4 July 2017
'Made in Russia' Brand Poised for Global Food Export Roll-out
With the Russian Agricultural Ministry backing a transformative campaign aimed at establishing geographically specific branding among the country's food and drinks exports, Hong Kong could play a key role as a regional distribution hub.
With Russia looking to expand its exports beyond mineral resources and semi-finished products, the development of the country's food and beverages sector has been designated as a priority. Despite the recognised trade barriers, in terms of both quotas and strict import/export logistics and safety protocols, considerable efforts are now under way to transform the country into a substantial force within the global food market.
One of the most conspicuous signs of this new commitment has been moves by the Russian Agriculture Ministry to brand Russia's food and beverages in line with their country or region of origin. The hope here is to establish geographically specific brands comparable to Parma ham or Mexican Tequila.
There is little official doubt as to the scale of the task, with establishing such brands expected to cost millions of dollars and to involve long-term promotion across numerous geographically distinct markets. The task of carrying out such branding has already gone out to tender, however, along with a brief that details the global requirements.
Although the task ahead may seem vast, so too do the potential rewards. Russia's exports of agricultural products have doubled in value terms since 2011 and are currently estimated to be worth around US$17 billion per annum. Over the next five to seven years, the Agriculture Ministry is predicting that this will rise to somewhere in the region of $40-50 billion.
In many ways, the groundwork for the proposed international campaign was laid down by the creation of a number of 'umbrella' brands that followed the imposition of the sanctions/counter sanctions in 2014. At the time, the Agriculture Ministry was heavily involved in backing domestic campaigns that promoted the benefits of apples, fish and flour of Russian origin.
Apart from endorsing their homegrown credentials – an approach that chimed well with the nationalistic fervour stirred up by events in Ukraine – the campaign also emphasised the naturally grown and genetically-modified-free status of Russian produce. It is believed that these latter elements will form an integral part of the proposed international promotional activity.
In terms of the markets that will be initially targetted, the Ministry of Agriculture's Agriculture Products Export Development Programme has designated China, Southeast Asia and the Middle East as the priorities. Under the terms of the Programme, meat, meat products, grain, flour, vegetable oils and butter, as well as ready-made products and tinned food, are to be the principal products for the first wave of the export drive.
These priorities are very much in line with the success currently enjoyed by a number of Russia's food exports. In 2016, grain was its lead export in the sector, with sales of $5.6 billion. This was followed by fish and seafood ($3 billion) and vegetable oils ($1.14 billion).
In terms of markets, China was the largest recipient of Russia's agricultural product exports, accounting for 10% of the total. This was followed by Turkey (9%), Egypt and South Korea (8% apiece) and Kazakhstan (7%).
With regard to future exports, several products and regions have already been earmarked as having particular potential. These include butter from Vologda, honey from Bashkiria, mineral water from the Caucasus region, Cedrick nuts and dried wild berries from Siberia, Kamchatka crabs (also known as Chatka) and Russian caviar.
In terms of beverages, Russian vodka remains the clear front-runner. The prospects of Russian wineries, however, should not be discounted. At present, several – most notably the Crimean Massandra brand – are looking to restore the reputations they enjoyed in their heyday, while a number of more recent contenders, including Abrau Durso, and Chateaux Tamagne and Fanagoria, are looking to make their debut on the global stage.
In order to be successful, a number of regional distribution hubs will have to be established as part of the initiative. Given Russia's strategic turn to the East, Hong Kong would seem to be ideally positioned to play a key role in the implementation of the programme.
For any Hong Kong business looking to take advantage of the opportunities likely to emerge, it may well be worth attending one of the many Moscow food fairs over the coming months. With many Russian exporters set to participate in the high-profile food trade shows set to be held in Hong Kong, Shanghai, Beijing, Ningbo and Harbin, it may also be possible to make useful contacts closer to home.
Additionally, beyond the scope of the products identified as priorities by the Agriculture Ministry, it may be worth evaluating the prospects of the country's confectionery and bakery exports. Over recent years, many such items have already proved popular with mainland tourists visiting Russia, indicating a ready export market for such items.
Leonid Orlov, Moscow Consultant