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Fresh produce importers in Russia are apparently losing out as competition and cost-cutting in the country's retail sector puts the squeeze on margins along the supply chain, a new investigation by Eurofruit has found.

In a special report due to be published in its September 2013 issue, the magazine found that a shift towards more direct sourcing programmes among the country's leading grocery operators is making life increasingly difficult for service providers in urban areas such as Moscow and St Petersburg – despite consumer spending power showing better growth than in the European Union.

"Many of the importers have lost good clients because more and more retailers are moving towards direct imports," explained one industry insider, who preferred not to be named.

"The supermarket chains don't rely so much any more on regional wholesale centres, which used to give the retailers a cushion. It's not like that any more and it's quite likely that some of the smaller import service providers are going to go out of business as a result, unless of course they unite in order to survive."

For many fresh fruit and vegetable exporters to Russia, however, the country continues to offer plenty of scope for good business.

"The best prospects are still in Russia, which for years has been the most promising market and I think will continue to be," commented Krzysztof Lewandowski of Polish exporter Eurosad.

His company sells fruit including apples and pears to customers in the country. Compared with Poland’s neighbours to the west and south, he suggested, the prosperity of Russian consumers and the productivity of its economy were prompting retailers to expand their own operations.

Russian consumers apparently remain sensitive to price, but are definitely spending, especially at the top end of the market where incomes are growing.

"We're seeing new imported items like Romanian cherries coming into the market for the first time and doing well, backed by special promotional events run with support from the European Union," revealed one importer.

A full report on eastern European markets including Russia will be published in the September 2013 issue of Eurofruit. To subscribe, visit eurofruitmagazine.com/subscribe

source: http://www.fruitnet.com