Sales of premium and indulgence products represent a clear indicator of the development of the Russian consumer economy. Francisco Redruello, research analyst at Euromonitor International, analyses current trends and looks ahead.


There are many indicators of economic development but the growth of non-essential food products represents a useful barometer of how a country’s consumer market is developing.  And economic growth and the resulting increase in purchasing power in Russia are playing a key role in the growth of specific impulse and indulgence food categories


Sales of chocolate boxed assortments, for instance, grew by 14% in retail value during 2007. These products have benefited significantly from an increase in demand for premium offerings in upper-tier cities such as Moscow and St Petersburg. Euromonitor International highlights that while Russian consumers tend to buy premium boxed assortments for friends and family, they purchase more economically-priced bagged lines for their own consumption.


Milk chocolate tablets outsell dark by more than two to one, accounting for almost 70% of total value sales in 2007. Russian consumers prefer milk chocolate which was the staple chocolate type produced during the Soviet era. However, sales of dark chocolate are benefiting from growth in the premium chocolate market where dark varieties predominate.


Premium growth has also been seen in other impulse food categories such as chocolate-coated biscuits, which grew by 17% in retail value during 2007, outstripping the 9% average growth recorded by the entire biscuits category.

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The popularity of chocolate-coated biscuits was underpinned by strong investment in product innovation. Research shows that Russian manufacturers are investing heavily in expanding their product portfolios through the addition of premium fillings such as walnut and bran. In turn, this trend is capturing the attention of more affluent consumers who are willing to pay a premium for higher quality flavours.


Meanwhile, chocolate countlines have benefited from the expanding snacking culture, particularly in urban areas, with retail value sales of these products growing by 14% in  2007, consolidating strong growth since 1998. Critically, the consumer base for these products is expanding from teenagers to adults, who are increasingly purchasing them as snack items for on-the-go consumption.


In a similar vein, sweet and savoury snacks sales have been boosted as the snacking culture has taken root in Russia. Retail value sales of sweet and savoury snacks rose by 15% in 2007, continuing the robust growth trend seen in previous years. Chips/crisps accounted for 40% of sales. Consumed with beer at home or in pubs, crisps are particularly popular with male consumers, who eat them while watching sports programmes with friends or family.


However, in spite of the increasing popularity of snacking, there are still some snack concepts that have not yet taken off in Russia, snack bars being a notable example. But this sector clearly has significant potential for expansion. The most popular formats currently are nut-based bars with sugar syrup, manufactured by smaller local factories. Granola/muesli bars are consumed by a relatively small group of consumers, mostly young affluent women in urban areas willing to pay a premium for a snack with a perceived health benefit.


Energy bars were only introduced in Russia in 2004, but are growing well. Value sales were up by 22% in 2007, almost twice the average growth recorded across the snack bars category as a whole. That said, they still accounted for less than 10% of overall snack bar retail value sales in 2007. However, energy bars are becoming more popular with young male sports enthusiasts in urban areas, generally being purchased at gyms.


Indeed, Euromonitor International research suggests health and wellness are playing an increasingly important role in the purchasing decisions of Russian consumers. This has clearly benefited the performance of impulse food categories such as fruit snacks.


Having only emerged in 2001, fruit snacks represent the most dynamic product category within sweet and savoury snacks, growing by almost 30% in 2007 and proving particularly popular among health-conscious consumers. In particular, they are considered to be a good source of vitamins and are recommended for consumption during winter months. However, the consumer base for fruit snacks remains relatively small and retail sales of these products accounted for less than 2% of the total sweet and savoury snacks category in 2007.


This healthy eating trend has also made its way into the biscuits category. Russian manufacturers are paying increasing attention to the health content of their products. Whole grains are increasingly featuring in NPD while manufacturers are also making a point of reducing the sugar and trans-fat content of their offerings.


In contrast, however, research shows that ice cream consumers show little interest in low-fat or sugar-free products. Ice cream in Russia is mostly available in high-fat and sugar varieties, and healthier variants remain rare in the country. Euromonitor International highlights that reluctance to try low-fat indulgence products stems from the fact that fat-rich products are favourably perceived as a valuable energy source for the long winter season, and also have a more pleasing mouthfeel and texture.


Overall, Euromonitor International predicts strong growth for most impulse and indulgence categories over the five-year period from 2007 to 2012. Chocolate confectionery and sweet and savoury snacks are set to register a particularly strong performance, growing by 30% and 90% in retail volume respectively.


Research suggests that growth in upper-tier cities such as Moscow and St Petersburg, the principal engines of economic development so far, will begin to show the first signs of maturity, particularly in relation to standard branded products. In contrast, lower-tier cities and medium-sized towns in rural regions will witness the strongest sales growth. Such localities will likely start to benefit from better economic conditions trickling down from the major urban centres. This is a key factor that will likely boost consumer expenditure on impulse and indulgence products as a whole across the entire country.