16 July 2019
As Russia Gets Ever Spicier, Can HK Exports Be Flavour of the Month?
Eschewing their traditional love of black pepper, increasingly cosmopolitan Russian consumers are now looking for ever more exotic flavourings, with Hong Kong exporters seemingly well-placed to help sate this particular culinary craving.
The typical perception of Russian cuisine is that it seldom strays far from borsch, chicken Kiev, caviar or vodka. While there may be a grain of truth to that, it's also true that Russians are increasingly inclined to experiment with more exotic spices and flavourings. Indeed, the country's consumers now partake of more spices per head than their counterparts in near-neighbouring Finland or Sweden, with the average Russian personally enjoying up to a kilo per annum of such food enhancements, a development that has resulted in the creation of a sizable market over recent years.
In the immediate post-Soviet years of the early 1990s, the spice market throughout the bloc was virtually synonymous with black pepper, which accounted for 40% of sales in the sector. Indeed, for a long time, the segment was officially referred to as "Pepper and Other Spices". Much has changed since then, though, with black pepper now accounting for just 10% of the market, while the kind of mixed spices required for borsch, barbeques and marinating have come to dominate.
While many of the spices traditionally associated with Russian cuisine – notably horseradish, mustard, dill, parsley and garlic – remain popular, many consumers have proven willing to experiment with the more exotic ingredients required to recreate the dishes of Italy, France or even Mexico. In addition to this, there is also evidence of a growing tendency for novel flavourings to be added to one of the true staples of Russian cooking – bread.
This has seen elements as diverse as cumin and caraway seeds incorporated into rye breads, while wheat breads have benefited from the judicious deployment of turmeric and mustard seeds. All of these have augmented the black pepper and bay leaves that have long been staples of Russian loaves and have helped make the traditional servings of winter-dried mushroom and noodle soup a little tastier than once they were.
Novelty aside, though, just how big is this market and is it one worth giving consideration to as a serious business opportunity? Well, according to the most recently-available official statistics, it's a market that's currently worth some US$ 400 million and one that is set to continue growing steadily.
This is partly down to the fact that, although many ethnic Russians now favour semi-prepared deli food and eating out above cooking at home, this is being more than compensated for by the very different preferences of many of the migrants making their homes in the country. Typically drawn from the Central Asian states and the Caucasus, they – like the ethnic Georgians and Armenians who have long resided in the country – use copious amount of various spices when they cook and even when eating out.
At present, nearly all Russia's spices are imported, with Vietnam, China, India, Brazil, Indonesia and Poland the primary suppliers. Up until 2013, Vietnam occupied the number one slot with a market share of 40%. Since then, thanks to a number of political, socio-economic and logistical factors, China has taken the lead, with Vietnam now second, India third and Georgia at number four.
In terms of the structure of the industry, it is dominated by a small number of large Russian distributors. Typically, they supply the country's food processing companies with considerable quantities of various spices, while also servicing the hospitality sector and the own-label industry.
Perhaps unexpectedly, given the country's reliance on imports, Russia is also an exporter of spices. It is, however, a relatively small sector, valued just below US$30 million per annum, and focused primarily on anise, coriander and cumin of Russian origin, as well as variously-branded mixed spices for sale in a number of the former Soviet countries and in several of the Central and Eastern European markets. It is partly bolstered by promotion from several Russian tea exporters who see mixed spices as something of an add-on to their primary stock.
Overall, moving into the Russian market could be opportune for any Hong Kong spice supplier looking for new territories. In addition to access to the country's 155 million consumers, such a move would also allow exporters to easily target buyers throughout Central Asia and the former Soviet bloc, especially given the advantageous inter-region customs arrangements that prevail.
In addition, following moves to grant Russian meat producers greater access to the mainland market, a surge in such exports is now widely anticipated. Given that such suppliers are keen to ensure that their products meet the expected taste profile of mainlanders, there may be a role for Hong Kong businesses to act both as flavouring consultants and spice suppliers to these would-be exporters.
Leonid Orlov, Moscow Consultant