MOSCOW FOOD & BEVERAGE A Cushman & Wakefield Research Publication
2014
RUSSIAN CONSUMERS The common thinking of Russian food consisting of boiled potatoes and borsch is wrong. The Russian food and beverage sector is thriving - eating out is now a part of everyday life. In Moscow it is possible to experience the full range of global cuisine at all price points. In 2013, the Moscow food and beverage sector was USD 5.2 billion. This figure has grown 5 – 10 percent per annum over the last 5 years. There continues to be strong growth potential for Moscow’s food and beverage sector. Statistics show that Russian household spending on eating out significantly lags the rest of Europe (Russia ranks last in this category.). Only 3.3 percent of Russia’s total food spending is dedicated to dining out. Muscovites’ spending, however, outstrips the rest of Russia. Approximately 8 percent of the capital’s food spending is on dining out. This figure trails what is seen in other world capitals — Londoners and New Yorkers spend almost half of total food expenditures on dining out.
61% of Moscow’s 10 000
food service companies operate in the casual segment
CATERING, % of food spending Position
COUNTRY
Catering, % from food spending
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Spain Ireland Greece Great Britain Portugal Malta Cyprus Austria Italia Bulgaria Iceland Luxembourg Finland Slovakia Slovenia France Belgium Czech Republic Norway Germany Denmark Netherlands Sweden Estonia Hungary Macedonia Latvia Russia Romania Poland Lithuania
14.8 11.8 10.4 8.8 8.8 8.6 8.0 7.9 7.7 7.5 7.1 6.0 6.0 5.9 5.6 5.4 5.2 5.2 5.1 4.8 4.5 4.5 4.5 4.4 3.5 3.5 3.3 3.3 2.8 2.2 1.9
* data of 2011, RIA Analytics, including tourists
RETAIL SPACE ACROSS RUSSIA 2013 - 2014
FOOD & BEVERAGE OPERATORS
TOP Restaurant GROUPS
NEW FOOD&BEVERAGE RETAILERS IN RUSSIA, 2012 - 2014
International brands continue to show an interest in the Russian market. Most international brands start with the Moscow and St. Petersburg markets; and many partner with local operators (for example, Burger King, Paul, Dunkin’ Donuts, Cinnabon and Pinkberry). In Moscow, the most developed market segment is fast food. The majority of the leading international fast food brands are already present in Russia and Moscow (more specifically), including: McDonald’s, Subway, Burger King and KFC. McDonald’s is the quintessential fast food “success story” in Russia. As the Soviet Union began to split apart, McDonald’s opened its first store in 1990. At its 20th anniversary, Russia is McDonald’s fastest growing European market, serving 950,000 customers daily. The chain employs more than 25,000 people in Russia and each new store opening generates on average 100 new local jobs (and significant regional economic development). In addition to fast food restaurants, coffee shops are a popular market segment. Most restaurant groups own well-recognized coffee shop brands. Traditionally, the market has been dominated by large Russian players, including: Shokoladnitsa, Coffee House (which was recently taken over by Shokoladnitsa) and Coffeemania. But, international operators (such as: Starbucks, Costa Coffee and Coffeeshop Company) are also making an impact on the market.
In addition to the above-mentioned retailers, the most valuable restaurant groups are: The Novikov Group has more than 40 different restaurant projects across themes and price points. The Novikov Group has operated since 1992. The Ginza Group has 36 distinct restaurant and bar concept projects (covering a wide demographic). The Company has been working in the market since 2003. TOP FOOD&BEVERAGE CHAINS IN RUSSIA Number of units Restaurant in Moscow REA
Stardog's
509
Kroshka Kartoshka
279
Shokoladnitsa
256
Mcdonalds
186
Subway
185
Burger King
133
KFC
126
Baskin Robbins
126
Teremok
123
Il Patio
77
Starbucks
69
Yakitoriya
67
Planeta Sushi
64
Sbarro
64
Tanuki
52
Yaposha
41
Dunkin Donuts
34
Paul Bakery
23
Costa Coffee
22
T.G.I. Friday's
14
* Source: corporate websites
PEDESTRIAN ZONES ng
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Pedestrian streets, which fundamentally change traffic flow, offer huge retail activity potential. The city’s food and beverage operators recognize this and have shown great interest in additional development. Today, pedestrian zones are primarily occupied by cafes and restaurants.
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The Moscow city government actively supports the development of pedestrian zones throughout the city. Concept development has been the key event for Moscow’s high streets in 2013-2014.
Klementovsky
Garden Ring
Areas with broadened sidewalks Pedestrian streets Restaurant areas
RETAIL SPACE ACROSS RUSSIA
FOOD & BEVERAGE CORRIDORS KEY AREAS
PROFILE
KEY FOOD & BEVERAGE OPERATORs
RENT FOR 300 - 350 sq.m UNIT
1 Kamergerskiy
Well-established entertainment area. Fashionable district in the historical city center
Prime Star, Gusto, Dve Palochki, Akademia, Starbucks, LPQ, Shokoladnitsa, CoffeeShop
$1,000 - $2,000
2 Sretenka
Historical city center with a large number of restaurants/cafes (across price points).
Rock'n'Roll Bar & Cafe, Beverly Hills Diner, Coffee Bean,Volkonsky, Kozlovica
$800 - $1,500
3 Pyatnitskaya
Lively retail and leisure district, surrounded by business
BQ Cafe, LPQ, Paul, Jon Joli, Mama Tao, Punch&Judi Pub, Chugunny Most, Hub
$1,000 - $1,500
4 Myasnitskaya
Historical city center with a large number of restaurants/cafes (across price points)
Dantes, Didu, Red Espresso Bar, Aloha Bar, Dve Palochki, Scherbet, Dream Bar
$1,000 - $1,500
5 Arbat
Well-established entertainment area. Lively retail and leisure district. Traditional tourist destination
McDonald's, Starbucks, Dunkin’ Donuts, Harat’s Pub, LPQ, Rukkola, Khinkalnaya, Hard Rock Café, Krispy Kreme
$1,000 - $1,500
6 Red October
Former chocolate factory — nightlife hotspot
Strelka, Rolling Stone Bar, JOYs, Produkty, Zu Café, Reka, Icon
7 MaroseikaPokrovka
Historical city center with a large number of restaurants/ cafes.
Volkonskiy, Shokoladnitsa, Prime Star, McDonald’s, Jean Jacques, Follow me café, Pilsner, Bulka, Coffemania
$1,000 - $1,500
8 Tverskaya Zastava Square
Pedestrian zone between Leningradsky Prospect and Tverskaya Yamskaya St. Developing business region.
Torro Grill, La Bottega, LPQ, Coffeemania, Starbucks, Osteria Bianca, Hudson
$1,500 - $2,000
$500 - $1,000
SHOPPING MALLS The shopping mall format is the most popular format in Moscow (and in Russia, as well). Moscow has 112 quality shopping malls with 3.9 mln sq m total GLA. And shopping malls will continue to be popular moving forward. Projections suggest that 30 new shopping malls may be built in Moscow in the next three years. Lacking entertainment options, shopping centers are an attractive leisure opportunity for many Russians. Due to this, even during the 2008-2009 global economic downturn, foot traffic in Russia’s malls remained solid. It is essential that every quality Moscow shopping mall has a food court (including both fast food and upscale dining options). However, historically, the size of Moscow food courts has lagged behind what is seen in other countries worldwide (due in part to a limited number of food operators on the Russian market in previous years). The situation is changing though. New prime shopping malls (including: Aviapark, Columbus and Metropolis phase 2) have significantly larger food courts. In these projects, food and beverage operators account for 13-15 percent of total shops. Moving forward, the number of cafes and restaurants will grow in shopping malls; and these malls will be a prime destination for Moscow’s food & beverage retailers.
The Shoopping mall challenge Integrating more food & beverage operators Food & Beverage
* Shopping malls with GLA 10,000+ sq.m
Country
% of food & beverage stores, total number of prime shopping mall retail units
Australia
23%
Turkey
19%
Netherlands
18%
UAE
17%
UK
17%
USA
17%
Germany
17%
Spain
16%
Scandinavian countries
14%
France
13%
Czech Republic
13%
Poland
13%
Moscow
10%
INTERNATIONAL BRANDS IN RUSSIA
LOCAL RUSSIAN BRANDS
Italy * Source: Сushman&Wakefiled
9%
RETAIL SPACE ACROSS RUSSIA
INTERACTIVE MAPS
Cushman&Wakefiled Russia interactive map
http://www.interactivemaps.ru/ COLUMBUS
MOSCOW MALL
ODINTSOVO GALLERY
RIVER MALL
AVIA PARK
VODNY
RETAIL SPACE ACROSS RUSSIA
RUSSIAN RETAIL FORMATS SHOPPING CENTERS
STREET RETAIL
NEW RETAIL FORMATS
As of January 1, 2013, Russia’s total existing quality shopping center stock stood at more than 16.4 million sq m GLA (or 115.4 sq m per 1000 inhabitants). This lags behind Europe’s average of 259.9 sq m. Numerous positive signs exist in the segment. New “world class” malls are being built in Moscow. The most successful shopping malls have 100 percent occupancy, as well as long retailer waiting lists. The majority of quality projects have been built in Moscow and other major Russian cities. However, in recent years, developers have shown increased interest in mid-sized cities (with populations less than 500,000).
The Russian high street market is unsophisticated and non-transparent. Many buildings are inappropriate for modern retail (for example, due to: utility challenges, poor shop depth and being located under residential properties). Street retail is also negatively impacted by Russia’s harsh climate (which dissuades foot traffic). However, recent signs of improvement have been seen. It should also be noted that in many mid-sized Russian cities (population less than 500,000) street retail continues to dominate because there are no other viable alternatives.
As the retail sector continues to evolve, new retail formats will emerge in Russia. Retail Parks Retail parks have not yet been built in Russia. However, because of sustained, strong demand from big box operators (including global leaders), developers continue to consider this format. Factory Outlets Russia’s first factory outlet opened in 2012; and two more entered the market in 2013. These three outlets are in the Moscow Region. However, due to strong demand, developers are considering factory outlets in the regions. E-commerce E-commerce is surging in Russia. In 2012, almost 22 million Russian consumers made Internet purchases (a 50 percent year-on-year increase). Statistics indicate that retail turnover in the segment grew 36 percent in 2012 and stood at USD 11 bln. At 2 percent of Russia’s total retail turnover, the segment (e-commerce) still has significant growth opportunity.
THE CUSHMAN & WAKEFIELD TEAM
RUSSIAN RETAIL TEAM
RUSSIAN RESEARCH TEAM
люAXIM KARBASNIKOFF Partner, Head of retail services
DENIS SOKOLOV Partner, Research Director
maxim.karbasnikoff@eur.cushwake.com
denis.sokolov@eur.cushwake.com
лЋKATERINA ZEMSKAYA Partner, Head of retail agency
LADA BELAYCHUK Associate, Research Director
Ekaterina.zemskaya@eur.cushwake.com
Ekaterina.zemskaya@eur.cushwake.com
TATIANA DIVINA Associate, Research Director Tatyana.Divina@eur.cushwake.com
Cushman & Wakefield Ducat Place III 6 Gasheka Street Moscow, Russia 125047 +7 (495) 797-9600 www.cushmanwakefield.ru www.cwrussia.ru www.marketbeat.ru www.facebook.com/cwrussia