Packaged Food in Russia

Abstract

Why buy this report

• Get insight into trends in market performance
• Pinpoint growth sectors and identify factors driving change
• Identify market and brand leaders and understand the competitive environment

Product coverage

Baby food; Bakery products; Canned/preserved food; Chilled processed food; Confectionery; Dairy products; Dried processed food; Frozen processed food; Ice cream; Impulse snack products; Meal replacement products; Meal solutions; Noodles; Nutrition/staples; Oils and fats; Pasta; Ready meals; Sauces; dressings and condiments; Snack bars; Soup; Spreads; Sweet and savoury snacks

Executive summary

Food sales remain buoyant

In spite of a declining population and inflation, which remains in double figures, the Russian packaged food market continued to post positive current value growth in 2007. Basically, the restructuring of the Russian economy has begun to pay dividends with GDP increasing rapidly and average incomes also rising quickly and helping to underpin sales of packaged foods, especially in urban areas where the Russian economy has developed the most rapidly and with it more Western modes of living have penetrated the most. The emergence of supermarket shopping and a general modernisation of the country' s distribution network have also proved significant in encouraging this trend to develop.

Premium segment develops

Within the Russian market, a degree of saturation has become apparent which has begun to lead to the development of premium and economy segments. With rising incomes, more consumers are shifting to premium products which meet their demands for superior quality, which is generally more powerful a pull than increased prices are a deterrent. The growing trend towards snacking and the impact of busy lifestyles will provide further growth of packaged food consumption. With rapidly growing domestic incomes throughout Russia, customers appreciate the convenience of easy-to-prepare foods and various packaging formats from single small-sized packs for small households to big family items.

Market dominated by large players

The packaged food market is led by giant players in Russia. Other manufacturers tend to consolidate to withstand the tough competition. Customers tend to stay loyal to a few brands. Since the large manufacturers can generally afford to occupy the best shelf space in supermarkets, customer loyalty stimulates the further development of famous brands, leaving less space for smaller manufacturer activity. Manufacturers offer wide assortments of products in all sectors. Nowadays consumers are able to choose the best-quality products and most convenient packaging formats. Their loyalty to a brand depends not only on a product' s characteristics, but also on its presence in major distribution outlets.

Independents rule

Sales of packaged food in Russia continue to be dominated by the independent channel which includes a myriad of privately-owned ' mom and pop' style outlets. Although these outlets still account for the lion' s share of sales there has been a notable rise in the number of domestic supermarkets and discounters opening across the country. There has also been a degree of international interest in the Russian market with large international players such as Rewe and Spar already active in the country and looking to expand their presence still further over the forecast period. The modernisation of the Russian distribution network has helped to encourage growth along with increased levels of personal income, which have encouraged increasing sales away from unpackaged foodstuffs.

Further growth likely

Although the Russian population is likely to suffer further declines over the forecast period, this is likely to be countered by a further rapid development of the wider Russian economy. Economic development will continue to push up levels of personal income and encourage the consumption of a wider range of packaged foods which will become more affordable and also likely sought after for reasons of convenience as lifestyles become more hectic. The development of packaged food will be further boosted by chained retail operators such as Perekriostok, whose further expansion will bring more Russians into contact with Western shopping patterns.