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Russian food and beverage industry survey - EY - Russia

Composition of respondents

Around 70% of respondents believe that the crisis in the food and beverage industry is still ongoing.

Although there have been no major economic upheavals and the peak of the crisis is over, market participants are still cautious about the current economic situation.

In addition to drought, fires and poor harvests, the year 2010 was marked by a number of other events which impacted the food industry.

These include consolidation within the beverage and dairy segments and a notable amount of legislative activity in areas which directly or indirectly affect food companies.

The new law on trade, which entered into force in 2010 to a mixed reception within the business community, initiatives in the area of customs regulation and certain other changes affect both the current state of the market and its future development.

The crisis of 2008-2009 forced most companies to review their development strategies and focus efforts on optimizing business processes with a view to increasing their operating efficiency.

96% of respondents indicated the raising of operating efficiency as a priority goal for 2011. Key objectives singled out by survey participants also included business diversification and expansion into new markets with a view to lowering dependence on the current situation.

The participants in the study were generally optimistic about the prospects for the development of the key segments of the food industry, some of them expecting doubledigit growth rates as consumer demand revives.

This upbeat stance is reinforced by the fact that market participants expect to witness positive results from Russia’s accession to the WTO.

More than 70% of respondents indicated a number of positive changes in the industry that should ensue from Russia’s joining of the WTO. These include lower customs duties and increased transparency in customs regulation and administration.

Participants in the survey

30 Russian and foreign1 food manufacturers possessing production facilities in the territory of the Russian Federation took part in this survey.

Composition of respondents

Foreign companies represented the largest group of survey participants (41%). The number of Russian companies and Russian companies with foreign capital was about equal, at 28% and 31% respectively.

1. In accordance with the adopted definitions of the specified categories:

  • A Russian company is a Russian manufacturer without foreign capital involvement.

  • A Russian company with foreign capital is a Russian manufacturer in which a foreign company has an interest in the capital but is not involved in day-to-day management.

  • A foreign company is a subsidiary / branch of a foreign company with involvement in day-to-day management.

Except as otherwise stated, Russian companies with foreign capital involvement are included in the category of Russian companies.

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