+

Knowing a new market

Overview, trends, requests

+Brief summary

� Russian fresh fruit market: data, forecast, trends

� Most popular fruits

� Wholesale trends

� Retail trends

� Brazil exports to Russia

� Competition and ideas for exporters

� JFresh – about the speaker

� 16 slides only!

+Fresh fruit import to Russia, thousand tons

2009 to 2010 +10% growth

Brazilian imports: 0.4% in 2008 down to 0.25% in 2010

+Fresh fruit import to Russia

� Recession in 2008 influenced the market with 1 year lag and led to 5% import drop in terms of volume after 3 years of constant growth

� In 2010 the market has recovered in terms of volume, not value

� Full year (2011) volume growth +10%. Focus on conventional fruits, exotics have decreased

� Per capita consumption ~53 kg/year, 74% (39 kg) – imports, 26% –domestic produce.

� Organic growth – should be not more than 3-5% yoy (+3 kg p/a)

� 2015: 6 500 - 6 600 thousand tones of imported fresh fruit, 47 kg per capita

General trends and 3-5 year forecast

+Consumer preferences

� Are not changing significantly over last 5 years

� Recession had increased the share of conventional fruit – citrus, bananas, apples

� Only apples and pears may be partially replaced by domestically grown varieties

� Exotic fruits refer to higher culture of consumption

� Exotics have periods of higher demand

+Wholesale trends

� Affordable and variable logistics: import starts from 1 40’RF, not from one fully loaded conventional vessel

� The amount of importers is growing (over 1000 companies), standalone leader can’t be distinguished. At the same time, top-15 can be named. Many import operators work via brokers

� Top-5 “control” 16% of the import market; top-15 “control” 30%. Leaders depend on destination/specialization

� Lot’s of small companies, providing service for retail from Europe. Bigger companies operate on further destinations

� Demand for consignment deals in sector of conventional fruit

+Retail trends

+Retailers in Russia

� Have doubled the amount of modern stores within last 5 years

� Top-5 control 33% of industry turnover; top-10 control 40%. The market is still fragmented, but concentration increases

� Have increased quality standards and tolerance levels

� Are thinking of launching own import programs. Or at least aware of the FOB/CIF prices. MAGNIT is one of the biggest importers with own banana and citrus import programs

� Try to dictate prices to importers on the basis of “shelf price”

� Anyway, retail is the most common and desired client for most importers

+What we know about Brazil

Why not

these

fruits?

+Key fruits varieties from Brazil

VarietyVolume of imports,

2010, kgShare in total import

Mango 4 881 813 35.0%

Apples 3 313 079 27.3%

Limes 2 095 055 15.0%

Melons 1 283 385 9.2%

Grapes 935 799 6.7%

Watermelons 593 361 4.3%

Papaya 168 466 1.2%

Pineapples 106 944 0.8%

Avocado 92 607 0.7%

Other 484 158 3.5%

Total 13 954 667

+Dynamics of sales of exotic fruits

(one hypermarket in SPb), kg

16 863

27 910

39 371 38 047

46 284

52 736

70 971

2003 2004 2005 2006 2007 2008 2009

6 904

16 935 17 396

25 361

18 979

24 233

26 855

2003 2004 2005 2006 2007 2008 2009

+Competition, threats, ideas

� Consumption of exotic assortment is very vulnerable to recession

� Demand from wholesalers depends on demand from retail. Retailers don’t make planning in exotics sector

� Key characteristic for retail – long shelf life

� European producers are offering similar products

� Cost of labor is increasing

� Air freight is expensive, sea freight – too long

� Ecuador, Peru, Chile – developing exotics sector

� It’s very important to find a partner, that has regular sales to retail

� It might be good to use Europe as the turnover point for products. It also diversifies the possible markets

+Varieties, sizing, packaging

� Russian consumers prefer bigger

sizes of most fruits

� Easy peelers are the only fruits

preferred small

� Wholesalers are ready to accept

smaller fruit (or even 2nd category)

if the difference in prices is

significant

� Expensive fruit should be looking

accordingly

Fruit box optimal

Apples 18 kn 60-70-80

Pears 18 kn 60-90

Lemons 18 kn 88-113

Oranges 15 kn 64-72-88

Mandarins 10 kn 4-5

Red Globe 8.2 kn L-XL-J

Thompson 8.2 kn 19.0+

Kiwi 10 kn 24-30

+Varieties, sizes, packaging

how to teach consumers to distinguish varieties?

+JFresh

� One of the biggest importers of

conventional fruits

� Wide regional presence

� Long history

� Experienced management

� 20-25% sales to retail

+ Thank you!Dmitry Gerasimov

JFresh

dger@jfresh.org

Skype: dimasgera