THE RUSSIAN FOOD PROCESSING EQUIPMENT MARKET
Russia appears to have entered a phase of relative political stability, which is raising consumer confidence and stimulating the growth of the local economy. The Russian economy is performing well and records healthy growth rates of 6%. Retail sales and imports have shown robust growth over the last 3 years. With rising average incomes, high consumer confidence and spending as well as steady development of a middle class in large urban centres, Russia has regained its attractiveness for Western companies. The Russian food processing and packaging equipment market is growing rapidly and has potential for producers and sellers.
Russian sectors of the Food industry also have entered a stage, where quality is becoming critical to remain competitive. Brand image and promotion is becoming increasingly sophisticated. If Russian companies want to produce products of higher quality and brand them to anxious consumers, most will need to replace their aging and often obsolete equipment. As domestic machinery production has not yet reached the required quality and quantity levels, there is a strong demand for foreign food processing equipment including packaging machinery. In their turn equipment vendors should respond by offering flexible leasing terms, greater training and service support, and quality products, which are all in high demand by Russian domestic food producers both large and small.
There are seven main sectors of the Russian food processing and packaging equipment market:
· Meat and poultry;
· Fruit and vegetables;
· Vegetable oil and fat;
· Convenience food.
Products, which are imported to Russia, have changed significantly since 1998. The major portion of imports today belongs to various types of machinery (including industrial equipment, electronic products, home appliances, etc.) and vehicles. The part of the machinery, equipment and vehicles import is about 39%. Import of machinery and equipment is expected to grow further, whereas imports of foodstuff and agricultural raw materials will not increase. Processing plants are also to buy domestic raw materials. Other reasons include quotas and growing competitiveness of domestic food products compared to imported ones.
The growth in income of the population in the last 2-5 years has increased demand for meat (poultry and pork) and dairy products. The demand for dairy products increased due to a rise in domestic production, relatively low prices and strong preferences of the Russian population for dairy. Demand for beef and high value fish continues to decline due to high prices. The increase of purchasing power led to the creation of a completely new market for Russia – the convenience food sector.
The food processing industry as a whole has been one of the fastest growing industries in Russia, and thus, one of the most perspective areas for business activity. After a sharp decline in the 1990s, there has been a positive trend in the growth of food processing and packaging industry since 1999.
Exercise 3. Complete the sentences using the information from the text:
1. The major portion of imports today belongs to…
2. The Russian food processing and packaging equipment market …
3. If Russian companies want to produce products of higher quality and brand them to anxious consumers, …
4. Import of machinery and equipment is expected to …
5. There are seven main sectors …
Exercise 4. Look at the table 1, read the information given under the table and compare the most active suppliers of the equipment in different years. Give the reasons of their success:
The top ten countries – importers of food processing equipment to Russia are presented in the table below:
Leading positions are changing year-to-year, but among these 11 countries, over 6 are always present. These are Germany, Italy, Denmark, Austria, the Netherlands and Switzerland, with Germany and Italy counting as the main suppliers of food processing equipment to Russia. This can be explained by active position of these countries in food processing equipment. Germany accomplishes several programs supporting continuous imports to Russia. German and Italian companies are active in various exhibitions, forums, conferences and other events, promoting their products.
Exercise 5. Using the information given in the Text 1 and in the Table 2 speak about the processing equipment mostly used in our country and explain why:
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