Wednesday, October 1, 2008

Food Show Memo: Record Attendance at World Food Moscow 2008 Show Demonstrates Russia's Growing Consumerism and International Opportunities

The emergence of Russia as a major food and grocery consuming nation was on display at the recently-ended World Food Moscow 2008 trade show, which featured over 1,300 exhibitors from throughout the world and was attended by thousands more food and grocery industry professionals, all focusing on how to do business in the country of about 143 million that's becoming flush with cash from its sales of oil and other natural resources, along with creating a growing higher-income consuming class, as well as the beginnings of a middle class.

The product exhibitions at the huge World Food Moscow 2008 show, which ran from September 23-27, ranged from basic food and grocery products, fresh produce, meats and other perishables, to non-foods and natural, organic, specialty and gourmet products from throughout the world, including Europe, Asia, the U.S., Canada and Latin-Central America.

Fresh produce, including organics, was a big feature of this year's Moscow food show. Produce suppliers and trade associations from Europe, Latin and Central America, Asia and the U.S. all had a major presence at the show. Many of these suppliers already do some business in Russia but want to expand their respective business in the increasingly affluent nation. Others are hoping to get into the Russian market as it improves its logistics systems and more larger and even upscale supermarkets open throughout the country.

The show also included a series of forums in which various speakers talked about how to enter the Russian food and grocery market, along with ways to increase business in the nation, discussions of Russian consumer behavior and other related topics. The annual Russian Agricultural Outlook forum also is a part of each year's Moscow food show.

Russia's food and grocery retailing industry is going through a rapid modernization process, adopting the western supermarket, superstore and hypermarket models in increasing numbers. Western chains like France's Carrefour (the worlds second largest global retailer) and Wal-Mart (the world's number one retailer) are currently in the process of entering Russia with their first stores.

As an example of the growing consumer affluence in Russia, this year's World Food Moscow 2008 show featured far more specialty, gourmet, natural and organic food and grocery products across all categories, according to the food show's organizers. This included specialty and organic fresh produce items and meats, gourmet, specialty and organic shelf-stable food products from throughout Europe and even the U.S. and Australia, and lots of higher-end premium products including beverages as well as food items.

As is the practice in Russia, foreign companies in any sector who are let in early tend to get preferential treatment by the Russian government. This is the case with overseas food and grocery companies as well. Much of doing business in the food industry in Russia still relies on setting up various joint-ventures with Russian companies, along with going through various layers of government and quasi-government middle men, each who takes a cut of the action.

A new U.S-Russia cold war? "Nyet." Some analysts and pundits are suggesting the U.S. and Russia are on the verge of a new cold war over Russia's recent invasion (after Georgia's invasion) of two breakaway states of the Republic of Georgia, which the U.S. is allied with. No impending new cold war was evident on September 27 however when John Beyrle, the United States Ambassador to Russia , attended the last day of the World Food Moscow 2008 food show. Ambassador Beyrle, pictured above enjoying a slice of apple, greeted Russian officials at the show as well as visted U.S. exhibitor companies and trade groups such as the California Grape Association and USA Pears, among others.

This system isn't in the main preventing European, American and Asia food and grocery companies --big, medium-sized and even small -- from wanting to enter the Russian market though, as was evidenced by the record attendance and number of exhibitors at the just-ended Moscow food show.

The natural and organic products categories, along with imported specialty, gourmet and ethnic food and grocery products, are in the infant stage in terms of category development in Russia. Therefore, Russia is a growing new market for western and Asian suppliers. The potential is very big and lucrative.

Additionally, with western chains Carrefour (based in France) and Wal-Mart (based in the U.S.) planning to soon open their first stores in Russia, the opportunity for western natural, organic, specialty and gourmet foods suppliers and marketers who already do business with these two mega-retailers should be enhanced.

More Russians than ever before also are traveling abroad, particularly those from the country's new upper-income class. As these and other Russians travel to western European cities and to the U.S. more frequently they will acquire an increased taste for and desire of the food products from these countries, just as Americans and Europeans who travel throughout the world do for foods from other lands. This fact will increase demand for imported foods in Russia, creating additional opportunity for western suppliers and marketers.

The organizers of the Food Moscow 2008 food show have a comprehensive photo and video gallery of this year's and last year's shows, ranging from pictures of various exhibitor booths and forum events to the trade show's product tasting events and award presentations. Click here to view that photo gallery.

Additionally, the Netherlands-based Web site took photos of the fresh produce exhibitors at this year's World Food Moscow 2008 food show. Click here to view the photo report.

The Food Show Moscow 2008 event is held annually in the fall, usually in late September or early October. According to the show's organizers, this year's show had the highest number of exhibitors and attendees in its history.

Despite a bit of a freeze in Russian western relations, especially with the U.S., American and European companies and food industry representatives attended this year's Moscow show in great numbers.

This fact reflects that despite a chilling of political relations between these western nations and Russia, trade between the west and Russia is still moving forward.

It also reflects the fact Russia is spending billions of dollars to improve its agricultural industries and is looking to U.S. and European companies for much of the expertise and technology to achieve that goal, as it is looking towards the west to help modernize its entire food distribution chain, from the farm and food processing plant to the supermarket.

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