Market Advice, the Moscow-based market research company, says that having interviewed decision makers from the 30 biggest players in the €350 million industry, the consensus is that imports from Ukrainian confectionery companies such as Roshen, AVK and Kiev-Konti are continuing to impact the market because Russian producers are often unable to compete on a price basis.
Manufacturers reported that improvements in the quality of Ukrainian caramel means that the it now largely matches that manufactured in Russia. Additionally, respondents said that because Ukraine has a good supply of cheap sugar from the domestic sugar industry, it is able to offer its caramels onto the Russian market at highly competitive prices.
So successful has the Ukrainian move onto the Russian market been, that in recent years there has been a growing trend towards Ukrainian caramel makers buying up Russian businesses. In 2001 Roshen bought up Likonf's Lipetsk confectionery factory and at the beginning of this year Kiev-Konti bought up another smaller Russian caramel player, Konditer, in a deal that is expected to grow its share of the market to 5 per cent.
Besides the growing influence of Ukrainian businesses, manufacturers have also reported increased demand for diabetic and other sugar-free ranges. The report's findings indicate that currently 50 per cent of all Russian caramel manufacturers now offer a reduced sugar caramel product, highlighting consumers' increasing demands for products that are more focused towards niche requirements.
On top of that manufacturers said they were also responding to consumer needs by increasing the quality of their products through the introduction of increasingly natural ingredients.
With regards to market growth, manufacturers said they envisaged their main market growth to lie in the cheaper and premium segments. Some 40 per cent of respondents said they believed there would be dynamic growth for caramels in the price range up to $1.3/kg, with the same figure reporting that they expected significant growth in the $1.6 to $2.2/kg segment.
The 30 leading players, combined with the handful of far smaller players on the Russian caramel market, collectively produce around 350,000 tons of caramel each year, in a market that is currently growing at between 5 and 8 per cent annually. Leading western players include Mars, Chupa Chups and Nestle, whilst leading domestic players are represented by Krasny Octyabr and Babaevskoye.
For the complete results of this market survey on the Russian caramel sector contact Market Advice.