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Market situation unlikely to change in January and February

Russian retail decrease quality standards

RK Marketing/Fruit News Director, Irina Koziy, reports that the consequences of the Russian embargo for the country’s retailers are exactly those that had been predicted. “The product range is smaller than it used to be, and prices are significantly higher. There are products coming from other countries, but in most cases volumes are still not significant. At the moment, there are far fewer types and varieties of fruit and vegetables available to Russian consumers - fewer apple varieties, fewer pears, leaf vegetables, tomatoes and other fresh produce items.”

The point, according to Irina, is that it takes time to build relationships between suppliers in other countries and importers in Russia. “It’s a long process that cannot be completed in just a couple of months. There is also the question of availability, or supply and demand,” she says.

For example, the volume of apples exported by alternative suppliers, like Switzerland, which used to be insignificant, has increased considerably, “but this is still very limited volumes at pretty high prices. Collaterally, some traditional suppliers, like Morocco, Egypt or Israel, have also been able to increase their market shares in Russia,” explains Irina.

These suppliers are precisely the ones which may potentially be most affected by the devaluation of the Rouble, although “the reaction for now is a quiet market, as companies are studying the situation and trying to understand what’s going to happen,” says Irina.

Meanwhile, for Russian retailers, the lower import volumes also entail a higher percentage of problems, “and often, buyers from the retail chains have told us they had to decrease their quality standards.”

Consumers, in any case, while unhappy about the growing prices for almost all food items, are surviving, conscious that the issues are also caused by the difference in exchange rates. “In most cases, they perceive the market problems mostly as a consequence of the drop of the Rouble,” assures Irina.

Regarding the suspicions that banned EU products could still be entering the Russian market, Irina states that it is still unclear whether there is such a scenario. “I’m sure some products are being repackaged, but the Rosselkhoznadzor has been working hard to stop this illegal trade, and I don’t believe these sales reach massive volumes.”

The bottom line is that consumers will continue purchasing fruit and vegetables, even at the higher prices and from different suppliers, with hopes that the limits on imports will be over soon and that governments will come to some agreement.
In this sense, “we are looking at March as the earliest timeframe for an improvement in the relationships between Europe and the U.S. and Russia; by then, hopefully a portion of the sanctions will be lifted, but what is sure is that the market situation in January and February will certainly not be good,” concludes Irina.