Demand for organic and functional food in Russia
The rapidly growing demand for organic, functional and ecological food in Russia provides interesting business opportunities for Finnish food and beverage companies. Nowadays, more and more people lead a healthy lifestyle and buy organic products with health promotion promises. Following European trends, Russians also tend to live a healthy lifestyle. In Russia, demand for organic food is growing despite the country’s economic and financial crisis. Russia’s organic market is in the early stage of development but it is growing fast.
Companies and sectors benefitting from this opportunity
Russia’s organic food market has grown by over 60% over the past five years. An increase of $116 million in total from 2010 demonstrates how Russian consumers are hungry for healthier, organic and ecological offering. Roughly, 3% of Russia’s population regularly choose healthier, organically sourced options. This equates to four and a half million health conscious Russians on the look for organic products – and this demand is only set to rise. Currently, the size of the organic sector, in Russia treated as a sub-segment of the overall health food market, is up to $250m. Globally, this is a little on the small side. Worldwide, organic and green foodstuffs is an industry worth approximately $100 billion. Even so, Russian organic food sales have tripled since the start of the decade. Russians have consistently been buying 10% more natural foods year-on-year since 2010.
Solutions or products needed
The embargo on importing European foodstuffs, imposed by Russia in 2014, is acting as an incentive for domestic production. However, there could be interesting market opportunities since there are number of sanction free product categories. It is still early days for this young market, so imports from producers in more established markets play a vital role – imports are prevailing in the health food market.
Products with good market potential include e.g:
- organic and eco-products
- food supplements
- lactose-free, gluten-free and hypoallergic products
- jams and fruit jelly
- muesli and cereals
- sauces, seasoning
- baby food
- tea, cocoa
All these categories are sanction-free and allowed to be imported to Russia.
Background information about the market
Up to 85% of all the health foods in Russia, including organic items, are imported. Just 15% of domestic need is covered by Russian-grown produce. Just 60 organic producers hold international certification to US and EU standards. While this is voluntary, it marks how small the sector is. There are a couple of reasons for this. Firstly, lack of domestic development of farming in a sustainable, pesticide-free, natural way. Another is trust. Food labelling in Russia is not the most accurate, regarding locally produced goods. See the abundance of “fake” dairy products in stores nationwide as an example.
President Vladimir Putin signed in August 2018 a new law regulating production, storing and transportation of organic produce in Russia. The decree bans agrochemicals, pesticides, antibiotics growth stimulators and hormones.
The new law, previously approved by both chambers of the Russian Parliament, will enter force on January 1, 2020. The regulation introduces references to “organic product”, “manufacturer of organic product” and “organic agriculture,” as well as sets control over producing, storing, labeling, selling and transporting goods of the kind.
The measure, which also includes creating of a national register, will help to force dishonest players out of the market and will have a positive impact on the quality of organic products, according to State Duma speaker Vyacheslav Volodin.
Only products which apply to the conditions in the new bill, and their manufacturers, can be considered “organic”. This law adopts models seen in over 80 countries worldwide, restricting the use of agrochemicals and pesticides in production.
Team Finland activities available for Finnish companies
There are several food/wellness fairs in Russia this autumn such as World Food – International Food Exhibition in Moscow in September 2019 and EcoCityExpo in Moscow in November 2019. In St.Petersburg InterFood in April 2019 and Peterfood 2019 would be interesting.
Food From Finland acting as a partner in ProdExpo 11.-15.2. Moscow, Russia
Coaching day & buyer meetings with Prisma chain St. Petersburg 29.4.
If you are interested in the Russian market, please contact the Finnish-Russian Chamber of Commerce (FRCC) in St. Petersburg to get advice of where to target and who to contact. FRCC can also organize meetings with potential partners in Russia. Regarding Russia, it is important to be proactive and offer solutions to the market.
For more information please contact:
Irina Krasnova (FIN, ENG, RU)
Advisor, Food Industry
+7 812 322 2121
+7 921 796 0338