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Review of the Russian Market of Non-Sweet Snacks

Research by the Company Euromonitor International
Non-sweet snacks are one of the most important segments of the Russian market of packaged foods. In 2016, retail sales of non-sweet snacks throughout the country amounted to 267 billion rubles, which is 10% higher than in the previous year. The market is expected to continue growing and reach 286 billion rubles by the end of 2017.
The non-sweet snack market includes domestic retail sales of various types of packaged snacks through all sales channels to the end consumer. The market includes the following categories: nuts; seeds; dried fruit and nut mixes; potato crisps; corn crisps; extruded snacks; puffed rice cakes; salted rusks; vegetable crisps; sushki and bubliks; salted sticks; salted crackers; crispbread; popcorn; dried fish, seafood and meat snacks. In the structure of retail sales, the largest categories are sushki and rusks, seeds, nuts and dried fruit and nut mixes, as well as potato crisps.
Economic recession and declining real consumption expenditures in recent years have served as the main constraining factors for growth of the Russian snack market. Consumers reacted to increased prices by reducing expenses on products other than necessity goods as well as switching from expensive snack categories to more affordable brands and private labels. Therefore discounts remain the main tool for stimulating sales, and private labels are one of the long-term strategies of retail chains that have become relevant in the aforementioned conditions.
Nevertheless, the culture of snack consumption in Russia continues to form and strengthen, which is the main factor that supports snack sales. The development of categories such as healthy and sweet snacks, which create competition for salted snacks, has also contributed to this. The concept of eating healthy on the go has been gaining popularity in Russia, and is especially demanded by urban citizens. Snacks positioned as natural and healthy goods are becoming more popular for instance, jelly candy containing fruit and berry juice and enriched with vitamins has been gaining popularity as a natural sweet snack for kids. Producers increase demand by introducing new product categories perceived as healthy, such as granola, fruit and nut bars. New packaging solutions are emerging, too for example, drinking yoghurts in cups similar to takeaway coffee cups.
Potato crisps remain one of the most popular snacks among Russians. In 2016, retail sales in this category amounted to 16 and 23% of total non-sweet snack sales in volume and value terms respectively. In times of economic recession, discounts and promotions have become an important tool for producers aiming to maintain sales, and have given buyers an opportunity to choose better offers among well-known brands instead of abandoning the purchase.
Average per capita consumption of potato crisps in Russia has been growing, although its growth is limited by the low purchasing power compared to more developed markets, where crisp consumption is higher. Average per capita consumption of crisps is expected to continue growing during the next five years but to remain lower than the level of Western countries, which will be defined by moderate economic growth and competition from other salted and sweet snacks popular in Russia. At the same time, consumption in the USA, Spain and Great Britain will stay at the current level or decline, which will be due to high saturation as well as competition from other snack categories and the healthy eating trend.
The presence of retail chains private labels in various product categories is becoming common. In particular, private labels have been strengthening their positions in the category of non-sweet snacks, offering an alternative to branded goods at competitive prices. Private labels became especially popular as consumer spending decreased, when buyers did not wish to abandon favourite products but were looking for ways to save money. In Russia, the share of private labels in monetary terms equalled 10% of the non-sweet snack market on the whole in 2016. Private labels are most developed in the following categories: salted crackers, rusks, dried seafood and meat snacks, seeds, nuts, and dried fruit and nut mixes. It is expected that through development of modern trade formats and moderate growth in real consumer incomes, private labels will keep strengthening their positions. The potential for growth in the share of private labels in the Russian market remains, as it is lower than in a number of other countries.
By 2022, retail sales of non-sweet snacks in Russia will have reached 358 billion rubles. Moderate demand for snacks will be based on total average annual growth in GDP* by 1.6% and growth in real consumption expenditures by 2.1% from 2018 to 2022. In the next 5 years, puffed rice cakes are expected to be the fastest growing category in value terms. In the long term, the Russian snack market will be developing in the direction of meeting demands of consumers valuing healthy benefits in choosing food products. Fully organic premium snacks with a low fat and salt content, made from healthy ingredients, will be winning over consumers as the economic situation improves.
Consumers perceive most non-sweet snack categories as unhealthy and high in fat and salt. Therefore future production of alternatives with less fat and salt will be one of the key strategies of Russian snack producers. In Western Europe, companies are actively supplying salted snacks with slogans on the package aimed to convince the consumer that the product in question is not as unhealthy potato crisps that are slightly salted; snacks with sea salt instead of regular salt; snacks that were baked rather than fried et cetera. Companies in the Russian market have already started practicing the strategy of healthifying snacks. For example, KDV Group sells its famous Kirieshki rusks in packaging noting that they were dried in an oven and produced from whole-grain flour.
Offering snacks perceived as healthy by default will be another important direction of development in the Russian market examples of such snacks would be nuts, dried fruit and nut mixes, puffed rice cakes, or vegetable crisps. The use of healthy ingredients will also become more common and popular. Producers in the Western markets supply snacks with healthy ingredients, which serve as the main element for their promotion; the ingredients used include superfoods such as berries or linseeds, and ancient grains (quinoa, chia, millet, buckwheat, and others).
Another important future strategy for producers is offering convenient snack packaging small packages for eating on the go, zipper packs, large packages for sharing, packaging aimed to preserve healthy properties of food, and more. Marking healthy benefits of the snack on the package will also be an important part of the promotion strategy.

* CAGR (Compound Annual Growth Rate).

Lidiya Shuktomova,
Senior Analyst
Euromonitor International