Russia is home to one of the world’s biggest tea and coffee markets. In fact, the statistics are simply mind boggling. For example, 94% of all Russians are tea drinkers. The nation is the world’s second biggest tea market and the eighth largest coffee market globally.

 

 

Tea is the world’s most popular drink, and Russia’s population certainly loves this drink. According to a presentation at the 2015 World Tea Expo, Russian retail sales of tea totalled $4 billion in 2014. A further report from the International Coffee Organisation relates that tea encompasses two thirds of Russia’s entire hot drinks sector.

 

As tea is such an integral part of Russian life, that even the harshest of economic conditions fail to blunt Russian appetites for this particular beverage. Euromonitor suggests Russia’s tea market will grow at a steady 1% annually for the foreseeable future. Small growth, yes, but this is a well-developed, mature sector that is unlikely to see any major shake ups in the coming years.

 

Imports are a hot commodity when it comes to tea in Russia. While domestic production has seen some increases recently, with the first half of 2015 showing recorded production levels of 47.6 thousand tons (14% higher than the same period in 2014), Russia relies on overseas countries to satiate its tea needs. 

 

The first half of 2015 saw Russian businesses import a total of 68,076 tons of tea worth $256.7 million. 172,606 tons of various teas were imported in 2014, for context, at a value of $645.8 million – showing the huge desire for quality teas amongst Russia’s many millions of consumers.

 

Three nations dominate Russian tea imports, accounting for nearly 70% of total volumes shipped. Sri Lanka comes out on top, supplying 29.91% of tea imports, followed by India with 23.52% with Kenya rounding off the big three by shipping 15.57% of total tea imports to Russia in 2015. 

 

Black tea is the most popular variety on the market, as 86% of Russian consumers take their tea this way. Green teas hold a 9% market share while herbal varieties are not very popular. Just 1% of Russians regularly consume herbal teas.

 

While loose tea seems to rule the roost, packaged tea and tea bags are seeing their popularity rise.  As such, bulk imports of tea are set to rise as domestic brands seek to match demand. 

 

 

While tea is still very much the hot drink of choice for Russians, coffee has been making significant headway into Russia since the turn of the millennium. Coffee was a $750 million market in 2001. Now, it is worth over $2.5 billion according to the Russian Association of Tea and Coffee Manufacturers (Rusteacoffee). Consumption per capita is currently rated at around 1.7 kilograms or more than 120 cups of coffee per year.

 

Much like tea, Russia sources the vast majority of its coffee supplies from overseas, with volumes increasing at an average annual rate of 5.2% since 1994. In 2014, for example, Russia imported 154,526 tons of coffee and associated products worth approximately $571.6 million. 

 

Coffee coming to Russia is split into three distinct categories. Green (unroasted) coffee accounts for 48% of imports, with soluble coffee contributing 44% of import volumes with roasted coffee making up the remaining 8%. 
 

Countries that export to Russia are split depending on the variety of coffee they offer. For example, Vietnam supplies 38% of green coffee to Russia, while India accounts for 25% of soluble coffee imports. 

 

This upswing in coffee consumption is tied in with the rise of speciality coffee chains and shops in Russia. The increasing prevalence of such establishments is leading to an increase in popularity of both instant and fresh coffee offerings. At present, instant/freeze dried varieties account for 61.09% of the sector, while fresh coffee, including pods, holds a 38.91% market share.

 

Coffee pods are a market sector importers could potentially exploit, as demand for these types of coffee product has grown 22% in recent years.

 

Coffee is predicted to grow at a slightly higher rate than tea. Euromonitor predicts a compound annual growth rate of 2% annually until 2020. While the coffee sector is a little less robust than tea, due to being a relative newcomer to Russian palates, it remains healthy in the face of Russia’s ongoing economic underperformance.

 

 

Tea is simply too larger a part of Russian lifestyles to ever seriously decline in popularity. Likewise, coffee has firmly established itself in Russia and predications for controlled, healthy growth suggest it isn’t going anywhere any time soon.

 

As such, Russia is somewhat of a captive market for exporters. Domestic producers will require the raw materials, machinery and know how when it comes to creating top quality offerings. Likewise, the average Russian consumer has a strong desire for the very best products, which international companies can easily offer.