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Coffee production on rise in Russia

From the September 2016 issue.

Amid the ongoing stagnation of the Russian economy and the consequences of the financial crisis in the country, global coffee majors are considering further expansion of local production.

The Nestle factory in Timashevsk
The financial crisis in Russia caused by Western sanctions has resulted in the devaluation of the local currency, the ruble, and the decline of purchasing power of local population.

This, in turn, has led to the decline of revenue for the coffee majors, as local customers are no longer able to buy coffee in the same volumes, and at the same prices, as in the past. The biggest sales decline is observed in the case of imported coffee, prices for which are usually higher than those of locally produced products.

In response to this, some of the major players in the coffee market have begun to consider alternative ways for their further development in the Russian market, in particular through the increase of localisation of production.

Swiss coffee giant Nestlé recently launched the production of its Nescafé Gold Barista coffee brand, which will be produced at its flagship Russian factory in the city of Timashevsk in the Krasnodar region on the Black Sea.

In addition, the company has recently completed the modernisation of its technology for the production of another flagship coffee brand – Nescafé Classic.

According to recent statements from Maurizio Patarnello, Head of Nestlé Russia–Eurasia, Nestlé’s subsidiary in Russia and Commonwealth of Independent States (CIS), despite the current difficult situation in the Russian consumer market, and in particular in the coffee segment, the company expects its coffee sales will start to grow by the end of the year.

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