Market potential for food & drink logistics in Russia

Food & drink is a major, major industry in Russia.

As one of the world’s top agricultural producers, as well as a key importer, thousands of tonnes of produce enters and exits the country annually. 

Everything is catered for; from finished goods direct to supermarket shelves, to live animals destined for slaughter, to ingredients to fuel Russia’s enormous food processing sector.

Combined, they represent enormous opportunities for transporters to make headways in Russia’s logistics sector.

Food & drink logistics opportunities in Russia

Imports & export volumes

In terms of raw foodstuffs, ingredients and finished products, Russia is one of the world’s largest importers of food & drink items.

Please be aware that sanctions are still in force banning imports of food & drink items from the EU, US, Canada, Norway and Australia. The measures will remain in place until at least 2020.

However, while this initially proved a stumbling block, import-wise, the volume of imported food & drink has actually been increased in recent years.
For example, imports rose 11% in 2017, and 2018 forecasts suggests the nation imported over $30bn. This is lower than the $40bn annually than the pre-ban volumes seen in 2014, but it does mean activity is picking up.

Then there are exports. Russia has been boosting its domestic production volumes in grain, milk & dairy, and meat products, partly to satiate internal demand, but mostly to focus on export markets.

In 2018, the value of its food & drink exports reached $25bn. It has plans afoot to grow these further. By 2025, they could be valued as much as $40bn.

Much of the exported food is destined for China, which is exerting further trade influence via its One Belt One Road initiative. 

Cold chain potential rises in Russia

Cold chain is one area foreign firms can enjoy potential expansion into Russia, either in supply refrigeration equipment or a full cold chain service.

However, fresh fruits and vegetables, meat and seafood coming in from overseas often requires temperature-controlled transport too.

Russian revenues from frozen food exceed $4.9 billion a year. Tighter household budgets are predicted as cultivating even greater sales of frozen foodstuffs. Convenience and cost-effectiveness is a big trend amongst Russian consumers, which frozen meals offer in abundance. Shoppers’ tastes are having a knock-on effect on the transport and logistics sector.

Increasing sales of frozen foods, such as ready meals and deserts, is stoking up the need for more refrigerator trucks, warehousing, and storage facilities. For context, frozen products often must be kept at temperatures -18°C and -24°C, while fruits, vegetables, and chilled items should be stored at around 0°C to 5°C.

Based on the above, we can see a big hole in the food & drink logistics sector that needs to be filled. We’re talking warehouse equipment, refrigerated transport like temperature-controlled trucks or reefer lorries.

Automation becomes key trend in Russian food retail logistics

Automation of translogistics and warehouse processes is proving a big boon for Russia’s leading supermarket chain, and could be farmed out to other market bellwethers, based on succesful implementation.

X5 Retail Group has recently completed a major project to automate its demand replenishment of its distribution centres for the Group’s Perekretsok and Karusel chains.

The system, which was supplied by JDA Software, uses the company's data on sales, marketing, and market activity from the past two years in order to predict demand. It also takes in information on natural disasters, public events, and other outside influences that may have an impact on consumer behaviour and retail operations.

Analysis of such data allows the system to forecast sales volumes for each item at each outlet, tweaking supply plans accordingly to be able to fulfil demand fully and in advance. Settings and calculation processes can be tailored to different product categories, allowing for greater flexibility, the company said.

Implementation of the end-to-end supply chain management software, which has boosted forecast accuracy by 17%, the retailer said. This allows stores to increase actual availability of goods by 5% and has enabled the company to decrease inventory levels by 13%.

Unlock the potential for food & drink logistics in Russian retail at TransRussia 2020

As Russia’s only international transport and logistics exhibition, this is an event you want to mark in your calendar for 2020. For exhibitors, you can meet nearly 17,000 cargo owners freight forwarders, retailers and others in need of transportation services and technologies on the Russian market. 

Visitors are primed for purchasing, and more than two thirds will only attend TransRussia amongst industry events.

Book your stand today and get ahead of your competitors in the market.
To find out more, contact our team for more information on this industry-leading international event.