Review of the Russian Market of Healthy FoodsResearch by the Company “Step by Step”
The market of healthy foods can be divided into three large segments:
* organic foods: goods grown on natural fertilizers, in environmentally friendly areas, and produced without the use of artificial and unhealthy ingredients (vegetables, fruit, meat and fish, dairy, grains, juices etc.);
* functional products: foods enriched with vitamins and other additives improving human health (fermented dairy products, bakery products, beverages etc.);
* products for diet and diabetes: foods produced with certain dietary standards – connected to medical requirements or personal motives – taken into account (carb-free foods, product low on sugar, fat-free products, gluten-free goods and other similar categories).
The volume of the Russian market of healthy foods amounted to $ 413 million in 2015.
All segments of the healthy food market have approximately even shares – however, the largest sales volume falls on organic foods and equals 43% in value terms, of $ 178 million (graph 1). The lowest volume belongs to dietetic products – 26%, or $ 106 million. The share of functional goods is 31%, or $ 128 million.
The volume of the organic product segment amounted to $ 178 million in 2015. According to the National Organic Union, from 2010 to 2015 the figure increased by 60%, from $ 116 million. According to FAS USDA, the Russian market of organic goods amounted to around $ 225 million in 2016.
In physical terms the figure reached 10.8 thousand tons, which is equivalent to the data for 2014. Nevertheless, since products of this category can be replaced and due to declining purchasing power in Russia combined with high prices for organic products, the growth rate in consumption volumes has been decreasing. This is happening despite the high popularity of a healthy lifestyle and healthy eating among Russians. As a result the market is growing, but at a slower rate than in the previous years.
During the past few years, an increase in functional product consumption and production in the segment has been observed. In 2015 the volume of the segment reached $ 128 million.
The volume of the dietetic product segment amounted to $ 106 million. In 2015, 6.7 million tons of bakery goods were produced in the Russian Federation, whereas only 1% (69.5 thousand tons) thereof were dietetic goods and 0.5% (35 thousand tons) were products enriched with vitamins and minerals.
The Russian market of healthy foods is still in its infancy. At the moment its main specificities are:
* large volumes of uncertified* organic goods;
* import substitution;
* growth in popularity of traditional products;
* minimized content of ingredients ‘unclear’ for the consumer;
* development of premium products without E-number ingredients, or with their codes replaced with full substance names on the package (i.e. ‘citric acid’ instead of ‘E330’);
* increasing volumes of functional good production;
* large number of innovative solutions in the range;
* substantial excess in demand for healthy products against supply in million cities;
* shortage of storages and processing capacities in market players.
Prices for healthy foods are primarily defined by the producer, and these products are overpriced in Russia. In countries of the Eurozone and in the USA organic products are 20-60% more expensive than their traditional analogues, whereas in Russia the difference in prices is significantly higher and can range from 150 to 600%.
Healthy foods are present in the following price segments:
* low – up to 1000 rubles per kilogram;
* medium – 1000-2000 rubles per kilogram;
* high – îò 2000 rubles per kilogram.
Among trademarks offering products for the highest prices, one can name “Fit & Sweet” (“Fitandsweet” LLC, Moscow) and “Excess Free” (“Excess Free Fabric” LLC, Moscow), as well as products by a number of private farms. Brands associated with lowest prices include “Dietika” (“Dietika” LLC, Saint Petersburg), “McMaster” (“Makaron Servis” LLC, Moscow) and “Di & Di” (“Korporatsiya (Corporation) Di & Di” LLC, Saint Petersburg).
The largest producers of healthy foods in Russia are:
* “Arcom” Group – products for diet and diabetes;
* “Petrodiet” LLC – products for diet and diabetes;
* “Diadar” CJSC – products for diet and diabetes;
* “EkoNiva-APK” agroindustrial holding – organic products;
* “Torgovy Dom (Trading House) “Kiprino” LLC – organic dairy products.
In the countries of the EU, around 10-15% of farmers officially produce and sell organic goods. In Russia the number of farms involved in organic food production is similar – around 15% of agricultural producers.
According to experts’ forecasts, in 10-20 years healthy foods will occupy not less than one thirds of the overall food consumption volume in Russia. This is the goal of the “Concept of the state policy of the Russian Federation in the field of healthy nutrition of the population for the period till 2020” program. Experts state that if this program is successfully and fully implemented, by 2020 Russia may account for up to 10-15% of the world’s total organic food production.
According to estimations by the Union of Organic Farming, the market of organic agricultural products in Russia is growing at an annual rate of 10-15%, and thus in 2020 it will amount to not less than 18 billion rubles. EurAsEC countries may occupy around 30% of the market, or 6-7 billion rubles.
If the “Concept of the state policy of the Russian Federation in the field of healthy nutrition of the population for the period till 2020” state program is successfully implemented, the following is expected by 2020:
* an increase in production of mass-consumption goods enriched with vitamins and minerals, including bakery products of mass consumption as well as dairy products – up to 40-50% of the overall production volume;
* an increase in the share of dairy and meat products with a lowered fat content – up to 20-30% of the overall production volume;
* an increase in the share of domestic production or fruit and vegetables, fresh or processed, – up to 40-50% of the overall production volume (including organic production);
* 80% of the market supplied with domestically produced specialized goods for baby food, including dietetic products (curative or preventive);
* growth in proper supply of vitamins for children and adults – by not less than 70%;
* a decrease in obesity and hypertension rates (by 30%) and diabetes rates (by 7%) in the Russian population due to growth in dietetic product consumption.
* At the moment no certification system exists for organic products in Russia.
Chairman of the Board of Directors
“Step by Step” Group