Spending lots of money on expensive advertising campaigns may not be the best way to build growth in the Russian chocolate market, at least according to a study from Moscow-based consultancy Market Advice carried out in the first half of 2002.
Although Swiss-based Nestlé is the most popular manufacturer of chocolate in Russia (operating from a number of production facilities there, including the 'Russia' factory), other international players are far less popular, despite their high levels of advertising. While Nestlé was voted the most popular producer by over 22 per cent of respondents, high-spending international rivals Cadbury and Mars fared less well, garnering just 2 per cent and 1.7 per cent respectively.
The only other international player to feature in the top 10 was Germany's Stollwerck (which operated the Pokrov factory now sold to KJS), which was voted the most popular by 6.6 per cent of respondents. All the other most popular brands were produced by local companies: Babaevsky was the number two player with 16.4 per cent, while Krasny Oktyabr (or Red October) was in third place with 13.4 per cent.
But the popularity of brands also varies according to region, Market Advice's study showed, with regional players not surprisingly coming out on top with their local consumers. Thus, the intriguingly-monikered producer Named after Krupskaya was by far the most popular producer in the north west of Russia (with a 37 per cent share) but was unheard of in other regions such as the North Caucasus.
But while Nestlé is currently the biggest player in Russia, the market research company pointed out that the April 2002 merger of Red October with Rot-Front (the fourth most popular company with a 12 per cent share) had created a Russian group likely to overtake the foreign operator as the market leader.
Market Advice's report on the Russian market was commissioned by the Russian National Association of the Confectionery Industry with a view to creating a generic promotional campaign for chocolate and cocoa-based products there. The aim of this campaign is to increase consumption of chocolate over the next five years to the levels last seen in the days of the USSR. At present, Russians consume 2-3 kg per head each year; in the Soviet era, consumption was nearer 8 kg per capita.
The research shows that consumer attitudes to chocolate vary widely, although for the most part it is seen as a good product. Almost all of the 1,500 people questioned by Market Advice said they thought chocolate was tasty and nutritious, while 40 per cent said they thought it made a nice present and a quarter said they thought it was stimulating.
However, there were concerns about the potential high calorie content of chocolate (one reason why Market Advice said it expected the diet chocolate sector to show some of the fastest growth in the coming years), the potential allergic effects, and the cost. However, the balance of the responses favours an increase in consumption, Market Advice said.
The industry was also interested in ascertaining what the likely expenditure on chocolate would be in the future - after all, it is hard to envisage an increase in consumption if people cannot afford to buy the product.
The study showed that since 82 per cent of the Russian population was currently classified as low income, the most they would be likely to spend each month on chocolate would be around 300 roubles (€9), irrespective of whether they live in the city or the countryside. However, the consultancy said that the 10 per cent of the population with a high family income could spend up to 500 roubles a month.
For more information on Market Advice's report on the Russian and CIS chocolate markets click here.