The Taste of Crisis: What the Economic Downturn Means for Russians’ Food Purchasing and Dining Habits

By Jed Holmes, Senior Policy Analyst, The PBN Company

Plunging Restaurant Receipts Inspire “Anti-Crisis Menus”

According to Vladimir Malyshkov, head of Moscow’s consumer market and services department, the economic crisis has caused a 25-30% drop in revenues for high-end restaurants in the Russian capital, with both average receipt totals and visitation dropping, RIA Novosti reported.

At the same time, he said that turnover at mid-range and economy dining establishments revenues are holding steady or even increasing.  In particular fast food establishments, from street piroshki vendors to Western franchises, are reporting higher revenues.  For example, McDonald’s flagship restaurant on Pushkin Square had the highest sales total for the franchise worldwide, according to a Moscow Times report.

Malyshkov pointed out that some restaurants have created “anti-crisis menus”, offering business lunch options for as little as 100 rubles, or a little under $3. According to the city government’s statistics, restaurant prices have declined on average 15-20%.

Consumers Experiment with Format

Economic pressures are affecting grocery stores as well. Lev Khasis, head of the Association of Retail Companies (known by Russian acronym AKORT), told the newspaper Trud:  “Consumption is shifting from the premium products to basic products.  Instead of buying milk with a high fat content, consumers are choosing low or non-fat milk, instead of expensive bread they choose ordinary bread.  A demand has even appeared for brown pasta, which earlier you couldn’t force people to buy.”

Market observers note a range of reactions to declining personal income.  “We are seeing a migration among various retail formats,” Elena Kalashnikova, General Director of Viktoria Group told Trud.  Consumers are making multiple trips per week to small neighborhood stores rather than major food stockpiling runs to large food stores, as it is psychologically easier to spend in small amounts than to dole out a large sum at once, she explained.  Analysts also see mid-size supermarkets losing customers to both large discount hypermarkets and open-air markets.

Consolidation on Store Shelves

AKORT Executive Director Ilya Belanovsky told Kazanskie Vedomosti that while he doesn’t expect there to be shortages of any particular products, retailers will likely be forced to reduce the assortment on offer.  “This dictated both by the drive to reduce costs and simply common sense: why do you need to fill store shelves with 30 different brands of sunflower oil, 70 different types of bottled water, 130 different vodkas?  And the suppliers themselves during the crisis are not aiming to expand their assortment but rather to focus on the fasting moving products, reducing their risks to a minimum.  Now is not the time for experiments,” Belanovsky told the newspaper.

Empty Pockets = More Pocketing

Retailers are complaining about a dramatic rise in shoplifting.  According to Moskovsky Komsomolets, shoplifting arrests are up by one third. Lev Khasis, who is also General Director of the retail group X5, says that the group’s chains (which include Perekrestok, Pyaterochka and Karusel) recorded 750,000 incidents of shoplifting in 2008, with only about a third of these offenders caught red-handed.  Given current trends, this number could rise to 2 million in 2009, Khasis said.

The Silver Lining

Russian nutritionists are hoping that the economic crisis will result in more people dining at home and eating healthier.  In late February Gennady Onischenko, Russia’s Chief Sanitary Doctor and head of the government’s consumer protection agency Rospotrebnadzor, together with Viktor Tutelyan, director of the Institute of Nutrition of the Russian Academy of Medical Science, issued a comprehensive meal planner, suggesting nutritional meals for reasonable prices.  According to the document, if one followed the suggestions in this meal planner, monthly food costs per person would be under $100 per adult.

As Luke Harding reported in the Guardian, “The planner recommends a healthy breakfast of oatmeal porridge and fried eggs, washed down with a cup of budget chicory coffee. Lunch includes bortsch, Russia and Ukraine’s famous beetroot soup, with a salad. Dinner is fried fish. Chocolate, crisps, pizza and fizzy drinks are all out.”  As Russians learn to spend more prudently they might also learn a few lessons in nutrition, at least that’s what the country’s leading doctors hope.

Possibly related posts:

1. The Matryoshka: Another Victim of the Economic Crisis
2. Russians Up in Arms Over the Crisis?
3. Dollar Stores, Pound Shops…and Tenge Markets
4. Psychoanalysis or Retail Therapy: (Not) Spending in the Crisis
5. What Crisis? Finding Solace in the Supermarket