The Russian market, while still forming, is largely untapped by U.S. exporters and could offer great rewards, according to an article in the current issue of the USDA publication AgExporter.
In the first five months of 1994, Russia expanded to become the fifth largest market in the world for U.S. consumer-oriented products, surpassing such countries as South Korea, Taiwan and Singapore.
Also, the market for imported consumer-ready food in Russia is estimated at $2.5 billion and predicted to grow as further economic recovery occurs.
Europe currently dominates the Russian import market, most of which consists of upscale food purchased by the wealthiest 10 to 15 percent of the population.
European Union nations alone account for $1.4 billion of the total, mainly because their proximity to Russia allows for quick delivery of specialty orders.
Still, interest in American products is high, and Russian producers provide little competition in the upscale food arena. In 1993, American agricultural exports to Russia rose sharply to $346 million from $126 million the previous year. Exports of snack foods, red meat and poultry also increased significantly.
For the first five months of 1994, U.S. food exports are estimated at $206 million, 280 percent ahead of the same period in 1993.
Though European foods crowd most of the shelves at Western-style supermarkets in Moscow and St. Petersburg, U.S. goods are starting to make inroads, particularly in freezers where American ice cream, pizzas and processed chicken products are prevalent.
Still, Russia's problems cannot be ignored. The food distribution system remains shaky, at best, although improvements are being made. Additionally, the legal and banking mechanisms are not equipped to deal effectively with international trade.
On the other hand, the magazine says that now is the time to enter the market and build up product recognition, since advertising costs are low by American standards and European companies have not spent much in this area.
Some high-profile products already known in Russia include Mars, Coca-Cola, Smirnoff vodka, and fast-food outlets such as McDonald's and Pizza Hut.
Promotional materials are rare in Russia, and owners seem eager to put product displays in their stores.
Also, if the Russian processing industry becomes advanced enough to compete in the upscale market, additional export outlets will open up for non-brand imported ingredients, such as dried fruit, nuts, flavorings and concentrates for juice drinks.
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