STiR coffee and tea magazine

STiR coffee and tea 37 One of the major current trends of the Russian coffee market is the steadily growing takeaway segment. According to data from Russian research agency Smart Ranking, the Russian takeaway coffee market increased by 21% in 2023 compared to 2022 and amounted to about 102.7 billion rubles ($1.19 billion). In 2022 its turnover was estimated at 85 billion rubles, while in 2021 it was much less at 57 billion rubles. Ramaz Chanturia is the head of the Russian Tea and Coffee Association (RTCA) A holding pattern, until the chips fall on the table and a clear path is seen forward. Meanwhile, in addition to JDE Peet's, an- other global player massively transformed its Rus- sian business. This global player, Tchibo GmbH, changed its name to Tibio LLC and launched the umbrella brand Tibio instead of Tchibo. In the meantime, most Russian analysts inter- viewed believe that the refusal to develop foreign flagship brands in Russia significantly weakened the positions of these global players in the local market. According to them, given the high level of competition in the market, it is important for brands to continue brand-building activities to keep attracting customers, and with the growing influence of the private label segment and the de- cline of the purchasing power of Russian custom- ers, brand loyalty, remains one of the key ways to retain customers. According Ramaz Chanturia, head of the Rus- sian Tea and Coffee Association (RTCA), the mar- ket continues its transformation. He comments, "In recent years it was faced with an oversupply of products due to the decline of exports, when in a single year (2022-2023) coffee exports fell by 40%, largely for instant coffee. This of course was due to the closure of the EU market for Russian coffee suppliers coupled with serious logistics problems." RTCA states that Western sanctions did not have a catastrophic effect on the domestic coffee market and did not result in a significant change of customer preferences. And according to Chantu- ria, manufacturers are working to minimize price increases by using inexpensive raw materials. In the meantime, representatives of leading Russian coffee chains confirm the current tough times for their businesses and share their hopes for the recovery of the market in the second half of 2024. Alexander Machulsky, the director and co-owner of Bodryi Den coffee chain, which comprises up to 200 coffeehouses throughout Russia and pri- marily in Siberia, shared, the company "lives in a new system in which it is forced to work and rebuild." He continues, "We are seeing market growth. Logistics has been partially rebuilt; the price has stabilized. We understand that the dollar exchange rate is not as important as its stable level in the period for planning. We track the growth of consumption both in sales terms, and also in the loading of roast- ing capacities." Most analysts expect at least a partial recovery of the Russian coffee mar- ket towards the end of the current year. Alexey Popovichev, executive direc- tor of Rusbrand, a public association which unites leading coffee producers in Russia recently stated in an interview, despite the fact that buyers are trying to save money, the overall consumption of coffee in Russia remains high compared to tea. According to him, urban populations still prefer coffee to tea, largely due to the popularity of takeaway drinks and coffee chains. Popo- vichev also expects sales of premium coffee in general in Russia to resume at least in the long-term. In the meantime, representatives of leading Russian retailers are paying at- tention to new trends in the Russian market. According to Evgeniy Galimsky, director of loyalty and ecosystem products development at X5 Retail Group, one of Russia's leading retail chains, there is ever-growing demand for coffee in capsules in addition to some types of instant coffees. He added that he is seeing an interest in such products among young buyers increasing by 270% year-over-year, while among adult consumers it is also growing, by 190%. Ac- cording to him, older generations are predominantly giving up caffeine, with the demand falling by 14% in this age group. The popular coffee chain Bodryi Den has over 200 locations and is experiencing market growth.

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