Russian Flower Market
Russia is the world’s largest importer of flowers. According to the latest data it is among the six leading countries importing all types of cut flowers. Ahead of Russia there are only such consuming markets as the USA, Germany, the Netherlands, Great Britain and France. According to forecasts in the nearest 10 years Russia will be the world’s second flower importer after Germany.
According to various analysts in 2012 the volume of sales in Russia amounted to over 4 billion US dollars, with 90% of imports.
In the structure of cut flowers import rose holds the first place – 43%, followed by chrysanthemum and carnation with shares of 22% and 16% respectively.
The main suppliers are the Netherlands (70% of the market) and South American countries. Ecuadorian roses make up 60% of import both in terms of volume and value. Ecuadorian roses are distinguished by high quality. They withstand long distance transportation and have good stability characteristics.
Colombia is the second rose supplier, and the main suppliers of carnation.
According to marketing research of the world and Russian cut flower market in 2012 the growth of rose supplies to Russia was observed from all main suppliers.
But the highest growth rate was from Kenya. Rose import from this country grew by more than 50% in quantity and value terms.
Israel is the largest supplier of greens. Cut flowers are also supplied from Turkey, Kenya and Ethiopia.
The main supplier of orchids to the Russian cut flower market is Thailand.
The larger share of imported flowers is distributed in Moscow. According to market experts flower sales in Moscow makes 17.5 – 23% from the total flower sales in Russia. Moscow is followed by Moscow region and St. Petersburg (18% and 13% respectively).
Flower market growth in Russia is ensured not only by import but also by local producers. According to medium-term forecasts volume growth of the Russian cut flowers production will significantly outpace the growth of imports into the country. Local production of cut flowers and marketing of greenhouse products in Russia in recent years is growing rapidly. At that large investments are directed to non-core business, to flower industrial greenhouses. The average growth rate between 2008-2011 was 23%. It was ensured thanks to commissioning of new greenhouse complexes and to the newly built commercial greenhouses reaching full production capacity.
The largest production volume of cut flowers in terms of quantity in Russia is in the Central Federal Okrug. First of all it is connected with the growth of investments in cut flowers production and appearance of new production greenhouses.
Many leading analysts of consulting companies predict positive growth of the Russian flower market. According to Global Research Consulting (GRC) the volume of the Russian cut flowers market is about 1 billion pcs.
The Russian flower market is very far from saturation. Today the market shows annual 20-25% growth. The actual size of the market is estimated by analysts at
$ 40 billion.
Everybody can find its niche in the Russian flower market today!
Russian Flower Market
Structure State Prospects
Russian flower market… What are its peculiarities, needs and development prospects in new economic conditions?
This topical issue is scheduled for discussion with the professional community within the frameworks of the Business Program of the International exhibition “FlowersExpo’2016” (13-15 September, 2016, Moscow, IEC “Crocus Expo”).
Peculiarities and Needs
Russia with its vast territories and different weather conditions of many regions where the production of their own flowers and ornamental plants is unprofitable is still the largest consumer and importer of flowers. The experts include it in the top six leading countries in consumption and import of all kinds of cut flowers after the USA, Germany, the Netherlands, Great Britain and France.
Growth in sales of cut flowers in Russia has been constantly increasing in recent years and has grown from 938 million pcs. in 2005 to 1.75 million pcs. in 2014. The amount of flower sales according to different analysts accounted for over 4 billion USD where 90% is import.
The main suppliers of flowers are the Netherlands (44% of the market) and South American countries. Colombia and Ecuador supply almost half of all cut flower (Ecuador: 36%, Colombia: 13%).
The largest share of imported flowers is sold in Moscow. According to experts the sales market here accounts for 17.5- 23% of the total sales in Russia. Moscow is followed by Moscow region and St. Petersburg, 18% and 13% respectively.
As to the structure of cut flower import, rose ranks first – 43%. It is followed by chrysanthemums and carnation, 22 and 16% respectively. Over 60% of rose import both in kind and in value terms is supplied from Ecuador. The second place among rose supplying countries is occupied by Colombia.
According to marketing research of the world and Russian cut flower markets the growth of rose import to Russia is noted from all main supplying countries.
However, the highest growth rate is observed in Kenya. Import from this country increased over the past few years by more than 50% in quantity and value terms.
New countries India and Vietnam are now entering the Russian market. Japan also shows interest in the Russian market. The major constraint here is logistics.
What are the changes the crisis of 2015 brought to the successfully developing Russian flower market? According to experts the decline in sales in real terms in 2015 occurred within 12-15%. At the same time due to devaluation of the ruble the figures in monetary terms have not changed much.
It should be borne in mind that the needs of the Russian flower market are satisfied not only by imports but also through domestic production.
Domestic production of cut flowers and marketing of nursery floral and ornamental products in Russia have been growing rapidly. This growth was achieved due to introduction of new greenhouse complexes and due to the recently built facilities that achieved their full capacity.
By 2015 the area of modern flower producing greenhouses reached 168 ha. They are furnished with state-of-the-art equipment, use the latest technologies and have competent specialists. Their weak link is planting stock which is mainly supplied from European countries (mainly from Holland). No single company in Russia is engaged in production of certified planting stock.
Over the last 4 years domestic production of cut flowers have increased 2.5 times and reached 15% of the total sales.
The Central Federal District accounts for the largest volume of cut flowers production in real terms. It is due to an increase of investments and building of new greenhouses there. In the nearest future new flower greenhouses will be commissioned in Kursk, and greenhouse production areas in Belgorod will be enlarged. The production is drawn towards southern territories.
According to medium-term forecasts the growth of cut flowers production in Russia will considerably outpace the growth of import.
Forecasts and Prospects
Speaking about flower import without which it is impossible to meet the demand of the Russians for flowers, like in any import-dependent segment, the Russian flower market responded to soared currency rate by increasing the final flower cost and reducing olumes.
According to experts in 2015 the reduction of volumes in the Russian flower market was within 12-15%. At the same time due to the ruble devaluation, monetary indicators remained practically unchanged.
According to “RoyalFloraHolland”, which in spring sales of 2016 paid special attention to the Russian market, due to the latest events flower sales in Russia for 8 March was under considerable pressure (the turnover fell by 8%).
However, our market has its chance. Specifics of the Russian flower market is that flowers for the Russians are still a very important and essential attributes of holidays, family events and public celebrations. And despite the crisis the demand for flowers is still at a sufficiently high level.
Therefore experts say that despite serious decline in consumer interest and a number of technological difficulties, the Russian market still remains interesting for investors.
In 2016 further decline is not expected. Moreover according to the market participants in the current year the market will not only maintain its positions but will go up and the growth rates will be increasing as the crisis in the country’s economy is overcome.
Analysts from consulting companies predict positive growth of the Russian flower market in the next five years. By GLOBAL REACH CONSULTING (GRC) estimate, the volume of the Russian cut flower market will make up over 2 billion pcs in real terms.
According to forecasts of analysts from BusinessStat the sales will reach 2.16 billion pcs in 2019 exceeding the level of 2014 by 23%.
The main growth drivers are floristic services and sales growth thanks to increase in the average purchase frequency. Gradually flowers will not be looked upon only as a holiday attribute. Following the global trend the Russians will start to consider flowers as a daily attribute of home décor elements.
It is forecasted that, having overcome the crisis in the next 10 years Russia will take the second place in Europe after Germany in the volume of flowers imports. The actual capacity of the Russian flower market is still estimated by experts at $ 40 billion.
International Exhibition on Floriculture and Green Industry “FlowersExpo” - key to the promising Russian market.