Russian Prime Minister finds new way to get supermarkets to cut margins

Posted by Daniel Palmer on 26th June 2009

Russian Prime Minister Vladimir Putin has paid a surprise visit to a supermarket in Moscow, queried their prices and received a guarantee that the cost of pork for customers would fall the next day.

His visit to the dairy and meat aisles of a supermarket outlet of one of Russia’s largest retail chains – X5 Retail Group – came with food producers and the leading managers of the retailer in tow.

The first target was sausages, according to the Kommersant daily, with Mr Putin questioning the cost of the higher priced sausages only to be met with the response that they are very high quality and there were cheaper options available.

“Look, these ones are just 49 rubles (A$1.94),” Managing Director of Corporate Relations for the X5 Retail Group, Yuri Kobaladze, said.

“Too expensive,” Mr Putin countered.


“I can show you your mark-up,” Mr Putin remarked, brandishing a piece of paper with producer prices. “Look at this kind of sausage, your mark-up is 52 percent!”

The Prime Minister then turned his attention to pork.

“How much is pork?” he asked, according to Interfax.

The price tag was over double that of a list of farm gate prices he had in front of him.

“This is double the price. Is that normal?” he queried.

“Is 120 per cent a high markup?” Mr Kobaladze replied.

“Very high.”

“It will be lowered tomorrow,” the retail boss promised.

And that was that… It’s hard to argue with the Prime Minister.

Russia, which has plans to become the world’s food bowl, is grappling with the ongoing impact of recession and Mr Putin is desperate to strike a better balance between the cost at the farm gate and the cost to the consumer. A recent survey found growing food prices were considered the country’s biggest problem by around three-quarters of respondents.

Could we see our own Kevin Rudd trawl the supermarket aisles in the weeks ahead? After all, those who can remember back to the election campaign would recall the Labor Party talking tough about food inflation. If nothing else it would be nice to get some news about politicians that has nothing to do with “utegate”.