Hot Drinks in Russia

COVID-19 impact on hot drinks

The COVID-19 crisis has had a marked impact on hot drinks sales in the Russian market, leading to a downturn in volumes in 2020. The closure of foodservice outlets during the state of emergency existing between April and June and consumers’ reluctance to return to cafés, bars and restaurants when they reopened because of concerns about contracting the COVID-19 virus have resulted in a steep decline in foodservice volumes.

COVID-19 country impact

Restrictions to prevent the spread of COVID-19 were introduced gradually in Russia. The entry of Chinese citizens was banned from 20 February, with this being extended to Iranians from 28 February and South Koreans from 1 March.

Company response

The leading players in each of the main hot drinks categories have gained share in 2020, as consumers have turned to trusted, well-established brands in a time of uncertainty and the increased consumer reliance on modern grocery retailing has favoured major brands. Orimi Trade, the leading manufacturer in tea and the second largest company in fresh ground coffee, remains the largest player in overall hot drinks.

Retailing shift

The supermarkets and convenience stores channels have both gained share in hot drinks in 2020. These outlets tend to be close to consumers’ homes and are, therefore, perceived to be both convenient and safe to visit for shopping.

Foodservice vs retail split

Tea and other hot drinks are already strongly associated with home consumption, meaning that the dramatic decline in on-trade sales resulting from the closure of foodservice channels has had a limited impact on overall sales in these categories. Coffee has been hit significantly harder by the loss of foodservice sales, with the expansion of specialist coffee shops and fast food chains playing an important role in exposing consumers to coffee and establishing the fashionable image of the drink.

What next for hot drinks?

While foodservice is set to benefit from the return to hectic consumer lifestyles as the immediate threat from COVID-19 diminishes, its recovery is expected to be constrained by the enduring economic impact of measures aimed at limiting the spread of the pandemic. It is estimated that up to 30% of outlets will not be able to survive the crisis and reopen, while another wave of foodservice outlet closures is expected in the first quarter of 2021.

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