Leading brands leave Russia, but their products are easy to find

Bottles and cans of Coca Cola imported from Japan and China together with other soft drinks containers are displayed for sale in Vladivostok, Russia, February 20, 2023. REUTERS/Tatiana Meel

Coca-Cola trucks cross the border into Russia, holidaymakers return home with the latest Zara designs, and local internet marketplaces purchase IKEA's furniture stocks. Although Western brands have departed the nation, their products remain.

Despite European, North American, and Japanese corporations leaving Russia due to their actions in Ukraine, the impact on Russian consumers is limited, despite longer delivery times and higher prices for certain commodities.

The supply lines have changed, but the products are available online and in stores. Buyers need to know where to search.

Notably, most products involved are not subject to sanctions, and these transnational flows are legal. And Moscow welcomes them regardless of the route they travel.

The continuous availability of brands illustrates the difficulty corporations experience in managing supply networks when leaving a market.

Zara in Minsk

Once Moscow sent soldiers into Ukraine, the owner of Zara, Inditex, closed its 502 Russian stores and sold them to the UAE-based Daher Group.

Today, small-scale imports and online sellers are keeping them alive, according to a Reuters analysis of six major online marketplaces and interviews with twelve customers and dealers.

Albina, 32, brought an empty suitcase to Minsk last summer and returned 24 hours later with 33,000 roubles ($442) worth of clothing for herself and her friends from the Inditex brands Zara, Bershka, and Massimo Dutti.

Inditex has not pulled out of Belarus, a firm Moscow ally, as have most Western companies ceased operations in Russia. The corporation did not respond to this inquiry.

Albina told Reuters that she also purchased clothing in Paris and Dubai through an online seller network.

"There are pages on Instagram, on Telegram, there are girls I know who moved to live in Europe, Istanbul, or Dubai," she said. "They collect orders, let's say in Istanbul, they take 15%-30% (as commission), then get them delivered here, and you pay for the delivery."

The year prior's high rouble and weak Turkish lira played into the hands of Russian consumers.

Dinara Ismailova, the marketing director of CDEK Forward, told Reuters that currency fluctuations contributed to a sevenfold surge in shipments from Turkey. CDEK Forward is a shipping service for international e-commerce sites.

"As soon as brands said they were leaving, some kind of panic started, and volumes and orders rose sharply," Ismailova explained.

Last year, CDEK Forward's revenue doubled in terms of money, with 80 per cent of that coming from clothing, while its revenue from goods tripled.

"It's comparable to if you went to a Zara store in New York, bought something there and sent it to your friends in Moscow," Ismailova explained.

Online marketplaces

As supply chains broke down, Russia legalized so-called parallel imports, allowing shops to bring in foreign products without the approval of the trademark owner.

Imported items are widely available on e-commerce websites, and vendors frequently promote that they import things from abroad.

Wildberries, the market leader, sells leftover stock from Inditex brands and has around 17,000 Zara items in its portfolio. According to a source close to Inditex, these were clearance stockpiles in Russia when the company halted operations there.

The company Wildberries did not reply to a request for comment.

Coca-Cola is a typical Western product sold by Wildberries, Ozon, and Yandex Market, which is frequently represented as imported to assure customers that it is authentic.

While Coca-Cola Co. stopped making and marketing beverages in Russia last year, others have been importing them from Europe, Kazakhstan, Uzbekistan, and China, as evidenced by labels on cans and bottles.

This arrangement is peculiar in that prices change. In one Moscow store, three cans of Coca-Cola imported from Denmark, Poland, and the United Kingdom were sold at three different prices.

A senior employee of a large retailer described how businesses have changed.

"Contacts were quickly established, and new contracts with new partners signed, new money flows, and logistical supply chains with Turkish, Polish and Kazakh companies were launched," he said on condition of anonymity.

Coca-Coke is currently distributed in even more nations.

The staffer said, "However, as usual, it is the buyer who pays more for these new inconveniences,"

'Friendly' imports

While trading remains somewhat inefficient, these new partnerships remain here, according to Ram Ben Tzion, chief executive officer of the digital vetting platform Publican.

"The parallel importing mechanisms have been consolidated and expanded, meaning that pretty much everything is accessible and still will be in the future," Ben Tzion said, pointing to border truck lines and the emergence of new organizations in neighbouring states.

"Coca-Cola can easily notice the 'surge in demand' from countries neighbouring Russia, where most parallel imports come from," stated Ben Tzion. It is not in their best interest to take action.

Coca-Cola declined to comment.

According to their trade data, the exports of "Friendly" nations that do not impose sanctions on Russia have increased. Russia has ceased publishing such statistics.

Last year, China-Russia trade reached a new high of 1.28 trillion yuan ($186 billion), while Turkey's exports to Russia increased by 61.8% to $9.34 billion, and Kazakhstan's exports increased by 25.1% to $8.8 billion.

As a result of the loss of regulatory control, however, Ben Tzion suggests that other low-quality commodities may reach Russia via unofficial supply networks.


Some brands must fight for years against counterfeits and illegal imports. In the interim, Coca-Russian Cola's competitors have increased bottling capacity and introduced new Cola products.

When IKEA departed Russia, it sold its shares to Yandex Market, the e-commerce division of IT giant Yandex. Inter IKEA Group's owner of the IKEA brand announced that it sold the remaining inventory to Yandex for an undisclosed amount as it scaled out IKEA Retail Russia.

According to Yandex Market, it connects vendors who previously sold goods through IKEA shops with clients directly.

Former suppliers are also willing to offer IKEA products with minor modifications under various brands. One advertises a bedding set labelled "ARUA (analogue of IKEA BERGPALM)".

IKEA stated it was investigating online advertisements for similar products.

Even if new prospects present themselves to Russian companies, their dependence on Western brands may impede efforts to increase local production.

"Over time, market forces will continue to drive the products Russians are used to into the market, and while there is an aspiration to move to 'Made in Russia, ' it will be tough to get people hooked up on Russian coke," said Ben Tzion.

Publish : 2023-02-22 14:39:00

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