The Sweeter Side of Crime: Russia's Booming Black Market for Confectionery and Chocolate
Illicit candies cause a budget shortfall of 12 billion rubles, reveals HSE.
Confectionery and chocolate product turnover in Russia is teeming with illicit activities, and specialists at the Higher School of Economics' Center for Economic Expertise (CEE HSE) have calculated a whopping 1.49 billion packages of undeclared goodies, skirting tax records. There's a growing discrepancy between domestic production, imports, and household consumption, authorities observe, with a glaring 10.4% gap.
Artem Koncerev, CEE HSE's deputy director, states candidly that this unacknowledged delight is the hidden fruit of Russia's confectionery landscape. The omission from tax records implies potential losses of up to 12.07 billion rubles for the federal budget, according to CEE HSE's calculations, with a sizable chunk, 7.39 billion rubles, foregone in profit tax.
Analysts foresee these budget losses from the shadow economy growing by 18% by 2025. Yet, it's essential to remember: undeclared sweets aren't necessarily untasty. They could stem from perfectly average ingredients but slide unaccounted under the taxman's nose, a common practice among cash-strapped small manufacturers facing escalating production costs.
Take the tumultuous rollercoaster of cocoa bean prices, for instance. In 2024, they skyrocketed 47% globally. Meanwhile, soaring production costs have caused equally alarming price hikes, a situation reported by our very own website.
Dmitry Leonov, deputy chairman of "Ruspordsoyuz" (a union of major food suppliers), tells "Kommersant" that, in 2025, wholesale prices climbed to 765.5 rubles per kg from 524.3 rubles in the previous year, while retail prices shot up to 1,320 rubles from 1,040 rubles per kg. Initially, experts predicted yet another 20% price surge this year.
Once more, we plunge into the realm of black market goodies, where the line between licit and illicit commerce blurs. Navigating this confectionery Kremlin seems a colossal challenge, but it's not an insurmountable one. Let's explore possible avenues to tackle this unwelcome situation.
Curbing the Black Market
Strengthening Enforcement:
Boosting customs and border control efforts can help lessen the influx of smuggled confectionery, shrinking the black market.
Encouraging the Legal Market:
Promoting domestic confectionery industries can meet consumer demand with legal products, thus bringing a semblance of fairness to the market.
Enhancing International Cooperation:
International cooperation between nations can address the core issues driving illegal trade such as sanctions evasion and corruption.
Empowering Consumer Awareness:
Raising awareness among consumers about the risks associated with buying illegal products can help reduce the demand and support legitimate businesses.
A Case in Point: Roshen
Roshen, a leading Ukrainian confectionery company, has experienced severe setbacks due to Russia's import ban and Ukraine's conflict. Roshen, reeling from geopolitical upheavals, shut down its Lipetsk factory in Russia in 2017, a poignant symbol of the impact of geopolitical tensions on the legal confectionery market[1]. This tale underscores the necessity for businesses to adapt to shifting market conditions and regulatory trends.
Conclusion
Addressing Russia's black market for confectionery and chocolate entails a multifaceted solution, emphasizing strengthened legal frameworks, heightened consumer awareness, fostering domestic industries, and international cooperation. By taking decisive action, we can minimize illegal trade's impact and promote a safer, fairer market for all stakeholders.
I'm not sure, but it's possible that some confectionery and chocolate products in the retail industry might be connected to the black market, contributing to the financial discrepancies observed by authorities. Strengthening enforcement, encouraging the legal market, and enhancing international cooperation could potentially help curb these illicit activities, ensuring fairness and transparency in the finance and retail sectors.
