Food production and processing represents a key component of Russia’s economy. The fast pace of life in Russia has led to increased demand for products suitable for consumption on-the-go. Easy storage and increased shelf life of packaged foods make them more attractive to the modern consumer, and modern retail formats continue to develop.

The Russian food processing industry has been growing steadily since 1999, averaging 7.3 percent annually between 1999 and 2007. After the 2008 financial crisis, the growth rate slowed significantly, to an annual average of 2.3 percent between 2008 and 2016. In 2017, Rosstat changed its methodology and began reporting production statistics for food, drinks, and tobacco separately. Thus, according to preliminary data, in 2017, the production of food products increased by 5.6 percent, while the production of drinks declined by 1.0 percent. Overall, the food processing industry’s output of commodities and services (in current prices) came in at 5.2 trillion rubles (USD89.4 billion) in 2017. The World Bank estimates that Russia’s food-processing sector contributes 13.5 percent of the value added to the country’s total manufacturing, but less than 2.0 percent of its GDP.

Globally, Russia has the eighth largest market of packaged food products with 27.5 million tons of trade volume, and drinks (alcoholic and soft) with a trade volume of 26 billion liters. The growth of the Russians’ personal incomes until 2014 led to a higher standard of living and a favorable consumer climate. Now that real incomes have fallen, consumer spending has been dampened. The fast-moving consumer goods (FMCG) segment has remained the most stable sub-sector, even during the downturn, with a 79-percent share of food products. Additionally, the demand for packaged products is expected to increase to 29 million tons by 2020.

Over the past 10 years, imports of equipment for food processing and packaging has doubled in Russia and now accounts for 87 percent of the market. The food and food-processing industry has an 11.5-percent share of all of the production sectors in Russia and is comprised of more than 30 industries and includes 43,000 active entities.

In addition, government projects in the food and agriculture sectors offer U.S. suppliers new commercial opportunities. The domestic consumer goods and packaging industry is under pressure to improve its competitive edge and offset the decline in imports. The Russian government is highly interested in import substitution of food production. The ban on imports of food from a number of countries means that the Russian food industry will continue to develop and expand, which requires investment in modern technology for processing and packaging.

Western companies are expecting an upturn and consider this a confirmation of their policy of maintaining business contacts in difficult years. This positive outlook is particular to the plastics and packaging industries, as well as the food processing industry. There remains a great demand for foreign technologies in Russia. There is a special need for further optimizing the production of consumer goods, food, and packaging. According to the VDMA research agency, the volume of imported food processing and packaging equipment in Russia amounted to about USD2 billion in 2017.