Local demand brands – Newspaper Kommersant No. 234 (7435) dated 12/16/2022

The reduction in the activity of global players is changing the balance of power in the Russian market of food and consumer goods (FMCG). The share of the top 50 brands is declining in favor of private labels (PL) of chains and small local players. The latter intend to increase their market shares in 2023 as well, but experts do not expect a noticeable change in the composition of the top 50 brands.

The share of the largest brands in the FMCG market in Russia has decreased this year, according to a NielsenIQ study. According to analysts, physical sales of the five largest brands of food products decreased by 26% year-on-year, and their share in money – from 25% to 22.5%. For the five major non-food brands, unit sales decreased by 37%, and the monetary share decreased from 42.3% to 36.3%. The total market share of the top 50 FMCG brands decreased to 25.2% from 27% a year earlier. The total sales of the top 50 brands in NielsenIQ are estimated at 1.7 trillion rubles.

NielsenIQ Russia Client Relations Director Saltanat Nysanova notes that the largest brands are losing their share due to the switching of buyers to private label chains, which already account for 9% of sales, as well as the strengthening of small and local players. As follows from the NielsenIQ data, the most noticeable drop was shown by the brands of foreign companies, which revised their work in Russia after the outbreak of hostilities in Ukraine and the tightening of Western sanctions.

Vodka Khortytsya, which is part of the Global Spirits of Ukrainian businessman Yevgeny Chernyak, which has been discontinued in the Russian Federation, has dropped 13 positions year-on-year. Similarly, the position in the rating of the Gillette brand of the American P&G has decreased, the Zewa brand of the Swedish Essity has lost ten positions. P&G previously announced the termination of investments in the Russian Federation, and Essity plans to leave the market. According to a Kommersant source in the market, the dynamics are associated with the refusal to invest in discounts and advertising and the expansion of the assortment by networks through private labels and other brands. Coca-Cola and Pepsi, also discontinued, dropped four and eight spots, respectively. The brand of dairy products PepsiCo “Miracle” also dropped by eight lines.

At the same time, Chernogolovka, Chesterfield (Philip Morris), Hochland and Brest-Litovsk of the Belarusian Savushkin Product were included in the list of 50 largest NielsenIQ brands. Camel (JTI) moved up nine spots to take third place in FCMG sales. The Chernogolovka Group explains the dynamics by expanding the range, including through cola, increasing distribution, growing demand for lemonades, and investing in marketing. Maxim Korolev, editor-in-chief of the Russkiy Tabak news agency, connects the increase in Chesterfield’s share with the brand’s accessibility. JTI Russia Marketing Director Dmitry Isakov says that Camel was able to offer the optimal assortment, and JTI ensured uninterrupted supplies.

Alexey Popovichev, Executive Director of Rusbrand, confirms that many new products have appeared on the FCMG market this year, and buyers have begun to choose private labels more often, which usually cost less. In 2023, the distribution of shares will depend on the resumption of marketing activity by global companies, the dynamics of imports and other factors, the expert says. But Mr. Popovichev does not expect major changes. According to him, the main global players have already made all the announcements regarding the work in Russia, and for the appearance of new local brands in the top 50, they need significant investments and noticeable marketing activity.

Chernogolovka Group of Companies says that the main efforts in the beverage category in 2023 will be focused on building a distribution network, including in the Far East. The group will also continue to invest in brands and expand the range in new categories. The Association of Retail Companies (AKORT; includes X5 Group, Magnit, Lenta, Auchan, etc.) expects that in the coming years, the share of private labels in Russian retail may at least double from the current 12% of the total revenue of chains. In Europe, the share of private labels in the sales of retail chains reaches almost 30%, according to ACORT.

Anatoly Kostyrev