Just the Facts – Chocolate in Russia

Mars yesterday (4 August) announced plans to launch its second and largest confectionery factory in Russia in 2012. Here, with the help of Euromonitor report Confectionery in Russia, we take a closer look at the Russian chocolate market.

In 2009, chocolate confectionery in Russia was estimated to grow 16% in value terms to reach RUB217bn (US$17.28bn) and 2% retail volume growth to reach 703,000 tonnes. Growth is predicted to increase 10.6% in volume terms between 2009 to 2014 and reach RUB258bn in sales by 2014 compared to RUB217bn in 2009.
Traditionally, Russian consumers used to prefer plain dark chocolate as the country has a long established history of such chocolate production. However, since 2009 there has been more of a shift towards milk chocolate, especially among younger consumers who grew up being exposed to the extensive promotion of milk chocolate by multinationals Kraft Foods Russia and Nestlé Russia, resulting in its fast growth.
Devaluation of the national currency and growing inflation rates as a consequence of the global financial crisis, has affected chocolate confectionery prices in Russia. Moreover, cost of production is increasing due to the rise in raw material prices, such as cocoa beans, in 2009. As a result, unit prices are expected to grow 14% by 2014.
Leading positions in the Russian chocolate market were occupied by local player Rossiya with a 12.4% share in 2009, followed by Mars with an 8% share and Kraft with 7.6% of the market. The multinationals adopted successful strategies by developing international brands and acquiring national players to strengthen their brand portfolios. For example, Nestle climbed the rankings to ninth place in 2009, as a result of its acquisition of local player Ruzskaya Konditerskaya Fabrika in 2008.The company is working on the promotion of its international Nestlé brand, introducing new products such as tablets with yoghurt and forest fruit filling.
Chocolate confectionery is expected to see strong competition from dried fruit and snack bars, packed seeds and nuts as a lot of people in spite of the crisis are still concerned with health issues. Sugar confectionery is also a potential threat to the category as the unstable environment is driving people to buy cheaper products, especially consumers who are middle aged and older.