The Russian HoReCa sector is now going through a forced transformation. The main questions that the participants face: how to replace a number of imported products, where to find suppliers and how to keep the business.
Quest after quest
For domestic restaurateurs, the current situation is not the first challenge, sanctions against Russia have gradually tightened over 8 years. Therefore, market participants have already successfully replaced a large segment of foreign goods. For example, over the years, food imports from the United States have significantly decreased, only alcohol, nuts and groceries were supplied. Until 2014, many actors purchased duck in France, now they buy it in Belarus, Kazakhstan and Russia.
However, if earlier the main problem was the search for suppliers, now the situation is more like an equation with several unknowns. It is necessary not only to find a partner providing high-quality goods, but also to resolve difficulties with payment and delivery – nevertheless, some positions are almost impossible to replace. And it was logistics that became a stumbling block – products are not included in the sanctions lists.
World leaders of container shipping have stopped accepting orders for deliveries to Russia. But most of the goods from Africa, India, Central and South America, China were imported into the Russian Federation by sea and container lines. Rail and road transportation is also very limited, air traffic with many countries has been interrupted. Suppliers change the conditions for shipments, switch to prepayment, since importers may refuse the ordered item due to exchange rate jumps. The list of countries from which deliveries can be made is constantly changing. In a word, logistics turned into a quest, and this affected prices inevitably.
For example, logistics companies are now offering to import goods from the EU through Serbia, Kazakhstan, Turkey. However, delivery costs have doubled and deadlines have increased. The most acute issue is with the import of fish from the Faroe Islands – many positions were delivered to Russia from Denmark. Now these deliveries are under a big question.
The rapid increase in the cost of products reduces the margin of the business, so restaurateurs began to look actively for analogues. Some products can be replaced with local ones, the process is already underway. But here, too, everything is not so simple: for many years, Russian companies have used imported products – packaging, equipment, raw materials. Now this has caused an increase in prices for domestic goods and interruptions in their production. Reforms and capacity building will take time.
The granaries of the Motherland
Products with the supply of which domestic restaurateurs have no difficulties include, first of all, eggs, meat and poultry. Here, market participants are in a favorable position: unlike the rest of the world, in Russia prices for these categories do not rise – there are no problems with feed, production increases from year to year. The lack of exports reduces the cost of goods – now everything is supplied to the domestic market. Even taking into account the fact that due to the difficult economic situation, some of the players will leave it and the supply will reduce, there will be no deficit and significant price rise.
Another category in demand by restaurants is rice, which is also replaced successfully by domestic producers. For several years now, instead of Chinese, American and Italian, most establishments have been purchasing round-grain Russian rice. Also in Russia there is no shortage of grain, flour, vegetable oil. Another question is that prices for these products have now increased due to the dependence of our industries on a number of imported goods such as packaging and equipment.
For the same reason, the cost of products of the Russian dairy industry increased by 20%. There will be no shortage here even given the possible reduction in the assortment. However, domestic producers cannot yet replace completely a number of goods from the EU, for example, hard cheeses, – you need to build a long cycle.
The situation with wine cards is much better. In recent years, many new players have appeared on the Russian wine market with experience in the best wineries in the world. The industry is developing actively and it gives the restaurateur the opportunity to surprise guests. But imported hard alcohol and some cocktails are likely to disappear from the bar menu – supplies are unstable, prices have risen significantly.
Not everything is so simple with fruits, vegetables, berries, and herbs. Many positions were imported previously from Spain – about 30-40% of this product is produced in the Russian Federation. Both the volume of farms and climatic features play a role here. Prices for some goods, in particular onion, beet, carrot, apple, have grown by 30-70% since February 2022. It will take about 5 years to compensate for the import of some categories due to the development of domestic production. So far, all hope is to increase supplies from countries that have not supported the sanctions, in particular Turkey. Moreover, the ban on the import of tomato, pepper, zucchini and eggplant from a number of neighboring states was lifted.
But such a delicacy as truffle is grown in Russia – on the Black Sea coast of the Caucasus. In its properties, it is almost identical to its French counterpart, but a little more democratic in price. Most likely, Russian restaurateurs will switch to it.
The most painful issue is seafood. There are no special problems with crab, oysters, scallop, mussels, squid and sea urchins – they are mined in Russia. But manufacturers will have to increase their volume due to increased demand. However, difficulties with imports from the Faroe Islands can hit positions such as herring and mackerel.
Red fish from the Far East is considered the world best in quality, but for a number of reasons it is still difficult to replace completely foreign analogues. Firstly, in the summer, Russian factories are traditionally closed for prophylaxis and do not ship products. Previously, restaurants worked at this time with raw materials from Norway, Chile and Denmark. Now supplies are under question. Secondly, this is planting material: fry and fertilized trout caviar. The gap can be closed through cooperation with Iran, where aquaculture is very well developed. Such a decision will stimulate the development of domestic companies. But the results will appear only in a few years. In the meantime, restaurateurs can be saved by parallel imports, supplies from Turkey and Egypt and menu adaptation – the transition to less “promoted” red fish, coho and chum salmon.
Oriental notes
In some segments, the percentage of foreign products will always be significant. These are goods that cannot be produced in Russia at all or in large volume due to climatic factors: tea, coffee, cocoa, citrus fruits, spices, exotic fruits. Many of the listed items were previously imported from Asia, but now the volume of supplies has only increased. For example, restrictions on the import of citrus from the PRC have been lifted.
Asian suppliers can also help offset shortages in a range of goods. For example, tuna and exotic fruits can be imported from Vietnam. China exports analog meat and dairy products: the country is one of the leading producers of soybeans, legumes and food from plant raw materials.
However, a final turn towards Asia should not be expected. Indeed, pan-Asian tastes have come into fashion in recent years. Nevertheless, we are talking in many respects about the notes that are included in traditional European and Russian dishes. Consumers are not ready to abandon completely the usual cuisine.
The Asian market will not be able to completely replace goods from the EU and the United States, for example, olive oil. The barrier is that many products are too different from European and American counterparts in their organoleptic properties.
New Flavors Time
In this situation, menu optimization for restaurateurs is the most suitable option that allows you to maintain marginality and not get a large stop list. This is especially true for network projects – it is not easy for them to find suppliers who can quickly provide large volumes of high-quality product.
Market participants will have to reduce premium positions and adjust recipes, as well as think about new dishes and ingredients. On the other hand, this will give impetus to the development of domestic gastronomy, including authentic projects. The transition period has begun, and in the coming months, domestic restaurateurs will surprise guests with interesting innovations.
By Yuri Moiseev, restaurateur, founder of Lark Café and cafe-bakery “Jhavoronok”