THE CONFERENCE PROCEEDINGS - IFEAT

FROM THE 1990s UNTIL TODAYThe reason why I am not going into a detailed historical discussion is that, after the collapse of theUSSR, the F&F industry was destroyed almost completely. However sad it was, we had to start againfrom scratch, with new people, new technologies, and a new market. Only one flavour producersurvived in Russia from the Soviet time, and it had to deal with the new situations, including strongcompetition from imported products and a new ingredients market as Chinese output in the industryexpanded and diversified.In the Soviet era, the industry was mostly self-sufficient, with a few occasional contacts with majorEuropean companies like IFF or Givaudan.As soon as the market opened up in the early 1990s, it was flooded with imported goods includingfragrances and flavours. Major multinationals set up their representative offices, branch companies ordistribution agreements.Russian F&F production began to recover in the late 1990s as the business environment grew stronger.At first the newly established producers simply mixed imported flavour or fragrance concentrates withsolvents. Then they went farther and started to make their own formulations.After the crisis in 1998, when the rouble fell by almost 300% against the USD, the economy receivedan unexpected boost. Foreign brands tripled in price, became less competitive and some of themtemporarily left the market. This encouraged local producers to develop further.The world financial crisis of 2008 led to stagnation in some industries such as construction, marketingand banking. In the production of consumer goods in Russia, the negative impact was small. Thecosmetics and food industries did not face any decline at all, but the demand structure changedconsiderably. Previously booming interest in the luxury segment seized up, while consumer demandturned back to mass-market products. Now the trend is in reverse. Since 2010, the interest in selectedbrands and luxury products has slowly regained its position on the market.Starting from the late 1990s, the local flavour and fragrance industry in particular has been developingat a dynamic pace. Today there are 28 producers of flavours and fragrances in this region. In Table 1you can see how the number of companies has grown from 1995 until today:Table 1. Number of F&F producers in Russia and Ukraine per decade*RussiaandBelarusUkraineTotalFlavourproducersFragranceproducersBoth1995 3 - 3 3 - -2000 6 - 6 5 1 -2005 13 3 16 10 2 42010 19 3 22 11 7 42012 23 5 28 16 8 4* Only currently operating companies are counted, including one in Belarus256