Stefano Vlahovic: Consumers determine market development
— 2005-09-09 —
Modern products are supposed to be easily available and simple to cook, as well as healthy and fat-free. Convenience foods represent an alternative to traditional home-cooking because they offer guaranteed freshness and fast preparation. Frozen chicken meat-based products represent a rapidly expanding segment of the convenience foods market. And although this segment is relatively young, its growth exceeds that of other meat-based counterparts. Today Vitrina discussed these growth trends with Stefano Vlahovic, PRODUKTY PITANIA Company President.
What are your predictions with regards to convenience foods market growth?
Russian manufacturers used to be way behind their American and European colleagues in terms of equipment and product range. Today, however, they are able to deliver a much wider range of high quality products to Russian consumers. In the last five years, the Russian market has grown steadier; and although its growth rate is down to 10% a year, it still retains significant growth potential. Consumer demand for these products is driven by fast and convenient preparation, a broad variety of high-quality products, and affordable prices. As consumer income grows, we are seeing a much higher demand for products that meet these criteria.
What are the major trends in the frozen foods market?
Consumers determine the way markets develop. As the macroeconomic climate in this country improves, people can afford buying more of a better product. In addition, rising income makes it possible for consumers to eat out more often. In fact, two or three new restaurants open in Moscow every day, and the number of public catering facilities in the city has risen to about 10,000. Given the food service market’s high potential, we have made it a development priority. We already cooperate with several popular fast-food networks. At the same time, competition is growing on the frozen foods market, especially as new players emerge and operators compete for leadership by using proactive promotion, among other strategies for attracting consumer attention. Recently, a number of manufacturers have located their production facilities in the Kaliningrad region because it is the only Russian seaport in the Baltic Sea that does not freeze in winter, as well as a large transport center. The region was also declared a special economic zone, which means that local operators enjoy benefits while working here.
What products are in the greatest consumer demand?
The most popular products are those with complex recipes, which are value-added – particularly ready-made courses and frozen vegetables. But the high demand for chicken meat has given rise to another major trend. The Russian Meat Union estimated that by 2010, chicken meat will represent 45% of total consumption, with convenience foods accounting for 30—35% of the volume.
Recently, retailers have become more and more active in marketing products under their private labels. What are the prospects for this segment?
Whereas private label sales in Europe run between 14% and 41% (ACNielsen), they are only 1% of the current market in Russia. And despite the evident benefits, we are not planning to expand our operations in this segment because we are interested in promoting our own brand. Popular trademarks help win customer loyalty and our priorities lie in further expanding production, developing our own distribution system, and increasing the role of marketing and branding.
Marina Romashkina