Recently published research from Business Monitor International, "Russia Food & Drink Report Q3 2012", is now available at Fast Market Research

Boston, MA -- (SBWire) -- 08/17/2012 --Ongoing disinflation, low unemployment and relatively low household leverage suggest that domestic demand conditions in Russia will remain relatively sanguine in 2012. There is plenty of investment continuing to take place across sectors such as food retailing, which bodes well for the consumer sector.

Headline Industry Data

- 2012 per capita food consumption (local currency) = +10.2%; forecast compound annual growth rate (CAGR) to 2016 = +10.5%
- 2012 beer volume sales = 2.8%; forecast CAGR to 2016 = +2.9%
- 2012 mass grocery retail sales (local currency) = +24.4%; forecast CAGR to 2016 = +28%

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Key Company Trends

Sector Investments Intensifying: French canned and frozen food producer Bonduelle has agreed a deal to purchase the Russian and Commonwealth of Independent States (CIS) assets of fellow French food producer CECAB for an undisclosed price. The deal includes the D'Auacy and Globus canned food brands, as well as a 6,000-hectare cooperative and a factory in the town of Timachevsk, Russia. The acquisition comes shortly after Bonduelle agreed a deal to ramp up its Brazilian exposure and suggests the firm is currently keen to expand its emerging market reach. US ice cream firm Baskin Robbins' outlet network in Russia and the CIS has grown to 230. The firm has increased the number of outlets by 100 since the beginning of 2009, expanding into 13 new cities. It has stores in 81 Russian cities, though most of the cafes are in Moscow.

Mitigating Subdued Same-Store Sales With Store Expansions: Russian food retailer Dixy posted a 59.1% year-on-year (y-o-y) rise in sales, to RUB102.2bn (US$3.36bn), in FY11 (ended December 2011). The rise was attributed to the recent acquisition of smaller rival Victoria Group by the retailer in June 2011. Like-for-like sales grew by 6.3% y-o-y during the year, and Dixy launched 255 new outlets in the country. Although X5 reported a 32% growth in its overall sales for the year ending December 2011, the retailer's like-for-like sales in Q411 declined by 2% in local currency terms, bearing out the faltering strength of domestic demand. While we have a cautious near-term domestic demand outlook in Russia, we believe X5's discount retail strength and continued store expansions will allow it to weather the macroeconomic headwinds relatively well.

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