Russian confectioner adds to premium range

- Last updated on GMT

Related tags: Confectionery, Marketing

Russian confectionery group Mechta has launched a new premium
product line - the latest in a growing number of local producers
entering an upmarket segment which was once the sole domain of
western companies. Angela Drujinina reports.

The new Morskaya Collektsia product - a range of sea shell-shaped chocolates in an elegant box with a transparent pane - mimics the design of similar products imported from Belgium, France or Italy, but Mechta believes that it can compete with these imported products in terms of quality as well.

The new product line comes in two variants. Morskaya Akvarel is a dark and white chocolate shell with a chocolate and nut centre, while Nevedomiy Mir is a dark and white chocolate shell with a milk chocolate and liqueur centre.

The premium chocolate market in Russia barely existed prior to the arrival of western European players a decade or so ago, but since 1999 a number of local confectioners have also begun focusing on this lucrative sector.

Russian producers retail their chocolates at around RUR380-400 ($10-12) per kilogram, offering products of similar quality at a significant discount to western imports, which sell for more than RUR700 per kilogram. Mechta's products are positioned in the low- to mid-priced section of the premium market, retailing for RUR450-500 per kilogram.

"Although Mechta products are in a lower price segment than Belgian chocolates, were have noticed that the Belgian producers have begun to react to our positioning, showing that they clearly believe us to be a threat,"​ Evgeny Zorin, Mechta's marketing manager, told CEE-foodindustry.com​.

"Mechta is just two years old, and our market is not very big at the moment. But we are growing fast. At first we were focused only on the Moscow market, but now our chocolates can be bought in all of Russia's major cities where there is an existing market for premium chocolates, and where consumers can afford them: St. Petersburg, Yekaterinburg, Novosibirsk, Rostov and others."​The first Russian company to enter the premium chocolate market was Odintsovo Confectionery (OKF), which sells its hand-made products under the A. Korkunov brand, named after the company's owner, Andrei Korkunov. First launched in 1999, this year the brand became the first Russian chocolate to enter the super-premium sector, retailing for more than RUR600 per kilogram - or roughly $1 per chocolate.

With increasing numbers of Russian players keen to exploit the substantial profit opportunities in the premium segment - margins are between 50-80 per cent, allowing companies to more than offset raising input costs in recent months - it is no surprise that its growth has outstripped that of the chocolate market as a whole in the last few years. According to data from market research group Business Analytica​, Russian chocolate sales remained flat in 2003 at some 643,700 tons, masking rapid growth in the market share of premium (+14.2 per cent) and super-premium (+10 per cent) products compared to the previous year.

The move of Russian confectioners into the premium sector contrasts dramatically with the strategies of many western firms, which have begun local production in order to tap into the mainstream chocolate market. Pokrov, owned by Kraft Jacobs, and TM Kompliment, owned by Cadbury, have both taken this particular route down market in recent times.

This desire to begin local production can be explained by the fact that traditional chocolate brands remain extremely popular among Russian consumers. But this is not just a sentimental attachment or one based on the fact that local products are cheaper than imports: most Russians believe that domestic chocolate brands are of better quality than foreign brands, using more natural ingredients. Russia's confectionery market - both sugar and chocolate - is currently estimated at around 2 billion tons a year, and is growing at an average of 10 per cent per annum. But despite this rapid growth, there are still significant opportunities for domestic and foreign producers, according to Viktor Sharshapin, president of the Association of Confectionery Producers (ASKOND).

"We have not yet reached the production levels of the 1980s, when the confectionery industry produced about 20 kg per capita a year, as current output is around 13.5kg per head,"​ he said. "The potential of the market is obvious, especially given the fact that only producers are currently operating at around 60 per cent of existing capacity."

Related news

Related products

show more

Let’s create your next special chocolate moment

Let’s create your next special chocolate moment

AAK - the first choice for value-adding vegetable oil solutions | 18-Jan-2019 | Product Brochure

The premium chocolate market is forecasted to grow three times faster than the standard chocolate segment. In addition, consumers are increasingly focused...

Accelerate your supply chain as pressures intensify

Accelerate your supply chain as pressures intensify

William Reed | 01-Oct-2018 | Technical / White Paper

Food, Drink and Non-Food manufacturers are under pressure. Range reviews, massive retail mergers, the backlash against plastic packaging and the ongoing...

Related suppliers