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26th International Exhibition for Food, Beverages and Food Raw Materials “Prodexpo-2019”
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Review of the Russian Market for Snack Bars

Research by the Consulting Company “Dvornikova & Partners”
Recently, the segment of snack bars has been gaining popularity in the Russian market. Three main varieties of these products are distinguished:
1. Cereal and granola bars. They contain oat flakes, dried fruit and berries, nuts, seeds, and sometimes honey.
2. Fruit and nut bars. They contain nuts as well as chopped dried fruit and berries.  In turn, fruit and nut bars as a category are divided into fruit bars and fruit and nut bars themselves, thus indicating the difference in what the product is based on: dried fruit alone or dried fruit and nuts, respectively.
3. Energy bars. Their main ingredients include maltodextrin (a carbohydrate obtained from corn starch), corn syrup, sugars (such as fructose, glucose and sucrose), and sometimes dried fruit or cereals (such as rice flour and oat flakes).
The calorie content of snack bars depends on their ingredients and may vary between 150 and 400 kcal per 100 grams. Product weight varies between 25 and 40 grams on average.
Today, fruit and nut bars and cereal bars are among the most demanded foods among consumers living a healthy lifestyle and monitoring their diets. Snack bars are also suitable for sports nutrition, as they have high energy content and do not require any special preparation or storage.

Consumption of snack bars has been growing year to year. Let us examine development trends in the market exemplified by cereal bars in particular. According to “IndexBox” in monetary terms, consumption of cereal bars was growing: +4% in 2017, to 1,180.2 million rubles. According to “Nielsen” from June of 2017 to May of 2018 sales of cereal bars in major retail chains increased both in volume (+10.1%) and value (+8%).
Domestic products prevail in the Russian market for cereal bars: in 2017, they occupied the share of 87.4%. The share of imported products was mainly made up from supplies by “Hero AG” (“Corny”), and “Cereal Partners Worldwide S.A.” (“Nestl? Fitness”, “Nesquik”). 
Retailers actively react to the trend, and the average number of snack bar SKUs per store increased substantially: whereas in 2016 it equaled 19, in 2018 said number reached 28 and the amount of products was 47.4% greater (data by “Nielsen”). In addition, according to “Nielsen”, cereal bars have become the most popular snack bar variety, their sales growing by 9.9% in physical terms.
The main growth driver for snack bar consumption volumes in the Russian Federation and the CIS is increasing interest in healthy eating, actively gaining momentum in recent years.
The key trends in the snack bar market in 2018–2019 include the following:
* growth in prices for products at 1–3% on average*;
* increasing competition as a result of new players entering the market;
* supply getting greater in retail chains through manufacturers’ expanded product ranges;
* growth in volumes of healthy food consumption, in particular, healthy snacks in million cities.

At the moment, the Russian market for snack bars is characterized by a low degree of consolidation. According to data by “IndexBox”, the largest producers of snack bars in 2017 were “Pishchevoy Kombinat (Food Factory) “Linfas” CJSC (Saint Petersburg, “Vitalad” trademark), and “Leovit Nutrio” LLC (Moscow, “d’Arts, Energy” and “Moy Layk (My Like)” trademarks). The total share of these players in physical terms amounted to 26%. Other manufacturers accounted for no more than 1.5% each in the market structure; among others, these include the following companies: “Lakomstva dlya Zdorovya (Treats for Health)” LLC (Moscow, “Nature” trademark), “BioFoodLab” LLC (Moscow, “Bite” trademark), “Klin Snack” LLC  (Vladimir region, “Pikki” trademark), “Organic Food” LLC (Saint Petersburg, “R.A.W.Life” trademark), and “Good-Food” Group” LLC (Moscow, “Nutberry” trademark).
Active policies of international players have allowed them to increase their presence in the Russian market in recent years. To illustrate, according to “IndexBox”, the market share of “Hero AG” (“Corny” trademark) reached 3.4% in physical terms in 2017, whereas the share of “Nestlé” (“Fitness” and “Nesquik” trademarks) grew to 2.8%.

As snack bars have been getting increasingly popular in the market, more and more small and medium-sized producers have been emerging. Large players have been aiming to expand their product lines.
In the coming years, further development of private labels at retail chains is expected. It should be noted that the categories of snacks produced within private labels have been gaining popularity among Russian consumers. For instance, according to “IndexBox”, in April 2016 – March 2017 sales thereof increased by 5.5 and 8.2% in physical and monetary terms respectively compared with the similar period a year earlier.
Following growing demand for products analyzed in the Russian Federation and the CIS, the share of exports has been on the increase.
The level of snack bar consumption is highly susceptible to consumer income levels. At the same time, snack bars have been slowly but steadily entering common store product ranges, thus ceasing to be exotic. This is primarily due to the gradual formation of a healthy snack consumption culture. Until recently, purchases of snack bars were impulsive, whereas today consumers put them in their product baskets knowingly.
In the coming few years, the following factors will serve as the key ones for development of the Russian market for snack bars:
* consumer preferences among the population as well as the healthy eating trend, namely gradual abandonment of sugars, salt and artificial ingredients;
* formation of new consumer preferences, which will contribute to growth in consumption volumes of both healthy snacks in general and snack bars in particular.

Since healthy bars as a product category belong to the market for healthy goods, development of this niche will depend upon respective trends such as increasing demand for health and wellness products, namely:
* snack bars enriched with vitamins and fatty acids;
* snack bars enriched with pro- and prebiotics;
* “…-free” snack bars, i.e. not containing sugar, preservatives, gluten, artificial coloring and flavors, or lactose; this includes Clean Label products**;
* snack bars for vegetarians, vegans and raw eaters, the number of which in Russia has been growing annually***;
* snack bars with a high content of healthy nutrients, i.e. superfoods (not popular in Russia yet);
* fermented snack bars good for digestion;
* plant-based snack bars, virtually absent in the Russian market for now, but included in the top three key trends in the global market for healthy goods along with growing demand for probiotic, natural and functional products as well as consumer interest in innovative packaging, according to a recent study by “Technavio”.
One of the key trends for food market development is the global movement towards healthy living and naturalness. Healthonism and weight management have been in the spotlight along with health and wellness.
Healthonism (a portmanteau of “health” and “hedonism”) is a trend involving the desire to combine consumption of pleasure-inducing foods with health benefits (e.g. antioxidant-containing alcoholic beverages, products with lowered sugar content, or “healthy” fast food).
Weight management is a comprehensive system of activities aimed at lowering or controlling one’s weight.
Part of said aspect are manufacturers’ mobile apps, the goal of which is not only to ensure direct communication between companies and brands and their consumers, but also to inform consumers on the benefits of products as well as ways to prepare and consume them. Examples of the above include European applications Danone insiDe, Unilever, Activia VIP, and Nestlé.

The trends listed above require the following actions on the part of Russian producers of healthy snack bars:
1. Keeping pace with the environment through constantly analyzing the Russian and global markets, activities of competitors and suppliers, scientific advances and patents in the field of food and drinks, consumer behavior, and related markets as well as being on the lookout for ideas for new product development;
2. Establishing constant two-way communication with consumers with the help of social media, focus groups, platforms for feedback etc.;
3. Introducing new types of healthy snack bars and reviewing the existing ones to cater to current needs and lifestyles (health and wellness) of various target audiences;
4. Giving paramount importance to product taste, as healthy foods which cannot be delicious are a thing of the past;
5. Encouraging consumers to try brand-new snack bars with flavors unknown to them, highlighting their health benefits and naturalness;
6. Forming alliances with suppliers of ingredients and packaging, who are often first to learn of new market trends;
7. Focusing on products designed for breakfasts, dinners or snacks in promotion, as they are the key meals for modern urban residents;
8. Paying attention to packaging, which needs to be convenient for consumption (examples include single-serve packaging or packages for consumption on the go) and storage (zip seal bags or packaging suitable for microwaving).

“Dvornikova & Partners” conducted an independent study on the composition of several brands of fruit & nut and fruit bars in terms of presence of artificial additives and preservatives. The reason for said research was the fact that virtually all manufacturers of fruit and nut bars highlight and guarantee a complete lack of any artificial additives and preservatives in promoting their products. Is this really the case, though?
In order to test this, the V. M. Gorbatov Federal Research Center for Food Systems of the Russian Academy of Sciences purchased the following snack bars:
* “Bite” fruit and nut bar, “peanut-banana” flavor  (“BioFoodLab” LLC);
* “Pikki” fruit bar, “prune-apple” flavor (“Klin Snack” LLC);
* “Intellekt” snack bar, “SmartFormula” trademark (“Ozersky Suvenir” LLC)
* “Frutilad” non-glazed apricot-flavored fruit bar (“Beloe Derevo (White Tree)” LLC);
* “Fitofruit” fruit and nut bar, “apricot” flavor (“Prodinko” LLC);
* “Nutberry” fruit bar, “ginger-honey-cinnamon” (“Fabrika (Factory) “Good-Food” LLC).
Four out of the six snack bar packages stated that the product did not contain any preservatives, coloring, or flavors.
According to protocols obtained by the V. M. Gorbatov Federal Research Center for Food Systems, all snack bar samples listed above contain preservatives E220 (sulfur dioxide), E200 (sorbic acid), and E210 (benzoic acid).
In the case of all aforementioned snack bars, it is required to state the preservative content level in their composition in accordance with TR TS 022/2011 “Food Product Labeling”:**** if the total sulfur dioxide and sulfite content exceeds 10 milligrams per kilogram or 10 milligrams per 1 liter expressed in sulfur dioxide, product packaging is to include information on preservatives used.
However, despite the technical regulations of the Customs Union (namely TR TS 022/2011), “Bite”, “Pikki”, “Frutilad” and “Fitofruit” snack bars lack any mention of preservative content on their labels. The presence of preservatives is only properly stated on the packaging of snack bars of “Nutberry” and “SmartFormula” trademarks.
A recent study by “Deloitte” has revealed that today, the traditional criteria of consumer choice in the food market (quality, taste, and price) are inseparable from a new group of criteria, namely health and wellness as well as safety and transparency: consumers want to know what exactly they are eating.
Today, health and wellness are evolving from a mere trend to a true lifestyle all around the world. According to a global study by “Nielsen”, 67% of consumers in Russia have reported actively monitoring their diets in order to prevent various diseases, whereas 39% pay attention to product composition before purchasing food and drinks. At the same time, 70% of Russians state that they are ready to pay more for products which do not contain any undesirable ingredients.
Therefore one of the ways for producers to earn consumer trust would be to constantly confirm naturalness and quality of the foods produced (thus forming brand “transparency”).

In all cases, fruit and nut bars purchased and sent for testing at the V. M. Gorbatov Federal Research Center for Food Systems are products containing natural ingredients (dried fruit and nuts). At the same time, in presenting their products as natural and not containing any preservatives, the manufacturer is not supposed to mislead the consumer by concealing the true product composition from them. 
Today’s consumers are sophisticated and are aware that if a product has a shelf life of more than a month outside a refrigerator, it means that it most likely contains preservatives (even if natural rather than artificial). Manufacturers ought to acknowledge this fact and form relations with their consumers based on honesty and transparency. As has been mentioned above, consumers today desire to know what they eat, and forming brand transparency becomes the main argument in this respect.
Among the six brands of healthy fruit and nut bars, only two – “Nutberry” and “SmartFormula”—can currently rightfully claim to be honest with their consumers. A brand, above all, implies consumer trust, which can only be built with clear and open relations.  As they say in Russia, small lies create big distrust.

* According to data by “IndexBox”.
** CleanLabel is an international term meaning a new principle of food production, which implies a natural product composition, a clear composition description, and a lack of artificial components.
*** According to the Mintel Global Food and Drink Trends 2017 study, the amount of vegan foods and beverages in the world increased by 257% in 2016 compared with 2012.
**** Article 4, Requirements for Labeling of Food Products. 4.4. General Requirements for Indication of Ingredients in Food Products Labeling.

Ekaterina Dvornikova,
General Director
Expert Company “Dvornikova & Partners”