There are still a few Soviet-era Lada cars being driven around inner Moscow, but they are endangered, not only by their own rust and legendary unreliability, but by the flood of foreign cars that jam the Russian capital’s broad streets to near-immobility. Nothing signals Russia’s new petrodollar wealth more clearly than the number of late-model luxury cars – BMW, Mercedes, Jaguar – stuffed into Moscow. It’s a phenomenon that’s significant to Australia not because of the cars, but because of what the drivers choose to eat.

As in China and India, newly-rich Russians are eating more protein. And unlike its Asian counterparts, Russia is already a nation of dedicated red meat eaters – there is no conversion from white meat necessary here. In fact, the new Russia offers the world’s most promising market for protein.

In the past 12 months, it has imported more than a million tonnes of meat – and unlike the high-end East Asian beef markets, it wants everything, from marbled rib-eye steak to chuck and offal. In central Moscow and St Petersburg, some 101 billionaires, an estimated 88,000 millionaires, and an uncountable number of the more modestly wealthy that form Russia’s first-ever middle class are turning to steak, once a rarity on Russian menus, for the first time.

Elsewhere, most of Russia’s 143 million citizens still drive Ladas as they wait for the economic tide to float their boats, and they stick to their usual sources of protein: mince-filled dumplings, cured sausages of infinite variety, and a colourful array of tinned meats.

“Russia is a one-stop butcher’s shop,” says David Jones, Meat and Livestock Australia’s regional manager, Europe, and himself a former butcher.

Australia’s main opportunities lie in the top end of the market, where its strengths and cost structure are similar to those of its main competitors, the US and New Zealand.

Russia’s food service and retail sector are increasingly dealing with steak, and most big restaurants in the biggest cities feature Australian steak. Volatile currencies have also helped make Australia a strong competitor against the dominant player in the huge frozen beef sector, Brazil. In 2007, Australia’s total beef exports to Russia amounted to a modest 5063t, back from an earlier peak of 12,500t in 2006. But with appreciation of the Brazilian currency, the real, in January this year, demand for Australian product exploded.

As of September, Australia has pumped more than 60,000 tonnes of meat into Russia for 2008, mostly frozen commodity product. This had shown Russia to be a market of huge promise and large challenges, Mr Jones said. Australia is benefiting not only from appreciation of the real, but from market growth: Russia imported 26 per cent more beef in the first half of this year compared with the equivalent period in 2007. However, the market, which is nothing if not volatile, has now had a hiccup.

Australia’s bull run on the Russian frozen beef market slowed abruptly in September, with a fresh depreciation of the real and renewed Russian focus on Brazil, coupled with the Russian ruble’s depreciation against the US dollar. Still, Australia managed to ship about 5000 tonnes of meat into Russia last month. Mr Jones said that Russian importers also appeared to have ordered heavily before the onset of winter, driven by the threat of ports freezing up and an importer quota system that rewarded past performance, so Russian meat storages were full to overflowing.

MLA expects it will be at least a month before the orders start flowing again and just how strongly they will flow, and where, is difficult to assess: a feature of the Russian meat market is its lack of reliable figures. An opaque and still-emerging market is only one of the challenges exporters have to contend with if they want to engage with the Russian bear. The exporter rumour mill recently reported that two Russian importers wanted to “renegotiate” orders already landed in Russian ports. Russian border inspection also operates its own rulebook, guided by a strong desire for safe food imports.

In 2007, 35 European Union meat suppliers were banned by the Russian quarantine agency, Rosselkhoznadzor, because of “dangerous bacteria” in pork and poultry products. The red-hot Russian economy presents other long-term hazards. While the nation has annual GDP growth of 7.6 per cent, a vast trade surplus in its favour, and accumulated cash reserves of $US500 billion, inflation in 2008 stands at 15 to 16pc.

These are challenges Australian exporters are happy to negotiate, because this remains a market too big, and too promising, to ignore.

Matthew Cawood visited Moscow as a guest of Meat and Livestock Australia.

Safe and reliable

AUSTRADE’S senior trade commissioner in Moscow, Dan Tebbutt, hasn’t any doubts. “Russia is one of the most exciting markets for food anywhere in the world,” he says – one with a voracious appetite for quality imported products.

The nation’s retail sector is growing at 15 to 20 per cent year on year, the food sector at 40pc, and advertising at 35pc – driven by real wages growth that hit 16.2pc in 2007.

“Russians are very proud people; they want the best and have high expectations from life,” Mr Tebbutt said. “For a lot of their history they haven’t had the opportunity to fulfil those ambitions. Now they have the opportunity, they’re grabbing it.”

Australia is well positioned to capture some of that demand, with Russians perceiving Australia as “ecologically safe” and a reliable producer of top-quality food.

But it’s not only food that the new Russia needs. Mr Tebbutt believes there is considerable opportunity for marketing technology and know-how in this economy, as well as investment. There are some threats to foreign investment, he acknowledges, but argues that “any smart global player in agribusiness needs to be in this market”.

Mr Tebbutt is responsible for nine countries – Russia and the Commonwealth of Independent States (CIS) countries like Ukraine, Kazakhstan and Uzbekistan – that collectively cover 20 per cent of the Earth’s surface.

The economies of several are being lifted on a tide of petrodollars, but Mr Tebbutt says the fundamental strengths of the region go far deeper.

“They (Russia) became the world’s biggest diamond exporter two years ago, they’re in the top three or four exporters of iron ore, they’re one of the world’s biggest coal producers, and they are the world’s biggest nickel producer.”

To Russia with steak – at up to $100 a pop

It’s doubtful that even Australia contains a more one-eyed fan of Australian beef than Yankel Schein, the “concept chef” for Moscow steakhouse chain Goodmans.

An Israeli who has worked in Moscow for 12 years, Mr Schein helped establish the eight-restaurant Goodmans chain and so introduce Russians to steak – a significant feat, given that there is no native word for “steak” in Russian.

It is even more significant in light of a contemporary Goodmans price list, a reflection of the manic Moscow economy, where a 16-ounce “Chateaubriand” steak sells for a couple of dollars shy of $A100, and standard rib-eye, New York or filet mignon steaks each costs about $63 – and that’s without a side-serving or drinks.

Lamb is also on the menu, priced at about $17 per four ounces for a 14 to 25 ounce rack. Except for a single US cut listed on the menu, it’s all Australian. Each night, the Goodmans restaurants are packed to the rafters with enthusiastic diners chomping into (mostly) Australian meat. The US has only made a recent return to the Russian market after its 2003 BSE scare, but Mr Schein said despite a historic Russian bias towards US beef, about 80 per cent of customers have stuck with Australian product.

Meat and Livestock Australia has encouraged the Goodmans experience a step further, into the Russian supermarket Alphabet of Taste, where Australian steaks carrying a tiny Australian flag also wear a Goodmans endorsement. Other upmarket restaurants in Moscow and St Petersburg, including a growing number of steakhouses, carry Australian steak as a premium item on the menus.

As far as Mr Schein is concerned, Australia and the US are the only two countries worth buying steak from.

“Nobody else can win on your natural resources, your quality and grading systems,” he said. “In Moscow, the quality of Australian grainfed beef can’t be replaced. Maybe we could raise beef in Russia … maybe after 50 years and billions of dollars.”

His only suggestion for improvement in the Australian system was to get more beef into the European Union system.

Goodmans’ next project is to take its chain to London. Pictured (below) is a typical evening scene in one of Goodmans’ Moscow steakhouses, with the waiter displaying a range of Australian-sourced meat.