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¹4/2017


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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”

Branding in the Russian Market of Snacks

Research of the Branding Company “Labelmen”

The share of snacks in the Russian food market amounts to around 1%. This is a rather small but at the same time one of the most attractive segments of the Russian food market, and there are several reasons for that:
1. access to cheap raw materials for snack production (primarily potatoes, bread and corn);
2. long shelf life and convenience of logistics;
3. low price sensitivity and consumers’ willingness to overpay for attractive brands (in terms of price a 40-gram package of croutons is comparable with a 750-gram package or bread of classic varieties);
4. high degree of industrial processing and technological opportunities to create diverse product offers (unlike traditional product categories);
5. long-term trend of increasing meal frequency, leading to growth in snack consumption in Russia and abroad.
Therefore it is no surprise that, following transnational players such as “Mondelez International”, “Kellogg’s” and “Pepsico” having ‘opened’ the product category in its modern form in Russia, Russian players also actively joined the market development and the competition for market shares.
From the standpoint of the “Arial Branding” technique developed by “Labelmen” agency, all the markets can be examined regarding two factors:
* technological capabilities of branding;
* consumer propensity towards brands.
These two factors combined determine the potential of branding for the given category.
The category of snacks, along with the categories of drinks and semi-finished products, has the biggest potential in terms of branding. Attractiveness and popularity of brands define the players’ success in the given market, and other elements of the offer (the product, the price, and distribution) serve as a confirmation of the brand’s promises. Therefore when trademarks are created, not only unique names, logos and package design are developed, but also package shapes, sounds made by opening the package, special crunch produced by the good in commercials etc.
High levels of competition and a large number of brands make it necessary to ensure clear product positioning, which is followed by most players. Experts at the branding company “Labelmen” analyzed 60 product brands by 15 key players of the snack market.
The results of the study demonstrated that there are only 3 umbrella product brands: “Beerka”, “Kliny (Wedges)” and “Shturval (Ship’s Wheel)”. Among them, only “Beerka” occupies strong positions in most regions, and its main category is fish snacks. Other brands are presented in single product segments, the ones having leading positions in them being as follows: “3 Korochki (3 Crusts)”, “Vorontsovskie” and “Kirieshki” in the crouton segment, “Estrella”, “Lay’s”, “Pringles” and “Russkaya Kartoshka (Russian Potato)” in the chips segment, “Babkiny Semechki (Granny’s Seeds)” in the segment of seed snacks, and “Jazz” in the nut segment.
Niche-oriented, narrow-category players (“Pringles”, “Yemelya”, “Russko”) use the ‘monobrand’ brand architecture (i.e. one brand in a single product category), which is rather vulnerable. The ‘hybrid’ type (one brand presented in several categories), which is difficult to manage, is used by several players: “Atardo Snack Group Company”, “Klinskie Sneki (Klinsky Snacks)”, and, as an exception, “KDV” with its umbrella brand “Beerka”. The vast majority of players use the most relevant type of brand architecture, namely ‘brand portfolio’, which involves several brands specializing in narrow product categories.
The rigidity of the market and the narrowness of the product and price segments make the ‘brand portfolio’ architecture type the most attractive, as it provides lower commercial risks on the one hand (due to distribution among several brands) and, on the other hand, high competitiveness of certain specialized brands that are adapted to narrow demand and specifics of certain product categories
Another important element in positioning in the snack market is the price. As the example of the ‘crouton’ category shows, most market players position brands both by product and by price segment. “Beerka” positions itself in the mid-price segment in all product categories occupied by the brand (croutons, nuts, fish snacks). The brand “3 Korochki” sticks to the discounter strategy, which brought it market success. The popular brand “KhrusTeam (We Crunch)” uses subbrands in order to be present in two price categories at the same time. Only the brand “Kirieshki” is different in this regard, present in two price categories as is.
Snacks are a product category of impulse demand. Having a unique and clear positioning alone is not enough for a brand to achieve market success – in order to encourage people to impulse-buy the product, which is not essential, expensive and also unhealthy, it needs to be made teasingly appetizing. The struggle to achieve success in this prompts brands to regularly improve their main weapon – the package. This is insufficient, however. A snack-like name is necessary as well, which would ideally either sound crunchy, like  "Estrella", “Cheetos”, “Hroom!”, “Kirieshki” and “KhrusTeam”, growl like “Beerka”, or ring like “Lay’s”, “Pringles”, “Vorontsovskie” and “Jazz”.
The second important criterion for a successful name is a clear translation of the brand’s position. There are countless brands in a given category, and almost every one of them regularly bombards its consumer with advertising communication, and therefore the name itself serves as an important form of identification and advertisement. For instance, the positioning of the brand “Beerka” (“Delivered to beer”) is translated perfectly by the brand name, as it includes the word ‘beer’ and sounds similar to ‘rybka’(‘little fish’) – its key product category.
The brand “Vorontsovskie”, which rapidly entered the group of leaders in the ‘croutons’ category, translates unique positioning in its name – a traditional, patriotic crouton brand.
The characteristics of snack product categories have significant differences: nuts are considered to be the healthiest snacks among them, chips and croutons are regarded as the tastiest and most affordable ones, and fish snacks are seen as the most expensive. These features of the product categories dictate semantic positioning of brands. The majority of widespread brands of nuts are positioned in the ‘naturalness’ semantic territory (“Botanica”, “Natur Foods”, “Dary Prirody (Gifts of Nature)”, “Semushka (Seed)”), fish snack brands have occupied the ‘sea theme’ (“Barentsev”, “Morskie (Sea)”, “Sukhogruz (Dry-Cargo Ship)”, “Shturval”), and croutons occupied ‘affordable traditional snacks’ (“3 Korochki”, “Vorontsovskie”, “Yemelya”, “Zolotaya Korochka (Golden Crust)”). But the most popular semantic territory is the ‘tasty and crunchy’ field generic for snacks (“Estrella”, “Lay’s”, “Tuc”, “Zolotaya Kartoshka (Golden Potato)”, “Kirieshki”, “KhrusTeam”, “Khrustyashiy Kartofel (Crunchy Potato)”).
Strong brands are characterized by clear positioning. Moreover, successful brands create new semantic territories of positioning! For instance, the brand “Beerka” opened a category of beer snacks in Russia, “Vorontsovskie” introduced traditional, ‘patriarchal’ croutons, the unbeatable “3 Korochki (3 Crusts)” became a positive discount trademark in the segment, and “Kirieshki” served as the clownish leader in the category.
The category of snacks is highly impulsive, with consumer preferences constantly changing. This means that in the next few years new exciting market player battles await us in this product category – to succeed, players will need to use all the branding tools available.

Irina Vedenetskaya,
General Manager
Branding Company “Labelmen”

Dmitry Golovnev,
Marketing Director
Branding





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