Nielsen Russia experts forecast long-term growth for this market segment
Are FMCG store brands going to take off in 2020 in Russia? In this Nielsen Russia article, experts answer this question with a “yes.” Read our summary of this article to find out why.
Store brands in Russia’s FMCG sector: current state
In terms of sales of private label FMCG products, Russia seems to be lagging behind. In Great Britain, private label products make up 44% of FMCG purchases, in Germany their share is 40%, in France – 34%, and in Italy – 28%. In Russia this number is under 5%.
However, Nielsen Russia experts believe that this is soon going to change.
Reasons why FMCG store brands are going to grow in Russia
Retailers have been reinventing store brands in Russia over the last couple of years. At this point Russian consumers’ perception of store brands has changed as well.
Nowadays, retailers invest in developing a variety of private labels, including premium products, and customers are attracted to private labels because of their quality and variety.
Reasons to invest in store brands for Russian retailers
The largest Russian retailers are developing store brands for several reasons, one if them being that these products don’t require significant investments in marketing.
Consequently, they offer additional growth opportunities compared to branded products and may well turn out to be more profitable long-term.
Several Russian retailers have recently launched or plan to launch low-cost stores carrying primarily store-brand FMCG products. According to Konstantin Loktev, head of the retailer department at Nielsen Russia, another venue of growth for private label sales is e-commerce (read more about the Russian FMCG e-commerce market here).
Reasons to consume store brands for Russian buyers
While most customers shopping for store-brand FMCG products are looking for sales, this is not true for all buyers.
For example, 27% of high-income buyers in a recent Nielsen Russia survey started buying more private-label products (compared to 22% of respondents on average).
33% of respondents in the survey are interested in purchasing higher-price store brands. 79% of respondents are looking for healthy living products, and 65% are looking at premium product ranges.
Konstantin Loktev mentions that demand for FMCG products is becoming more stratified, with consumers choosing products in different price ranges based on their consumption patterns and preferences.
Growing private label FMCG product categories
According to Nielsen Russia survey results, more and more people are open to buying store brand products in 2020. Sales of store-brand toothbrushes grew by 77%, cleaning products by 40%, bleach by 38%, coffee beans by 31%, and tea by 16%. The same can be said for alcohol, in particular whiskey and vermouth (41% and 47% growth respectively).
For additional information on developments in the Russian FMCG sector, browse our past articles.
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