Interest grows on Russian coffee market

02/01/2006 – Spain’s Seda Solubles and Switzerland’s Alma Food have begun a packaging and logistics joint-venture to take advantage of growing demand for coffee in Russia, Ukraine and other CIS countries.

The object of the agreement is to provide customers with a wider assortment of coffee products in various packages. For example, Seda will bottle coffee in glass bottles and Alma will use cans and soft packages such as sachets.

“The goal of this collaboration is to satisfy the requirements of our customers as much as possible, because coffee manufacturers, as a rule, have in their portfolio coffee in different packages,” said Francesco Corsetti, Alma Food marketing director.

The two firms will also co-operate on the launch of a new manufacturing line for roasting coffee at the beginning of 2006. All the packing equipment is situated in Moscow.

Alma Food and Seda Solubles also decided to offer CIS customers logistics, distribution import and trade marketing services.

Among present Alma Food customers there are such companies as: Cafe Soluvel Brasilia (Brasil), trademark of Future Enterprises (Singapore), trademark of JFK (India), as well as the brands Grand Arabica and Cafe Cubana.

The joint-venture move follows growth on the Russian coffee market in particular, and analyst predictions of a future coffee culture in there, possibly along similar lines to that Western Europe and the US.

Starbucks recently won the right to use its namesake trademark in Russia and is thought to be planning store-openings in the country.

The Russian coffee market rose with 4 per cent in volume to 108,000 tonnes last year. Natural coffee is rising the quickest – at 9 per cent – while soluble/instant coffee and coffee mixtures rose 3 per cent in volume terms.

Market participants estimate that the segment of natural coffee is worth about $150m, and they are sure that in the future it will rise as more restaurants switch over to it from instant.

“Soon, all the market growth will be on the account of natural coffee”, said Ramaz Chanturiya, general director of the Russian Association of Tea and Coffee producers, Roschaykofe.

There are about 30 companies working on this market, although 85 per cent of it is held by Zolotye Kupola, Kuplo, Orimi trade, Product-Service and Pauling.

Aleksey Popovichev, executive director of the Coffee manufacturers organization, estimated that Russian roasters still hold 80 per cent of the market. “So far, no western manufacturer has opened a single roasting facility in Russia,” he said.

Western firms have only been selling quality instant coffee in Russia for around 15 years.

Experts say there are a few reasons for the rising popularity of fresh coffee over instant.

“Such coffee has more variety than soluble, both from a geographical point of view and by flavour properties,” said Elena Holupkova, Orimi Trade’s marketing director.

Igor Hramov, general director of coffee roaster Blues Coffee, said it there was also a changing attitude among restaurants. “Now no restaurants or cafes will offer you soluble coffee; they will offer only natural.”

The value of Russia’s fresh coffee market grew by 10 per cent last year, supported by the country’s boom in consumer foodservice and a “burgeoning coffee culture”, according to a recent report by Euromonitor.

The report points out, however, that instant coffee still accounts for 90 per cent of the market in value terms, with sales growing 13 per cent to $2bn in 2004.