The spending power of middle-class shoppers in Russia has been reduced in the last couple of years, so Andrey Volkov from Tropic group said that importers have to play it safe with what they purchase and are more hesitant to introduce new exotics. People are only really buying the basic fruit and vegetables, ie. bananas, citrus, potatoes, cabbage.
Tropic group is one of the top 5 importers in Russia, and their largest importer of Moroccan tomatoes. Just last December, the company imported a total of 13,000 tonnes, in just one month. Depending on which hemisphere is in season at that moment, they have trading partners in Morocco, Turkey, Egypt, Israel, China, Pakistan, India, South Africa, Peru and Chile.
"We have programs throughout the year and we are not bringing in huge quantities of exotics, but there are steady supplies. For example, we bring in one container each of avocados, mangos and pineapples every week. This always increases before Christmas." said Andrey.
The company has various warehouses which are strategically placed for supply to the major cities. The biggest and newest warehouse in Tula, is 20,000 square metres and supplies the area in and around Moscow. The company also rents two warehouses located in Moscow itself which are 10,000 square metres. The goods arrive in the Port of Russia, where a small portion is kept for the local market around St. Petersburg, with the rest being sent directly to Moscow or Tula for further distribution in the European part of Russia. 90% of the import sales go to the supermarket chains.
Russian crisis good for improving market
Andrey reports that there have been a lot of problems in the last several years with bad companies who take large volumes of fruit and veg and then 'disappear' into thin air without paying a cent, leading to a large volume of unpaid debts.
"The supermarkets are more protected from these problems because they have properties and are able to absorb the losses. We have to be vigilant and very aware of who we are dealing with, especially in the last 5 years." continued Andrey.
"I have been in the fruit business for the last 20 years and the business was totally different back then, compared to what it is today. The competition is very high, which has multiple companies fighting for one client. Many are often forced into a corner when it comes to pricing because if you are not willing to lower it to the level they are wanting, they will just go with another company who will."
But it's not all doom and gloom; "My prediction is that the market will be cleaned up in the coming years, survival of the fittest, and reach the same kind of level as the rest of Europe, with a few major importers, with a lot of the medium importers disappearing." said Andrey.
"That is something positive we can take out of the crisis, I am expecting that the wrong people should disappear. It's just like the wild, wild west - only the strongest will survive."