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            Archive of numbers / Archive of headings
NUMBER:  ¹1   ¹2   ¹4   ¹5   ¹6   ¹7   

¹ 1(2015)


Russian Wine Market
Research of the Center of Investigations of Federal and Regional Alcohol Markets (“CIFRRA”)

Review of Russian Beer Market
Research of the Company “GfK Rus”

Review of Russian Tea Market
Research of Information-Analytical Company “VVS”

Review of Russian Bread Market
Research of the Company “Step by Step”

Review of Moscow Poultry Market
Research of Marketing Agency “FDFgroup”

Review of Russian Market of Vegetable Oil
Research of the Company “ID-Marketing”

Review of Russian Market of Milk and Dairy Products
Research of the Company “Intesco Research Group”

Review of Cheese Import
Research of the Company “I-Marketing”

Review of Russian Market of Snacks
Research of the Company “Market Analitika”

Review of Russian Flour Market
Research of the Company “Global Reach Consulting”

Review of Russian Market of Fresh Vegetables
Research of the Company “RBC.research”

Review of Russian Market of Flexible Packaging
Research of the Company “Abercade”

Russian Market of Lease Service in Q3 2014
Research of Rating Agency “Expert RA”

“SIAL 2014” Food Show

International Exhibition of Gelato - MIG

Review of Russian Bread Market
Research of the Company “Step by Step”

Practically every family has bread on its table. Bread constitutes a significant part of Russians' diet. Still, recent trend of bread market is declining consumption. This trend is observed both in wheat and rye bread segments. Let's get a detailed look at current performance of Russian bread market.
One of the most obvious trends of Russian bread market is significant extension of the offered product range. To a great extent it is related to technological innovations. For instance, various technologies of dough freezing are getting increasingly popular on the review market. Development of this technology gives the opportunity to retailers to offer fresh in store baked bread to the clients because usage of frozen dough reduces dough production costs. A number of retail chains like “Auchan” and “Metro” open in-store bakeries working with frozen dough among other options. Freshly baked bread is also offered by chains “Azbuka Vkusa (Taste ABC)” and “Perekrestok (Crossroads)”.
Besides, active development of technologies helps Russian consumers both buy fresh bread in retail chains and bake it at home. With home bread machines Russians can always have freshly baked bread at home. Availability and convenience of this technology makes home-made bread a rival to traditional industrially baked bread.
It is important to mention that extension of product range determine changes in consumer preferences. Increasing interest of Russians to healthy living, high attention to knowledge of products they consume stimulate manufacturers launch uncommon products accenting naturalness and absence of harmful ingredients. Availability of bread with healthy ingredients like nuts and dried fruits increases. Vitamin enriched bread is being launched to the market. Today share of healthy bread offerings is relatively small, no more than 7% but it demonstrates good growth potential.
Desire of Russian consumers to make their diets healthier causes reduction of bread consumption. This respectively affects sales and production volume. For instance, in 2011-2013 bread production in Russia reduced almost by 5%. Most impressive decline was observed in 2013 when production volume reduced by 2.52%. In January–October 2014 production of bread with short shelf life constituted 5151 thousand tons or by 1.4% less against same period of 2013.
Declining consumption volume affects bread manufacturers because they have to reduce production volume. Production facilities of bread plants are loaded by 30-50% only. Most impressive decline of production volume was observed in Southern Federal District and Privolzhsky FD. Reduced distribution accelerates competition between manufacturers. In the fight for consumers companies try to enhance competitive advantages and cut prices. In order to reduce production costs manufacturers often have to add to their products ingredients extending shelf life and stabilizers to improve bread taste. With consideration of current trends of the review market it can be assumed that SME bakeries will demonstrate vibrant growth during the coming several years because they can promptly respond to the changes of consumer demand and offer exactly what consumers want.
The majority of bread kinds have a short shelf life, therefore share of import on the review market is insignificant. In 2013 Russia imported 5056.69 tons of bread which constituted less than 1% of market volume. Major supplying countries were Finland, Germany and Poland. Aggregately these three countries controlled about 60% of import volume. Export constituted about 30% of foreign trade.
It should be mentioned that though production volume was declining for several years, in 2013 Russian bread market saw 13.7% increase in value over previous year. As it has been mentioned already share of import is very small (about 1%), so increase of market value on the background of declined domestic production in volume means that growth was driven by increased unit prices. Inflation contributes a lot to market growth in value; in 2011–2013 inflation rate constituted 6%. Inflation makes unit prices grow: in 2011-2012 bread prices increased by 5.3% on the average (bread made from A+ grade flour not considered), in 2013 retail prices for all kinds of bread increased almost by 15%. In January–November 2014 prices for bread grew by 3 to 5.2% depending on segment.
Increasing share of expensive bread with various additives also contributes to market growth in value. Thus, recently Russian bread market saw significant increase of unit prices on the background of declining demand.
Bread is mainly distributed via retail chains but one of the recent trends on the review market is distribution via bread trucks. Licenses for distribution via bread trucks were already received by such companies as “Khlebny Dom (Bread House)” OJSC and “Arnaut” OJSC (Saint Petersburg). Such branded stores on wheels help manufacturers to offer product at better prices due to reduced logistics costs.
Talking about consumer preferences we should mention that major choice factor for bread is freshness. Second important choice factor is the price. Consumers also pay attention to manufacturer name and in this case grows importance of packaging as a tool increasing recognition of a brand/manufacturer and developing consumer loyalty. Branded packaging receives the best response from young consumers aged 25-30 years. Growing importance of packaging opens better marketing opportunities helping manufacturers attract new consumers.
Russian bread market showed vibrant development during recent years as product range was extending and new distribution channels emerged. At the same time growing prices for bread and changes of consumer preferences lead to decline of bread consumption and displacement of bread with substitution products which in its turn lead to decline of bread production. 

Anastasia Ptukha
General Director

Ekaterina Soboleva
PR Manager
“Step by Step” Group