Russian Economy General News: #12

A bullish stock market expected for the next days and weeks at Moscow Exchange.

Shelves of local importance, by Anatoly Kostyrev for Kommersant.ru. 26.07.2022.

The share of Russian consumer goods is growing.

The reduction in imports of food and consumer goods with the outbreak of military operations of the Russian Federation in Ukraine allowed Russian manufacturers to increase their market share to 83% by July. The trend was most noticeable in the sales of beer, strong alcoholic beverages, snacks and hygiene products. The potential for growth in the share of local players remains, but will depend, among other things, on the cost and complexity of imports.

By July, the share of local food products and consumer goods (FMCG) in the sales structure of retail chains reached 83% against 79% a year earlier, NielsenIQ Russia calculated. According to the company's retail director Konstantin Loktev, local brands have been actively replacing goods that have disappeared from the shelves in the past few months.

"Due to the boom in demand at the beginning of hostilities in Ukraine and the accompanying economic crisis, as well as supply disruptions, the assortment in food categories decreased by 10%, and non-food - by more than 20%, which created opportunities for local players", says Mr. Loktev.

According to NielsenIQ estimates, the share of Russian beer increased the most, from 79% to 89%. In the category of strong alcoholic beverages, the indicator increased from 39% to 46%, personal care products - from 28% to 35%, snacks - from 85% to 92%, frozen food - from 94% to 99%, chocolate - from 76% to 79%. In sales of dairy products and cigarettes, the share of local products remained at 91% and 80%, respectively, while in the category of soft drinks it increased from 90% to 91%. According to Konstantin Loktev, large producers of such drinks have been producing products in the Russian Federation for a long time. Although sales of Tarkhun, Baikal, and Duchess flavored sodas began to grow at double-digit rates against the backdrop of the crisis, and the new brands CoolCola, Street, Fancy, Fantola, Chernogolovka Kola took 5% of sales in the category in just two months, he notes.

The general director of Volkovskaya Brewery, Alexei Aksel, notes that the reduction in beer imports is due to the reluctance of the owners of the largest brands to work in Russia, problems with logistics and mutual settlements. Against this background, the share of localized brands will grow, and new products will appear that can replace the disappeared ones, he points out. For example, the Moscow Brewing Company (MPK) has released Ballantine Stout, which could be an alternative to Guinness, and a separate British-style Ballantine Chocolate Stout. But the share of imported beer on the Russian market will remain, Mr. Axel says. Director of TSIFRRA Vadim Drobiz notes that although alcohol imports in April-July could be reduced by more than 40%, distributors should still have stocks, and a sharp increase in the share of local products will begin in September.

Roman Kvinikadze, founder and CEO of NappyClub (produces hygiene products, cosmetics, household chemicals, etc.), explains that a significant reduction in the marketing budgets of transnational companies, as well as an increase in the cost of imported European raw materials, contributes to the growth in the share of local brands. If the political situation remains tense, logistics from Europe does not normalize, then the share of local players in the hygiene segment may grow to 70%, Mr. Kvinikadze predicts. But, he notes, in any such product there are too many imported components that are absent in the Russian Federation, and the production itself is highly mechanized, requiring qualification and excluding downtime.

Marat Ibragimov, senior analyst at Gazprombank, notes that the presence of well-known imported brands in a particular category was an important factor in the value positioning of retail chains, since for some buyers this was a sign of the sufficiency of the assortment.

But in the context of a general reduction in imports, this factor fades into the background, and consumers are gradually switching more and more to Russian brands, he points out.

So, on July 25, Lenta reported in its reporting that it was working with the assortment and pricing in order to quickly respond to changes in external market conditions.

Stores experienced a reduction in the imported assortment of food and drinks.

Alexey Popovichev, Executive Director of Rusbrand, expects that the share of FMCG products and goods produced in the Russian Federation will continue to grow, primarily due to Russian manufacturers and global companies remaining in the country. In addition, the situation contributes to the emergence of new players on the market if they have the necessary investments. An increase in the share of imports in the mass segments of FMCG, according to Mr. Popovichev, is hardly possible now, since the complexity of logistics leads to higher prices for products.

https://www.kommersant.ru/doc/5480465.

Rosstat recorded deflation for the second month in a row, 10.08.2022.

In July, compared with June, consumer prices in Russia fell by 0.39%, Rosstat reported. The last time the July deflation was observed was in 2011, but it was symbolic: the reduction in prices for goods and services did not exceed 0.01%. In annual terms (compared to July of the previous year), inflation amounted to 15.1%.

Seasonal price reductions traditionally occur in August-September, when farmers are harvesting and food supply is growing. However, in 2022, the situation turned out to be atypical: deflation has been observed for the second month in a row since the very beginning of summer: in June, consumer prices for the first time in the history of modern Russia for this month decreased by 0.35%.

The main driver of price reductions in July was the reduction in the price of fruits and vegetables - minus 11.5% per month. Food products as a whole fell in price by 1.5%, and non-food products - by 0.4%. The only category that went up in price was services — plus 1.4%.

The leaders in terms of cost reduction were white cabbage - minus 33.2%, potatoes - 27.6%, beets - by 27.1%. Among the goods that fell in price over the month, in addition to vegetables and fruits, there were chicken eggs - minus 4.4%, granulated sugar - 3.5%, buckwheat - 3.2%.

At the same time, prices for chewing gum, margarine, chilled and frozen salmon fish, caramel, cereal flakes (breakfast cereals) increased by 1.3–2%. Among the segment of services that has risen in price as a whole, housing and communal services showed the greatest growth — by 3.4%. Of these, prices for water disposal increased by 5.6%, hot water supply rose by 4.9% and heating by 4.8%.

Earlier, the Central Bank announced a decrease in inflationary expectations of the population in July to a minimum since March 2021, they amounted to 10.8%. In addition, in early July, the regulator improved its inflation forecast: it will be 12-15% in 2022 (instead of the previously expected 14-17%), drop to 5-7% in 2023 and return to 4% in 2024.

https://www.rbc.ru/economics/10/08/2022/62f3bc4b9a79475c425bc4b8

It's a political decision.
Anc can help by a factor to stabilize lira.
A short position, one would say

A short position, one would say

A short position as of Turkey's, it should be clarified!

Broski wrote:I don't get why these excess revenues can't be reinvested into the Russian economy, who is supposed to benefit from this?

Spare a moment to read about inflation bro.
Seriously, nothing bad behind my back.