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4/2017


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DRINKS
The State and Development Prospects of the Global Wine Market
Research by the Center for Investigations of Federal and Regional Alcohol Markets

Consumer Behavior in the Russian Market of Carbonated Beverages
Research by the Company MASMI

CONFECTIONERY
Review of Jelly Candy Imports
Research of the Information-Analytical Company VVS

MEAT
Branding in the Russian Meat Market
Research by the Branding Company Labelmen

Review of the Russian Sausage Market
Research by the Company Market Analitika (Market Analytics)

FISH & SEAFOOD
Review of the Russian Market of Fresh and Processed Fish
Research by Information Agency Credinform

DAIRY PRODUCTS
Review of the Russian Milk Market
Research by the Company Global Reach Consulting

Specialized Networks Selling Milk and Dairy Products
Research by the Company RBC Market Research

Review of the Russian Ice Cream Market
Research of the Company NeoAnalytics

BABY FOOD
Consumer Behavior in the Market of Food for Children
Research by the Company MarketSense

INGREDIENTS
Russian Imports of Cocoa Products
Research of the Company ID-Marketing

RETAIL
Prospects of Private Labels in Food Product Categories*
Research by the Company ReedExhibitions

PACKAGE
Review of the Russian Market of Disposable Tableware
Research of the Company I-Marketing

TRADE SHOWS
21st International Exhibition for Food Products, Drinks and Ingredients Interfood St. Petersburg 2017


26th International Beer-2017 Exhibition and Fair


HEALTHY NUTRITION
Review of the Russian Market of Healthy Foods
Research by the Company Step by Step

Beer Advertising in Retail Chains

Research by the Company Hypercom

The analysis of promotional activities in the category of alcoholic beverages in 2016 showed that the share of spirits in catalogs of retain networks decreased by 5%. At the same time the share of beer in promotions increased by 4%, reaching around 29 thousand promo offers throughout the year, or 2,400 per month. And these are just figures for beer! Surely, it must be difficult to resist such promotional pressure. The same conclusion was reached by a group of State Duma deputies, who, in early February, introduced a bill on the imposition of a ban on sales stimulation for alcohol products with discounts in Russia, including coupons and vouchers, as well as free distribution of alcoholic beverages.
Looking at consumer benefits used in promotions in the beer category, the most popular ones have been crossed out prices and instant discounts 63.2 and 22.6% respectively. It should be noted that around 10% of promo catalogs take place without any declared promotion mechanics*, even though everyone is aware that they exist in there.
Regarding the distribution chart of the discount depth, it becomes apparent that discounts between 20 and 30% are used most often. The maximum discount is at 66.7%, with a coupon provided.
What retail chain formats tend to make large discounts within the category in question? During the year 2016, almost half (46%) of 20-30% discounts were observed in supermarkets. Discount stores were second, followed by hypermarkets.
The number and size of the discount are only one of the key methods used by retail outlets to affect price perception in promo leaflets. Another way, not necessarily achieved by agreeing on the best conditions with the manufacturer, but by replacing the product planned with a similar product by another manufacturer or in different packaging, is the inclusion of cheap goods in catalogs. A big discount offered combined with the low promo price is a combination that is always perceived positively. However, given that this strategy can be used by several networks simultaneously, it is necessary to determine which one in fact provides the best promo offer. Two graphs were built for this purpose. In the first one, based on the number of discounts and promo prices for goods in four retail chains in the second quarter of 2016, we aimed to reflect their promo strategies. The second graph allows one to compare the promo strategies in question.
During the time period examined, in Dixi retain chain promo catalogs included 86% of goods with the discount type of promotion mechanics, the size of the weighted average discount equaling 25%.
At Dixi, prices of the first decile, i.e. closer to the minimal prices, exceed the prices of the first decile in the other three retail chains. In other words, prices minimal for Dixi are the highest compared to the other three networks.
The largest amount of promotions in the first decile clearly reflects the promotion strategy of low prices in the chain. Now one only needs to see how many goods priced within the promo decile are present in each of the given retail networks.
As can be seen on the graph, Lenta (Ribbon) supermarket is leading in the number of low prices, whereas in the middle price range the leader is Pyaterochka (Five).
Manufacturers can always choose between participation with a high number of SKU in thematic and seasonal promo catalogs and constant participation in all leaflets of the retail network, but with a limited number of goods. There are a number of intermediate options between the two alternatives, and they characterize the relations between the manufacturer and the network. We defined loyalty to the promo plan of the chain as the frequency of occurrence of at least one good by the given manufacturer in promo catalogs.
For example, promotional strategy by Heineken in the second quarter of 2016 shows that its presence in Magnit discount stores increased, even though it is far from the frequency of its occurrence in the other three retail chains. Only representatives of Heineken can say whether it is intentional or not. In this case it is enough to state that there are manufacturers whose loyalty to the network is as high as 100% in other word, every catalog contains at least one product by the manufacturer. Obviously, it is no coincidence.
We introduced a special visibility index for promotions, which is determined by their place in the catalog on the cover, on the last page, or on the right/on the left inside the catalog. This affects the buyers reaction as well as the marketing budget spent by the producer on the retail network.
The analysis of the visibility index reflects the partnership level for the retail chain producer pair. Some retailers provide the manufacturer with similar places in the catalog, whereas others highlight certain manufacturers better.
Picture 8 shows that SAN InBev has a good visibility Pyaterochka retail chain, but falls behind in the other three networks. It is reasonable to regard said index along with the frequency of occurrence of the given manufacturer in the network. Heinekens example demonstrates that along with increasing the frequency in Dixi, the retail chain provides it with a less attractive place, which is a serious cause for negotiations.
The seasonal factor is another important indicator. Looking at the promo calendar for 2016, despite the expectations, the peaks of promo activity in the beer category in Russia did not fall on the warm months. For comparison: the season of the highest promotional activity for beer in Romania starts in May and ends in September, and in Hungary it is scattered throughout the year.
In the conditions of declining purchasing power, marketing events, including discounts and bonus products for purchases, are becoming more effective. More and more buyers have been paying attention to promotions, and some even look for them specifically. On the other hand, any kind of bans and limits in place (e.g. on advertising on TV and retail chain websites, or alcoholic beverage sales, including beer, after 10 pm), more of which will apparently follow, will only contribute to the creation of original and effective ways to bypass the restrictions.

* The mechanism of conducting promotions used to increase sales, market shares etc.; examples include discount, gift and 3 for 2.

Sebastian Gika





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