Consumer Foodservice in Russia

Abstract

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• Pinpoint growth sectors and identify factors driving change
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Product coverage

Consumer foodservice by chained/independent; Consumer foodservice by type; Consumer foodservice by type and chained/independent

Executive summary

Consumer foodservice records lower growth after six-year boom

In 2006 the Russian economy continued its active development, with the country attracting more foreign investments and confident growth of GDP. However, since 2004 rapid increases in world oil prices have caused higher inflation rates, while real incomes of consumers saw less active growth compared to previous years. In 2006 the Russian Government forced all alcoholic drinks retailers and wholesalers to change duty-excise marks according to the new excise system. This resulted in a significant fall in retail and foodservice sales of alcoholic drinks in Russia. Some foodservice operators commented that in July and August 2006 their month' s sales fell by 30-50% in comparison to previous months. Both the smaller growth rate of real incomes and the alcohol crisis caused consumer foodservice to experience lower value growth in 2006 than in previous years of the review period.

Regulation of alcoholic drinks consumption induces growth of drinking concept outlets

At the beginning 2007 the Federal Government accepted another law regulating the culture of consumption of alcoholic drinks. As of July 2007 people are forbidden from consuming alcoholic drinks in public places like railway or bus stations, parks, football stadiums etc. The new Federal Law underpins the rapid development of drinking concept restaurants and bars. In 2006 a new chain of bars for football fans, under the brand SPB, was launched in St Petersburg. Recently Rosinter Restaurants Holding OAO signed an agreement with SUN InBev to expand the chain into other regions of central and northwestern Russia.

Booming shopping malls provide regional expansion of foodservice chains at food courts

Although the competitive environment is fragmented in Russia, a few leading foodservice operators have begun regional expansion into other wealthy cities. The markets of Moscow and St Petersburg are expected to reach saturation in the near future. Modern retail formats such as shopping malls and trade and entertainment centres play a significant role in regional expansion of foodservice competitors. Due to agreements with property developers, certain chains like Coffee House, Shokoladnitsa, Baskin-Robbins, Kroshka-Kartoshka, Teremok, Call a Pizza, Vostochny Basar, La Cucaracha, Rostik' s KFC, McDonald' s, Subway, Sbarro have mushroomed in the regions with their new outlets located in the food courts of retail outlets.

Advanced competitors obsessed by free casual niche

Fast casual and casual dining are the most popular terms tackled by foodservice experts and leading market operators in Russia. Moscow competitors comment that Moscow citizens are gradually switching to healthy foods and are already prepared to accept the fast casual dining format. The merger of two bakery products fast food chains -- 5 Zvezd and Prime -- has generated growing interest amongst operators in Moscow, with regard to the development of fast casual chains. As fine dining is facing stagnation, more full-service restaurants are switching to democratic concepts, which are considered as casual dining in Russia.

Consumer foodservice boom ends with slower growth forecast

Consumer foodservice in Russia is expected to see a slower rate of constant value growth in the forecast period than in the review period, due to expected higher proliferation of chained and independent fast food outlets, cafes, street stalls and takeaways offering moderately priced service. However, the market will experience greater growth in terms of the number of transactions than in terms of units/outlets and constant value, because consumers will develop a culture of eating-out and socialising in foodservice outlets. Generally positive development of consumer foodservice will be due to the rapid growth of chained operators. Chained operators' value share of the market is expected to increase from 23% in 2006 to 31% in 2011.