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BACKGROUND TO INGREDIENTS RUSSIA

ingredients manufacturers welcome their own show in Russia

With a population of over 150 million, the Russian Federation is a market with huge potential, boasting a well-educated workforce, developed industrial and infrastructional base and rich natural resources. Russia continues to offer international entrepreneurs outstanding long-term market potential within the food and food technology industries.

Presently, 60% of the food and drink consumed in Russia is produced locally, since the Russian customer would always prefer to buy internally in the belief that domestic products are tastier and healthier. However, due to lack of advanced technology, the majority of foodstuffs produced in Russia has a very brief shelf life and is susceptible to decay.

Given this, the potential for western suppliers of food ingredients is vast. With Russia's growing economic stability, local food industry professionals are now beginning to consider the long-term future. Additives, flavourings, vitamins and preservatives are needed in order to improve the taste, yield and longevity of domestically produced food and drink. This long-term aim is supported by the Russian government which is committed to a complex food and stabilisation programme until the year 2000.

International exhibitors at INGREDIENTS RUSSIA'2000 will capitalise upon the current need for food improvers by presenting their ingredients to the 5000 local food and drink processing plants. The Russian Federation saw the 1st dedicated food ingredients show in 1998. The need for a dedicated Food Ingredients show is highlighted in that this will be the 3rd edition of Ingredients Russia and the show continues to grow on a yearly basis as the Russian market becomes more stable.

INGREDIENTS RUSSIA '2000 will take full advantage of the Internet to ensure maximum worldwide publicity. The exhibition will have its own website giving information regarding exhibitors, floorplan etc. In addition 'EXPO-WEB INGREDIENTS RUSSIA' will be part of a series of on-line events taking place simultaneously, allowing companies to visit the exhibition via the Internet.

INGREDIENTS RUSSIA '2000 is organised by ITE GROUP PLC, London -who with over 200 trade events worldwide, are committed to the food technology industry with an extensive calendar of food, drink, and food processing, packaging and ingredients exhibitions in the following locations: St Petersburg, Moscow, Budapest, Kiev, Almaty, Baku, Turkey and Poland.

Background to the Russian Federation

By land the Russian Federation is the largest country in the world, being some 70 times larger than the UK and almost twice the size of the USA. Following the collapse of the USSR, the independent Russian Federation retained over 75% of the Soviet Union's total land area and 51% of its population.

Although Russia has endured bitter economic hardship since the disintegration of the USSR in 1991, this remains a potentially prosperous country with a well educated work force, widening industrial base, large domestic market and a rich natural and infrastructional base. The economic outlook is now the best it has been since the reform process began. The commitment of the Russian government to radical economic reform is a measure of its determination to lay the basis for sustained economic growth. "The future of Russia lies in local production", stated Editor Leisman of Wall Street Journal.

The need for Ingredients in the Russian food industry

As with the need for machinery, the need for new ingredients in the Russian food industry is enormous. With pressure to meet internal demand for better quality food and drink products, Russian producers are currently sourcing the right ingredients, additives, colourings and flavourings to bring their food products in line with their western counterparts. Currently over 70% of the ingredients used in food and drink production in Russia are imported. There are over 5000 food and drink processing plants in Russia and this figure is growing monthly.

The Opportunities by Industry Sector

\ Bakery - Bread remains a staple item of diet amongst the Russians. The bread and bakery sector consists of almost 1,500 enterprises. There is a federal programme for stabilisation and development in the bakery sector up to the year 2000. \ Confectionery - The confectionery sector in Russia includes over 3000 confectionery factories. Of these approximately 20 are large-scale enterprises with over 1,000 employees. The manufacture of savoury biscuits is seen as a promising growth area. At present this market is growing by about 10,000 tons per annum.
\ Milk - This sector contains 1,860 enterprises capable of processing 148,000 tons of milk per shift. About 1,000 enterprises during the fifties are equipped with technology of 70% expired lifespan. Russian machine builders cannot supply competitive machinery so currently 80% of milk products are produced using foreign equipment.
\ Sugar - There are a total of 96 sugar processing factories in Russia. Despite recent sugar importation, analysts forecast that by the year 2000, 60% of the supply of sugar will be fulfilled by domestic production.
\ Meat - The meat industry in Russia is served by approximately 1,000 enterprises. Up to 60% of production lines do not meet current standards. Foreign meat processing machinery is 40% more efficient, accurate and reliable than home built counterparts. Over the next two years capacity will increase by 5-7% due to the completion of building and modernisation work already begun. Many of the new purchases will be form abroad.
\ Fruit & Veg - Approximately 700 enterprises are currently engaged in the manufacture of fruit and vegetable based foods. Russian fruit and vegetable processing factories are in need of new machinery to meet demand. The most urgent need is for packaging machinery and freezing machinery.
\ Tea - In 1995, 120-130,000 tons of tea were produced in Russia. Russian tea competes because it represents good quality at a price some 30% lower than imported varieties. Tea is the most popular drink in Russia, consumed by 98.5% of the population. As import duties on pre-packed are set to increase, growing interest in packaging machinery is likely. \ Drinks - Over 170 enterprises produce alcoholic drinks in Russia, whilst over 269 enterprises such as Coca-Cola and PepsiCo has lead to a significant increase in production within this sector. Wimm Bill Dann is Russia's largest manufacturer of juices (J7) and soft drinks.

Why export to Russia

The Russian Federation offers international entrepreneurs outstanding long-term market potential in a large number of industries such as food processing/packaging equipment, building and construction equipment and materials, industrial chemicals, and medical equipment to name but a few. Covering 11 time zones and home to approximately 150 million people, the Russian Federation has vast natural and human resources. Today, the demand for imported capital equipment/services, and consumer goods remains remarkably strong, with imports representing an extraordinarily large percentage of the national market. The Russian Federation continues to pursue a programme of dramatic economic, political and social transformation. With the recent elections held in March 2000 the Russian economy is becoming increasingly more stable and offers manufacturers great opportunities to increase business in the Russian Federation and the CIS.