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Review of the Russian Market of Chocolate Products

Research by the Company Market Analitika
According to the analysis of official statistics, the segment of flour confections (including cakes and pastries) is currently the most capacious segment of the Russian confectionery market, accounting for the share of 50.2% in the overall market volume in physical terms. Sugar confections occupy 30.2%, whereas the smallest share of 19.6% belongs to chocolate confections.
Chocolate confectionery goods are characterised by higher prices compared with those for flour and sugar confections. In January 2018, the average price for chocolate equalled 832.7 rubles per kilogram, whereas the average price for chocolate candies was 593.19 rubles.
The volume of the market of chocolate and sugar confections amounted to 1,755 thousand tons in 2017 (+3.1% to the level of 2016), and the share of imported goods in the market has dropped almost two-fold since 2012 from 16.9% to 8.8%.
Market growth was primarily achieved through increased output volumes. According to the Russian Federal State Statistics Service (Rosstat), following a slight decline in 2015, production of chocolate and sugar confectionery goods in 2017 continued its growth trend, having increased by 1.9% and reaching 1.83 million tons. Since 2011, the output volume of chocolate and sugar confections has grown by 19%.
In 2016, production of chocolate and cocoa-containing goods, packaged, without additives and fillings, amounted to 36.9 thousand tons (+4.4% to 2015). Production of chocolate and packaged foods containing cocoa, without fillings but with additives, increased by 9.5% during the same time period, compared with 2015, and amounted to 58.9 thousand tons. Production of chocolate candies grew by 4.7% and equalled 448.1 thousand tons, including candies with alcohol, output of which dropped by 14.2%, whereas production of other candies demonstrated a 6.5% increase.
The Central Federal District is the leader in production of chocolate and sugar confections, occupying the share of 53.6% in the total volume of goods in the category produced in 2017. The share of the Central Federal District has demonstrated a slight decline during the past 8 years from 57% in 2012 to the aforementioned 53.6% in 2017. The leading region is followed by the Volga Federal District with the share of 20.2%. It should be noted that said production structure is typical for most food segments and is caused by population concentration among federal districts in Russia.
Output growth in 2017 was observed in the Central, Southern, Volga and Ural Federal Districts. A decline in production, on the other hand, was recorded in the Siberian, North Caucasian and Far Eastern Federal Districts.
Regarding imports of chocolate and sugar confections into Russia in 2017, their volume amounted to 88 thousand tons 17% higher than the volume in 2016, which equalled 76 thousand tons.
The key countries exporting chocolate confectionery into the Russian market in 2017, in physical terms, were Germany (23%), Belarus (20.4%), Italy (10.5%) and Poland (9.2%) together, these countries accounted for 63% of imports.
Russia supplies chocolate confectionery goods to almost 40 countries of the world. In 2017, exports of chocolate products almost reached the level of 2013 163 thousand tons (+4% to 2016). In monetary terms, exports increased compared with 2016, reaching $ 481 million (+1%).
The main purchasers of Russian chocolate confectionery are Kazakhstan (21.3%), China (10.7%), Belarus (10.9%) and Kyrgyzstan (7.5%), the total share of which occupied around a half of Russian exports in both volume and value terms.
Just recently, the market of chocolate products was facing a crisis, as declining household incomes were restraining consumption of chocolate. At the moment, however, the level of confectionery product consumption in Russia is reaching its maximum value.
In 2017, the volume of confectionery consumption in Russia amounted to approximately 24.07 kilograms per capita per year (+4.6% to 2016). The dynamics of this indicator have been demonstrating growth in specific consumption both in the total volume and across individual types of confectionery products.
Experts believe that consumption of sweets began to rapidly increase starting with the second half of 2017. This is primarily due to improved consumer sentiments as well as slowed down rates of growth in prices for confectionery reaching levels lower than food inflation.
Consumption of chocolate confections demonstrated the highest growth rates in 2017 it reached 5 kilograms per capita per year, against 4.5 kilograms in late 2016. Chocolate products remain one of the favourite types of sweets among Russians, and after almost two years of saving, consumers finally began to return to their former habits and to increase expenditures on these types of confectionery. The pre-New Year period had a significant impact on the situation, resulting in a sharp increase in demand for chocolate confections, which affects the results of the year. Biscuits, waffles and gingerbreads remain the most consumed sweet varieties.
The most dynamic categories in the market of chocolate products have been goods oriented towards children primarily these imply chocolate with toys. The popularity of chocolate bars has been growing as well.
Increased interest towards health and wellness among Russians is one of the recent local trends. Therefore the trend of naturalness and healthy eating is among the most promising ones in the confectionery market in this connection, a number of manufacturers consider production of functional confectionery goods to be a strategic direction of development. In addition, consumers interest in healthy sweets has an influence on sales channels for instance, low-calorie candies and protein bars with chocolate tend to be popular among fitness club visitors.

Tatyana Evdokimova,
Market Analitika