our opinion, the rate of growth deceleration till less than 1% is most probable”, – Elvira Nabiullina, the head of Russian Central Bank, said during the Association of Russian Banks conference.

According to Rosstat estimations, last year GDP of Russian Federation increased by 1.3%. This year Ministry of Economic Development is expecting a GDP slowdown till 1.8% in case of a capital outflow stabilization at the level of $60-70 billion. If the capital outflow is more than $100 billion, GDP growth will hardy be more than 0.6%. Concurrently, the official rate of GDP forecast remains at the level of 2.5%. It will be revised in the beginning of April.

www.retailer.ru

Gold kiwifruit volumes forecast to rise in 2014

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Kiwifruit growers have taken another step along the recovery pathway from the vine-killing disease Psa, with gold kiwifruit volumes forecast to rise in 2014 after two years of decline, Zespri’s Chief Executive Lain Jager says.

The 2014 harvest began in orchards in Gisborne, Hawke’s Bay and Te Puke last week, with the first shipment of Zespri Kiwifruit due to leave the Port of Tauranga on the MV Lapponian Reefer for Japan on Sunday (30 March).

Mr Jager said it was forecast the industry would harvest up to 16 million trays of gold kiwifruit – which includes around 9 million trays of Zespri SunGold/Gold3 – and a total crop volume of all Zespri varieties of around 85 million trays of kiwifruit. The estimated gold volume is up from around 11 million trays harvested last season.

Mr Jager said that Zespri is well on track to having 50 million trays of SunGold by 2018, with over half of New Zealand growers now growing more than one variety on their orchards. The industry earned around NZ$1 billion in export earnings last year.

Zespri expects to load around 49 chartered refrigerated vessels over the next 32 weeks to exclusively carry the majority of the 2014 New Zealand kiwifruit harvest to key markets in Asia and Europe, including two ships direct to Shanghai.

www.freshplaza.com

Russia’s X5 Finalises Ukraine Exit

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One of Russia’s biggest retailers X5 Retail Group has finalised the sale of its Perekrestok supermarket operations in Ukraine, the company said in a statement on Tuesday.

The sale of the retailer’s Ukraine unit, X5 Group Ukraine, which accounts for less than 0.3% of total revenue is “consistent with the company’s strategy to focus on core retail activities within the Russian Federation,” it said in the statement. It did not disclose the value of the deal, or its buyer.

X5 is the first Russian company to pull out of the country since Russia’s annexation of Ukraine’s Crimea region that followed the overthrow of Moscow-backed President Viktor Yanukovich.

Reuters have said that the deal had been in the works since October 2013, but the crisis over Crimea may have quickened the pace of talks.

Varus is buying the lease rights to 13 Perekryostok stores in and near Kiev, as well as in-store facilities and stock, Capital quoted Varus’s co-owner Ruslan Shostak as saying.

According to the 2013 financial report, X5 has 12 stores in Ukraine out of a total of 4,544 mostly across Russia.

www.freshplaza.com

Devaluation of the Rouble hampers fruit export to Russia

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Although Crimea no longer dominates the daily news, it has affected fruit export. “I think that the political situation cost volume and also price development,” said fruit exporter Kees Oskam from Vleuten. “But I’m actually happy that we can simply still deliver at these prices. It could be worse.”

“Of course we would have preferred higher prices, but the Rouble has almost halved in value and that plays an important role. There are region’s to which we can no longer export because it is too expensive. In Moscow and the surrounding areas that is not the case because the average income is higher.” Trading company Jan Oskam traditionally export top fruit to The Ukraine, but even there devaluation of the Hryvna has caused problems.

“It is a daily priority to see if we can export. I have to say last week was more difficult than this week, maybe because it was still front page news. Obviously we are talking to receivers who are equally concerned to keep trade moving,” said the trader.

“The fact that the pear price is unstable on the Russian market makes for a tricky situation because the market is and remains unpredictable,” concluded Kees. “Only a few apples go to Russia here and there, because Polish exporters have cornered the market with their lower prices, but they also complain a lot about difficulties they have with supplies from Serbia.”

www.freshplaza.com