Healthy lifestyle FMCG products in Russia: a high-growth segment

Healthy FMCG products are a high-growth segment on the Russian market

Growing consumer sophistication leads to more specific packaging claims for healthy lifestyle FMCG products

We have written about FMCG market development in Russia, pointing out that packaged convenience goods, including the nascent “superfoods” segment, are one of the key growth areas. A recent study by Nielsen Russia provides a more in-depth look at how FMCG product sales are impacted by the growing popularity of a healthier lifestyle. The study focuses on comparing the sales and the wording on the healthy lifestyle FMCG products in Russia to the sales of the “regular” ones.

Overall trends for healthy lifestyle FMCG products sector in Russia

According to the survey results, 41% of Russian consumers are willing to pay more for natural products, which is confirmed by the pricing comparison between “healthy” and “regular” products across different product categories.

At the same time, it is possible to capitalize on the healthy living trend even in product categories traditionally considered “unhealthy”, such as fruit juice and chips, by introducing products catering to that specific demand.

Nielsen research took into account the following 5 product categories:

  • porridge (an important type of breakfast food in Russia)
  • yogurts
  • breakfast cereal varieties, including granola and muesli
  • chips
  • fruit juice

The Q2 2019 research analyzes the connection between the product description on packages and sales for these 5 categories.

Packaging claims and sales growth in Q2 2019 for healthy lifestyle FMCG products in Russia

Interestingly, instead of generic verbiage manufacturers have started using more specific claims on the packaging to generate sales – a strategy that has apparently worked across all of the product categories.

The most commonly used terms on the packaging are:

  1. No additives (18%)
  2. Organic (7%)
  3. Healthy (2%)
  4. GMO-free (1%)

The terms used on the packaging of products with the highest sales growth rates across the 5 categories are:

  1. Terms denoting organic or natural products (+39%)
  2. Gluten-free (+25%)
  3. GMO-free (+50%)
  4. Vegan (+102%)

Healthy lifestyle FMCG products: winning categories and “health” pricing premiums

Changes in the healthy breakfast category have affected both the packaging and the assortment of the offered products.

For example, the healthy living trend has led to a decrease in demand for low-fat or fat-free yogurts, at the same time leading to new offers, such as “superfood” yogurts that include grains, muesli etc.

Muesli and granola as a separate ready-to-eat breakfast category have been gaining popularity, growing from 17% to 20% of market share.

While porridges do not show the same growth rate, the survey data shows that within that category the clear winners in terms of sales volume and premium pricing are the products clearly labeled as natural: porridges with “natural”, “organic”, “contains natural fibers” and “contains vitamins and minerals” on the package sell for prices 1.5 times higher than the average.

How the growing healthy living trend in Russia affects sales of “not-quite-healthy” FMCG products

For the fruit juice and potato chips categories, market changes are in line with worldwide trends: the more health-conscious the consumers are, the more important it is to include specific claims on the packaging.

Fruit juice packaging in Russia has evolved from “no preservatives” to “does not contain artificial colorants”, “contains potassium”, and “made from real fruit”.

Potato chips producers have introduced varieties with “less unhealthy” signifiers on package. Market data shows that the changes have resulted in sales increases: potato chips as a category have experienced sales growth of 11% by volume and 16% by value, whereas the “healthy potato chips” sales grew by 79% and 93% respectively.

It is not unreasonable to expect further growth of the healthy product sector - Olga Dashkevich, Nielsen Russia’s Chief Customer Officer

How to capitalize on the healthy lifestyle FMCG products trend in Russia

Since it appears that the healthy living trend is here to stay, the study takeaway is that there are multiple opportunities to grow sales of niche FMCG products by introducing new offers, or making sure that the packaging addresses the criteria that affect Russian consumers’ purchasing decisions of Russian consumers.

Olga Dashkevich, Nielsen Russia’s Chief Customer Officer, points out that “According to the consumer confidence index data, health is one of the chief concerns for Russian consumers. … GMO-free products, plant milk, and vegan produce consumption increases are in double and triple digits. …[It] is not unreasonable to expect further growth of the healthy product sector. There are still multiple opportunities for niche FMCG products. Numbers show that consumers are ready to buy natural products at higher prices, as long as products are of higher quality and manufacturers successfully communicate the advantages of buying them.”