It's hard not to be impressed by the millions being pumped into the Moscow region by these operators as they look to grab a slice of the largest and least developed consumer goods markets in Europe. At Metro's Russian office, spokeswoman Elena Solovieva says there is room for everybody to build a presence in Moscow and beyond. "Within the next two to three years, the big international operators of hypermarkets and specialised distribution formats will no doubt appear in the biggest Russian cities. There will be space for them ­ and for the existing retail chains and other formats. Sure, competition will grow, but to the advantage, finally, of the population." Metro ­ which is running a poster campaign in Moscow to publicise the opening of its first outlets in Russia ­ has earmarked $150m to build six C&C depots in the capital by the end of next year. It is also considering how best to roll out its wholesale format to other major Russian cities. The reason for the interest of Metro et al is simple. The economy is starting to recover after the dramatic fiscal collapse and devaluation of the rouble in 1998 that turned it into the basketcase of Europe. As Spar Russia md Dmitry Maslov puts it: "Once you hit rock bottom, there is only one way to go, and that's up." Today, there are plenty of encouraging signs of life. GDP is growing; inflation is surprisingly low by Russian standards (about 20%); consumption of goods and services is rising, and consumer confidence is recovering. Levels of disposable income have bounced back ­ officially to about $300 a month in Moscow, unofficially much higher, although outside the capital they are much lower. Consumer advertising has risen 40% year-on-year, providing further proof that something positive is happening, according to Jeffrey Hesse, director of the agricultural trade office at the US embassy. "Obviously companies are chasing after a market they believe is growing," he says. And Hesse believes there are opportunities for producers of value added grocery products as well as commodity goods. It's been a rough few years for domestic food and drink producers, many owned by international fmcg companies. But now the industry is one of the fastest growing in Russia, and it was not only domestic firms that were upbeat at last month's World Food Moscow exhibition. The foreign exhibitors were also keen to capitalise on the positive vibes surrounding the economy. Commodities will always account for the bulk of food imports to Russia because the country cannot grow enough to feed itself. That makes it an important trading partner for traditional exporters of everything from meat and poultry to dairy and fresh produce ­ which were out in force at the show. However, the focus went beyond commodity items. There were plenty of foreign companies showing processed, added value goods. Locally produced versions of British favourites such as Cadbury and Irn-Bru could also be found, along with plenty of tea brands. But the British company making waves was Burton's Foods which was supporting the relaunch of Wagon Wheels by its new distributor Melfoods. Before the economic collapse in 1998, Burton's shipped 20 containers a month of its biscuit brand to the country. And it wants that business back. Lynne Jones, Burton's commercial manager, Europe, says with stability returning and more foreign retailers opening stores, it was "now or never". Before the crisis, Russia was a decent enough market for British food exporters. Food from Britain figures show that we shipped £142.5m worth of stuff there in 1997 ­ most of it commodities such as meat, dairy, cereals and sugar. By last year, according to FFB, our food and drink exports to Russia were worth only £53.6m ­ with fish and cereals the only areas showing significant year on year growth. Cathy Cottrell, second secretary (commercial) at the British Embassy in Moscow, agrees the time is right for more British food and drink companies to explore the opportunities available in Russia. "Food ingredient companies in particular should take a look," she says. "The food processing industry here is the fastest growing in the country and Russia can't meet the demand for raw materials." However, the market is difficult, particularly outside Moscow, and holds plenty of risks. Cottrell warns: "You need a good partner; you need to do your homework, but this is a huge market for those prepared to take it seriously." And if foreign retailers are prepared to take Russia seriously, shouldn't more manufacturers be doing likewise? n {{COVER FEATURE }}