Russia

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.”

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Russian fruit & vegetable imports saw continued growth in 2013

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The Russian import market of fresh fruit and vegetables in 2013 was worth 8.2 billion dollars (6.2 billion Euro). Two years before it was 7.7 billion dollars. In 2011 and 2012 the value was 5.5 and 6.0 billion Euro respectively. Volume comparisons show last year figures at 8.4 million ton, compared to 8 in 2012 and 8.3 in 2011. Previous years showed imports increasing sharply.

Apples and bananas are the two major products which are imported to Russia. Apple import continued to grow in 2013 but banana import was more modest. Tomatoes, the third import product showed good growth as did fourth place, soft citrus, then a number of products follow which reached a peak in 2011 but in recent years have fallen, these are oranges, pears, grapes and carrots. Onion import in 2013 was also seen to have been previously higher.

Ecuador is the most important supplier of fresh fruit and vegetables. This is mostly due to the banana. Ecuadorian bananas have a free monopoly on the Russian banana market. Turkey is the other massive supplier of fresh fruit and vegetables to Russia but import is not longer growing. Poland is rising as third supplier. Almost three quarters of Polish deliveries consists of apples. China follows in fourth place but their import shows a falling trend and apples, soft citrus and tomatoes are their most important products. Spanish import, number 5, has stabilised after a short spurt in 2013. The main Spanish products going to Russia are peaches/nectarines and tomatoes. Morocco also supply soft citrus, and Israel are a large supplier of products such as carrots and peppers.

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Russian apple prices lower year-on-year

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The Russian apple market participants say about stagnation in the sector.

For the present, many apple growers have already finished their season. Still selling farmers do not revise prices in view of stably low demand for apples and often low quality of offered produce.

As a result, growers’ apple prices vary between RUB 15-30/kg (EUR 0.27-0.55/kg), depending on quality and production region. It should be reminded that in the mid-March 2013 domestic apples were offered at RUB 0.31/kg and higher.

As regards imported apples, the demand for them also remains extremely low, and prices are still stable.

www.fruit-inform.com

Possible ban from Russia big problem for EU exporters

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With Russia being a large importer of fresh produce, the current political situation between European nations and Russia could have significant ramifications for European exporters. The threat that the political climate could negatively impact their business has many European shippers hoping for a quick resolution to any political issues EU countries and Russia may have.

“If Russia bans any European produce, then it’s obvious that this will be a big problem for exporters currently working with Russia,” said Eric Guasch, President of AFRAA, an organization dedicated to promoting trade between the two nations. AFRAA is already working to lift the Russian ban on European potatoes and pork, and any further restrictions on European products would further hurt the continent’s shippers.

As for Israeli exporters, any action taken by Russia would only have an impact on some commodities, explained Rafi Zuri of Galil Export in Israel.Also Spanish kaki fruit from Spain would suffer, which will probably be a benefit for Sharon  fruit from Israel in winter, as they compete on persimmon during the winter. Other commodities wouldn’t have an advantage. Part of that has to do with the competition Israeli exporters face from Turkish exporters. Because products from Turkey are cheaper, and the Russian market prioritizes low-priced produce.

But throughout most of Europe, worries are much more prevalent, and the feeling is that any ban would eventually hurt Russia as well as Europe. Because of the potential impacts the current situation could unleash on those working in the fresh produce trade in both countries, everyone hopes political tensions can be resolved quickly.

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Slowdown in Pyaterochka refurbishment process

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The X5 Retail Group, a prominent grocery retailer, has announced that the total number of Pyaterochkadiscounters to be refurbished this year will be less than previously planned. This is because the project has proven to be more challenging than the company had estimated.

The retailer had planned to revamp 1,100 stores in 2014 and to complete the refurbishment of the entire chain by the end of 2015. The average cost of reformatting one establishment is $360,000 (€259,000). In October 2013 X5 planned to spend between $160m and $440m (€115-317m) on this over 18 months.

At the end of last year, X5 was operating 4,544 stores in total. These included 3,822 Pyaterochka discounters, 390 Perekrestok supermarkets, 83 Karusel hypermarkets, and 189 differently branded express stores.

www.ceeretail.com

Selgros comes to Volgograd

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Selgros, a grocery wholesaler, entered the local Volgograd market by opening a cash and carry hypermarket in Marshala Yeremenko Street on 6 March 2014. The outlet offers a range of more than 40,000 food and non-food SKUs and operates on a trading space of 8,500 m2. The amount invested in the project was RUB 1bn (€19.8m).

In addition to the new store in Volgograd, there are seven Selgros hypermarkets in Russia: in Altufyevo, Kotelniki, Vnukovo and Biryulevo (all four are Moscow’s districts) and in Rostov-on-Don, Kazan and Ryazan.

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Metro IPO plans in doubt due to Ukraine crisis

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The stock valuation of German hypermarket chain Metro has taken a heavy hit over the past week, and the retailer’s plans to launch an initial-public-offering of its Russian unit has been thrown into doubt due to the fallout of the current situation in Ukraine.

Over the weekend, Metro shares fell by over 5% in early trading on the German mid-cap stock exchange to €28.50.

Metro had hoped to raise around €1 billion by selling 25% of its stake in its Russia cash-and-carry unit in a London listing but due to Russia’s involvement in the political chaos surrounding Ukraine, details of the group’s plans aren’t currently clear.

A Metro spokesperson said it would “monitor the situation in Ukraine closely” because market conditions need to be favourable in order to launch an IPO.

Metro planned to use the proceeds from the IPO to expand its cash-and-carry business in Russia, its most profitable unit and the country’s fourth-biggest retailer behind X5, Magnit (MGNTq.L) and French chain Auchan.

Metro operates 72 stores in Russia and achieved sales of 183 billion roubles in 2013.

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2013 tough year for Russian fresh produce imports

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Due to a number of factors, 2013 was a difficult year for many of Russia’s fruit and vegetable suppliers. Bad weather negatively impacted some crops while restrictions on fresh produce shipments to Russia from several regions of origin limited supplies. Many companies in Moscow also experienced problems with fresh produce storage when one of the biggest warehouse complexes in the city was closed. Negative changes in consumer behaviour and purchasing power also became evident at the end of the year.

According to data from the Federal Customs Service, imports of fruit, nuts and dried fruit to Russia in 2013 remained roughly equal to 2012 levels – amounting to 6.19 million MT or $6.26 billion. Compared to the previous year’s figures (6.16 million MT, $6.28 billion), the volume of imported fruit increased by 0.4 percent and the value decreased by 0.35 percent. Imports of vegetables over the same period grew more intensively. The gross import volume of vegetables reached 2.90 million MT, or $2.80 billion, exceeding the volume and value of 2012 by 6.3 percent and 12.4 percent, respectively.

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11% increase in revenue for Metro in 2013

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There was an 11.3% year-on-year increase in the Russian revenues of Metro Cash & Carry, the grocery retail division of the German Metro Group, to RUB 183.2bn (€3.68bn), in 2013. At the same time, the company’s like-for-like sales grew by 7.7%. The company disclosed its Russian financial results for the first time because it is considering an IPO for the Russian Metro Cash & Carry business. The Metro Group is planning to float 25% on the London Stock Exchange (LSE).

In addition, the company’s EBITDA rentability figure has reached 12.4%, which is a record among large grocery retailers in the country.

According to Metro’s quarterly report, at the end of 2013 it was operating 73 Metro Cash & Carry hypermarkets in Russia.

www.ceeretail.com

Russia reduces apple imports

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Russia’s imports of apples are still significantly lower compared with the previous season, according to Federal State Statistics Service of the Russian Federation.

In particular, Russian importers purchased just 109,000 tons of apples in January 2014, a decrease of 28% year-on-year. Russia’s cumulative imports over the first 7 months of the current season fell by 15% compared with the same period of the previous season and totaled 575,000 tons.

Such a sharp decrease in apple imports is connected with lower shipments from Poland, which has reduced exports to Russia by 30% since the beginning of the season 2013/14, and rather moderate demand for apples in the Russian Federation.

www.fruit-inform.com