Retailers were drawn to farming – Newspaper Kommersant No. 34 (7479) of 02/28/2023

Russians began to switch more often to farm products after the withdrawal of Western producers from the market. This prompted federal retailers to invest in services to organize the delivery of local products to their stores. So, the fund, among the founders of which is the founder of Vkusvill Andrey Krivenko, became a co-owner of the Food Miles platform, which purchases goods from farmers for large chains. Similar services are beginning to be developed by Magnit and X5 Group. Chains launch such projects in an attempt to increase the range of high-margin products.

The TealTech Capital investment fund acquired 20% of the Food Miles service, which organizes the logistics and supplies of goods from local producers and farmers to large retail chains. This was reported to Kommersant by representatives of the parties, without disclosing the amount of the transaction. According to the Unified State Register of Legal Entities, TealTech Capital became a co-owner of the service at the end of January this year.

Food Miles was founded in 2018 by Andrey Gidrevich, who, according to the Unified State Register of Legal Entities, owns 58% in Food Miles LLC. Another 19.5% belongs to Sergey Dmitriev, 2.5% belongs to Alexander Gorny. Currently, Food Miles operates in Moscow, St. Petersburg and the Far East.

About 180 farms use the service today. The Food Miles commission is about 10% in Moscow and St. Petersburg. According to the company’s calculations, the expenses of farmers when working independently with retail chains amount to about 20%. TealTech Capital says that investments will be used to expand the service to million-plus cities where it is not represented, to expand the team and develop the IT product.

According to a NielsenIQ study, over the past year, almost half of Russians have become more likely to purchase locally produced goods, after the products of Western brands that have disappeared from the market have disappeared from the shelves. According to the Association of Retailers, in 2022, about 48% of international suppliers reported a suspension of work in the country.

Regional retailers work directly with local producers and farmers, but it is difficult for them to get on the shelves of federal chain stores, says Ivan Babukhadze, director of the Union of Independent Chains of Russia. At the same time, One Story partner Olga Sumishevskaya notes that it is among large retailers that competition for fresh products has unfolded. This is confirmed by the networks themselves.

Thus, Magnit is testing its aggregator for the purchase and supply of farmers’ products and does not rule out joint work with Food Miles, said Yevgeny Sluchevsky, director of the company’s agricultural and industrial complex. X5 Group (Perekrestok, Pyaterochka, Chizhik networks) is also developing a logistics aggregator for small local manufacturers.

Such services are necessary because small businesses do not have sufficient logistical competencies to work with large chains, says Andrey Gidrevich of Food Miles. It is difficult for such manufacturers to ensure the stability of supplies themselves, it is unprofitable for them to organize their own logistics due to small volumes of production, agrees Olga Sumishevskaya. Working through such aggregators, farmers receive a stable source of product sales, the expert notes.

Mikhail Burmistrov, General Director of Infoline-Analytics, believes that by working with farmers, retailers increase customer loyalty, ensure differentiation from competitors and get products with a higher margin on the shelves. Buyers choose farm and local products mainly not for a low price, but for taste characteristics, the expert explains. According to AKORT, the share of local producers in the range of retail chains reaches 90% in the category of bakery products and chicken eggs, more than 30% in dairy products, 24% in confectionery.

Alina Savitskaya