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Review of the Russian Market of Cereal Bars

Research by the Company IndexBox
Cereal bars are goods produced from raw or baked cereals in a compressed form, with added berries, dried fruit, nuts, syrups, or yoghurt. In the preparation process, other ingredients may be added, such as honey, chocolate or caramel.
The calorie content of cereal bars may vary from 150 to 400 kilocalories per 100 grams depending on the ingredient composition. The weight of a cereal bar varies from 25 to 40 grams on average.
Originally, cereal bars were created as a curative food product. Today they are among the most demanded goods for people eating healthy. Cereal bars are also suitable for child and sports nutrition, as they have a high nutritional value while not requiring any specific preparation or storage conditions; they are inexpensive and are ideal for a healthy snack.
Among cereal products used as components for cereal bar production, wheat flakes (flattened grains) are to be highlighted the share of these bars is around 44% of all goods produced. In turn, the share of cereal bars from barley grains is estimated at 23%, whereas cereal bars from corn grains have the share of 12%. The shares of other cereal bars in the top five made from oat and rye grains are 8 and 4% respectively. Other types of grain products combined account for 9%.

The volume of cereal bar consumption in 2016 amounted to 35,351 tons, which is 8% higher than in 2015. According to preliminary data, consumption in 2017 increased by 17% and reached 41,219 tons.
Domestically produced goods prevail in the Russian market of cereal bars in 2017, they occupied around 87.4%. The share of imported products, which amounted to 12.6%, was mainly accounted for by Hero Group and Cereal Partners (Nestlé).
The main countries supplying cereal bars to the Russian market are Germany, Belarus, Italy, Poland and France they account for about 90% of imports in physical terms. In turn, Russian cereal bars are exported primarily to the countries of the CIS: Kazakhstan, Belarus, Azerbaijan and Uzbekistan approximately 65% of all exports in volume terms.
In the medium term, slight growth in the share of imports is expected. At the same time, an increase in volumes of local production and orientation towards exports is forecasted, as competition in the domestic market is growing.
The main driver for growth in cereal bar consumption volumes in Russia and the CIS is increasing interest in healthy eating, which has been rapidly developing in recent years.
Other key trends in 20162017 include:
* ongoing increase in prices for products, at 13% on average by late 2017;
* increasing competition in regions with high supplier concentration;
* growing cereal bar supply in retail chains;
* increasing volumes of consumption of healthy foods on the whole and snacks in particular in million cities.

According to preliminary data, the volume of cereal bar production in 2017 amounted to 36,872 tons (+14% to the indicator of the previous year). In the medium term, growth in output of cereal bars will continue, which will be connected with increasing consumption of healthy snacks and popularity of the health and wellness lifestyle both in Russia and abroad.
Among domestic producers, the following companies should be highlighted: Pishchevoy Kombinat (Food Factory) Linfas CJSC (Saint Petersburg), Leovit Nutrio LLC (Moscow), NovaProdukt AG LLC (Moscow), and Beloe Derevo (White Tree) LLC (Novosibirsk region).
At the moment, the cereal bar market is characterised by a rather low degree of consolidation on average, the two largest producers occupy approximately 26% of the market in physical terms. The largest producers of 2017 are Linfas and Leovit Nutrio. Other producers account for up to 1.5% each in the structure of the market in physical terms. Small manufacturers include Lakomstva dlya Zdorovya (Treats for Health) LLC (Nature trademark) and BioFoodLab LLC (Bite trademark) in Moscow, as well as Klin Snack LLC (Vladimir region, Pikki trademark) and Organic Food LLC (Saint Petersburg, R.A.W. Life trademark), which mainly specialise in producing fruit and nut bars.
Foreign players active policy over the past few years has allowed them to increase their presence in the market. The share of Hero AG (Switzerland, Corny trademark) grew and reached 3.4% in 2017 in physical terms, whereas the share of Nestlé (Fitness and Nesquik trademarks) increased to 2.8%.
Against the backdrop of growing popularity of cereal bars among consumers, higher numbers of small and medium-sized businesses are expected to emerge. In addition, the product lines of large market players are expected to be expanded.

The main cereal bar brands represented in the market include the trademarks Corny and Cornybig (Hero AG/Hero Rus LLC, Moscow), Extremeenergy/Fitness Collection (Linfas), Fitness (Nestlé/Cereal Partners Rus, Perm), Frutilad (Beloe Derevo LLC), and Khudeem za Nedelyu (Slim in a Week) (Leovit Nutrio). The total share of these brands in the market is around 55% in physical terms.

In the medium term, up to 2021, a gradual increase in volumes of both local production and imports of cereal bars is forecasted, along with ongoing growth in consumption. In the retail segment, major foreign players selling their goods in large federal chains are expected to strengthen their marketing policies.
Annual growth in cereal bar consumption volumes will amount to around 105%, and consumption is expected to reach 50,117 tons by 2021.
In addition, an increase in the share of cereal bar exports is expected by 2021, caused by growing consumption thereof in the countries of the CIS.
At the same time, consumer preferences and the forming trend of healthy eating (cutting down on sugar, salt and artificial ingredients) will serve as the main factor of development in the cereal bar market. The formation of new consumer preferences will contribute to growth in consumption volumes of both healthy snacks on the whole and cereal bars in particular.
We would like to highlight that the market has the following specific characteristic: no sharp increase in cereal bar consumption is to be expected with growing household incomes. When household incomes decline, however, cereal bars are among the first products that consumers begin to abandon, as the culture of healthy foods consumption is still forming, and purchases of said products are impulsive at times.

Anna Chernysheva,
Junior Specialist
IndexBox Russia