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6/2017


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DRINKS
Prospects of Development of the Russian Wine Market
Research by the Center for Investigations of Federal and Regional Alcohol Markets (CIFRRA)

Review of the Russian Beer Market
Research by the Company I-Marketing

TEA & COFFEE
Review of the Russian Coffee Market
Research by the Company Step by Step

CONFECTIONERY
Review of the Russian Confectionery Market
Research by the Information Agency Credinform

Review of the Russian Market of Fruit Preserves
Research by the Company I-Marketing

MEAT
Review of the Russian Meat Market
Research by the Company Market Analitika

FISH & SEAFOOD
Review of the Russian Market of Fish and Fish Products
Research by the Company NeoAnalytics

DAIRY PRODUCTS
Review of the Russian Dairy Market
Research by Information Agency Credinform

Ways to Increase Realization of Expired Food Products
Study by the Marketing Agency ScanMarket

INGREDIENTS
Review of the Russian Market of Starch Products
Research by the Company ID-Marketing

TRADE SHOWS
22nd International Exhibition Agroprodmash-2017


4th exhibition Anufood China-2017


34th Exhibition Anuga-2017


Exhibition Drinktec-2017


26th International WorldFood Moscow Exhibition


FOODSERVICE
Review of the Russian Restaurant Market*
Research by the Company RBC Market Research

FINANCE & LOANS
Leasing Market in Russia
Research by the Rating Agency RAEX (Expert RA)

Review of the Russian Tea Market

Research by Company Step by Step

The Russian tea market is among the largest ones in the world. This has a lot to do with the fact that almost the whole population of the country drinks tea.

PRODUCTION STRUCTURE AND DYNAMICS
During the period from 2010 to 2016, the peak of tea production in Russia fell on 2013. After that a decline was being observed. It is important to note that production of coffee, regarded as a substitute for tea by some consumers, is steadily growing, in particular, taking over part of the tea consumption.
Gross tea harvest in Russia is not high, and until 2013 it was declining. However, it started increasing in 2014 by virtue of the overall state support program for agriculture. In Russia tea is only grown in Krasnodar Krai and in the Republic of Adygea.
Tea production is mainly concentrated in the Northwestern Federal District, which produced almost 80% of all tea due to production facilities of Orimi Trade LLC (Saint Petersburg) being located there.
The Central Federal District is second with the share of 15%, having lost 20 pp in favor of the Northwestern Federal District and other regions in 20102016. The third position is held by Southern Federal District with a share of only 5.3%. It should be noted there is virtually no connection between production locations and tea growing locations.

MARKET SIZE DYNAMICS
Market growth is occurring in monetary terms, which is primarily due to growth in prices for tea, the peak of which happened in 2015. Against the backdrop of declining output volumes, minimal exports and a practically stable volume of imports one can speak of a market reduction in physical terms despite an increase in retail trade turnover in monetary terms.
Given that tea is consumed by virtually the whole Russias population, the structure of retail sale thereof in value terms has been remaining practically unchanged during the past years. The leaders in tea consumption are the Central and Volga Federal Districts. The share of the Crimean Federal District, (before it joined the Southern Federal District) in 2015 amounted to 0.5% of all sales. All in all, one can state that there is a direct correlation between tea consumption and population of federal districts.

PRICES
According to Rosstat, in recent year slight growth in prices for tea has been recorded. A sharp increase occurred in 2015, when teabags became 30.7% more expensive and prices for loose leaf tea increased by 40%. In 2016 the price increase slowed down and did not reach 5% for either tea category during the first half of the year. The highest prices as of June 2017 were recorded in Moscow, whereas the lowest prices were demonstrated by the Volga Federal District.

FOREIGN TRADE
Russia mainly imports black tea: for example, in both 2015 and 2016, its share in the overall volume of imports amounted to around 92% in physical terms. The share of green tea equaled 8.2%, and the share of mate (Paraguayan tea beverage), slowly gaining popularity in Russia, amounted to 0.02% of imports.
The volume of tea imports in 2014 and 2015 equaled 173.5 thousand tons and 173.1 thousand tons respectively, whereas in 2016 it amounted to 164.3 thousand tons. Thus one can conclude that sanctions virtually did not concern the tea market. Import volume is insignificant. Most tea is imported into Russia from India, Sri Lanka and Kenya, which accounted for 67% of imports in 2016 26.9, 24.3 and 15.8% respectively. Almost 75% of tea supplied to Russia is delivered without a trademark in large quantities and is intended for packing. Among packaged tea brands, the leader is Ahmad Tea (Ahmad Tea Ltd., Great Britain), the share of which is around 5% of imports.

CONSUMPTION
Tea consumption in Russia is rather stable and grows along with growth in retail trade turnover. It should be noted that coffee has substantially increased its structural share in 20152016. This was largely due to the development of fashion for it the country, not only spreading within the HoReCa field but also in consumption at home and at work. In addition, interest in this drink is increasing due to growth in consumption of coffee beans and ground coffee under the influence of growing sales of coffee machines as well as high marketing activity of manufacturers. Tea, on the other hand, is only starting to become available in the range of products for capsule coffee machines.
Such dynamics lead to a situation where within the drinks product category, tea is losing its structural share to coffee, which is making shares of other drinks (chicory and others) decrease as well.
According to Nielsen, the largest volume of consumption falls on tea in teabags 30.4 and 29.2% in volume and value terms respectively. Tea sold by weight occupies 16.7 and 11.7% respectively. It should be noted that in 2016, compared to 2015, sales of private labels of retail chains dropped by 16.3% in the category of teabags and by 2.8% in the category of tea sold by weight.

Elena Ponomareva,
Development Director
Step by Step Group





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