All the ingredients for substantial food price increases and inflation in Russia are now in place.

These ingredients include the devaluation of the rouble, the prospect of empty supermarket shelves, the increased cost of sourcing food from new suppliers in far-flung regions around the world, negative economic indicators, and the onset of winter.

However, to date, food price increases have been minimal and patchy throughout Russia. The simplest explanation for these minimal increases is that they are based on the instincts, resiliency, capacity, and tolerance of ordinary Russians to make do with less.

It should be noted that huge variations and volatilities in Russian food prices are commonplace.

There are many prime examples of Russians’ traditional prudence and survival instincts in their response to the current crisis.

In June and July, sales of new cars dropped by 20% and laptops by 33%. Cancellation of foreign holidays all but wiped Russia’s travel agency sector. Russian consumers and farmers are now forcing supermarkets to cut their costs, drop their demands for hello money and share the pain of food price inflation.

Russian pressure on McDonald’s has sent shock waves and distress signals through the restaurant group’s global food chain. The group’s immediate response is to give out free coffee with Big Macs.

Beer marketing

One European company which has seized on the well-honed Russian austerity characteristic is the Danish brewer Carlsberg.

The group’s Baltika Russian beer brand recently saw its share of the Russian market fall by 1.2% to 37.4%. Considering that 35% of Carlsberg’s annual profits come out of Russia, this is extremely serious. A resultant profit warning sliced nearly 6% off the group’s share price.

To halt the slide, Carlsberg introduced a slightly smaller beer bottle for the Russian market. The tactic appears to have worked, with sales volume and value recovering. Denmark’s pig farmers are not so lucky. The loss of Russian markets will cost them €215m a year.

Other EU food exporters are opening backdoor corridors into Russian markets, via the Balkans, Belarus, and Kazakhstan.

Marine Harvest ASA, the Norwegian-owned largest farmed-salmon producer in the world, is going a few steps further. The giant PLC group recently paid out €100m for a Chilean company and is re-locating many of its operations to the Faroe Islands. Faroe now has a European monopoly to supply the massive Russian fish market, which takes 140,000t of salmon a year.

The devaluation of the Russian rouble is a mixed-bag. The bad news for Russian consumers and Irish food exporters is that currency devaluation drives up imported food prices.

The good news is that this creates opportunities. Since the beginning of the year, the rouble lost 15% against the dollar, but only 8% against the euro.

Clearly, American farm machinery and pedigree livestock exporters are almost at twice the disadvantage of their European counterparts in Russian markets.

Brendan Dunleavy has over 20 years’ agricultural project management experience in Russia and Ukraine