Required Report - public distribution

**Date:** 03/26/2004

**GAIN Report Number:** RS4304

RS3316

**Russian Federation**

**HRI Food Service Sector**

**Report**

**2004**

**Approved by:**

![](media/image1.wmf)Jeffrey Hesse, ATO Director

U.S. Embassy Moscow

**Prepared by:**

Qualitel Data Services, ATO Staff

**Report Highlights:**

Sharp increases in consumer incomes and expanding tourism are creating a
boom in Russia's HRI sector, with total sales in 2002 up by 28 percent.
However, further expansion is expected as the average Russian consumer
spends only seven percent of total food expenditures on meals away from
home. Buoyed by the growth in the HRI sector, imports of
consumer-oriented food products also increased sharply in 2002 -- up 21
percent to \$5.6 billion. Growing consumer demand and favorable changes
in Euro/Dollar and Ruble/Dollar exchange rates are creating
opportunities for a wide range of U.S. food and beverage products.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Moscow ATO \[RS4\]

\[RS\]

**TABLE OF CONTENTS**

# 

[**SECTION I. MARKET SUMMARY 3**](#section-i.-market-summary)

[HRI SUB-SECTORS 4](#hri-sub-sectors)

[Restaurants 4](#restaurants)

[Hotels and Resorts 4](#hotels-and-resorts)

[Institutional 5](#institutional)

[ADVANTAGES AND CHALLENGES FOR U.S. PRODUCTS IN RUSSIA
6](#advantages-and-challenges-for-u.s.-products-in-russia)

[SECTION II. ROAD MAP FOR MARKET ENTRY
6](#section-ii.-road-map-for-market-entry)

[A. ENTRY STRATEGY 6](#a.-entry-strategy)

[B. MARKET STRUCTURE 8](#b.-market-structure)

[Restaurants 8](#restaurants-1)

[Fast Food 10](#fast-food)

[Hotels and Resorts 11](#hotels-and-resorts-1)

[Large Chain Restaurants 12](#large-chain-restaurants)

[Products Used/Supply Sources For Selected Restaurant Chains
13](#products-usedsupply-sources-for-selected-restaurant-chains)

[Coffee Shop Chains In Russia 14](#coffee-shop-chains-in-russia)

[High Category Hotels 15](#high-category-hotels)

[Major Suppliers of Food Products For Restaurants
16](#major-suppliers-of-food-products-for-restaurants)

[SECTION III. COMPETITION 17](#section-iii.-competition)

[Russian Imports of Selected Food, 2000-2002
17](#russian-imports-of-selected-food-2000-2002)

[Import Competition for Selected Products
18](#import-competition-for-selected-products)

[SECTION IV. BEST PRODUCT PROSPECTS
19](#section-iv.-best-product-prospects)

[A. Products Present in the Market Which Have Good Sales Potential
19](#a.-products-present-in-the-market-which-have-good-sales-potential)

[B. Products Not Present in Significant Quantities but With Good Sales
Potential
19](#b.-products-not-present-in-significant-quantities-but-with-good-sales-potential)

[V. POST CONTACT AND FURTHER INFORMATION
20](#v.-post-contact-and-further-information)

[CONTACT INFORMATION FOR FAS OFFICES IN RUSSIA AND THE U.S.
20](#contact-information-for-fas-offices-in-russia-and-the-u.s.)

[USDA/FAS AND ATO PROGRAMS AND SERVICES
21](#usdafas-and-ato-programs-and-services)

[OTHER MARKET REPORTS 21](#other-market-reports)

[OTHER USEFUL CONTACTS 22](#other-useful-contacts)

[TRADE SHOWS IN RUSSIA 23](#trade-shows-in-russia)

[VI. APPENDIX 24](#vi.-appendix)

[GENERAL ECONOMIC AND DEMOGRAPHIC DATA
24](#general-economic-and-demographic-data)

[Demographic Trends 24](#demographic-trends)

[GDP Trends 24](#gdp-trends)

[HOTELS IN MOSCOW 24](#hotels-in-moscow)

[TOURISM 25](#tourism)

["CATERING" TO TOURISTS 25](#catering-to-tourists)

[CULTURE AND FOOD: TRENDS AND TRADITIONS
26](#culture-and-food-trends-and-traditions)

[CUISINES: TRENDS AND TRADITIONS 26](#cuisines-trends-and-traditions)

["HEALTHY" EATING 27](#healthy-eating)

#   {#section-1 .unnumbered}

# SECTION I. MARKET SUMMARY

-   The Russian economy has expanded sharply over the past five years,
    growing by more than seven percent in 2003.

-   Consumer spending has grown at an even faster rate -- up nearly 14
    percent in 2003. This, in turn, has encouraged rapid expansion in
    all areas of the Russian economy, particularly in services and
    entertainment.

-   At the same time, socio-demographic factors such as the growth of
    the urban population, increasing number of working females, and
    expanding tourism are all influencing demand for fast-food outlets
    and restaurants.

-   The level of food expenditures in Russia is quite high in comparison
    with Western countries. In fact, food accounted for about 46 percent
    of total purchases of goods (or more than \$69 billion) in 2002.

-   However, the average Russian consumer spends only seven percent of
    total food expenditures on food away from home. According to
    analysts, the current share of food expenditures in Russia
    corresponds to the U.S. level at the beginning of the 1960s.

-   Nevertheless, expenditures on food "away-from-home" are increasing
    rapidly. In fact, a 10 percent rise in consumer income now leads to
    an increase in "at-home" food expenses of just 2-3 percent while
    "away-from-home" food expenditures increase by 8-9 percent.

-   Total food sales in the Russian HRI sector were \$4.82 billion in
    2002 and increased by 16 percent to an estimated \$5.6 billion in
    2003.

+---------------------+-------+-------+-------+-------+--------------+
| ###### HRI Food     |       |       |       |       |              |
|  Sales, 2000-2003\* |       |       |       |       |              |
+---------------------+-------+-------+-------+-------+--------------+
|                     | **2   | **2   | **2   | **200 | **5 year     |
|                     | 000** | 001** | 002** | 3\*** | growth**     |
+---------------------+-------+-------+-------+-------+--------------+
| **Annual Sales      | 2.69  | 3.76  | 4.82  | 5.60  | More than    |
| (\$billion)**       |       |       |       |       | 200%         |
+---------------------+-------+-------+-------+-------+--------------+
| **\* Estimate**     |       |       |       |       |              |
+---------------------+-------+-------+-------+-------+--------------+

-   The Restaurant sub-sector accounts for the largest share of
    "away-from-home" food expenditures.

+-----------------------------+-------------------+-------------------+
| ###### HRI Food             |                   |                   |
| Sales By Sub-Sector (2002)  |                   |                   |
| & Estimated Growth (2003)\* |                   |                   |
+-----------------------------+-------------------+-------------------+
|                             | **Food sales      | **Growth (%)**    |
|                             | (%)**             |                   |
|                             |                   | **2003\***        |
|                             | **2002**          |                   |
+-----------------------------+-------------------+-------------------+
| Hotels and Resorts          | 5                 | 26                |
+-----------------------------+-------------------+-------------------+
| Restaurants                 | 85                | 16                |
+-----------------------------+-------------------+-------------------+
| Institutional Contractors   | 10                | N/A               |
+-----------------------------+-------------------+-------------------+
| **\* Estimate**             |                   |                   |
+-----------------------------+-------------------+-------------------+

## 

-   The 1998 economic crisis and ruble devaluation led to a sharp
    reduction of market share for imported food and beverage products as
    consumers were forced to substitute with cheaper local goods.
    However, rising consumer incomes in the past several years have
    helped push the overall market share for imported food products to
    34 percent.

## HRI SUB-SECTORS

### Restaurants

-   Moscow and St. Petersburg account for the major share of the
    restaurant market in Russia. As for the other regions, the level of
    development in the restaurant sub-sector varies widely. For those
    regions with economies based on oil, gas or other natural resources,
    higher consumer incomes attract a higher level of food service.

-   At present, the number of cafes, restaurants and other food outlets
    in Russia lags well behind Western standards. For example, while
    there are more than 14,000 restaurants in Paris and more than 17,000
    restaurants in New York, the number of restaurants in Moscow totals
    only about 3,500 according to the Moscow Guild of Restaurant Owners.

-   The Russian restaurant market consists of several market niches,
    each of which is different in terms of total food sales and the
    number of "players":

```{=html}
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```
-   Fast food, which is divided into two separate segments:
    street/mobile fast-food (kiosks, stalls, carts, etc.) and
    walk-in/sit-down fast-food outlets

-   "Democratic" restaurants -- moderately priced outlets

-   "Boutique" restaurants -- higher priced/exclusive outlets

-   Coffee shops

```{=html}
<!-- -->
```
-   While official statistics do not draw a distinction between fast
    food and "democratic" (moderately priced) restaurants, the following
    table provides an approximate distribution by segment based on a
    combination of official statistics and the expert opinions of market
    participants.

[]{.mark}

+-------------------+-------+-------+-------+-------+-------+-------+
| ###### Distribut  |       |       |       |       |       |       |
| ion Of Restaurant |       |       |       |       |       |       |
| s By Sub-Category |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
|                   | **Mos |       |       | **Rus |       |       |
|                   | cow** |       |       | sia** |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
|                   | Share | Sales | G     | Share | Sales | G     |
|                   |       |       | rowth |       |       | rowth |
|                   | of    | \(2   |       | of    | \(2   |       |
|                   | total | 002\) | (20   | total | 002\) | (20   |
|                   | ou    |       | 03)\* | ou    |       | 03)\* |
|                   | tlets | -     |       | tlets | -     |       |
|                   | (     | \$Mil | -%-   | (     | \$Mil | -%-   |
|                   | 2002) | lion- |       | 2002) | lion- |       |
|                   |       |       |       |       |       |       |
|                   | -%-   |       |       | -%-   |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| **Fast food**     | 50    | 480   | 15    | 40    | 1,000 | 10-12 |
+-------------------+-------+-------+-------+-------+-------+-------+
| **Democratic      | 15    | 360   | 40    | 15    | 1,500 | 30    |
| Restaurants**     |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| **Luxury          | 4     | \~200 | 7     | 2     | 500   | 5     |
| Restaurants**     |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| **Coffee Shops**  | 4     | 20    | 63    | 2     | 40    | 40    |
+-------------------+-------+-------+-------+-------+-------+-------+
| **Others**        | 37    | \~140 | \-    | 41    | \~    | \-    |
|                   |       |       |       |       | 1,060 |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| **Total**         | **    | *     | *     | **    | *     | **16  |
|                   | 100** | *\~1, | *40** | 100** | *\~4, | -17** |
|                   |       | 200** |       |       | 100** |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| **\*Estimate**    |       |       |       |       |       |       |
|                   |       |       |       |       |       |       |
| ***Source:*       |       |       |       |       |       |       |
| All-Russian       |       |       |       |       |       |       |
| Congress of       |       |       |       |       |       |       |
| Restaurateurs and |       |       |       |       |       |       |
| Food Service      |       |       |       |       |       |       |
| Leaders;          |       |       |       |       |       |       |
| Consumers\'       |       |       |       |       |       |       |
| Market and        |       |       |       |       |       |       |
| Services          |       |       |       |       |       |       |
| Department        |       |       |       |       |       |       |
| (Moscow City      |       |       |       |       |       |       |
| Government); and  |       |       |       |       |       |       |
| expert            |       |       |       |       |       |       |
| opinions.**       |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+

### Hotels and Resorts

-   According to the Russian State Statistics Committee (Goskomstat),
    the total turnover for the Hotel/Resort sub-sector was \$1.2 billion
    in 2002, an increase of 26 percent in comparison with 2001. Moscow
    hotels accounted for more than 42 percent of the total turnover and
    19 percent of the total number of rooms. St. Petersburg hotels
    accounted for almost 16 percent of the turnover and eight percent of
    the number of rooms. Hotels that cater to foreign guests appear to
    be most successful against the general background.

-   The Moscow and St. Petersburg markets draw 80 percent of foreign
    tourists. These markets are also characterized by a high level of
    business activity (especially in Moscow), the presence of more
    high-class hotels, and a developed tourist infrastructure (museums,
    transport, guides, restaurants and so on). However, the hotel
    business is beginning to develop in the regions, too. In fact, the
    Moscow/St. Petersburg market share has decreased by more than 10
    percent.

-   The total number of hotels in Russia is estimated at 4,300. The
    total number of rooms is about 188,000. Despite Moscow's developed
    tourist infrastructure, the number of rooms does not match European
    standards: there are 3-4 hotel rooms per 1000 people in Moscow
    versus 10-12 rooms in other European capitals.

-   On average, the breakdown of hotel income is as follows: room
    rentals -- 70 percent; services -- 10 percent; and food and
    beverages -- 20 percent. On this basis, food and beverage sales in
    the hotel sub-sector were an estimated \$240 million in 2002.

### Institutional

###### *Schools, Universities, Public companies, Hospitals*

-   At present, the level of development for this sub-sector in Russia
    is significantly lower in comparison with many countries. This
    segment forms a very small part of the total food service market in
    Russia and holds relatively little interest for U.S. exporters of
    food and beverage products.

#### 

###### *Transportation Services*

-   Transportation food service generally cannot be considered a
    strategic market niche for U.S. food products. However, there may be
    some potential due to the sheer volume of public transport in
    Russia. The Russian Federation territory is large, and Russians most
    often travel by train (1.3 billion passengers in 2002).

##### Railroad

-   Railroad transport is the primary (and, in some cases, only) mode of
    transportation for most consumers. In fact, the Russian railway
    system accounts for about 80% of the total transportation volume in
    Russia.

-   However, according to the Ministry of Communication, the Russian
    railway transport system has only 650 dining cars and 200 buffet
    cars. Further, the cost of a ticket for a "high-convenience"
    passenger car (there are 450 such cars in Russia) includes an
    "onboard" meal. The standard set includes coffee, carbonated water,
    bread, meat, cheese, yogurt, confectionery and in some cases -- a
    hot dish.

-   The annual volume of the meal market ("onboard" and "restaurant") in
    railway transport is about \$60 million.

##### Airlines

-   Airline passenger turnover was about 28 million persons in 2002, and
    the volume is increasing rapidly.

-   While there is increasing demand for services that match
    international quality standards, most local catering companies
    cannot meet the requirements of international airlines. The kitchens
    of the "Sheremet'evo" (Moscow), "Domodedovo" (Moscow) and "Pulkovo"
    (St. Petersburg) airports are the exception to this rule because
    they were created in cooperation with western companies.

-   With the increasing demand for quality, air transportation food
    service can become an attractive market niche for U.S. food and
    beverage exporters.

+-----------------------------------+-----------------------------------+
| ## ADVANTAGES AND CHALL           |                                   |
| ENGES FOR U.S. PRODUCTS IN RUSSIA |                                   |
+-----------------------------------+-----------------------------------+
| ***Advantages***                  | ***Challenges***                  |
+-----------------------------------+-----------------------------------+
| Rising consumer incomes and       | Difficult delivery: long shipping |
| changes in consumption culture    | times from the U.S.; complex      |
| are creating new opportunities as | customs regulations; internal     |
| consumers look for better quality | transport problems                |
| and more consistency              |                                   |
+-----------------------------------+-----------------------------------+
| U.S. fast food and theme          | Many consumers view U.S. food     |
| restaurants already popular among | products as "unnatural" -- they   |
| consumers, particularly younger   | worry that U.S. meat and poultry  |
| people, but there is room for     | contain "hormones" and            |
| further growth in the market      | "chemicals", fruits and           |
|                                   | vegetables lack "good taste"      |
+-----------------------------------+-----------------------------------+
| U.S. food and beverage products   | Quality of domestic production is |
| becoming more competitive due to  | improving and becoming more       |
| changes in exchange rates         | competitive (e.g., pork, poultry, |
|                                   | sauces, etc.)                     |
+-----------------------------------+-----------------------------------+
| Many food professionals in Russia | Some food professionals think     |
| recognize the quality,            | that the best quality U.S.        |
| consistency, originality, and     | products are not available for    |
| value of U.S. products for the    | export to other countries like    |
| HRI sector                        | Russia                            |
+-----------------------------------+-----------------------------------+

# 

# SECTION II. ROAD MAP FOR MARKET ENTRY

## A. ENTRY STRATEGY

It is difficult to identify a single best way to penetrate the Russian
HRI market because different products may require different marketing
approaches. However, several general ideas may be helpful in developing
a successful entry strategy.

-   U.S. exporters can approach the Russian HRI food market through a
    general importer/distributor or a specialized agent/representative.
    A few larger restaurant chains import some products directly, but
    most HRI outlets procure supplies through local distributors.

-   Given some of the existing myths about U.S. food products, broader
    market penetration may be difficult without some level of promotion.
    This could be accomplished in a variety of ways: through the
    importer; through an agent/representative; or via direct marketing.

-   The initial target, of course, should be importers, distributors
    and/or restaurateurs, who must understand the uses and advantages of
    the U.S. products. Technical support in the form of printed material
    and/or seminars is critical to the effort of educating, dispelling
    negative stereotypes and, ultimately, building loyalty to the U.S.
    product.

-   These trade partners can also assist in helping to organize/support
    a targeted mass-market campaign, which will help expand the
    audience.

-   The following activities should be considered examples of what can
    be done as part of an overall market strategy:

```{=html}
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```
-   Sponsoring technical seminars for food professionals in major
    Russian cities

-   Participating in seminars connected with major food
    exhibitions/trade shows

-   Sponsoring technical/training missions to the U.S. for Russian food
    professionals

-   Participating in or co-sponsoring other activities conducted by U.S.
    industry or state/regional associations (i.e., U.S. Meat Export
    Federation, Almond Board of California, etc.) and/or the U.S.
    Agricultural Trade Office in Moscow

```{=html}
<!-- -->
```
-   It may be necessary to develop a different strategic approach for
    each segment of the food service sector. For example: high-category
    restaurants and "democratic" restaurants will likely require
    different marketing/promotional tactics.

-   It is interesting to note that some buyers/chefs of the
    high-category restaurant segment think that American products of the
    best quality do not enter the export channel. For example:
    participants in a master class sponsored by the U.S. Meat Export
    Federation were pleased with the quality of the U.S. pork used but
    were surprised to learn that such product is readily available in
    the Russian market. This example highlights the need for further
    trade servicing and technical support.

-   Close contact with importers is also important to avoid logistical
    problems and shipping delays. Given the longer shipping time for
    U.S. products compared to products from Europe, it is essential that
    orders be filled as quickly and efficiently as possible.

## 

#### Distribution Channels for Food Service Sector

-   Overall, imported food products account for a large percentage of
    ingredients used in the restaurant business (as much as 60 percent
    depending on the segment).

-   However, many consumers are convinced that local products are
    fresher, healthier, etc. In response, some restaurant owners now
    claim to use only domestic ingredients. Ironically, many local
    products do not maintain the necessary level or consistency of
    quality, which is typically one of the most important factors cited
    by consumers in dining decisions.

-   Most ingredient purchases are made through
    distributors/intermediaries, who number in the hundreds at present.
    However, large restaurants and chains prefer to work with the larger
    suppliers, who typically are also importers.

-   Restaurants can also purchase directly from local producers,
    primarily vegetables and fruit during the summer season. In
    addition, meat cuisine restaurants of the low-to-middle price level
    prefer to buy meat directly from domestic producers.

-   For exclusive and/or exotic products (e.g., sushi ingredients) the
    restaurants most often contact foreign producers directly.

-   At the same time, some restaurant chains import products directly
    through their own trading arm, which considerably reduces the cost
    of production.

## B. MARKET STRUCTURE

### Restaurants

-   Russian/Ukrainian, Italian and Eastern cuisines are the most popular
    at present. (Please see the APPENDIX, CUISINES: TRADITIONS AND
    TRENDS for more information.)

-   As noted earlier, the restaurant business in Russia now covers
    several market segments: fast food outlets; democratic
    (moderately-priced) restaurants; haute cuisine or exclusive
    restaurants; and coffee houses.

-   Fast food outlets, democratic restaurants and coffee houses are
    currently the most popular and the fastest growing. According to
    industry forecasts, the share of democratic restaurants will
    continue to grow, while the market share for restaurants of high
    category or haute cuisine will diminish.

-   In addition, catering services are now developing quickly,
    particularly in Moscow and in St. Petersburg.

> ***"Democratic" Restaurants***

-   This is one of the fastest growing segments of the restaurant market
    and offers the best prospects for U.S. products. Growth is this
    sector also provides many opportunities for investors and
    franchisers.

-   The dominant players in this segment currently are the "Rosinter"
    group restaurants ("TGIFriday", "American Bar & Grill", "Sushi
    Planet", "Patio-Pizza", etc.) Also included in this category are the
    inexpensive Japanese restaurants of the "Vesta-Center International"
    group ("Yakitoria" and "Gin-no-taki"), and the "Romashka Management"
    theme projects ("Shesh-Besh", "Molly Gwinn", and others).

-   Some of the leading haute cuisine restaurateurs have also entered
    the "democratic" segment: "Arkadiy Novikov" ("Yolki-Palki" chain);
    "Dellos" ("Moo-Moo" restaurants); "Bardeev" ("Starlight Diner"
    chain).

-   The customer base for this market segment far exceeds that of the
    haute cuisine restaurants. Before the appearance of the "Sushi
    Planet" and "Yakitoria" restaurants, sushi was considered a delicacy
    and was served in only a few expensive restaurants. Likewise, before
    the opening of "Patio-Pizza" and others like it, Italian food of
    similar quality was available only at some expensive Italian
    "boutique" restaurants.

-   Traditional brazier-style cuisine, which was a specialty of the
    former (and expensive) "Tamerlan" restaurant, is now abundantly and
    inexpensively replicated by the "Yolki-Palki" chain.

***Steak Houses and American Cuisine Restaurants***

-   Although meat dishes are a staple of almost every Russian
    restaurant, U.S.-style steak houses aren't yet widespread. Market
    analysts attribute this to the fact that in Russia most of these
    restaurants were established only at the high end (average bill of
    about \$50).

-   "Traditional" meat restaurants in Russia work in various formats:
    meat courses account for more than 50 percent of the turnover in
    restaurants with Caucasus, Middle-Asian and Russian cuisines.
    However, classic steak houses occupy a relatively small part of the
    market. According to the "Rosinter Restaurants" group, American
    cuisine restaurants account for only about 3-4 percent of the Moscow
    market. These restaurants also represent a major part of the steak
    business.

-   While steak house and American cuisine restaurants do not represent
    a high growth segment at this point, there appears to be good
    potential for future growth. The \"TGIFriday's" and "American Bar
    and Grill" chains operated by the "Rosinter Restaurants" group, with
    60,000 visitors per year, currently account for the lion's share of
    this segment.

+-----------------+--------+-----------------------+-------------------+
| ###             |        |                       |                   |
| ### "Meat Cuisi |        |                       |                   |
| ne" Restaurants |        |                       |                   |
+-----------------+--------+-----------------------+-------------------+
| **Name**        | A      | **Cuisine**           | **Comments**      |
|                 | verage |                       |                   |
|                 |        |                       |                   |
|                 | Bill   |                       |                   |
+-----------------+--------+-----------------------+-------------------+
| American Bar    | \      | American, Italian,    | Frequently use    |
| and Grill       | $20-50 | Chinese, Mexican,     | imported          |
|                 |        | Japanese cuisine      | products,         |
|                 |        |                       | particularly      |
|                 |        |                       | meats, as local   |
|                 |        |                       | supplies don't    |
|                 |        |                       | provide           |
|                 |        |                       | consistent        |
|                 |        |                       | quality.          |
+-----------------+--------+-----------------------+-------------------+
| T.G.I. Friday   | \      | American, European,   |                   |
|                 | $20-40 | Mexican cuisine       |                   |
+-----------------+--------+-----------------------+-------------------+
| Uncle Gilley's  | \      | American, European,   |                   |
|                 | $50-70 | International,        |                   |
|                 |        | seafood cuisine       |                   |
+-----------------+--------+-----------------------+-------------------+
| El Gaucho       | \      | Latin American        |                   |
|                 | $50-70 | (Argentina) cuisine   |                   |
+-----------------+--------+-----------------------+-------------------+
| Louisiana       | \      | American, European    |                   |
|                 | $30-50 | cuisine               |                   |
+-----------------+--------+-----------------------+-------------------+
| Hippopotamus    | \      | American,             |                   |
|                 | $30-50 | Latin-American,       |                   |
|                 |        | Mexican cuisine       |                   |
+-----------------+--------+-----------------------+-------------------+
| Ruby Tuesday    | \      | American cuisine      |                   |
|                 | $20-30 |                       |                   |
+-----------------+--------+-----------------------+-------------------+
| Shesh-Besh      | \      | Caucasus cuisine      |                   |
|                 | $10-20 |                       |                   |
+-----------------+--------+-----------------------+-------------------+
| Steak House     | \      | European, Russian     |                   |
|                 | $10-20 | cuisine               |                   |
+-----------------+--------+-----------------------+-------------------+
| Hard Rock Cafe  | \      | American cuisine      |                   |
|                 | $20-30 |                       |                   |
+-----------------+--------+-----------------------+-------------------+
| American Steak  | \$     | American cuisine      |                   |
| House           | 50-100 |                       |                   |
| (Renaissance    |        |                       |                   |
| Hotel)          |        |                       |                   |
+-----------------+--------+-----------------------+-------------------+

-   Although the number of steak houses is growing slowly, overall
    consumption of steaks is increasing. As an example, the U.S. Meat
    Export Federation reports that membership in its American Beef Club
    (ABC) has grown more than one-third to 60 restaurants throughout
    Russia, including some non-steak house restaurants.

#### 

***Restaurants of Haute Cuisine***

-   High category (haute cuisine) restaurants started to appear in
    Russia as early as the late 1980's to early 1990's. They are
    associated with the names of Arkadiy Novikov, Andrei Dellos and
    other stars. They could (and still can) be considered boutique
    restaurants, typically using literary themes. The most notable
    restaurants are: "Pushkin" and "Seer" operated by Novikov; "Le Duc"
    and "Shinok" of Dellos; "Ulei" of Oleg Bardeev; "Oblomov na Presne"
    of Anton Tabakov; and "Absent" of Igor Buharov.

-   According to industry analysts, the haute cuisine niche is already
    crowded. However, the owners are convinced that restaurants of this
    kind will continue to open and evolve.

-   High category restaurants of this type are loyal consumers for
    imported high quality product such as marble beef.

### Fast Food

***Stationary Fast Food***

-   Stationary fast food is one of the fastest growing segments of the
    restaurant sector.

-   Western franchises account for a major share of this growth, but
    local chains are developing.

-   McDonald's, Rostiks, and Sbarro are among the better known/more
    popular chains in the stationary fast-food category.

+---------+---------------+-------------+------------------------------+
| ######  |               |             |                              |
|  "Pione |               |             |                              |
| ers" of |               |             |                              |
|  the St |               |             |                              |
| ationar |               |             |                              |
| y Fast  |               |             |                              |
| Food Ma |               |             |                              |
| rket in |               |             |                              |
|  Russia |               |             |                              |
+---------+---------------+-------------+------------------------------+
| **Chain | First Year of | **Number of | **Locations**                |
| Name**  | Operation in  | Outlets in  |                              |
|         | Russia        | Russia**    |                              |
+---------+---------------+-------------+------------------------------+
| McD     | 1990          | 104         | Moscow, St. Petersburg and   |
| onald's |               |             | the regions                  |
+---------+---------------+-------------+------------------------------+
| Rostiks | 1993          | 39          | Moscow, St. Petersburg,      |
|         |               |             | Novosibirsk, Omsk            |
+---------+---------------+-------------+------------------------------+
| Pizza   | 1997          | 34          | Moscow                       |
| Sbarro  |               |             |                              |
+---------+---------------+-------------+------------------------------+
| Subway  | 1994          | 7           | Moscow, Ekaterinburg         |
+---------+---------------+-------------+------------------------------+
| KFC     | \-            | 2           | St. Petersburg               |
+---------+---------------+-------------+------------------------------+
| Pizza   | \-            | 2           | Moscow                       |
| Hut     |               |             |                              |
+---------+---------------+-------------+------------------------------+
| Tаco    | 2003          | 1           | Moscow                       |
| Bell    |               |             |                              |
+---------+---------------+-------------+------------------------------+

[]{.mark}

***Street/Mobile Fast Food***

-   Currently, there are about 20 mobile fast-food chains operating in
    Russia. Typically, each features a particular product: grilled
    meats; baked potatoes; pancakes or pizza.

-   Domestic chains dominate in this segment. At present, many of the
    chains are already well developed in the Moscow market and are
    moving to the regions.

-   Main trends for the street fast-food market: displacement of
    independent vendors by chain outlets; appearance of new themes
    within the framework of existing chains; opening of stationary
    outlets by existing chains (e.g., "Stop-Top", "Steff", and
    "Kroshka-Kartoshka".)

-   The street/mobile fast-food sub-sector is growing rapidly (30-40
    percent per year). However, this category is of limited interest to
    U.S. exporters because these outlets typically use domestic
    ingredients.

+-----------------------------------------+----------------------------+
| ###### La                               |                            |
| rgest Mobile Fast-Food Chains in Russia |                            |
+-----------------------------------------+----------------------------+
| ######### Chain Name                    | First Year of Operation    |
|                                         |                            |
|                                         | in Russia                  |
+-----------------------------------------+----------------------------+
| Stop-Top (Steff)                        | 1993                       |
+-----------------------------------------+----------------------------+
| Kroshka-Kartoshka                       | 1997                       |
+-----------------------------------------+----------------------------+
| Teremok                                 | 1998                       |
+-----------------------------------------+----------------------------+
| Obzhora                                 | 2000                       |
+-----------------------------------------+----------------------------+
| Teremok -- Russkiy blini                | \-                         |
+-----------------------------------------+----------------------------+
| Pirozhki iz pechi                       | 1999                       |
+-----------------------------------------+----------------------------+
| Partnership E.V. Pirogov and S.A.       | 1998                       |
| Karavaeva                               |                            |
+-----------------------------------------+----------------------------+
| Nyam-Nyam                               | 1999                       |
+-----------------------------------------+----------------------------+
| ***Source:* All-Russian Congress of     |                            |
| Restaurateurs and Food Service          |                            |
| Leaders**                               |                            |
+-----------------------------------------+----------------------------+

[]{.mark}

***Coffee Houses***

-   Coffee houses are a relatively new concept in Russia and are not yet
    widespread. However, this is arguably the fastest growing area in
    the HRI sector, and the number of outlets is expected to grow
    rapidly over the next several years.

-   While coffee houses currently generate sales estimated at \$50-60
    million, the Moscow market alone is expected to expand several of
    times over during the next few years.

-   At present, the chains have a major presence only in Moscow and St.
    Petersburg but are expected to spread to the secondary cities in the
    near- to mid-term.

-   For additional information, please see the special report on coffee
    shop chains in our GAIN report #3310, The Russian Marketplace.

### 

### Hotels and Resorts

-   A new law calls for hotels in Russia to be classified according to
    generally accepted international standards. However, local experts
    still divide the Russian hotel market into four segments:

    -   Luxury classy hotels -- international chain hotels (4-5 stars)

    -   High category hotels -- former "Intourist" chain (Cosmos,
        Rossia, etc.)

    -   Average category hotels -- former hotels of Central and Regional
        Committees

    -   Economy category -- other hotel and resort outlets

+-----------------------------------+-----------------+-----------------+
| ######                            |                 |                 |
|  Moscow Hotels by Rating Category |                 |                 |
+-----------------------------------+-----------------+-----------------+
| **Hotel Rating**                  | **Share of      | **Occupancy     |
|                                   | Total Rooms     | (%)**           |
|                                   | (%)**           |                 |
+-----------------------------------+-----------------+-----------------+
| Luxury                            | 8               | 65              |
+-----------------------------------+-----------------+-----------------+
| High                              | 52              | 68              |
+-----------------------------------+-----------------+-----------------+
| Average                           | 26              | n/a             |
+-----------------------------------+-----------------+-----------------+
| Economy                           | 14              | n/a             |
+-----------------------------------+-----------------+-----------------+

-   In terms of occupancy rates, there are significant differences
    between official data and industry estimates. This may be due to
    underreporting or different estimation methods.

-   According to official data, overall occupancy in 2002 declined
    slightly (37 percent versus 38 percent in 2001). The highest
    occupancy rates were recorded in Moscow (55 percent) and St.
    Petersburg (57 percent); for other cities/regions, the rate was only
    12 percent.

-   Several well-known international chains are already present in
    Russia. While the chains' overall market share is still relatively
    small, this is the fastest growing hotel segment.

```{=html}
<!-- -->
```
-   Hotels at the high end primarily target foreign tourists and offer
    the best prospect for imports of U.S. food and beverage products.

C. COMPANY PROFILES

+---------+------------+-------------+------------+---------+---------+
| ### La  |            |             |            |         |         |
| rge Cha |            |             |            |         |         |
| in Rest |            |             |            |         |         |
| aurants |            |             |            |         |         |
+---------+------------+-------------+------------+---------+---------+
| **Res   | **Sales    | **Brand     | **Type**   | *       | **Loc   |
| taurant | (2002) /** | Name**      |            | *Number | ation** |
| /       |            |             |            | of      |         |
| Chain** | ***Growth  |             |            | Outlets |         |
|         | Rate       |             |            | in      |         |
|         | (200       |             |            | R       |         |
|         | 3/2002)*** |             |            | ussia** |         |
+---------+------------+-------------+------------+---------+---------+
| **R     | \$83       | Rostik\'s,  | Fast-Food  | 39      | Moscow  |
| ostik's | million    |             |            |         |         |
| Rest    |            |             |            |         | St.     |
| aurants | *growth:   |             |            |         | Pet     |
| Li      | 40%*       |             |            |         | ersburg |
| mited** |            |             |            |         |         |
| /       |            |             |            |         | Novo    |
|         |            |             |            |         | sibirsk |
| **R     |            |             |            |         |         |
| osinter |            |             |            |         | Omsk    |
| Restau  |            |             |            |         |         |
| rants** |            |             |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Patio Pizza | Democratic | 18      |         |
|         |            |             | (Family    |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | American    | Democratic | 4       | Moscow  |
|         |            | Bar & Grill | (American  |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | T.G.I.      |            | 4       | Moscow  |
|         |            | Fridays     |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Café Des    | High       | 1       | Moscow  |
|         |            | Artist      | category   |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Santa Fe &  | High       | 1       | Moscow  |
|         |            | Tsezarka    | category   |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Gooter\'s   | High       | 1       | Moscow  |
|         |            | Sport Bar   | category   |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Planet      | Democratic | 9       | Moscow  |
|         |            | Sushi       |            |         |         |
|         |            |             | (Asian     |         | St.     |
|         |            |             | cuisine)   |         | Pet     |
|         |            |             |            |         | ersburg |
|         |            |             |            |         |         |
|         |            |             |            |         | Novo    |
|         |            |             |            |         | sibirsk |
+---------+------------+-------------+------------+---------+---------+
|         |            | Benihana of |            | 1       | Moscow  |
|         |            | Tokyo       |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Abazu       |            | 1       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
|         |            | Café        | Fast-Food  | 6       | Moscow  |
|         |            | Moka-Loka   |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Sibirskaya  | Democratic | 6       | Omsk    |
|         |            | Corona      | (beer)     |         |         |
|         |            |             |            |         | Novo    |
|         |            |             |            |         | sibirsk |
|         |            |             |            |         |         |
|         |            |             |            |         | Kras    |
|         |            |             |            |         | noyarsk |
+---------+------------+-------------+------------+---------+---------+
| *       | \~\$150    | M           | Fast-Food  | 104     | Moscow  |
| *McDona | million    | cDonald\'s, |            |         |         |
| ld\'s** |            | McCafe      |            | (109    | St.     |
|         | *growth:   |             |            | \*)     | Pet     |
|         | 10-20%*    |             |            |         | ersburg |
|         |            |             |            |         | and     |
|         |            |             |            |         | regions |
+---------+------------+-------------+------------+---------+---------+
| **      | \~\$80-100 | Sirena,     | High       | 24      | Moscow  |
| Arkadiy | million    | Tsarskaya   | category   |         |         |
| No      |            | Ohota,      |            |         |         |
| vikov** | *growth:   | Kavkazskaya |            |         |         |
|         | 20%*       | Plennitsa,  |            |         |         |
|         |            | Beloe       |            |         |         |
|         |            | Solntse     |            |         |         |
|         |            | Puctyni,    |            |         |         |
|         |            | Uzbekistan, |            |         |         |
|         |            | Club-T,     |            |         |         |
|         |            | Cheese,     |            |         |         |
|         |            | Biscuit,    |            |         |         |
|         |            | Pyramid,    |            |         |         |
|         |            | Three       |            |         |         |
|         |            | Peskarya,   |            |         |         |
|         |            | Veranda u   |            |         |         |
|         |            | Dachi,      |            |         |         |
|         |            | Vanil',     |            |         |         |
|         |            | Y           |            |         |         |
|         |            | apona-Mama, |            |         |         |
|         |            | Vogue Café, |            |         |         |
|         |            | etc         |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Sushi-Vesla | Democratic | 1       | Moscow  |
|         |            |             | (Family    |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Yolki-Palki | Democratic | 21      | Moscow  |
|         |            |             | (Family    |         |         |
|         |            |             | style)     |         | St.     |
|         |            |             |            |         | Pet     |
|         |            |             |            |         | ersburg |
+---------+------------+-------------+------------+---------+---------+
| **      | \$27       | Sbarro      | Fast food  | 34      | Moscow  |
| Brazier | million    |             | /          | (45\*)  |         |
| &       |            |             | Democratic |         |         |
| Co      | *growth:   |             |            |         |         |
| mpany** | 50%*       |             | (Family    |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
| **Rest  | N/A        | Yakitorya   | Democratic | 9       | Moscow  |
| aurants |            |             |            |         |         |
| Associ  |            |             | (Asian     |         | St.     |
| ation - |            |             | cuisine)   |         | Pet     |
| Vesta   |            |             |            |         | ersburg |
| Center  |            |             |            |         |         |
| Int'l** |            |             |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Gi-no Taki  |            | 2       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
|         |            | Crab House  |            | 1       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
|         |            | Fudzi       |            | 2       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
|         |            | Hong Kong   |            | 1       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
|         |            | Sport Bar   |            | 1       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
|         |            | Navruz      | Democratic | 1       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
| **R     | N/A        | William     | Democratic | 1       | Moscow  |
| omashka |            | Bass        |            |         |         |
| Manag   |            |             | (Beer pub) |         |         |
| ement** |            |             |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | John Bull   | Democratic | 2       | Moscow  |
|         |            | Pub         |            |         |         |
|         |            |             | (Beer pub) |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Molly       | Democratic | 2       | Moscow  |
|         |            | Gwynn\'s    |            |         |         |
|         |            |             | (Beer pub) |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Piccadilly  | Democratic | 1       | Moscow  |
|         |            |             |            |         |         |
|         |            |             | (Family    |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Esperanto   | Democratic | 1       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
|         |            | Mir Pizza   | Democratic | 2       | Moscow  |
|         |            |             |            |         |         |
|         |            |             | (Family    |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | China City  | Democratic | 1       | Moscow  |
|         |            |             |            |         |         |
|         |            |             | (Family    |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Ca          | Democratic | 1       | Moscow  |
|         |            | ravan-Saray |            |         |         |
|         |            |             | (Family    |         |         |
|         |            |             | style)     |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Shesh-Besh  | Democratic | 5       | Moscow  |
|         |            |             | /          |         |         |
|         |            |             |            |         |         |
|         |            |             | Fast food  |         |         |
+---------+------------+-------------+------------+---------+---------+
| **Res   | \~\$60     | Pushkin,    | Haute      | 5       | Moscow  |
| taurant | million    | Bochka,     | cuisine    |         |         |
| House   |            | Shinok, Le  |            |         |         |
| of      |            | Duc, CDL    |            |         |         |
| Andrei  |            |             |            |         |         |
| D       |            |             |            |         |         |
| ellos** |            |             |            |         |         |
+---------+------------+-------------+------------+---------+---------+
|         |            | Moo-Moo     | Fast food  | 2       | Moscow  |
+---------+------------+-------------+------------+---------+---------+
| **Ti    | \$15       | Tinkoff     | Democratic | 5       | Moscow  |
| nkoff** | million    |             |            | (10\*)  |         |
|         |            |             | (Beer pub) |         | St.     |
|         | *growth:   |             |            |         | Pet     |
|         | 50%*       |             |            |         | ersburg |
|         |            |             |            |         |         |
|         |            |             |            |         | Samara  |
|         |            |             |            |         |         |
|         |            |             |            |         | Novo    |
|         |            |             |            |         | sibirsk |
|         |            |             |            |         |         |
|         |            |             |            |         | N.      |
|         |            |             |            |         | N       |
|         |            |             |            |         | ovgorod |
+---------+------------+-------------+------------+---------+---------+
| **\*    |            |             |            |         |         |
| Number  |            |             |            |         |         |
| of      |            |             |            |         |         |
| outlets |            |             |            |         |         |
| pr      |            |             |            |         |         |
| ojected |            |             |            |         |         |
| by end  |            |             |            |         |         |
| 2003**  |            |             |            |         |         |
|         |            |             |            |         |         |
| ***S    |            |             |            |         |         |
| ource:* |            |             |            |         |         |
| I       |            |             |            |         |         |
| ndustry |            |             |            |         |         |
| esti    |            |             |            |         |         |
| mates** |            |             |            |         |         |
+---------+------------+-------------+------------+---------+---------+

######### 

+----------+-----------------+-------+-------+------------------------+
| ### Pro  |                 |       |       |                        |
| ducts Us |                 |       |       |                        |
| ed/Suppl |                 |       |       |                        |
| y Source |                 |       |       |                        |
| s For Se |                 |       |       |                        |
| lected R |                 |       |       |                        |
| estauran |                 |       |       |                        |
| t Chains |                 |       |       |                        |
+----------+-----------------+-------+-------+------------------------+
| Name     | **Product**     | **    | **I   | **Purchasing           |
|          |                 | Share | mport | Agent/Source**         |
|          |                 | of    | Sh    |                        |
|          |                 | M     | are** |                        |
|          |                 | enu** |       |                        |
+----------+-----------------+-------+-------+------------------------+
| **Res    | Fish/seafood &  | 65%   | 100%  | Most product direct    |
| taurants | rice            |       |       | from Japan; but        |
| Ass      |                 |       |       |                        |
| ociation |                 |       |       | 1-2 tons/month         |
| Vest     |                 |       |       | imported from US       |
| a-Center |                 |       |       | (flying fish roe)      |
| -Interna |                 |       |       |                        |
| tional** |                 |       |       |                        |
+----------+-----------------+-------+-------+------------------------+
|          | Meat            | 15%   | 50%   | Direct import /        |
|          |                 |       |       | distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Desserts        | 10%   |       | Distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Fruits &        |       | 60%   | Distributors           |
|          | vegetables      |       |       |                        |
+----------+-----------------+-------+-------+------------------------+
|          | Others          |       |       | Direct import /        |
|          |                 |       |       | distributors           |
+----------+-----------------+-------+-------+------------------------+
| **       | Beef            | 60%   | 20%   | Distributors (USA)     |
| Romashka |                 |       |       |                        |
| Mana     |                 |       |       |                        |
| gement** |                 |       |       |                        |
+----------+-----------------+-------+-------+------------------------+
|          | Veal            |       |       | Distributors (Holland, |
|          |                 |       |       | Australia)             |
+----------+-----------------+-------+-------+------------------------+
|          | Pork            |       | 0%    | Distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Lamb            |       | 100%  | Distributors (New      |
|          |                 |       |       | Zealand)               |
+----------+-----------------+-------+-------+------------------------+
|          | Poultry meat    | 15%   | 60%   | Distributors (Brazil)  |
+----------+-----------------+-------+-------+------------------------+
|          | Fish            | 15%   | 90%   | Distributors (Norway)  |
+----------+-----------------+-------+-------+------------------------+
|          | Seafood         |       | 99%   | Distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Fruits &        | 10%   | 95%   | Distributors (Holland, |
|          | vegetables      |       |       | Spain)                 |
+----------+-----------------+-------+-------+------------------------+
| **Re     | Meat            | 50%   | 60%   | Distributors           |
| staurant |                 |       |       |                        |
| House of |                 |       |       |                        |
| Andrei   |                 |       |       |                        |
| Dellos** |                 |       |       |                        |
+----------+-----------------+-------+-------+------------------------+
|          | Vegetables      | 30%   | 0     | Depending on           |
|          |                 |       | -100% | seasonality            |
+----------+-----------------+-------+-------+------------------------+
|          | Fish & Seafood  | 20%   | 40%   | Distributors / Direct  |
|          |                 |       |       | import                 |
+----------+-----------------+-------+-------+------------------------+
| **T      | Red Meat        | 15%   | 60%   | Direct import /        |
| inkoff** |                 |       |       | distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Fish & Seafood  | 23%   | 95%   | Distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Poultry meat    | 4%    | 50%   | Distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Dairy products  | 5%    | 5%    | Distributors           |
+----------+-----------------+-------+-------+------------------------+
|          | Grocery         | 15%   | 30%   | Distributors           |
+----------+-----------------+-------+-------+------------------------+
| ***      |                 |       |       |                        |
| Source:* |                 |       |       |                        |
| Industry |                 |       |       |                        |
| est      |                 |       |       |                        |
| imates** |                 |       |       |                        |
+----------+-----------------+-------+-------+------------------------+

<table style="width:100%;">
<colgroup>
<col style="width: 14%" />
<col style="width: 1%" />
<col style="width: 6%" />
<col style="width: 10%" />
<col style="width: 1%" />
<col style="width: 0%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 5%" />
<col style="width: 11%" />
<col style="width: 1%" />
<col style="width: 9%" />
<col style="width: 6%" />
<col style="width: 5%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><h3 id="coffee-shop-chains-in-russia">Coffee Shop
Chains In Russia</h3></td>
<td></td>
</tr>
<tr class="even">
<td colspan="5"><strong>Chain Name</strong></td>
<td colspan="3"><p>Share (%)</p>
<p>of Total Sales</p></td>
<td colspan="2">Number of Outlets</td>
<td colspan="4">Locations</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="5">Coffee-House</td>
<td colspan="3">50</td>
<td colspan="2">25</td>
<td colspan="4">Moscow</td>
<td></td>
</tr>
<tr class="even">
<td colspan="5">“Idealnaya chashka” (Ideal Cup)</td>
<td colspan="3">10</td>
<td colspan="2">13</td>
<td colspan="4">St. Petersburg, Moscow</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="5">Shokoladnitsa</td>
<td colspan="3">25</td>
<td colspan="2">10</td>
<td colspan="4">Moscow</td>
<td></td>
</tr>
<tr class="even">
<td colspan="5">Moka-Loka</td>
<td colspan="3">4</td>
<td colspan="2">6</td>
<td colspan="4">Moscow</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="5">Coffee-Teppa</td>
<td colspan="3">2</td>
<td colspan="2">6</td>
<td colspan="4">Novosibirsk</td>
<td></td>
</tr>
<tr class="even">
<td colspan="5">New York Coffee</td>
<td colspan="3">1</td>
<td colspan="2">5</td>
<td colspan="4">Novosibirsk</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="5">Travels Coffee</td>
<td colspan="3">1</td>
<td colspan="2">5</td>
<td colspan="4">Novosibirsk</td>
<td></td>
</tr>
<tr class="even">
<td colspan="5">Coffee Mania</td>
<td colspan="3">2</td>
<td colspan="2">4</td>
<td colspan="4">Moscow, St. Petersburg</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="5">Babaru</td>
<td colspan="3">1</td>
<td colspan="2">4</td>
<td colspan="4">St. Petersburg</td>
<td></td>
</tr>
<tr class="even">
<td colspan="5">Coffee Bean</td>
<td colspan="3">1</td>
<td colspan="2">3</td>
<td colspan="4">Moscow</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="5">Zen Coffee</td>
<td colspan="3">1</td>
<td colspan="2">2</td>
<td colspan="4">Moscow</td>
<td></td>
</tr>
<tr class="even">
<td colspan="5">Segafredo</td>
<td colspan="3">1</td>
<td colspan="2">2</td>
<td colspan="4">Moscow</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="5">Marko</td>
<td colspan="3">-</td>
<td colspan="2">3</td>
<td colspan="4">St. Petersburg</td>
<td></td>
</tr>
<tr class="even">
<td colspan="5">Republic of Coffee</td>
<td colspan="3">-</td>
<td colspan="2">3</td>
<td colspan="4">St. Petersburg</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="14"><strong><em><sup>*</sup>Source</em>: Maya Delo (My
Business): Restaurant – magazine</strong></td>
<td></td>
</tr>
<tr class="even">
<td colspan="15"><h3 id="high-category-hotels">High Category
Hotels</h3></td>
</tr>
<tr class="odd">
<td><strong>Hotel</strong></td>
<td colspan="2"><strong>Rating</strong></td>
<td><p><strong># of</strong></p>
<p><strong>Hotels</strong></p></td>
<td colspan="3"><p><strong># of</strong></p>
<p><strong>Rooms</strong></p></td>
<td colspan="2"><strong>Location</strong></td>
<td colspan="2"><p><strong>Occupancy</strong></p>
<p><strong>Rate*</strong></p></td>
<td colspan="2"><strong>Food Outlets</strong></td>
<td colspan="2"><strong>Purchasing Agent</strong></td>
</tr>
<tr class="even">
<td colspan="15"><em><strong>Chain Hotels</strong></em></td>
</tr>
<tr class="odd">
<td>Marriott</td>
<td colspan="2">5/4</td>
<td>6</td>
<td colspan="3">1,509</td>
<td colspan="2"><p>Moscow,</p>
<p>St. Petersburg</p>
<p>Samara</p></td>
<td colspan="2">70-80%</td>
<td colspan="2"><p>Restaurants: <strong>10</strong></p>
<p>Bars: <strong>9</strong></p>
<p>Coffee shops: <strong>4</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>Radisson SAS</td>
<td colspan="2">4</td>
<td>4</td>
<td colspan="3">1,320</td>
<td colspan="2"><p>Moscow,</p>
<p>St. Petersburg</p>
<p>Sochi</p></td>
<td colspan="2">60-70%</td>
<td colspan="2"><p>Restaurants: <strong>8</strong></p>
<p>Bars: <strong>4</strong></p>
<p>Coffee shops: <strong>1</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>Accor, Novotel, Marco Polo</td>
<td colspan="2">4</td>
<td>3</td>
<td colspan="3">811</td>
<td colspan="2">Moscow</td>
<td colspan="2">60-65%</td>
<td colspan="2"><p>Restaurants: <strong>4</strong></p>
<p>Bars: <strong>5</strong></p>
<p>Coffee shops: <strong>1</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>Sheraton</td>
<td colspan="2">5</td>
<td>2</td>
<td colspan="3">478</td>
<td colspan="2"><p>Moscow</p>
<p>St. Petersburg</p></td>
<td colspan="2">45-50%</td>
<td colspan="2"><p>Restaurants: <strong>6</strong></p>
<p>Bars: <strong>3</strong></p>
<p>Coffee shops: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>Forte &amp; Le Meridian</td>
<td colspan="2">5</td>
<td>2</td>
<td colspan="3">797</td>
<td colspan="2"><p>Moscow</p>
<p>St. Petersburg</p></td>
<td colspan="2">50-70%</td>
<td colspan="2"><p>Restaurants: <strong>6</strong></p>
<p>Bars: <strong>5</strong></p>
<p>Coffee shops: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td><p>Word Trade Center</p>
<p>Hotel</p></td>
<td colspan="2">5/3</td>
<td>2</td>
<td colspan="3">707</td>
<td colspan="2">Moscow</td>
<td colspan="2">50%</td>
<td colspan="2"><p>Restaurants <strong>5</strong></p>
<p>Bars: <strong>2</strong></p>
<p>Coffee shops: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>Kempinski Hotels &amp; Resorts</td>
<td colspan="2">5</td>
<td>2</td>
<td colspan="3">533</td>
<td colspan="2"><p>Moscow</p>
<p>St. Petersburg</p></td>
<td colspan="2">45-50%</td>
<td colspan="2"><p>Restaurants: <strong>6</strong></p>
<p>Bars: <strong>3</strong></p>
<p>Coffee shops: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>UMACO / Katerina</td>
<td colspan="2">4</td>
<td>2</td>
<td colspan="3">311</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>4</strong></p>
<p>Bars: <strong>3</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>Best Western</td>
<td colspan="2">4</td>
<td>2</td>
<td colspan="3">166</td>
<td colspan="2"><p>Moscow,</p>
<p>St. Petersburg</p></td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>3</strong></p>
<p>Bars: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>Inter-Continental Hotels Group</td>
<td colspan="2">5</td>
<td>1</td>
<td colspan="3">371</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>5</strong></p>
<p>Bars: <strong>2</strong></p>
<p>Coffee shops: <strong>1</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>Hyatt</td>
<td colspan="2">5</td>
<td>1</td>
<td colspan="3">259</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>1</strong></p>
<p>Bars: <strong>2</strong></p>
<p>Coffee shops: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>Holiday Inn</td>
<td colspan="2">4</td>
<td>1</td>
<td colspan="3">154</td>
<td colspan="2">Moscow region</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>2</strong></p>
<p>Bars: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td colspan="15"><em><strong>Non-chain Hotels</strong></em></td>
</tr>
<tr class="even">
<td>Golden Ring Hotel</td>
<td colspan="2">5</td>
<td>1</td>
<td colspan="3">247</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants <strong>5</strong></p>
<p>Bars: <strong>3</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>President Hotel</td>
<td colspan="2">5</td>
<td>1</td>
<td colspan="3">210</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>7</strong></p>
<p>Bars: <strong>1</strong></p>
<p>Coffee shops: <strong>1</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>Russia</td>
<td colspan="2">3</td>
<td>1</td>
<td colspan="3">2,881</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>7</strong></p>
<p>Bars: <strong>2</strong></p>
<p>Coffee shops: <strong>1</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>Cosmos</td>
<td colspan="2">4</td>
<td>1</td>
<td colspan="3">1,777</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>7</strong></p>
<p>Bars: <strong>8</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>Ukraina</td>
<td colspan="2">4</td>
<td>1</td>
<td colspan="3">1,103</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>3</strong></p>
<p>Bars: <strong>4</strong></p>
<p>Coffee shops: <strong>1</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td>Aerostar</td>
<td colspan="2">4</td>
<td>1</td>
<td colspan="3">413</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>2</strong></p>
<p>Bars: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="even">
<td>Savoy</td>
<td colspan="2">4</td>
<td>1</td>
<td colspan="3">85</td>
<td colspan="2">Moscow</td>
<td colspan="2">-</td>
<td colspan="2"><p>Restaurants: <strong>1</strong></p>
<p>Bars: <strong>2</strong></p></td>
<td colspan="2">Distributors</td>
</tr>
<tr class="odd">
<td colspan="15"><strong><em>Source</em>: Department of External
Relations, Moscow City Government</strong></td>
</tr>
<tr class="even">
<td colspan="15"><h3
id="major-suppliers-of-food-products-for-restaurants">Major Suppliers of
Food Products For Restaurants</h3></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>Company Name</strong></td>
<td colspan="4"><strong>Principal Products</strong></td>
<td colspan="6"><strong>Country of origin</strong></td>
<td colspan="3"><strong>Customers</strong></td>
</tr>
<tr class="even">
<td colspan="2" rowspan="6"><strong>EMBORG</strong></td>
<td colspan="4">Marble Beef</td>
<td colspan="6">USA</td>
<td colspan="3" rowspan="6"><p>Hotels</p>
<p>Restaurants Supermarkets</p></td>
</tr>
<tr class="odd">
<td colspan="4">Beef</td>
<td colspan="6">Russia</td>
</tr>
<tr class="even">
<td colspan="4">Pork</td>
<td colspan="6">Russia, USA</td>
</tr>
<tr class="odd">
<td colspan="4">Veal</td>
<td colspan="6">New Zealand, USA</td>
</tr>
<tr class="even">
<td colspan="4">Poultry</td>
<td colspan="6">Denmark, Hungry, USA, Russia</td>
</tr>
<tr class="odd">
<td colspan="4">Grocery</td>
<td colspan="6">Germany, Denmark, Ukraine, Russia</td>
</tr>
<tr class="even">
<td colspan="2" rowspan="7"><strong>TIMEX</strong></td>
<td colspan="4">Marble Beef</td>
<td colspan="6">USA</td>
<td colspan="3" rowspan="7"><p>Restaurants</p>
<p>Cafes</p></td>
</tr>
<tr class="odd">
<td colspan="4">Pork</td>
<td colspan="6">Denmark, France</td>
</tr>
<tr class="even">
<td colspan="4">Lamb</td>
<td colspan="6">New Zealand</td>
</tr>
<tr class="odd">
<td colspan="4">Veal</td>
<td colspan="6">Netherlands</td>
</tr>
<tr class="even">
<td colspan="4">Game meat</td>
<td colspan="6">Germany</td>
</tr>
<tr class="odd">
<td colspan="4">Fish and Seafood</td>
<td colspan="6">Denmark, Belgium, Bangladesh, Malaysia, Thailand</td>
</tr>
<tr class="even">
<td colspan="4">Grocery</td>
<td colspan="6">Germany, Netherlands, USA</td>
</tr>
<tr class="odd">
<td colspan="2" rowspan="8"><strong>EAST-WEST</strong></td>
<td colspan="4">Marble Beef</td>
<td colspan="6">USA</td>
<td colspan="3" rowspan="8">Restaurants</td>
</tr>
<tr class="even">
<td colspan="4">Veal</td>
<td colspan="6">USA</td>
</tr>
<tr class="odd">
<td colspan="4">Beef</td>
<td colspan="6">Russia, Ukraine,</td>
</tr>
<tr class="even">
<td colspan="4">Pork</td>
<td colspan="6">USA, Russia, France</td>
</tr>
<tr class="odd">
<td colspan="4">Lamb</td>
<td colspan="6">New Zealand</td>
</tr>
<tr class="even">
<td colspan="4">Fish and Seafood</td>
<td colspan="6">Denmark, Norway</td>
</tr>
<tr class="odd">
<td colspan="4">Poultry</td>
<td colspan="6">France, Russia, Hungary</td>
</tr>
<tr class="even">
<td colspan="4">Grocery</td>
<td colspan="6">Poland, Germany, Russia, Netherlands</td>
</tr>
<tr class="odd">
<td colspan="2" rowspan="6"><strong>GLOBAL FOODS</strong></td>
<td colspan="4">Marble Beef</td>
<td colspan="6">USA</td>
<td colspan="3" rowspan="6"><p>Hotels</p>
<p>Restaurants</p></td>
</tr>
<tr class="even">
<td colspan="4">Veal</td>
<td colspan="6">USA, Netherlands</td>
</tr>
<tr class="odd">
<td colspan="4">Mutton, Lamb</td>
<td colspan="6">New Zealand</td>
</tr>
<tr class="even">
<td colspan="4">Pork</td>
<td colspan="6">USA</td>
</tr>
<tr class="odd">
<td colspan="4">Poultry</td>
<td colspan="6">France, Germany</td>
</tr>
<tr class="even">
<td colspan="4">Grocery</td>
<td colspan="6">USA, Belgium, Germany, Netherlands</td>
</tr>
<tr class="odd">
<td colspan="2" rowspan="7"><strong>AUSTRALIA TRADE HOUSE</strong></td>
<td colspan="4">Marble Beef</td>
<td colspan="6">USA, Australia</td>
<td colspan="3" rowspan="7"><p>Hotels</p>
<p>Restaurants</p>
<p>Supermarkets</p></td>
</tr>
<tr class="even">
<td colspan="4">Beef</td>
<td colspan="6">Russia</td>
</tr>
<tr class="odd">
<td colspan="4">Pork</td>
<td colspan="6">Denmark, France, Russia</td>
</tr>
<tr class="even">
<td colspan="4">Veal</td>
<td colspan="6">Australia</td>
</tr>
<tr class="odd">
<td colspan="4">Lamb, Australian lamb</td>
<td colspan="6">New Zealand, Australia</td>
</tr>
<tr class="even">
<td colspan="4">Fish and Seafood</td>
<td colspan="6">Malaysia, Thailand, Vietnam, Russia</td>
</tr>
<tr class="odd">
<td colspan="4">Grocery</td>
<td colspan="6">Australia, Russia, Italy</td>
</tr>
<tr class="even">
<td colspan="2" rowspan="5"><strong>ICEBIT</strong></td>
<td colspan="4">Marble Beef</td>
<td colspan="6">USA</td>
<td colspan="3" rowspan="5"><p>Restaurants</p>
<p>Supermarkets</p></td>
</tr>
<tr class="odd">
<td colspan="4">Beef</td>
<td colspan="6">Russia</td>
</tr>
<tr class="even">
<td colspan="4">Mutton, Lamb</td>
<td colspan="6">Australia, New Zealand</td>
</tr>
<tr class="odd">
<td colspan="4">Poultry</td>
<td colspan="6">France, Denmark, Hungry</td>
</tr>
<tr class="even">
<td colspan="4">Vegetables, Berries &amp; Fruit frozen</td>
<td colspan="6"></td>
</tr>
<tr class="odd">
<td colspan="2" rowspan="4"><strong>MARR RUSSIA</strong></td>
<td colspan="4">Beef, Marble Beef</td>
<td colspan="6">USA</td>
<td colspan="3" rowspan="4"><p>Hotels</p>
<p>Restaurants</p>
<p>Cafés</p>
<p>Supermarkets</p></td>
</tr>
<tr class="even">
<td colspan="4">Pork</td>
<td colspan="6">USA</td>
</tr>
<tr class="odd">
<td colspan="4">Mutton, Lamb</td>
<td colspan="6">New Zealand</td>
</tr>
<tr class="even">
<td colspan="4">Poultry</td>
<td colspan="6">France, Hungary</td>
</tr>
<tr class="odd">
<td colspan="2" rowspan="12"><strong>SNOW WORLD</strong></td>
<td colspan="4">Goose and duck liver products</td>
<td colspan="6">France</td>
<td colspan="3" rowspan="12"><p>Hotels</p>
<p>Restaurants</p></td>
</tr>
<tr class="even">
<td colspan="4">Turkey</td>
<td colspan="6">Hungary</td>
</tr>
<tr class="odd">
<td colspan="4">Quails, Pigeon</td>
<td colspan="6">France, Great Britain</td>
</tr>
<tr class="even">
<td colspan="4">Ostrich</td>
<td colspan="6">Southern Africa</td>
</tr>
<tr class="odd">
<td colspan="4">Mutton, Lamb</td>
<td colspan="6">New Zealand</td>
</tr>
<tr class="even">
<td colspan="4">Marble Beef</td>
<td colspan="6">USA (PRIME, ANGUS PRIDE, CHOICE)</td>
</tr>
<tr class="odd">
<td colspan="4">Veal</td>
<td colspan="6">Netherlands, New Zealand, USA, Australia</td>
</tr>
<tr class="even">
<td colspan="4">Beef</td>
<td colspan="6">“Mikoyan” Russia, “Klinskiy” Russia, Cherkizovo”
Russia</td>
</tr>
<tr class="odd">
<td colspan="4">Pork</td>
<td colspan="6">Russia</td>
</tr>
<tr class="even">
<td colspan="4">Game meat</td>
<td colspan="6">France, Australia, Great Britain, New Zealand</td>
</tr>
<tr class="odd">
<td colspan="4">Fish &amp; Seafood</td>
<td colspan="6">Denmark, Bangladesh, Belgium, Russia, Senegal,
Indonesia, Spain, France</td>
</tr>
<tr class="even">
<td colspan="4">Grocery</td>
<td colspan="6">RU, France, Italy, Denmark, Netherlands, Estonia</td>
</tr>
</tbody>
</table>

# SECTION III. COMPETITION

-   As noted earlier, imported products account for a large percentage
    of ingredients used in the restaurant business. However, a variety
    of domestic Russian products are starting to find an expanding
    market as their quality and consistency improves.

-   The major reasons for continued imports of food products for the HRI
    sector are:

    -   High and consistent quality

    -   Regular and secure supplies

    -   Preference of foreign tourists in terms of taste and quality

    -   Better appearance/packaging

[]{.mark}

+-----------+-------+-------+------+-------+-------+-------+----+----+
| ##        |       |       |      |       |       |       |    |    |
| # Russian |       |       |      |       |       |       |    |    |
|  Imports  |       |       |      |       |       |       |    |    |
| of Select |       |       |      |       |       |       |    |    |
| ed Food,  |       |       |      |       |       |       |    |    |
| 2000-2002 |       |       |      |       |       |       |    |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+
|           | **2   |       | **20 |       | **2   |       | ** |    |
|           | 000** |       | 01** |       | 002** |       | Gr |    |
|           |       |       |      |       |       |       | ow |    |
|           |       |       |      |       |       |       | th |    |
|           |       |       |      |       |       |       | ** |    |
|           |       |       |      |       |       |       |    |    |
|           |       |       |      |       |       |       | *  |    |
|           |       |       |      |       |       |       | *( |    |
|           |       |       |      |       |       |       | 20 |    |
|           |       |       |      |       |       |       | 02 |    |
|           |       |       |      |       |       |       | /2 |    |
|           |       |       |      |       |       |       | 00 |    |
|           |       |       |      |       |       |       | 1) |    |
|           |       |       |      |       |       |       | ** |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+
|           | V     | Value | Vo   | Value | V     | Value | Vo | V  |
|           | olume |       | lume |       | olume |       | lu | al |
|           |       | (\$1  |      | (\$1  |       | (\$1  | me | ue |
|           | (MT)  | ,000) | (MT) | ,000) | (MT)  | ,000) |    |    |
|           |       |       |      |       |       |       | (  | (  |
|           |       |       |      |       |       |       | %) | %) |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Fresh     | 1     | 12    | 36   | 4     | 3     | 4     | -2 | 8  |
| beef      | 1,449 | 3,412 | ,408 | 5,343 | 5,461 | 9,312 | .6 | .8 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Frozen    | 27    | 33    | 439  | 50    | 46    | 54    | 6  | 8  |
| beef      | 0,867 | 8,339 | ,169 | 0,193 | 9,193 | 1,741 | .8 | .3 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Pork      | 21    | 21    | 398  | 37    | 60    | 67    | 51 | 81 |
|           | 2,921 | 2,623 | ,207 | 2,741 | 1,984 | 6,643 | .2 | .5 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Meat      | 9     | 4     | 175  | 8     | 21    | 11    | 23 | 32 |
| products  | 7,317 | 5,630 | ,517 | 5,251 | 6,172 | 3,054 | .2 | .6 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Poultry   | 68    | 36    | 1    | 76    | 1,37  | 81    | -1 | 6  |
|           | 7,205 | 6,255 | ,390 | 5,597 | 5,173 | 5,557 | .1 | .5 |
|           |       |       | ,747 |       |       |       |    |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Fresh     | 6,351 | 2,842 | 8    | 6,224 | 1     | 1     | 51 | 1  |
| fish      |       |       | ,828 |       | 3,343 | 3,842 | .1 | 22 |
|           |       |       |      |       |       |       |    | .4 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Frozen    | 30    | 11    | 400  | 16    | 41    | 22    | 3  | 37 |
| fish      | 4,163 | 0,876 | ,426 | 6,250 | 4,195 | 8,953 | .4 | .7 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Filleted  | 1     | 7,097 | 18   | 1     | 3     | 3     | 85 | 94 |
| fish      | 0,604 |       | ,670 | 6,251 | 4,556 | 1,663 | .1 | .8 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Dri       | 8,332 | 2,982 | 13   | 5,028 | 1     | 5,881 | 6  | 17 |
| ed/salted |       |       | ,184 |       | 4,018 |       | .3 | .0 |
| fish      |       |       |      |       |       |       |    |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Seafood,  | 8,665 | 4,893 | 17   | 1     | 2     | 3     | 40 | 90 |
| other     |       |       | ,278 | 6,169 | 4,191 | 0,792 | .0 | .4 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Dairy     | 9     | 7     | 135  | 13    | 9     | 3     | -  | -  |
| products  | 1,548 | 5,663 | ,446 | 6,634 | 4,822 | 9,451 | 30 | 71 |
|           |       |       |      |       |       |       | .0 | .1 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Butter    | 5     | 7     | 136  | 16    | 10    | 13    | -  | -  |
|           | 3,857 | 4,854 | ,571 | 0,018 | 9,967 | 2,313 | 19 | 17 |
|           |       |       |      |       |       |       | .5 | .3 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Cheese    | 3     | 6     | 137  | 20    | 12    | 23    | -5 | 13 |
|           | 5,528 | 3,750 | ,211 | 7,121 | 9,301 | 4,982 | .8 | .5 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Eggs      | 917   | 1,671 | 0    | 0     | 2,498 | 7,337 | N  | N  |
|           |       |       |      |       |       |       | /A | /A |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Fresh     | N/A   | 31    | N/A  | 20    | N/A   | 26    | N  | 25 |
| v         |       | 2,600 |      | 9,200 |       | 2,620 | /A | .5 |
| egetables |       |       |      |       |       |       |    |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Fruits &  | N/A   | 64    | N/A  | 68    | N/A   | 81    | N  | 19 |
| nuts      |       | 5,100 |      | 2,300 |       | 6,733 | /A | .7 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Coffee    | 2     | 3     | 21   | 3     | 2     | 3     | 18 | 7  |
|           | 0,277 | 0,887 | ,692 | 2,210 | 5,693 | 4,463 | .4 | .0 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Tea       | 15    | 22    | 154  | 20    | 16    | 22    | 6  | 11 |
|           | 8,290 | 5,618 | ,626 | 5,833 | 5,313 | 8,677 | .9 | .1 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Cereals   | N/A   | 55    | N/A  | 22    | N/A   | 16    | N  | -  |
|           |       | 1,500 |      | 7,000 |       | 5,644 | /A | 27 |
|           |       |       |      |       |       |       |    | .0 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Vegetab   | 14    | 8     | 183  | 9     | 17    | 11    | -4 | 28 |
| le/animal | 9,512 | 8,028 | ,329 | 0,773 | 5,698 | 6,996 | .2 | .9 |
| fats/oils |       |       |      |       |       |       |    |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Canned    | 2     | 2     | 25   | 3     | 1     | 2     | -  | -  |
| meat      | 0,609 | 8,793 | ,114 | 7,928 | 9,207 | 9,584 | 23 | 22 |
|           |       |       |      |       |       |       | .5 | .0 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Canned    | 11    | 2     | 144  | 8     | 9     | 6     | -  | -  |
| fish      | 9,981 | 9,740 | ,447 | 2,005 | 6,276 | 9,840 | 33 | 14 |
|           |       |       |      |       |       |       | .3 | .8 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Sugar &   | N/A   | 89    | N/A  | 1,43  | N/A   | 1,10  | N/ | -  |
| sugar     |       | 4,600 |      | 2,900 |       | 8,388 | A  | 22 |
| products  |       |       |      |       |       |       |    | .6 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Canned    | N/A   | 23    | N/A  | 33    | N/A   | 43    | N/ | 28 |
| veg/fruit |       | 8,300 |      | 5,000 |       | 1,100 | A  | .7 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Juice     | 12    | 5     | 186  | 8     | 18    | 13    | 0  | 51 |
|           | 1,121 | 6,956 | ,671 | 6,173 | 6,769 | 0,591 | .1 | .5 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Beer      | 5     | 2     | 141  | 4     | 10    | 4     | -  | -  |
| ('000     | 3,573 | 4,935 | ,241 | 7,380 | 6,538 | 0,573 | 24 | 14 |
| liters)   |       |       |      |       |       |       | .6 | .4 |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| Wine      | 25    | 22    | 359  | 30    | 42    | 32    | 19 | 5  |
| ('000     | 0,874 | 3,106 | ,120 | 5,155 | 9,794 | 0,749 | .7 | .1 |
| liters)   |       |       |      |       |       |       |    |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+
| **        |       |       |      |       |       |       |    |    |
| *Source:* |       |       |      |       |       |       |    |    |
| G         |       |       |      |       |       |       |    |    |
| overnment |       |       |      |       |       |       |    |    |
| Customs   |       |       |      |       |       |       |    |    |
| Co        |       |       |      |       |       |       |    |    |
| mmittee** |       |       |      |       |       |       |    |    |
+-----------+-------+-------+------+-------+-------+-------+----+----+

+-----------------------------+-----------------------------------------+
| ### Import Compet           |                                         |
| ition for Selected Products |                                         |
+-----------------------------+-----------------------------------------+
| **Product**                 | **Country of origin**                   |
+-----------------------------+-----------------------------------------+
| Beef                        | Brazil, Argentina                       |
+-----------------------------+-----------------------------------------+
| Veal                        | Australia, Netherlands                  |
+-----------------------------+-----------------------------------------+
| Lamb                        | New Zealand                             |
+-----------------------------+-----------------------------------------+
| Pork                        | Russia, France, Hungary, Finland,       |
|                             | Denmark                                 |
+-----------------------------+-----------------------------------------+
| Game                        | UK, France                              |
+-----------------------------+-----------------------------------------+
| Poultry                     | France, Russia, Hungary                 |
+-----------------------------+-----------------------------------------+
| Fish & seafood              | Norway, Denmark, Asia                   |
+-----------------------------+-----------------------------------------+
| Wine                        | Moldova, France Italy                   |
+-----------------------------+-----------------------------------------+
| Dairy products              | Germany, Poland, New Zealand, Finland   |
+-----------------------------+-----------------------------------------+
| Frozen vegetables & fruits  | Belgium, Netherlands, France            |
+-----------------------------+-----------------------------------------+
| Canned vegetables & fruits  | Italy, Spain, France                    |
+-----------------------------+-----------------------------------------+
| Ice-cream                   | Germany                                 |
+-----------------------------+-----------------------------------------+
| Confectionary               | Europe                                  |
+-----------------------------+-----------------------------------------+
| Bakery                      | Europe                                  |
+-----------------------------+-----------------------------------------+
| Delicatessen                | Europe                                  |
+-----------------------------+-----------------------------------------+
| Seasoning                   | Europe, Russia                          |
+-----------------------------+-----------------------------------------+

[]{.mark}

[]{.mark}

# SECTION IV. BEST PRODUCT PROSPECTS

In general, restaurant owners note that they have few problems finding
adequate supplies of food products locally. The large number of local
importers/distributors ensures competitive prices and good selection.

## A. Products Present in the Market Which Have Good Sales Potential

While there is a wide range of products with good market potential in
the Russian HRI sector, the following product categories are the most
promising for U.S. exporters:

-   **Fish and seafood:** Demand for fish and seafood will expand in the
    near term due to a shift in favor of healthier eating/lifestyle, the
    continued popularity of Asian cuisine, and growing interest in new
    and exotic products. However, there is strong competition,
    particularly from Norway and other European countries.

-   **Pork:** Given limited domestic supplies, particularly for high
    quality pork, there is good potential for imports from the U.S.
    While there is strong competition from European and South American
    exporters, as well as a few local producers, a country-specific
    Tariff Rate Quota (TRQ) will encourage a good volume of imports from
    the U.S.

-   **High-quality beef:** U.S. grain-fed, marble beef already enjoys a
    good reputation in the HRI sector. However, with continued economic
    growth and further development in the food service industry, demand
    for U.S. high-quality beef should continue to increase. There is
    also a country-specific TRQ for U.S. beef.

-   **Semi-prepared products (dried/frozen):** Growing recognition of
    the economic advantages of using semi-prepared products has created
    good prospects for a variety of items including frozen vegetables,
    potato products, etc.

-   **Fresh fruit:** In keeping with growing interest in "healthy"
    cuisines, there is good potential for U.S. apples, pears, and
    citrus.

-   **Dried fruit/nuts:** Various popular ethnic cuisines and growing
    demand for quality desserts offer good opportunities for U.S.
    raisins, prunes, almonds, and other nuts.

-   **Ice cream and other frozen desserts:** While some U.S. products
    are already available, continued growth in the HRI sector and
    increasing demand for high quality and variety could create
    opportunities for more products.

-   **Wine:** The culture of wine consumption is well established and
    growing. There is good potential for increased imports of U.S. wine
    but strong promotion will be needed to compete with established Old
    World and aggressive New World suppliers.

## B. Products Not Present in Significant Quantities but With Good Sales Potential 

-   **Wild rice:** U.S. wild rice is already available in limited
    supply, but there should be room for further growth as the product
    shows promise due to the growing demand for "natural" products. Wild
    rice is also attractive as a "new" and "exotic" food.

-   **Certified organic/natural ingredients:** Growing interest in
    healthier eating/lifestyle could translate into demand for organic
    and natural products. At present, this market is quite small.
    However, there are signs that organic/natural foods could develop
    into a good niche market in the HRI sector.

-   **Functional food ingredients:** Similarly, growing interest in
    healthier eating could create a ready market for functional foods.
    This is clearly a limited market at present but one that could
    develop with proper support.

# V. POST CONTACT AND FURTHER INFORMATION

## CONTACT INFORMATION FOR FAS OFFICES IN RUSSIA AND THE U.S.

U.S. Agricultural Trade Office

American Embassy

Bolshoy Devyatinskiy Pereulok 8

121099 Moscow, Russia

Tel: 7 (095) 728-5560; Fax: 7 (095) 728-5069

E-mail : <atomoscow@usda.gov>

Jeffrey Hesse, Director

***For mail coming from the U.S.:***

Agricultural Trade Office

PSC 77 AGR

APO, AE 09721

***For international mail*:**

Agricultural Trade Office

U.S. Embassy - Box M

Itainen Puistortie 14

00140 Helsinki, Finland

***Covering Northwest Russia (St. Petersburg):***

ATO Marketing Assistant

American Consulate General

Nevskiy Prospekt, 25

191186 St. Petersburg, Russia

Tel: 7 (812) 326-2580; Fax: 7 (812) 326-2561

E-mail: <Maria.Baranova@mail.doc.gov>

***Covering the Russian Far East (Vladivostok):***

ATO Marketing Assistant

American Consulate General

Ulitsa Pushkinskaya, 32

690001 Vladivostok, Russia

Tel: 7 (4232) 300-070 or 300-089; Fax: 7 (4232) 300-089

E-mail: <usagrfe@rol.ru>

***For General Information on FAS/USDA Market Promotion Programs and
Activities:***

AgExport Services Division

Room 4939

14^th^ and Independence, SW

Washington, DC 20250

Tel: (202) 720-6343; Fax: (202) 690‑0193

## USDA/FAS AND ATO PROGRAMS AND SERVICES

The Foreign Agricultural Service and the Agricultural Trade
Office/Moscow offer a variety of programs, services, and information
resources to help U.S. exporters of food, beverage, and agricultural
products learn more about the Russian market, establish initial contact
with Russian buyers, and promote their products in the local market.
Following is a partial listing of programs and services:

***Trade Leads*** are direct inquiries from Russian buyers seeking U.S.
sources for specific food, beverage, or agricultural products. U.S.
companies can receive these Trade Leads by contacting the AgExport
Services Division, FAS/USDA or by visiting the USDA/FAS Homepage (see
contact information at the beginning of this section).

***Buyer Alert*** is a biweekly publication providing information on
specific food, beverage, and agricultural products offered by U.S.
exporters. U.S. companies may place ads in Buyer Alert by contacting the
AgExport Services Division, FAS/USDA (see contact information at the
beginning of this section).

***U.S. Supplier Lists*** are drawn from an extensive database of
companies that can supply a wide range of U.S. food, beverage, and
agricultural products. The ATO Moscow supplies these lists to Russian
importers on request. U.S. companies that wish to be included in this
database should contact the AgExport Services Division, FAS/USDA (see
contact information at the beginning of this section).

***Foreign Buyer Lists*** are drawn from an extensive database of
Russian importers dealing with a wide range of food, beverage, and
agricultural products. U.S. companies can order these lists through the
AgExport Services Division, FAS/USDA (see contact information at the
beginning of this section).

ATO/Moscow also coordinates U.S. participation in local trade shows (see
list of Russian Trade Shows below), sponsors supermarket and menu
promotions, provides support for trade missions, and can help arrange
appointments for first-time visitors to Russia. For more detail on these
and other programs or activities, please contact the ATO/Moscow (see
contact information above).

The FAS website ([www.fas.usda.gov](http://www.fas.usda.gov/)) is an
excellent source of information on other USDA/FAS export
promotion/assistance programs, such as the Market Access Program (MAP)
and Credit Guarantee Programs, as well as a wide range of information
and reports on market opportunities for U.S. food, beverage, and
agricultural exports world-wide.

## OTHER MARKET REPORTS

Reports on the Russian food and agricultural market are available on the
FAS website. U.S. exporters may also contact ATO/Moscow for copies of
these reports (see contact information at beginning of this section).
The following reports may be of particular interest:

  ------------------- ---------- ------------------------------------------
  **Report Title**    **Report   **Report Summary**
                      \#**       

  Exporter Guide      RS4301     Provides an overview of the Russian food
                                 market, identifying opportunities for U.S.
                                 food and beverage products in the retail,
                                 HRI, and processing sectors

  Food Processing     RS4302     Examines the Russian food processing
  Ingredients                    sector, focusing on market opportunities
                                 for U.S. food ingredients, including raw,
                                 semi-processed and specialty products

  Retail Food         RS4303     Reviews developments in Russian retail
                                 food sector, highlighting market
                                 opportunities for U.S. consumer-oriented
                                 food products

  Fish and Seafood    RS4305     Examines growing import market for wide
  Products Market                range of fish and seafood products
  Brief                          

  Wine Market Brief   RS2307     Brief look at the local market for wine
                                 and opportunities for U.S. exporters.

  The Russian         RS3310     Quarterly newsletter highlighting
  Marketplace                    developments in the Russian food retail,
                                 HRI, and processing sectors

  Food and            RS3020     Detailed information on Russia's food
  Agricultural Import            import requirements, including
  Regulations and                certification, labeling and packaging
  Standards                      requirements

  New Resolution      RS3031     Overview of new regulations concerning the
  Concerning Use of              testing and approval of foods containing
  GMOs in Food                   of genetically-modified organisms (GMOs)
  Products                       

  Livestock and       RS3018     Review of the Russian market for beef and
  Products Annual                pork, including production, consumption
                                 and trade.

  Poultry and         RS3019     Analysis of the Russian market for poultry
  Products Annual                meat, including production, consumption
                                 and trade.

  Fishery Products    RS3033     Overview of the Russian market for fish
  Annual                         and seafood products meat, including
                                 production, consumption and trade.
  ------------------- ---------- ------------------------------------------

## OTHER USEFUL CONTACTS

American Chamber of Commerce in Russia

Kosmodamianskaya Nab. 52, Building 1, 8th floor

113054 Moscow, Russia

Tel: (095) 961‑2141; Fax: (095) 961‑2142

Email: <amcham@amcham.ru>

American Chamber of Commerce in St. Petersburg

25 Nevsky Prospect

191186 St. Petersburg, Russia

Tel: (812) 326-2590; Fax: (812) 326-2591

Email: <sbytchkov@amcham.ru>

*For questions on agricultural machinery, food processing and packaging
equipment/materials, refrigeration equipment, etc., please contact the
U.S. & Foreign Commercial Service:*

Foreign Commercial Service

Bldg. 2, 23/38 Bolshaya Molchanovka

121069 Moscow, Russia

Tel: 7 (095) 737-5030; Fax: 7 (095) 737-5033

E-mail: <moscow.office.box@mail.doc.gov>

## TRADE SHOWS IN RUSSIA

The following are large, well-organized, international shows:

***WORLD FOOD MOSCOW***

The longest-running food and beverage show in Russia. World Food Moscow
draws well from throughout Russia and from many countries of the Former
Soviet Union.

*Date:* September 2004

*Location:* Krasnopresnenskaya Expocenter, Moscow

*Website:* <http://www.ite-exhibitions.com/>

*Contact:* Olga Taybakhtina, Marketing Assistant

ATO Moscow

Tel: 7 (095) 728-5560; Fax: 7 (095) 728-5069

E-mail: atomoscow@usda.gov

***PRODEXPO (U.S. Pavilion)***

Prodexpo is the largest food and beverage show in Russia, with a large
number of international exhibitors and many country pavilions.

*Date:* February 2005

*Location:* Krasnopresnenskaya Expocenter, Moscow

*Contact:* Olga Taybakhtina, Marketing Assistant

ATO Moscow

Tel: 7 (095) 728-5560; Fax: 7 (095) 728-5069

E-mail: <atomoscow@usda.gov>

***INTERFOOD 2004***

This show covers the important Northwest region of Russia (St.
Petersburg, Kaliningrad, etc.) However, the show also draws visitors
from Moscow and other areas of Russia, as well as neighboring countries.

*Date:* April 2004

*Location:* Lenexpo Center, St. Petersburg

*Contact:* Maria Baranova, Marketing Assistant

American Consulate General, St. Petersburg

Tel: 7 (812) 326-2580; Fax: 7 (812) 326-2561

E-mail: <Maria.Baranova@mail.doc.gov>

#  

# VI. APPENDIX

## 

## GENERAL ECONOMIC AND DEMOGRAPHIC DATA

+----------------------------------------------------+-----------------+
| ### Demographic Trends                             |                 |
+====================================================+=================+
|                                                    | **(millions)**  |
+----------------------------------------------------+-----------------+
| Total Population                                   | > 145.2         |
+----------------------------------------------------+-----------------+
| > 0-15 years                                       | > 32.0          |
+----------------------------------------------------+-----------------+
| > 15-60 years (male) & 15-55 years (female)        | > 72.3          |
+----------------------------------------------------+-----------------+
| > 60+ (male) 55+(female) years                     | > 40.9          |
+----------------------------------------------------+-----------------+
| > Males                                            | > 67.6          |
+----------------------------------------------------+-----------------+
| > Females                                          | > 77.6          |
+----------------------------------------------------+-----------------+
| > Number of births per 1,000 population            | > 9.8           |
+----------------------------------------------------+-----------------+
| > Urban Population                                 | > 106.4         |
+----------------------------------------------------+-----------------+
| > Employed Persons                                 | > 66.3          |
+----------------------------------------------------+-----------------+
| Total Number of Households                         | > 51.6          |
+----------------------------------------------------+-----------------+
| > Average Household Size                           | > 2.8           |
+----------------------------------------------------+-----------------+

+--------------------------+----------+----------+----------+----------+
| ### GDP Trends           |          |          |          |          |
+==========================+==========+==========+==========+==========+
|                          | **2000** | **2001** | **2002** | **       |
|                          |          |          |          | 2003\*** |
+--------------------------+----------+----------+----------+----------+
| **GDP (\$Billions)**     | > 244    | > 301    | > 362    | > 390    |
+--------------------------+----------+----------+----------+----------+
| **GDP per capita (\$)**  | > 1,700  | > 2,100  | > 2,500  | > 2,700  |
+--------------------------+----------+----------+----------+----------+
| **\*Estimate**           |          |          |          |          |
|                          |          |          |          |          |
| ***Source:* Russian      |          |          |          |          |
| State Statistics         |          |          |          |          |
| Committee (Goskomstat)** |          |          |          |          |
+--------------------------+----------+----------+----------+----------+

-   Note: According to official estimates, the "shadow" economy accounts
    for an estimated 20-25 percent of GDP. However, some industry
    analysts put this figure at 40-60 percent or more.

## HOTELS IN MOSCOW

-   The development of the hotel trade in Moscow has gone through
    several stages. Until the 1980-s, all hotels were of the so-called
    "Soviet" type. In the early 1990-s, international hotel chains began
    construction of higher-end facilities as the rapidly expanding
    market economy started to draw foreign businessmen. In fact, most of
    the existing four- and five-star hotels in Moscow were built during
    this period.

-   Prior to the 1998 economic crisis, the hotels were able to charge
    prices that were high even by European standards and still maintain
    good occupancy rates (65 percent in 1997). After the crisis,
    business travel declined significantly and occupancy fell to only 45
    percent, with the higher-class international hotels suffering most
    of all.

-   In response to the tougher market, hotels were forced to cut prices
    dramatically (as much as 30 percent). However, with five consecutive
    years of strong economic growth, prices and occupancy rates have
    returned to pre-crisis levels.

-   According to the Moscow City Government, there are about 150 hotels
    in Moscow with a total of 61,000 rooms. Of these, eight are
    classified as five-star hotels, 15 are four-star hotels, 37 are
    rated as three-star hotels, 26 are two-star hotels, seven are
    one-star hotels and the rest are not rated.

-   The turnover for Moscow hotels in 2002 was about \$600 million. The
    overall occupancy rate increased to nearly 70 percent. Overnight
    stays reached 12.2 billion, with foreign travellers accounting for
    about one-third of this total.

-   In August 2003, the Moscow City Government issued a planning
    document, "Concerning the Scheme of Hotel Allocation in Moscow to
    the year 2005". This plan calls for the construction of 122 new
    hotels with 22,000 rooms over the next three years.

+------------------+------------+------------+------------+------------+
| ###### Upper Seg |            |            |            |            |
| ment Hotel Stati |            |            |            |            |
| stics for Moscow |            |            |            |            |
+------------------+------------+------------+------------+------------+
|                  | **1999**   | **2000**   | **2001**   | **2002**   |
+------------------+------------+------------+------------+------------+
| Occupancy rate   | 39         | 44         | 55         | 65         |
| (%)              |            |            |            |            |
+------------------+------------+------------+------------+------------+
| Revenue          | \-         | 39         | 43         | 50         |
| (\$million)      |            |            |            |            |
+------------------+------------+------------+------------+------------+
| Average room     | 185        | 171        | 167        | 170        |
| cost             |            |            |            |            |
|                  |            |            |            |            |
| (\$ per day)     |            |            |            |            |
+------------------+------------+------------+------------+------------+
| ***Source*:      |            |            |            |            |
| "University of   |            |            |            |            |
| the Hotel,       |            |            |            |            |
| Tourist and      |            |            |            |            |
| Restaurant       |            |            |            |            |
| Business         |            |            |            |            |
| Association"**   |            |            |            |            |
+------------------+------------+------------+------------+------------+

## 

## TOURISM

-   According to World Tourist Organization, Russia has the potential to
    receive up to 40 million foreign tourists per year (dependent on the
    corresponding development of the tourist infrastructure). Tourism
    declined following the 1998 economic crisis, but it is now growing
    quickly once again.

-   In 2001, the Russian Federation had 21.6 million foreign visitors:
    3.0 million came for business; 2.4 million came as tourists; and
    14.1 million came for "personal" visits.

-   Overall, tourism increased by nearly eight percent in 2002, with
    Moscow and St. Petersburg drawing the largest numbers of visitors.
    In fact, the number of "hotel nights" increased by 11.4 percent for
    Moscow and 16.0 percent for St. Petersburg.

-   The Department of Tourism (DOT) estimates Russia's tourism market at
    \$8 billion annually, with "business-trip" tourism accounting for
    two-thirds of this total versus one-third for "recreation" tourism.

-   The DOT estimates that the average foreign business visitor spends
    about \$1,000 during a visit of 3.5 days in Moscow.

## "CATERING" TO TOURISTS

-   According to industry sources, tourists often eat breakfast and
    dinner in their hotel but eat lunch in the city. In an attempt to
    retain more of the tourist business, hotels are offering special
    catering services. For example, the Marriott Aurora hotel has
    developed a special service for tourist groups visiting Red Square:
    special carts meet the hotel guests with blini (crepes) and several
    kinds of red and black caviar, accompanied by vodka.

-   Pelmeni (Russia's version of ravioli) and blini are typically are
    included in the menu of almost any eating-place that caters to
    foreign tourists. Many first-time visitors are eager to sample such
    treats along with Russian traditional beverages such as vodka, kvas
    (fermented vegetable drink), Georgian wine and mineral water.

-   However, according to restaurant professionals, some foreigner
    visitors are wary of new dishes and opt for more familiar items such
    as Caesar salad, steaks, or other grilled dishes.

-   Budget travelers, including many domestic visitors, are not a
    primary target for upscale hotels and upscale restaurants. These
    visitors typically look to the fast-food segment as a way to
    economize.

-   Two "democratic", traditional Russian cuisine restaurant chains in
    Moscow, "Yolki-Palki" and "Moo-Moo", have become favorite
    destinations for tourist. For foreign visitors, these chains offer a
    national flavor and color; for domestic travelers, the restaurants
    offer familiar food at a reasonable price and can easily be found
    throughout the city.

-   However, food professionals note that foreign tourists do not yet
    see the local cuisine as a cultural highlight as they might for
    visits to Italy or France.

## CULTURE AND FOOD: TRENDS AND TRADITIONS

-   Traditionally, Russian hospitality was expressed through meals, and
    respect for visitors was demonstrated by the amount and variety of
    food on the table.

-   There was also the tradition of a "family table" - the entire family
    gathered at the table for breakfast, dinner and supper. The joint
    meal was an expression of their close family ties.

-   These traditions continue but are practiced to a lesser degree due
    to changes in life style. This is reflected, in part, by the rapid
    development of the HRI sector since the beginning of the 1990s.

-   Now Russian consumers have many more choices and are beginning to
    pay greater attention to quality and value. They are ready to pay
    more but demand more in return.

-   The number of expensive, high-end restaurants continues to grow.
    However, fast-food chains are increasing at an even faster rate.

-   At the same time, there is also growing interest in "healthy"
    eating. As a result, restaurants that offer "healthy" meals (for
    example, vegetarian restaurants) and restaurants specializing in
    local cuisines that claim to use only "natural" products are
    becoming more popular.

## CUISINES: TRENDS AND TRADITIONS

-   In the early 1990s, all things foreign or imported, including
    cuisines, were very popular. Now, Russian cuisine is making a strong
    comeback. According to one local research company, COMCON,
    two-thirds of restaurant visitors indicated a preference for Russian
    cuisine. Dishes from the Caucasus region were selected by 30
    percent, with Italian cuisine coming in third with 25 percent.
    French and Japanese cuisines were at the top of the list two years
    ago, but now were selected by only nine percent of respondents
    combined. (Note: respondents were allowed to indicate more than one
    preference.)

-   Food professionals note that as recently as two years ago there were
    only about 15 restaurants in Moscow that served sushi. Now, sushi is
    available in a large number of restaurants, including many
    inexpensive food outlets. However, the "expansion boom" seems to be
    over for many Asian cuisines, and "fusion" cooking has become the
    new "hot" trend.

## "HEALTHY" EATING

-   Over the last few years, there has been growing interest in "healthy
    living". For many Russians, a "healthy" meal is one of the main
    components of a "healthy" lifestyle.

-   Not surprisingly, "natural" products are seen as a key element of a
    "healthy" meal. Of course, "natural" means different things to
    different people. However, one of the factors considered is the
    country of origin, specifically the perceived "cleanliness" of the
    source.

-   In general, a "healthy" meal for many Russian consumers means a
    variety of products in the correct proportion. *"It is possible to
    eat everything, but in reasonable amounts, then there won't be any
    harm to my health."*

-   For some consumers, healthy eating is associated with sacrifice. The
    guidelines will be followed only in "emergency" situations but not
    as a "preventive measure" in daily life. As a result, even though
    consumers know the risks of eating certain products, they may not be
    willing to eliminate or even cut back on consumption.

-   It is also generally accepted that Russian women follow "healthy"
    eating guidelines more closely than men due to their desire to care
    for their children's health and for their own appearance.