Market News

US retailers missing out on huge market potential

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Walmart is very cautious about entry to Russia, but is potentially missing out on vast profits in a country that is home to a population of 140 million.

Walmart has possibly missed on 30% worth of growth that is currently being enjoyed by Russian retailers.

Consumers in Russian cities have basically embraced the western model or retail nowadays, but this is not yet the case in more remote areas.

This is not likely to change quickly as infrastructure is not in place for such an expansion. This is leading to intensified competition in the urban areas, which means that the longer companies like WalMart leave it to make their entry, the harder it will be to make an impact.

“Now there is more risk, but more return,” said Alexei Krivoshapko, director at Prosperity Capital Management, one of the biggest investors in Russian stocks with $4 billion under management. “Later there will be lower returns, more cash for entry, but less risk because it will be about buying a mature business.”

WalMart could also see competition from other foreign retailers if it tries to buy a local player in Russia, with accession to the World Trade Organization in 2012 making Russia’s import-heavy retail sector even more appealing for international players by simplifying the import process.

Source: Freshplaza

Moscow 3rd Most Attractive for Retailers in Europe

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The Russian capital ranked third in top 10 most attractive cross-border retail destinations in Europe, the Jones Lang LaSalle consulting company said on Wednesday.

The company’s experts analyzed the presence of 150 leading international retailers within 55 European markets and created an index. It reveals that Moscow attracts the third greatest number of international retailers after London and Paris.

“The sustainable growth of the disposable incomes of Moscow’s 15 million inhabitants has steadily boosted retail sales for the past three years. Moscow, still under development, now accounts for the third largest retail market in Europe and is the gate to a market of 140 million consumers,” Maxim Karbasnikoff, head of retail with Jones Lang LaSalle in Russia & the CIS, was quoted in a statement as saying.

Source: en.rian.ru

Rewe Group on expansion course in Russia

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With approval from the Russian competition authority, the Rewe Group is acquiring 12  “Citystores” of ENKA Group based in Istanbul. In so doing, the Rewe Group is driving forward its expansion strategy in foreign markets. “The acquisition in Russia underscores the strategic significance of foreign business for Rewe. In the meantime we are generating around one third of our turnover outside Germany’s borders. Eastern Europe is developing into a big attraction when it comes to foreign growth”, Alain Caparros, CEO of the Rewe Group, said.

The acquired locations in the greater metropolitan area of Moscow will be converted to the BILLA supermarket format in the coming months and be integrated into the existing distribution network. The company also plans to open around ten new BILLA stores by the end of the year, while continued investment will be made in the quality and modernization offensive.

“The Russian market is one of the growth markets for us, where we see great potential. Particularly as the greater metropolitan area of Moscow has high purchasing power”, explained Frank Hensel, CEO of Rewe International AG.

Source: www.freshplaza.com

Second tier retail chains are leaving the Russian market.

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Second tier retail chains are leaving the Russian market, Sergey Galitsky, Magnit CEO, said during the telephone conference. Meanwhile the competition among top three retail chains – X5 Retail Group, Magnit and Dixi – will keep escalating. Sergey Galitski confirmed their plans to raise gross revenues in 2012 at 25-30%, and EBITDA – at 7.5-8%. Magnit is one of Russia’s largest retail chains in terms of sales volume. As of 31 December 2011, the company operates 5,309 stores, including 93 hypermarkets and 210 drogery shops.

Source: www.retail.ru

Magnit eyes small competitors

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Fast-growing Russian food retailer Magnit is interested in acquiring smaller rivals as growing competition is set to leave less room for organic expansion, its CEO said on Friday.

“Competition is growing every day but we still have opportunities for more or less comfortable growth. What we see is the trend of replacement of second-tier chains and probably we all – (rivals) X5, Dixy and ourselves – are showing interest,” Sergei Galitskiy said.

Magnit has grown into Russia’s top food retailer by store count via organic expansion and also ranks second to X5 Retail Group in revenue terms.

Last year, it paid $32 million for a chain of some 14 stores in the Tambov region in central Russia, and plans to buy the remaining interest for $3.6 million this year, it said in audited full-year financial report on Friday.

Magnit and X5 control between them under 10% of the Russian food retail market which is widely expected to consolidate mainly at the expense of small regional chains and unorganized retail.

Source: www.freshplaza.com

Top Fruit Report Russia

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Pear: Conference has a good presence and some Abate from Italy, with stable prices but lower than in previous years. The arrivals from the southern hemisphere are still below those of 2011 and even 2010, having increased somewhat in the recent week; prices were adjusted for last week and remain below the previous ones for the last two years.

Apple: Poland dominates the market, which adds to the supply of Western Europe, with prices lower than those of 2011.

From the Southern Hemisphere a volume less than that of 2011 (-50%) and similar to that of 2010 has entered, due primarily to Argentina’s reduction. The first prices that were registered, were basically for Gala, they are below last year’s.

Source: www.freshplaza.com

Fruit and vegetable cultivation decreases in Russia between 2004 and 2010

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During the last few years Russia has become more and more an import market for fruit and vegetables. The own production clearly decreased, whilst import of fruit and vegetables increased sharply. Important trading partners are both countries in the region, such as Poland, Turkey, China and Uzbekistan as well as countries which are somewhat further away, such as the Netherlands, Israel, Ecuador and Argentina.
The total area of vegetables in Russia during the period 2004-2010 decreased form 945,000 HA to 759,000 HA, a decrease of 20%. The production of vegetables decreased by 11% from 14,809 to 13,233 million kgs in 2010. Especially the area and the production of cabbage decreased. The same development in the fruit cultivation can be seen. The area decreased by 43% and the production by 37%. With apples and pears both area and production were halved.
Whilst the production decreased imports sharply increased. In the period 2003-2010 imports of fresh vegetables into Russia increased by 91% from 1,220 to 2,327 million kgs. Especially more tomatoes and cucumber were imported. The import of fruit increased by 86% from 2,997 to 5,562 million kgs. Of practically all important fruit varieties more is imported. The increase was biggest with apples, mandarins, grapes and peaches.

Ag industry to benefit from Russia WTO membership

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Russia is expected to complete its full accession into the World trade Organization later this year after formally being approved late last year.

This could be good news for agricultural trade as tariffs have already begun  to be reduced.

Trade analyst Eric Trachtenberg, said  “Apple tariffs will go down, pear tariffs will go down, tree nuts… These are meaningful benefits for people looking to seek overseas markets for U.S. products.”

“It is still a large country and there’s economic growth, especially in the larger cities,” Trachtenberg said. “There’s rising disposable income, increasing real wages, and still falling unemployment and there is a dynamic and growing retail sector. There is strong product demand, some of it will come from direct sell to customers, some of it will come from increasing inputs to food processing.”

Source: www.freshplaza.com

Russia threatens ban of dried fruit imports

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Russia is threatening to ban imports of dried fruit from Tajikistan and Azerbaijan, according to a press release issued by Rosselnadzor, Russia’s agricultural oversight agency.

The possibility of a ban emerges after repeated instances of pests being discovered in shipments of dried fruits from both countries, according to the agency.

Rosselnadzor has warned the countries of measures they need to take to avoid the ban, stating that it reserves “the right to take additional protective measures.”

Source: www.freshplaza.com

Russia imports more apples from Moldavia and Serbia

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Russia imported 1.15 million tonnes of apples in 2011. That’s slightly more (+0.4%) than in 2010. Poland remains the most important supplier with around 283,000 tonnes (-18%). This is despite Poland supplying less apples in 2011 than in the two especially successful years before. Moldavia is becoming a more important supplier. In 2011 the country supplied 174,000 tonnes of apples to Russia (+14%). Five years ago this number was still around 1000 tonnes. Imports from China (150,600 tonnes, -3%) have been declining since the peak in 2008 (241.550 tonnes).

The number of deliveries from Serbia has increased significantly (90,700 tonnes, +45%). Argentina (60,150 tonnes, +102%) did well again, after the country only supplied small amounts of apples to Russia in the years 2009 and 2010. The countries from Central and South Europe supplied 222,100 tonnes (+3%) together. The small positive trend in the total import was due to the higher amount of deliveries since the beginning of the new harvest (+8.9%). In the first half of 2011 the number of imports was in a downward trend.

Source: www.freshplaza.com