STiR coffee and tea magazine

36 STiR coffee and tea | 2024 Issue 4 (August / September) T he demand for instant coffee is rapidly rising in Russia as cautious consumers opt for less expensive options. According to a report from the Russian Kommer- sant business paper, citing data from NielsenIQ, the demand for instant coffee this year has grown by 10.5% year-over-year in volume, particularly as sold in bags. An interesting fact con- sidering in the Russian hot drinks market, only instant coffee is showing growth. In fact, the consumption of ground coffee this year fell by at least 1%. According to analysts, the popularity of inexpensive coffee bags is growing partially due to the trend among consumers to- ward savings over consumption. These consumers remain very pragmatic, choosing multi-packaged coffee products which pro- vide a certain convenience. Again, according to NielsenIQ, coffee accounts for over 63% of the entire Russian hot beverage market. In this large market share, instant coffee is estimated at about a substantial 47%, while the demand for premium coffee brands is declining. Russian consumers have a single reason for switching to instant coffee: its affordability. In a report by the Russian analyst agency, Petrova 5 Con- sulting, the Russian coffee market reached 220,000 tons in 2023 (+5% from 2022), while in value terms the market grew to 210 billion rubles ($2.41 billion). That was 24% higher than in 2022, and growth was mainly due to the increase of the market share Russia's Rising Demand for Instant Coffee Russia is known as the instant coffee country. By Eugene Gerden The demand for instant coffee has spiked 10.5% this year, the only segment of the Russian hot drinks market showing growth. for instant coffee. At present Russia remains the country of in- stant coffee, which is confirmed by statistics showing that the segment grew by 11% in volume and by 23% in value last year. In terms of output, in 2023 the segment reached 100,000 tons (+4% by 2022), while most analysts expect the market to grow a further 2% this year. In general, the Russian coffee market continues to grow de- spite a significant reduction in the presence of foreign companies, most of which decided to put their Russian business and invest- ments on hold due to geopolitical risks and volatility. Many of them optimized their brand portfolios, accordingly, suspending any further promotion of their flagship brands in Russia. For example, the Russian subsidiary of the Dutch JDE Peet's, refused at the end of last year to promote its well-known Ja- cobs brand in the Russian market, despite its importance for the company and substantial popularity among Russian customers. Instead of Jacobs, the company decided to focus on the promo- tion of its products under the Monarch or Milicano brands in the Russian market. The Russian plant "Jacobs Dow Egberts Rus" is located in the St. Petersburg region and has a capacity of more than 35,000 tons of products per year. It produces instant cof- fee, coffee blends, roasted ground and ground coffee under the Jacobs Monarch, Jacobs Monarch Millicano, Carte Noire brands. For the company, the Russian market remains important, so it currently has no plans to cease operations, although it contin- ues to shift its consumer-facing marketing. According to earlier statements, made by JDE CEO Fabien Simon, JDE is not going to completely leave Russia, as the company's operations in the local market fully comply with Western sanctions. According to him, more than 900 people work in the Russian division of the company at present. Still, since the beginning of hostilities in Ukraine, JDE has distanced itself from direct management of its Russian business. Thus, JDE did not authorize investments in the expansion of pro- duction and stopped investments in advertising and promotion of its global brands in the Russian market.

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