Boston, MA -- (SBWire) -- 08/13/2013 --We reiterate our bullish outlook on the Russian retail sector, as rising incomes combined with expansion into the east of the country will benefit companies operating in the sector. We also expect an increasing focus on convenience for shoppers in Russia's bigger cities. We highlight our favourable view on Londonlisted O'Key, whose upscale business model fits well with our view on developments in the market, as a potential alternative to discounter Magnit.
Headline Industry Data (local currency):
- 2013 per capita food consumption = +10.7%; forecast compound annual growth rate (CAGR) to 2017 = +10.2%.
- 2013 beer volume sales = -1.5%; forecast CAGR to 2017 = +0.4%.
- 2013 fruit juice volume sales = +4.5%; forecast CAGR to 2017 = +5%.
- 2013 mass grocery retail sales = +26.8%; forecast CAGR to 2017 = +30%.
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Key Company Trends
AB InBev Closes Another Brewery As Beer Woes Persist: Russia's beer sector has been an almighty headache for the major companies involved since 2009. The crux of the problem, which resulted in beer volume sales tumbling by about 16.5% between 2009-2012, has been taxes. They have increased by more than 200% since 2010, and more recently the industry has also been hit hard by tighter restrictions on marketing and when and where beer can be sold. We do not expect things to improve anytime soon, and the decision by AB InBev to shut down another one of its factories reflects the reality that Russia's beer industry is simply not the opportunity it once was. AB InBev has attributed the decision to the tax and regulatory climate and will now operate seven breweries, having once had nine.
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Market Report, "Russia Food & Drink Report Q3 2013", Published
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