The expected slow down in consumer price growth from 2012 to 2015 will help boost per-capita consumption across major food and beverage sectors, according to KPMG’s and Nielsen latest report.
KPMG in Russia and CIS in partnership with Nielsen and Euromonitor International today has published the results of its survey on the Food and Beverage market in Russia.
The pace of the economic recovery should determine consumer expenditure growth in Russia. This is expected to close the gap between developed markets and outpace other BRIC countries. Continued growth of disposable income will establish a solid foundation for purchasing power growth over the next 5 years and will move Russia closer towards the level of developed countries.
The share of spending on food and beverages as a percentage of total expenditure should continue to decrease from 29% (2011) to 26% (2015).
The dairy market is one of the largest in the Russian F&B sector in terms of volume. It is expected to continue demonstrating the fastest growth in value terms (approximately 9–13%), which is mainly driven by dairy prices growing faster than general consumer inflation due to a deficiency in raw milk. Imported raw milk and dry milk is mainly from Belarus. Other market growth drivers are increase in consumption and a continued shift towards yogurts and deserts; by 2015 these segments should represent over 30% of the total diary market.
The Russian chocolate market is expected to grow by approximately 7–11% in value terms. The key growth driver is expected to be overall increase in per capita consumption, which is fueled by new products and varieties (e.g. snackable packaging formats, new tastes and flavours). Further, value growth will be driven by an expected increase in cocoa beans prices which will impact on consumer prices of Russian confectionary.
The coffee market is expected to demonstrate the slowest growth in terms of both volume and value as it is almost fully developed and has nearly reached saturation point in Russia; however, due to a strong tradition of tea drinking the overall proportion of coffee consumption is low.
The beverage market is one of the fastest developing markets in Russia. Total volume grew by approximately 12% in 2010 and is expected to level at an annual growth of 7% by 2015. The market landscape is expected to change over the coming years as lemonade, kvass and mineral water categories are expected to outperform the juice segment.
The salty snacks market is expected to grow at a rate of 9–12% until 2015 and is driven by the highest lag in per-capita consumption; however, some categories (e.g. fish, crisp breads) are likely to decline due to market saturation.
According to George Pataraya, Head of Consumer sector, KPMG in Russia and CIS: “Looking ahead at the Food and Beverage market we see consolidation, concentration and a reduction in growth rates across major segments. Even a couple years ago, FMCG markets were growing at double digit pace and companies grew organically following general consumer trends. Going forward organic growth may not allow shareholders to achieve their growth ambitions and M&A will rank higher on the agenda. Among the markets analysed dairy, beverages and salty snacks will show the highest investment attractiveness as they still have the highest potential for further growth and significant space for further consolidation and product innovations”.
© 2017 KPMG Audit LLC, the Mongolian member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.