Russian confectionery market growth slows

Speaking at a conference on food processing in Russia last week, Hans Guldenberg, the head of Nestlé's operations in Russia, said he expected growth in the market as a whole to slow considerably by 2010 - as little as 15 per cent over a six-year period.

According to analysts Market Advice​, the premium chocolate sector offers manufacturers one of the few possibilities for strong growth, although this segment is also likely to be dominated by the top two players, Nestlé and Sladko.

This is part of their ongoing struggle to create a brand identity across a wide range of confectionery products at varying price points, and, more importantly, throughout the country as a whole. As with most large countries, Russia is not a single market but rather a myriad of local markets, many of which have their own small-scale producers and popular local brands.

Market Advice said that most analysts agreed with Nestlé's gloomier forecast for market growth, with sales likely to expand by 3-6 per cent next year compared to 10 per cent last year.

Its own assessment of the market, carried out at the request of the London-based International Cocoa Organisation (ICCO), supports these estimates. A third of Russian's questioned by Market Advice said they would not increase their consumption of chocolate any more, as excessive intake was harmful, while another third said they would eat more as new products were launched and household incomes improved.

The final third said they would possibly eat more chocolate if their circumstances changed, but that the continuing uncertainty over the economic situation made it all but impossible to predict an increase in income.