Thursday, 12 July 2012

Russian Foodservice: The Future of Foodservice in Russia to 2016

London, July 12th, 2012 In 2011, the profit sector accounted for a 93.6% share of total foodservice sales and sales increased at a CAGR of 4.96% over the review period. In 2011, cost sector sales represented 6.4% of total foodservice sales and registered a CAGR of 3.48% during the review period (reference graph below).  The restaurant channel remained the largest in terms of foodservice sales, contributing 39.9% of profit sector sales. Growth in restaurant sales was primarily a reflection on the increase in sales at quick service restaurants, and coffee and tea shops. The largest channel in the cost sector was healthcare foodservices, which contributed 50.2% to total cost sector sales and recorded a CAGR of 3.32%.  

A decade of stable political environment and steady economic growth has created a new middle class in Russia which is eager to spend. Although wages have stagnated, the government’s efforts in preventing major job losses have maintained disposable incomes, which in turn have strengthened the sales of foodservices.

Russia’s services industry’s contribution was a significant 67.8% of GDP in 2009. Growth in the IT and engineering services has been particularly outstanding with software exports growing to US$2.8 billion in 2009. The entry into the WTO is expected to boost the growth of intellectual property driven services such as aerospace, software, and information and communication technologies. This industry growth has led to an increase in the number of single young professionals who prefer to eat out in quick service restaurants.

Urbanization in Russia has been stagnating since the last decade and has even shown signs of reversal, falling from 74% in 2000 to 73% in 2005. It is further expected to decline to 72.7% during the forecast period. This has led to an increased consumption of convenience foods and the expansion of fast-food chains across all the major cities.

Russian consumers have been quite slow to adopt information technology, but they are evolving rapidly to catch up with the rest of Europe. Personal computer penetration has increased from 12.2 PCs per 100 people in 2005 to 19 PCs per 100 people in 2010. The new wave of international restaurant chains has introduced websites with elaborate online menus such as McDonald’s, which has an online menu and items can be ordered through the website.

Russian consumers have been extremely reluctant to conduct online shopping due to factors such as low penetration, low awareness and unpleasant experiences. In the early days of the internet, people who experimented with e-commerce suffered due to fraudulent online companies, incorrect or damaged products being delivered or late delivery of goods.

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