Growth in Russian food industry below expectations

- Last updated on GMT

Related tags: Cent, Russia, Industry, Food

Russia's State Statistical Service has revealed that food industry
output is still growing at a healthy rate, though below original

The state bureau said that overall Russia's food industry had grown by an average of 6.1 per cent in the six month period between January and June this year. This was below the 7.2 per cent growth rate predicted by the Economic Trade Development and Trade Ministry earlier this year.

Although the figures easily topped last year's 5.1 per cent growth in food production volumes, the upward trend is ebbing off as the year goes on, with production growth for the month of June standing at 5 per cent.

The figures revealed that growth in the alcoholic beverage sectors was still very strong. The all-important beer market is still showing growth of 12.5 per, although this is down compared to the same period last year when the figure stood at 14.4 per cent. This reflects the growing maturity of the market and the fact that expansion is now starting to level off.

Meanwhile the smaller sparkling wine and brandy market showed growth of 37.9 per cent and 58.1 per cent, figures that are indicative of the growing spending power of the middle class and their desire to consume luxury or premium goods.

Another segments that experience significant were the ever-popular mayonnaise market, which grew by 20.8 per cent in the first six months of the year and the vegetable oil market which grew 33.4 per cent.

On the other hand the production of sugar has been heavily impacted by new tarrifs and cheaper imports, leading to a 31.8 per cent drop in production. Likewise the production of bread and bakery products has dropped 4.5 per cent, reflecting the increasing diversity of the Russian diet.

Last month spoke to the Trade Ministry's market research chief, Maria Tarasova, who believed that earlier predictions had been a optimistic. She said the being realistic the figure was more likely to be around 4 per cent growth for the year as a whole as exports were not expected to be very dynamic.

"Until the end of the year I see domestic demand for processed foods remaining stable, but there will be no significant growth in food exports - a factor that might otherwise have boosted the industry. For the moment food exports are still centred around the CIS countries, but in the longer term there will probably be more of an emphasis on exports to European countries,"​ she said. "Invariably this trend is likely to increase the quality of food exports as western European standards are relatively high."

On the other hand, Tarasova said that she believed the long term growth of food production was likely to be secure. She believes that as the domestic market matures, it will be the niche food markets that will fuel future growth.

Related topics: Market Trends

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