13 Dec 2016
Russia Looks to Boost Food and Drink Exports to China in 2017
With the mainland now the largest single destination for a wide variety of Russian food and drink products, hopes are high that a number of recent meat and poultry agreements will see exports grow further over the next 12 months.
China has now overtaken Turkey to become the largest importer of Russian food and beverages, with plans in place to build on that still further in 2017. In the first six months of 2016, Russia shipped some US$1.13 billion worth of food and drinks products to the mainland, representing some 10% of the country's total exports in the sector.
This growth in exports to China is likely to continue. In line with this, a number of Russia's leading food and drink producers – including Mikoyan Meat, the Stoilenskaya Niva Bakery and Aqua Life – have signed export deals totaling more than $100 million. Many of these agreements have been brokered by the Russian Export Centre (REC), a subsidiary of the VEB National Development Bank. The REC has also played a key role in establishing distribution hubs around the world, most recently opening a new depot in Dongguan in the Guangdong Province.
According to REC statistics, frozen fish represents the largest single category of Russia's exports to China. Once imported, they are then processed into fish sticks and other similar products. In total, China has bought $710 million worth of frozen fish from Russia this year.
The next-largest import is soya, followed by sunflower oil and soya oil, all of which are widely used in China's food-processing industries. In the case of sunflower oil, this represents a rather recent development, with no trade in the product existing between Russia and China prior to 2015.
As well as these relatively unsurprising items, food and drink exports to the mainland also include a number of products that Russia has not traditionally been associated with. This year, for instance, China bought 12 tonnes of Russian chocolate (valued at about $40 million), making the mainland the second-largest export destination for the product, after Kazakhstan. Overall, the most popular Russian chocolate brands among mainland consumers appear to be Aleyonka and Russian Ballet Chocolate.
Wine is another export sector that is developing rapidly, with the Crimea-based Massandra winery sending its first consignment of 17,600 bottles to China in the summer of 2015. This saw it follow the lead of Abrau Durso, another of Russia's most renowned wineries, which has been exporting its sparkling wines to China for some time.
Another big hit with mainland consumers seems to be Russian ice cream. Until recently, this was only available in Jilin and Heilongjiang provinces, but deliveries are now also being made to Beijing and Shanghai. Given the popularity of this particular export, plans are now in place to begin widespread distribution of a number of Russia's traditional dairy-style desserts.
For 2017, the trade in foodstuffs between the two countries is set to be expanded still further. This follows approval for meat originating in Russia to be distributed across China. A similar agreement has been reached with regard to the import of Russian poultry products.
This burgeoning trade is seen as representing a real opportunity for Hong Kong companies to act as sales agents and distributors for a wide range of Russian food and drink products. In particular, there are thought to be excellent prospects with regard to both bottled mineral water and a number of premium brands.
Leonid Orlov, Moscow Consultant