Market News

Retail chains will make a profit on Russia’s accession to the WTO

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Big retailer chains such as X5 Retail Group, “Azbuka Vkusa”,”Okay” and others will have made a profit on Russia’s accession to the World Trade Organization (WTO) by the end of 2013 according to the international rating agency Moody’s. Import duties reduction will increase the demand, and, consequently, that will increase revenues and profits of retail chains.

One of conditions of Russia’s accession to the WTO is a reduction of the import duties and tariffs from 10% to 7.8%, according to the report made by Moody’s experts. In their opinion, this should stimulate consumer demand and, therefore, benefits of importers and retailers.

As Moody’s reports, imported products have a significant share in retailers’ turnover; at the same time retailers will reduce retail prices less than the duties and tariffs will be reduced. As a result, the revenue will grow up.

Source:  www.fruitnews.ru

Price growth of fruits and vegetables in Russia: the prices have never grown so fast

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According to the Federal State Statistics Service, only during 1st and 2nd of July, the inflation rate grew up by 0.5%: the residential rate fee went up by 6.2%, electricity fee – by 4.7%, water and heating fees – by 2.4% and 3.2% respectively. Surface transportation fee went up by 4%. Vodka prices grew by 1.7%, chicken and sugar prices – by 0.7% and 0.5% respectively, according to the report of NEWSru.com with reference to newspaper Vedomosti.

But in June the inflation rate began to rise faster. As the Federal State Statistics Service reported, in June 2012 the price increase rate was 0.9% compared to 0.2% in June 2011. The reason of high rate of the inflation in June was the price growth of fruits and vegetables, as Oleg Zasov, director of the Department of Economic Development, explains. In general, food prices grew by 1.6% in June, but if fruit and vegetables were not taken into consideration, the food inflation was only 0.3%, according to the Federal State Statistics Service.

Prices for vegetables and fruits grew by 13.4% compared to May prices and they went up by 28.8% since the beginning of the year: in June the onion price grew by 39.6%, cabbage price – by 28.6%, potato price – by 24.4%, carrot price – by 21.9%, beet price – by 18.3%.  Lemon price grew by 20.0%, and grapes, pear and orange prices – by  6.3-9.8%.

Andrej Belousov, minister of the Department of Economic Development, called the price rise of fruit and vegetables abnormal. The prices for fruit and vegetables have never grown so fast, and one of the reasons is that the prices for the last year harvest were quite low, meanwhile the stock came to an end in May, and the prices began to rise.

Another reason of the price growth is the drought in Russia’s south regions in May: the harvest of vegetables, especially cabbage, was less than it had been expected before, as Dmitry Rylko, CEO of the Institute of Agricultural Market Studies, told, but he also said that the situation is going to return to its usual state in the nearest future. Dmitry Rylko and Andrej Belousov believe that in July price growth of vegetables and fruit is going to slow down, and then, in August and September, prices may decline.

But while there is no domestic harvest, the import rate is quite high, and it went up because of the depreciation of the ruble, as Evgenij Gavrilenkov, Troika Dialog chief economist, said. According to the Federal State Statistics Service, the general inflation rate grew by 3.8% since the beginning of the year.

Source: www.fruitnews.ru

The accession to the WTO and the Russian fishery industry

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As some experts say, the accession to the WTO will not change the total amount of fish and seafood on the Russian market. And fish consumption will continue to grow, as Andrej Krajnij, head of the Federal Fishery Agency, said during the parliamentary hearings in the State Duma on June 20. Four years ago, according to the Russian Statistics Service, the average fish consumption per capita was 12.7 kilos of fish, but the last year it was 22 kilos, and by 2020 it is expected to be 23.5 kilos.

Meanwhile, people involved in the fishery industry expect that the accession to the WTO may cause some serious problems. The deterioration of fishery fleet and the fact that there are almost no facilities for new fishery boats construction and repair of old ones and other factors put the Russian fishery industry in unequal conditions with fishermen from other countries, which are WTO members. Moreover, one of the main problems is the fact that the Russian fishing industry is limited by the imperfect legal system: unreasonable restrictions, outdated legal framework prevent the fishery sector from developing. And there are some assumptions that Russia’s accession to the WTO may even damage the whole fishery industry.

Nevertheless, it is only a forecast, now there are some government programs; their goals are to create good conditions for the development of the fishing industry as an important segment of the national economy of Russia after the WTO accession.

Source: www.frozen-products.ru

Russia’s accession to the WTO may be the end of Russian apples

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The last year Russia imported more than 1 million tons of apples. According to the Russian Statistics Service, the domestic crop was only 300 TMT. According to Pavel Grudinin, Lenin Sovhoz director, average consumption of fruit and berries in Russia is 53 kilos per capita (just to compare – in the U.S. it is 127 kg, in France – 135 kg, in Italy – 187 kg). And when Russia joins the WTO, the import of fruit will only grow up, completely replacing the Russian products as P. Grudinin, said at the conference on Russia’s WTO accession in April 2012.

One of the main problems is the high interest rate for the loans which is up to 14-15%. 18% of the agricultural enterprises is unprofitable, said Anatoly Altukhov, Secretary of the Department of Economics of the Russian Academy of Agricultural Sciences. The facts that a lot of enterprises have loans and the maintenance costs are constantly growing up, only make the situation worse. In 2011, the total credit debt of agricultural organizations was 1.688 trillion rubles, while revenues were 1.215 trillion, so, the credit debt excess was 39%. And without subsidies the agriculture sector is unprofitable or not sufficiently profitable.

Meanwhile, the experts of the Ministry of Economic Development assure that these problems are internal and are not connected with the WTO accession. And, in their opinion, the risks for the agriculture sector after the WTO accession are minimal.

Victor Batanin, Deputy Head of the Department of Trade Negotiations Ministry of Economic Development said that the conditions, on which Russia is ready to join the WTO, are rather good. And it gives Russia more opportunities to protect its inner market compared to other countries. Though no one denies that the potential threats still remain.

Source: www.fruitnews.ru

Russia’s accession to the WTO

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In the beginning of June, the Russian government approved the agreements for the country’s accession to the World Trade Organization (WTO) and sent them to the State Duma, the lower chamber of the Russian parliament, for ratification.

All documents to become a full member of the WTO must be ratified by the Russian government, parliament and president by July 23, 2012. Russia spent 18 years trying to enter the WTO, completing its accession in December 2011.

The Federation Council is ready to ratify the protocol on Russia’s accession to the WTO meeting on 18 July, when by the time the document will be approved by the State Duma, told RIA Novosti on June 28, Federation Council Speaker Valentina Matvienko.

The State Duma will examine the documents at its meeting on July 4.

Sources: en.rian.ru, www.retailer.ru

Russia may ban the import of fruits and vegetables from Turkey

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Russia may prohibit the supply of fruits and vegetables from Turkey because of the violations of the Russian customs claims. Rosselkhoznadzor (Federal Service for Veterinary and Phytosanitary Surveillance) admit such a possibility because of increasing quantity of supplies of fruits and vegetables that contain hazardous substances.

Meanwhile, Turkey is a major supplier of fruits and vegetables to Russia.

Source: www.fruitnews.ru

VTB and Burger King team up to promote fast food in Russia

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Burger King has found a helping hand in Russia to root itself in the country’s fast food market. The investment arm of Russia’s second largest bank VTB Capital will put up to $100 mln into a joint venture with the main rival of McDonald’s. VTB Capital will get a controlling stake in the deal with Russia’s largest Burger King franchisee – Burger Rus, Tim Demchenko, Head of Private Equity and Special Situations at VTB Capital, told Vedomosti daily.

The new firm will have exclusive rights to develop the fast food chain in the country for the next couple of decades.

“The initiative came from the headquarters of Burger King in the first place, for which active expansion into developing markets is one of the key priorities,” Demchenko added.

Co-owners of Shokoladnitsa – a chain of coffee houses – will get a big minority stake, with Burger King Europe – a European subsidiary of the US corporation – will also receive a small bit.

The investment from VTB Capital will be phased over 3 years, Demchenko explained. “That won’t be a single use payment at the stage of sealing the deal. The company’s business plan supposes very aggressive development, the opening of several hundreds of restaurants across the regions. We’ll be directing the investment in several tranches, as the business plan is being accomplished,” he added.

The deal continues the Miami-based chain’s focus on expanding in emerging markets at a time when the fast food industry is becoming increasingly saturated in the United States. In the past year, 80% of Burger King’s new openings have been in the region encompassing Europe, the Middle East and Africa.

Burger King, which has more than 12,500 restaurants worldwide, isn’t the only U.S. fast food company looking for growth overseas. In Russia, there are currently 57 Burger King locations.

Source: www.rt.com

Azbuka Vkusa announces the opening of a new branch in St. Petersburg

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Azbuka Vkusa announces the opening of its first supermarket outside the capital region. The company opens a branch in St. Petersburg and plans to launch there more than 10 supermarkets within 3 years.

The opening of the first supermarket in St. Petersburg is scheduled for autumn 2012. By the end of the business year 2012 there will be already four supermarkets in St. Petersburg.

In St. Petersburg Azbuka Vkusa will keep its traditional structure: one of network’s features is a unique range of goods – more than 18 thousand high quality items including both consumer goods and a large variety of fresh products, delicatessen and farm products.

Some information about the company: Azbuka Vkusa is the first Russian supermarket network specializing in the trade of high quality superior food, consumer goods and alcohol. The company was founded in 1997; and now there are 49 supermarkets in Moscow and the Moscow region. They have partners in more than 50 countries worldwide; more than 6,000 people work for the company. Azbuka Vkusa profit was about 21.6 billion rubles in the business year 2011 (it ended March 31, 2012).

Azbuka Vkusa became the first Russian company in the retail food trade that introduced and certified the system of quality management based on ISO 9000 standards. In 2012 the company successfully passed the recertification audit for the second time and confirmed compliance with the system to the international standard ISO 9001:2008.

Source: www.av.ru

Russia’s fishing industry experiences steady growth

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According to Russian statistics, the fish processing sector of the Russian economy increased by 81.3 thousand tons of fish.

In 2011, due to further construction in the fish processing industry, the storage of fish and fish products was around 2.7 thousand tonnes. There is growing investment activity in the fishing industry. During the period from 2000 to 2011 capital investment in the fishing industry increased 3.5-fold (from 2.2 billion to 7.8 billion rubles).

During this period the average annual growth rate of investment in fixed assets amounted to 14.2 per cent (510 million).

Source: www.thefishsite.com

Russia has become the largest importer of cherries from Iran for the first time

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By the middle of June 2012, Russia has become the largest importer of cherries not only from Moldova, but also from Iran.
Russia remains one of the world’s major importers of cherry: it is up to 75 MTM tons per year, while the Russian domestic cherry production is up to 70 MTM per year.
In 2011, Russia became the second largest exporter of cherry from Iran for the first time. In 2012, Russian export from Iran has been already evaluated as $ 6 million. Beside the cherry export from Iran, export of other products (such as potatoes, vegetables, tea, citrus fruits, olives, rice and processed products) is also growing.
In Moldova, according to the forecasts, the cherry harvest will be up to 10 MTM in 2012, that is 15% more than in 2011, and more than 50% of the harvest will be exported; and it is forecast that at least 65% of the exported cherry will go to Russia.
Export from the Caucasus region and Central Asia to the Russian market has a share of 20%.

Source: www.fruitnews.ru