Starbucks to Russia
Overview
Russia is the largest country in the world with a total population of 143 billion and areas stretching over Europe and Asia. Formerly the dominant public of the Union of Soviet Socialist Republics (USSR), Russia now is an independent country and the most influential member of the Commonwealth of the Independent States (CIS). Several governmental policies have been launched in the last few years aiming to transform the country to be more democratic with a market-oriented economy. From 2002 to 2006, Russia's economic growth has been improving with the average of 6.1% annually. Its real personal incomes and consumer expenditure has also been rising dramatically. Poverty has declined steadily and the middle class has continued to expand. The country's economy has been expanding with a rapid rate due to high oil prices, stabilized rubles, rise in exports, and increasing production and industrial output. In addition, Russia is full of an educated and skilled labor force. With a strategic location, providing the speedy and effective access to the countries of the CIS, the large number of population and increasing in consumer's purchasing power, Russian market is a profitable area that should not be overlooked at all.
Market Research
According to the research from Euromonitor International (October, 2005), Russian coffee market is dominated by an instant coffee with a significant 90% share of the market in value terms. The fresh coffee market is still in the introductory phase compared to the instant coffee; however, as shown in Exhibit 1, the market is growing at the rate of 10 percents in 2004 with the value of approximately 200 million dollars. Sales from coffee shops had risen to account for 8% of foodservice distribution in 2004, three percent higher than the previous year. Such significant growth is fostered by the current boom in foodservice, an increase in consumer awareness and a thriving coffee culture. In addition, Euromonitor found that
Russia is the largest country in the world with a total population of 143 billion and areas stretching over Europe and Asia. Formerly the dominant public of the Union of Soviet Socialist Republics (USSR), Russia now is an independent country and the most influential member of the Commonwealth of the Independent States (CIS). Several governmental policies have been launched in the last few years aiming to transform the country to be more democratic with a market-oriented economy. From 2002 to 2006, Russia's economic growth has been improving with the average of 6.1% annually. Its real personal incomes and consumer expenditure has also been rising dramatically. Poverty has declined steadily and the middle class has continued to expand. The country's economy has been expanding with a rapid rate due to high oil prices, stabilized rubles, rise in exports, and increasing production and industrial output. In addition, Russia is full of an educated and skilled labor force. With a strategic location, providing the speedy and effective access to the countries of the CIS, the large number of population and increasing in consumer's purchasing power, Russian market is a profitable area that should not be overlooked at all.
Market Research
According to the research from Euromonitor International (October, 2005), Russian coffee market is dominated by an instant coffee with a significant 90% share of the market in value terms. The fresh coffee market is still in the introductory phase compared to the instant coffee; however, as shown in Exhibit 1, the market is growing at the rate of 10 percents in 2004 with the value of approximately 200 million dollars. Sales from coffee shops had risen to account for 8% of foodservice distribution in 2004, three percent higher than the previous year. Such significant growth is fostered by the current boom in foodservice, an increase in consumer awareness and a thriving coffee culture. In addition, Euromonitor found that