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Review of the Russian Beer Market
Research by the Company “IndexBox”
Review of the Russian Tea Market
Research by the Company “NeoAnalytics”
Review of the Russian Coffee Market
Research by “Credinform” Information Agency
Review of the Russian Market for Flour Confections
Research by the Company “Step by Step”
Desserts at Catering Establishments
Research by the Company “NPD Group”
Review of the Russian Meat Market
Research by the Company “IndexBox”
Review of the Russian Dairy Market
Research by the Company “Laboratoriya Trendov”
Branding in the Russian Dairy Market
Research by the Branding Company “Labelmen”
Nut Imports into Russia
Research by the Company “ID Marketing”
Package Downsizing Trend in the Food Industry
Research by Independent Experts
Leasing Market in Russia
Research by “Expert RA” Rating Agency
Review of the Russian Market for Snack Bars
Research by the Consulting Company “Dvornikova & Partners”

Specifics of Branding in the Russian Vegetable Market

Research by the Branding Company “Labelmen”
According to the Ministry of Agriculture of the Russian Federation, the size of Russia’s domestic market for vegetables reached 17.6 million tonnes in 2017 (15.8 million tonnes of open field vegetables and 1.8 million tonnes of greenhouse vegetables). Production of vegetables during the year exceeded 16.3 million tonnes (15.4 million tonnes open field and 0.946 million tonnes greenhouse).
The market for fresh vegetables is among the steadily growing markets in Russia. According to the Russian Federal State Statistics Service (Rosstat), throughout 2010–2017, average per capita consumption of vegetables (excluding potatoes) increased from 102 to 107 kilograms per year. During the time period in question, gross harvest of greenhouse and open field vegetables across Russian farms of all categories grew from 12.1 to 16.38 million tonnes, having increased by more than 35%. The Ministry of Agriculture forecasts further growth in gross harvest of both greenhouse and open field vegetables for 2018.
Compared with the “abundant 2000s” said growth rates may, of course, seem far from fantastic. Nevertheless, given the “stagnating 2010s”, where a number of product categories (such as sausages, juices, cream cakes, and bakery) have been reducing their shares in physical terms, volume and value growth in the market for fresh vegetables is undoubtedly a positive event. The market has been attracting a huge number of new players – namely agricultural producers and suppliers of packaging and packaging equipment. This has resulted in low consolidation and numerous small players in the market.
At first glance it may appear strange that the most capacious and steadily developing segment of the food market remains low branded, but there are a number of solid reasons for that:
1. most products within the segment are sold by weight (lacking branded packaging, or unpackaged altogether);
2. fresh vegetables do not undergo processing, and supply is characterized by low – if any – product differentiation, which, in turn, severely limits the opportunities involving brand uniqueness;
3. the segment of fresh vegetables is highly vulnerable to market shocks; strengthening of the Russian ruble and imports being allowed would make domestic producers unable to compete.
There is a direct positive correlation between the degree of processing and the level of branding within a product category. A higher degree of processing implies more opportunities for supply differentiation and a potential effect of economies of scale. 
While the categories of vegetable chips, juices and sauces were branded back in the 1990s, and canned and frozen vegetables faced branding in the 2000s, 2 product categories still remain free of branding today – namely, pickled and salted vegetables, and fresh vegetables. This is no surprise, as categories where consumers are able to select goods on their own and check their quality (fresh vegetables being among such categories) do not need intermediation in a form of trademarks. Nevertheless, in recent years branding in the segment of fresh vegetables has come to life, to a certain extent.
An analysis of the sample of the largest and most prominent branding events in various segments of the vegetable market reveals that, whereas other segments have changes in already existing brands dominate in them, the segment of fresh vegetables is characterized by new brands launching in it.
Throughout 2015–2018, a number of factors stimulating branding in the category of fresh vegetables have been emerging.
1. Retail chains increasing their role. The share of retail chain turnover in total retail turnover exceeded 33% in 2018. Retail networks force suppliers to provide their goods packaged, and packaging implies branding.
2. Primary saturation of the vegetable market. Steady growth of the market attracted numerous market players, which increased competition within it. Expanding the offer requires differentiation; variety in packaging design constitutes the simplest, quickest and cheapest differentiation method.
3. Import substitution. A shortage of vegetables caused by the ban on imports made the market attractive for Russian players investing in production expansion and branding.
Fresh vegetables and greens are not among categories successful in the context of private labels in Russia, not reaching the top 10. Low retail consolidation makes private label development problematic, especially in segments where product freshness is critical. Similar to adjacent categories of fresh goods which became branded earlier (bread, milk, chilled convenience foods, cream cakes, and others), the maximum share of private labels in fresh vegetables and greens will not exceed 50%. The remaining minimum of 50% will be occupied by manufacturers’ brands. According to forecasts, manufacturers’ brands of fresh vegetables and greens will retain at least 50% of the market up until 2020.
At the moment the vast majority of domestic producers are supplying regular vegetables which lack any uniqueness. It is not expected that the ruble will grow stronger or that major foreign players will return to the market in the near future. If this becomes possible, however, then producers from southern parts of the country (Krasnodar Krai, Stavropol Krai, and others) may manage to compete with foreign suppliers successfully, whereas producers from the north, where the product costs are high, will face problems withstanding competition in terms of basic, non-unique goods.
Successful competition requires differentiation and products being given unique qualities. At the moment there is only one brand in the market for fresh vegetables that has products with distinct features – “Belaya Dacha (White Dacha)” (“Belaya Dacha Trading” CJSC, Moscow). This brand has switched its positioning to the segment of vegetable snacks, offering cleaned greens and vegetables ready for consumption on the go. Quite expectedly, it is one of the most successful and prominent brands within the category. Other players, which have been actively investing in branding but have been lagging behind in terms of product uniqueness, are under risk. In the 2000s, “JFC”, the leader in banana supplies in the Russian Federation, attempted to introduce its “Bonanza” trademark but failed due to lack of product differentiation among other things. The company was investing in the fancy brand and active advertising communications. However, it was only the respective label that was distinguishing the “Bonanza” bananas from any other bananas – as a result, the brand was eventually withdrawn from the market, and the company went bankrupt.
Product differentiation is essential for the creation of a strong and long-standing brand in the vegetable market. Favorable conditions for that are already in place: the market is growing; competition is fairly low; and there are numerous vacant solutions in product differentiation (packaging formats and materials, shelf lives, and others).

Irina Vedenetskaya,
General Director Branding Company “Labelmen”

Dmitry Golovnev,
Marketing Director Branding Company “Labelmen”