FMCG market in Russia (consumer goods)

The main articles are:

• Russian economy
• Retail in Russia

What is called everyday goods

The list of consumer goods (FMCG) includes:

• food,
• medicines (see Pharmaceutical market of Russia,
• household chemicals,
• personal care products and cosmetics,
• baby food,
• animal feed.

2023

Household chemicals production in Russia increased by 1.6% and reached 3.31 million tons

In 2023, the production of household chemicals in Russia reached 3.31 million tons. This is 1.6% more than in 2022, when 3.25 million tons of these products were produced in the country. Market trends are addressed in the BusinesStat survey published in mid-October 2024.

The study takes into account deodorants and flavors for air, polishing agents, household soap, as well as products for kitchen and plumbing, washing dishes, glasses and mirrors, washing, car care, care for shoes, clothes and fabrics, etc. Significant players in the industry are Lab Industries LLC, Unilever Rus LLC, Procter and Gamble - Novomoskovsk LLC, Faberlik JSC and Nefis Cosmetics JSC.

According to estimates, in 2019, 3.05 million tons of household chemicals were produced in the Russian Federation. A year later, an increase of 8.3% was recorded - to 3.3 million tons, and in 2021 the increase was another 7% with a final result of 3.53 million tons. However, in 2022, against the background of a worsening geopolitical situation, there was a drop of 7.9%.

The study says that a significant part of the Russian market is controlled by multinational companies that have their own production sites in the country. In 2022, Henkel, Unilever, Procter & Gamble, Reckitt Benckiser decided to reduce their presence in the Russian Federation: they abandoned advertising, investments in Russian business and reduced the range of manufactured goods. In addition, domestic production of household chemicals is highly dependent on imported components and components, primarily from Europe. Due to sanctions and the departure of foreign suppliers, domestic manufacturers of household chemicals faced a shortage of surfactants for detergents and washing agents, as well as polyethylene, polypropylene, paints and plastic. However, already in 2023, the production of household chemicals in Russia began to recover.^[1]

Sales growth of air fresheners by 19% to 46.9 thousand tons

In 2023, retail sales of air fresheners in Russia reached 46.9 thousand tons. The growth compared to the previous year, when about 39.3 thousand tons of these products were sold, amounted to 19.3%. The positive dynamics is due to deferred domestic demand and the restoration of imports, as stated in the BusinesStat study, the results of which were published on February 29, 2024.

The published statistics take into account sales of products such as aerosols, gels, deodorants, diffusers, odor absorbers, candles and sprays (interior perfumes). Among the significant market players are called Faberlik, Synergetic, Arnest, Sibiar and Aerosol Novomoskovsk.

According to estimates, 45.3 thousand tons of air fresheners were sold on the Russian market in 2019. In 2020, retail sales of these products decreased by 9.6% - to 40.9 thousand tons. Under the influence of the COVID-19 pandemic, demand was redistributed to disinfectants. In addition, in the Russian Federation there is a general trend towards the use of environmentally friendly and natural products: consumers often choose alternative methods of cleaning and refreshing air, for example, the use of essential oils. Because of this, sales of traditional fresheners are falling.

In 2021, due to deferred demand, the volume of sales increased by 3.5%, amounting to 42.4 thousand tons. And in 2022, amid a decrease in the solvency of the population and a sharp increase in product prices amid a worsening geopolitical situation, sales of fresheners decreased by 7.2%, amounting to 39.3 thousand tons. Buyers preferred to reduce the volume of purchased funds or switch to cheaper ones. In particular, many consumers refused to purchase automatic sprayers in favor of less expensive products.^[2]

The number of stores at the largest retail chains in Russia increased to 124 thousand.

At the end of 2023, the total number of retail facilities of the two hundred largest grocery chains in Russia reached 124.2 thousand. This is 12.78 thousand points more compared to 2022. That is, the annual increase was almost 12%, as stated in the INFOLine study, the results of which are presented at the end of March 2024.

The report said that the total trading area of ​ ​ the networks increased year-on-year by 2.68 million square meters, or 7.6%, reaching 37.86 million square meters. The share of the ten largest players in the growth of trading space increased by 4.4% - to 75.1% compared to 2022.

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INFOLine

INFOLine analysts name the decrease in retail space as one of the key market trends. In particular, the average footage of a grocery store decreased by 3.4% - to 304.26 square meters by the end of 2023. This is primarily due to a decrease in the number of large-format facilities commissioned. Thus, the share of hypermarkets in the structure of trading space on an annualized basis decreased from 15.5% to 14.3%, and the share of supermarkets - from 10.1% to 9%. The average area of ​ ​ retail facilities in the hypermarket format at the end of 2023 amounted to 5.25 thousand square meters, and the total number of such stores decreased by 10 - to 1031. In the supermarket format, the average footage was 940.4 square meters.

Another trend in the Russian market is the increase in the number of discounters, such as Chizhik and My Price. In addition, mini-shops near the house like "Vkusville" are gaining popularity. Such small street retail formats as Magnet Nearby, the Near franchise of the X5 Group, Red and White and Bristol of the Mercury Group are actively developing. It is said that in the discounter segment, the average footage of retail outlets at the end of 2023 was 404 square meters, and shops near the house had an average area of ​ ​ 99.7 square meters.^[3]

Dumplings sales have grown in Russia

In 2023, retail sales of dumplings in Russia in 2023 reached 476 thousand tons, which is 3.2% more than a year earlier. In comparison with 2019 (then 417 thousand tons of products were sold), the market volume increased by 14%, BusinesStat analysts calculated. Their data was published in May 2024. Read more here.

The leaders of the Russian market for the delivery of consumer goods are named

At the end of February 2024, the analytical company Infoline published a study on the Russian market for online delivery of consumer goods. The first place among such services was taken by Samokat, which at the end of 2023 recorded sales at 165.3 billion rubles (an increase of two times compared to 2022).

In the second position in the ranking of online sellers of consumer goods took Vkusville"" with an annual turnover of 140 billion rubles (+ 53% by 2022). On the third line X5 Group - with the delivery Fives of "," Intersection"" and the online store For the future"," sales growth - 78.8% to 133 billion rubles.

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Unsplash

According to Infoline managing partner Mikhail Burmistrov, the Russian e-Grocery market grew by + 47, despite large-scale challenges. In conditions of increased competition, those retailers that are able to guarantee the best customer experience, regardless of weather conditions or the load on the service on holidays, remain successful, the expert noted.

He explained the leadership of Samokat by a combination of effective assortment and logistics management technologies, as well as with strong marketing and a developed portfolio of his own brands, including in a number of categories of non-food products.

The Infoline study notes that most of the food was sold through the SberMarket delivery service, and Megamarket became the leader in the dynamics of online food sales among marketplaces.

Experts also pay attention to the growing turnover of marketplaces. Wildberries, which reached 4th place in 2023, increased food revenue by 73.3% to 99.3 billion rubles, and Ozon - 1.5 times, to 87 billion rubles. Ozon ranked sixth among everyday goods delivery services.^[4]

2022

In Russia, sales of bleach and stain remover decreased by 2.6% - to 72.5 thousand tons

The volume of the Russian bleach and stain remover market in 2022 amounted to 72.5 thousand tons, which is 2.6% less than a year earlier, when sales of these products were measured at 74.4 thousand tons. This is evidenced by the data that BusinesStat analysts released in December 2023.

The bulk of the demand in the market under consideration falls on bleaches - their sale in Russia in 2022 reached 59.5 thousand tons. Sales of stain remover amounted to 13 thousand tons.

At BusinesStat, bleaches were divided into three main species depending on their composition: chlorine-containing, oxygen and optical. The use of bleach and stain remover has become more frugal, with customers preferring to reduce purchases or switch to cheaper funds.

According to experts, one of the reasons for the increased demand for bleach and stain remover was the COVID-19 coronavirus pandemic. Chlorine-based cleaning products have begun to be used to wash and disinfect surfaces. Chlorine-containing bleaches are commonly known as "whiteness." Such funds are produced in Russia and are offered at relatively low prices.

According to the study, sales of bleach and stain remover in Russia in 2022 decreased against the background of a decrease in the solvency of the population, a sharp increase in product prices and a decrease in the need for disinfectants against the background of stabilization of the epidemiological situation. In 2021, sales of bleaches and stains decreased by 0.3% amid the high base of pandemic 2020. In 2021, the epidemic situation with the coronavirus began to gradually stabilize, and the population still had stocks of bleach and stain remover made during the period of rush purchases in 2020.^[5]

Reduction in the production of dishwashing products by 3% to 766 thousand tons.

At the end of 2022, the production of dishwashing products in Russia decreased by 3% compared to the volume of one year ago - from 789 thousand to 766 thousand tons. This is evidenced by data from the analytical company BusinesStat, published in December 2023.

According to the study, the production of dishwashing products in the Russian Federation has decreased largely due to the departure of foreign manufacturers. Most of them announced either the termination of work and the sale of assets to local buyers, or a reduction in output, with the exception of essential goods. For example, in March 2022, Procter & Gamble announced the suspension of investment and marketing activity, a reduction in product supplies to Russia and a significant reduction in the product portfolio at its plant in Novomoskovsk. In addition, Henkel announced its complete withdrawal from the market and the sale of its Russian assets.

Another problem for the Russian dishwashing market is that domestic companies are faced with a shortage of surfactants and other chemicals for the production of household chemicals due to the cessation of supplies by the largest foreign manufacturers (BASF, Clariant). It was not immediately possible to establish stable supplies of raw materials, analysts say.

According to their forecasts (the study was published in December 2023), in the coming years, the production of dishwashing products in Russia will grow as demand for products recovers. Taking advantage of the general uncertainty in the market, domestic manufacturers will increase their market share and expand the range. The state is also interested in the development of domestic production: for example, in July 2023, high customs duties were established on the import of detergents and cleaning products from "unfriendly" countries.^[6]

Russian companies oust imported washing powders

In 2022, 22.9 thousand tons of washing powders and liquid laundry products were imported from abroad to Russia, which is 34.6% less than a year earlier. The decline was due to the departure of some foreign manufacturers, which Russian companies began to use - in 2022 they increased production.

In 2022, shipments of washing powders from the United States were suspended (in 2021, the range was presented by the Amway trademark), laundry gels from Belgium, and laundry capsules from Serbia. In the conditions of a record reduction in the supply of washing products to Russia by Western partners in 2022, companies from Belarus quickly increased shipments of relatively cheap products to the domestic market. The share of supplies from this country soared almost 4 times: from 19.9% to 76.1%, partially compensating for the fall in imports of household laundry chemicals to Russia in 2022. The main range of products was occupied by the lines of brands "Seagull" and "Mara" from LLC "Perfume and Cosmetic Factory" Sonza. "

The Volgograd company Bionics noted a significant increase in demand for washing powders and dishwasher products and in 2022 announced its intention to increase their production 2.5 times, to 5,000 tons per month.

In addition, the BSK group tripled the production of Zifa and Luch detergents, and also announced the launch of an updated line of powders for children's linen on the market already.

According to experts, household laundry chemicals are essential goods and are included in the standard consumer basket, which ensures stable demand in the industry. The availability of the latest household appliances, the development of the market of cleaning services and dry cleaning laundry in the country also contribute to an increase in the consumption of detergents.^[7]

Imports of household chemicals to Russia decreased

In 2022, 312.2 million household chemicals were imported to Russia, which is 9.4% less than a year earlier. This is stated in a study by the analytical agency BusinesStat, which was released in May 2023.

According to the researchers, after the start of the special operation in Ukraine, a considerable number of multinational companies limited cooperation with Russian enterprises until the foreign policy situation normalizes. Procter & Gamble, Unilever, Kao Group reduced supplies, reduced the range and suspended advertising and investment activities in Russia. The German concern Henkel decided to leave the country and sold the Russian business to local investors.

Imports of household chemicals to Russia decreased over the year

The largest drop in imports of household chemicals in the Russian Federation in 2022 was noted in the following areas: Italy (by 33.8 million units), Germany (by 25.4 million), Britain (by 23.8 million), France (by 22.5 million). At the same time, supplies from Turkey (by 34.4 million units), Poland (by 24.2 million) and China (by 13.5 million) increased significantly. Probably, the supply of household chemicals from Turkey against the background of a reduction in imports from the EU will only grow, experts say. Firstly, Turkey offers a fairly wide range of high-quality local household chemicals (TM ABC, Bingo, Doa, Kalyon, Peros, Seba). In addition, factories of international giants P&G, Henkel, Reckitt, Unilever operate here. Secondly, Turkey remains neutral in the situation around Ukraine.

Thirdly, Turkey's undeniable advantage as a trading partner of Russia is convenient logistics: mainly goods are transported by sea. Novorossiysk There is a powerful seaport with a throughput of over 200 million tons per year, so delivery takes no more than 7 days. In addition, transportation by sea is quite economical in comparison with other types of cargo transportation, the study says.^[8]

Online sales of consumer goods increased by 43.5%

Online sales of consumer goods (FMCG) in Russia in 2022 increased by 43.5%, which is five times more than the average growth rate in the global market (8.3%). This is evidenced by the data that NielsenIQ analysts published in mid-March 2023. Read more here.

In Russia, food sales decreased by 5%

In Russia, food sales decreased - the turnover of trade in large chains in 2022 decreased by 5%. This is evidenced by the data of the Association of Retail Companies (AKORT), which were released on January 24, 2023.

According to Izvestia, the fall was due to the fact that citizens began to prefer the most necessary and cheap goods to expensive delicacies. However, the trend in online retail is different - there the turnover grew by 42%. But its indicators are still incomparable with stationary trade.

Russians began to buy fewer products

According to Igor Karavaev, Chairman of the AKORT Presidium, the most noticeable decline in the company was observed in the category of carbonated drinks, and the sale of drinking yogurts and curd desserts also decreased. The growth was observed in the category of "healthy lifestyle goods": fruits, vegetables, dietary cereals, as well as beer.

At the same time, the head of the Institute for the Development of Entrepreneurship and Economics (IRPE) Natalya Nazarova noted that although the turnover of food products has fallen, the situation in domestic trade cannot be called dramatic. She linked the drop in food sales to a decrease in the number of wealthy people - they went abroad. In addition, the development of trade was also affected by the fact that several grocery foreign brands left the domestic market at once - for example, in the drinks segment, she said.

Food products are among the top 5 most popular goods, which generally has a positive effect on the online segment, says Artem Sokolov, President of the Association of Internet Trade Companies (AKIT). So, in the all-Russian ranking in terms of popularity, they are in fourth position, and in Moscow and St. Petersburg - even in first. However, in 2022, the online food ordering service did not reach its peak of development, unlike, for example, classic retail, the expert added^[9]

2021: Lower share of imports in Russian grocery retail

The share of imports in Russian grocery retail over 10 years decreased by a third - to 24% in 2021 from 34% in 2012. Such data in early April 2022 were published in the audit and consulting network Finexpertiza.

In the total food turnover, the maximum share of imports is noted in the Smolensk and Magadan regions, St. Petersburg, Ryazan region, Moscow, Adygea, Krasnodar, Kamchatsky, Primorsky Territories and the Bryansk Region. Minimum imported products are sold by enterprises registered in Crimea, Mari El, Orenburg, Tyumen, Amur regions, Buryatia, Bashkortostan, Perm Territory, Novgorod and Belgorod regions, experts say.

Import dynamics in Russian grocery retail from 2005 to 2021

Among the main products, a high share of imports is observed in cheeses (32.5% in total commodity resources in physical terms at the end of 2021), animal oils (29.5%), vegetable oils (17%), beef and offal (27.6%). The share of imports in pork (about zero - 0.2%), flour (1.1%), cereals (1.1%), sausage products (1.3%), poultry meat (4.7%) and in general in meat products (5.6%), except beef, is insignificant.

In total Russian imports, food and agricultural raw materials for their production account for 11.5% in value terms. Food is the third most important import of Russia after machinery, equipment, transport and products of the chemical industry.

Most of all, Russian importers order fruits and nuts from abroad (17% in the commodity structure of food imports in value terms), drinks, including alcoholic (9.9%), dairy products, eggs and honey (8.7%), seeds and fruits (6.9%), fats and oils (6.4%), fish and seafood (6.3%).

Percentage of imports from areas

Among individual countries, the bulk of food is supplied to Russia from Belarus (13.5% in 2021 in value terms, primarily meat and dairy products) and Turkey (5.5%, mainly fruits and vegetables), as well as from Brazil (4.7%), Ecuador (4.3%) and China (4.2%). The CIS countries as a whole account for 20.6% of imports, the EU countries - 22.4%, and all states that supported sanctions against Russia, 28.7%.^[10]

2018: Sales slump from October 2017 to September 2018 by 3.2%

According to the consumer panel GfK, which consists of 20 thousand households in urban and rural Russia, for the first time the FMCG market showed negative dynamics by the end of the first half of 2018 (-1.8% in value terms). Comparison of July 2017 - June 2018 and the same period a year earlier. And according to the results of the annual period ending September 2018, the dynamics of sales decline increased (-3.2%). Comparison of October 2017 - September 2018 and the same period a year earlier.

The main reasons for the negative trend in the market for everyday goods are, firstly, the period of low inflation that was observed in the first half of the year - rather unusual conditions for the Russian market. Secondly, retailers and manufacturers overreached with promotions that put pressure on sales growth in monetary terms.

Thirdly, the decline in purchase volumes in most categories continued.

In Food, meat, eggs, fresh vegetables and fruits, fat and fat products, bakery products and baby food sank the most in terms of turnover in money. The category of frozen foods (+ 3.9%) made a positive contribution.

The growth in monetary terms of the frozen products category became possible due to the high dynamics of the ice cream category - it grew mainly due to higher prices, as well as due to the dumplings category, which received phenomenal consumer attention due to strong support in media and retail. The largest contribution to the growth of the dumplings category was made by such brands as Siberian Collection (over the past few years, growth from 11 to 3 places) and Miratorg (from 34 to 8).

"Using the example of the frozen products category, you can see that new items are an effective tool for sales growth and are able to provide positive dynamics of entire categories, provided there is sufficient communication support for launches. Thus, dumplings manufacturers managed to reformat a very familiar category to consumers due to the conclusion of interesting and fashionable tastes, for example, dumplings with marble beef. And thanks to a powerful advertising campaign and confident representation in retail, grow yourself and support the entire category, "says Elena Samodurova, Head of Consumer Panel Research at GfK[11].

Changes in the composition of the consumer basket signal that today the consumer is striving to spend more rationally on consumer goods. Apparently, people began to be more zealous about purchases, and priorities also changed, as indirectly indicated by the growth in sales of goods of long-term demand, mortgages, loans. In addition, there are signs that Russians are now preparing less at home. This is evidenced primarily by the reduction in purchases of fat and fat products and flour. During the 2014-2016 crisis, when the consumer began to spend more time at home, reduce takeaway purchases and prepared to save money, we saw an increase in these categories. Now, judging by the growth in the turnover of the restaurant business (+ 4%, according to Rosstat in the catering segment for the period from January to August 2018), as well as ready-made food (see Fig. 3), the consumer is again looking for convenience and saving time, which is given by the purchase of ready-made food and takeaways.

As for the volume of consumption in physical terms, the Russians bought more drinks in the annual period from October 2017 to September 2018. In other categories, negative dynamics is still observed (Fig. 2). Consumption of baby food as a whole remained stable (-0.5%), which is due to the current situation in the field of fertility in Russia.

Notes