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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 follow a healthy lifestyle and buy organic products with health promotion promises. 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. However, it is growing fast.

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, also 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 $250 m. Worldwide, organic and green foodstuffs is an industry worth approximately $100 billion, compared to which Russian share is still rather low. 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.

COMPANIES AND SECTORS BENEFITING FROM THIS OPPORTUNITY

  • Finnish food and beverage companies

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
  • vitamins
  • food supplements
  • lactose-free, gluten-free and hypoallergic products
  • jams and fruit jelly
  • honey
  • muesli and cereals
  • sauces, seasoning
  • baby food
  • tea, cocoa

All these categories are sanction free and allowed to be imported to Russia.

TEAM FINLAND ACTIVITIES AVAILABLE FOR FINNISH COMPANIES

Russia is one of the target markets of Food from Finland program. ProdExpo was held in Moscow in February 2020. This autumn there are several food/wellness fairs planned in Russia such as World Food – International Food Exhibition in Moscow in September 2020 and EcoCityExpo in Moscow in November 2020. In St.Petersburg Peterfood 2020 would be interesting.

Finnish Business in St. Petersburg will be held on 01.10.2020. Finnish Food Corner will be organized in the event, which will be an excellent place for Finnish companies to meet the buyers of retail chains, restaurants, importers and to get new useful contacts.

The Finnish-Russian Chamber of Commerce (FRCC) in St. Petersburg can give you advice about 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.

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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 labeling 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, entered force on January 1, 2020. The regulation introduces references to “organic produce”, “manufacturer of organic produce” and “organic agriculture,” as well as sets control over producing, storing, labeling, selling and transporting goods of the kind.

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.

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