Prospective freezing
— 2008-10-20 —

Russian frozen convenience foods market is the youngest and most dynamically developing segment of the Russia food industry. Leading experts predict no drops in sales o these products for the foreseeable future.
Per capita consumption of frozen meat products is 4 times lower in Russia than in Europe, so average growth forecasts settle around 15 per cent per annum.
Consumer growth is based on: changing life intensity, popular paying capacity growth, higher consumer awareness of benefits carried by frozen meat products.
Producers introduce new technologies, develop original recipes, packages, expand product range, and refine product storage and delivery.
Pelmenis prevail
Main market segments: frozen convenience meat products, frozen vegetables, mushrooms, frozen dough products, sea food.
More than one half of the market (70%) is represented by convenience meat products.
Pelmenis generate most of the sales of convenience meat products catering to more than 80% of consumers. Producers include Darya, Talosto, Raviollo, Mirital and numerous regional brands.
Competition will grow and strong brands are likely to gradually squeeze out minor trademarks while strong regional producers may grow to the national level.
Market players expand production and develop new products. Key players mention complex and combined recipes and ready-to-eat meals among their development priorities.
Another trend in the frozen convenience products market is that consumers buy more and more chicken meat. Chicken meat is a good raw material for producers inspired by such developments.
Active pancakes
Pancakes are developing very rapidly for a number of reasons such as: relatively new product, relatively low prices, and active market positions taken by producers.
Pancakes segment is highly concentrated with 5 producers accounting for more than 85% of the market.
Production development
Strong growth in frozen convenience meat products output is related to demand and consumption growth. In 2000-2007 production of convenience meat increased by 6 times.
Production growth in prominent in Central, South, Siberian and Far East federal districts.
In 2007 two main federal districts accounted for nearly 60% of the Russian frozen convenience products market. In January-July 2008 growth was observed in all of the main segments of the market.
As at August 1, 2008 the average retail price for minced meat was RUR 156 per kilo, and the price for pelmenis, manty, ravioli was RUR 106 per kilo.
So the differentiated variance in prices for manty, pelmenis and ravioli averaged 1.4 times.
Packages
Growing competitive pressure makes producers focus on packages as tools for positioning their goods and building consumer loyalty.
One of the market trends is the growth of sales of convenience products without packages. More and more producers specialize in delivery of such products upon orders from retailers. While growth in sales volumes is the beneficial part for producers, they also observe that their brands suffer from growth in this segment.
Surveys show that 70% of consumers buy packed products. Non-packed products reduce popularity of large packages and stimulate purchases of smaller amounts of products packed in 400 - 350 g packages.
Nevertheless packed products have numerous advantages. Both consumers and retailers prefer packed products. In this case quality is guaranteed to retailers and easy handling and consumption is guaranteed to consumers.
A general market trend is delivery of new products in new improved packages.
The market will grow based on new products that help replace comprehensive nourishment, i.e. in ready-to-eat courses. Retailers point out the 25-30% y-o-y growth in this segment.
Consumer preferences change because of higher consumer awareness. However, market growth is sometimes impeded when innovative products are not instantly accepted by cautious consumers and it takes time for them to get used to new products.
Premium and mid-high segments are the most promising in terms of growth. Average segment growth rates are lower and competition in the segment is stronger, so most of the growth will be based in the average segment while premium products will set the pace.
Overall, market development will involve expansion of Russian producers and their stronger market positions. This is a long, painstaking and investment-intensive process though. Areas of development include the need for modern production equipment, local raw materials development, the need for modern logistic routes and expanded distribution.
Segment-specific aspects
Absence of clear structure is characteristic of the market. That is why Produkty Pitania’s product portfolio comprises more than 50 items in several categories of frozen convenience foods. Chicken meat accounts for the major part of these items. In addition, we continue to develop new recipes that include other types of meat (beef and pork), vegetables and dough.
We build our product range to help every consumer select our products to his or her taste and save time to enjoy high quality products at optimal price.
Awareness figures from Marketing Index by TNS Gallup Media show that about 27% of adult consumers know our Zolotoy Petushok trademark, which is a high figure for this segment.
High demand for our products is based on its competitive advantages including modern high-tech production and elaborate distribution system. Market knowledge and development and creation of innovative products help us keep the leading position.
We expand our product portfolio with new products working ahead of the market’s needs. At the same time we are committed to consistent quality that is not affected by the rate of new products generation. We are committed to high quality above all and the number of products follows in the list of priorities.
Our product range updates are based on market trends and consumer preferences thus ensuring sustainable market position of the company.
High quality of product by default is what supports our competitive position and certainty about the future. The set of quality controls is implemented throughout the production process from incoming raw material to final products output. This is the fundamental principle that forms the basis of Produkty Pitania’s production operations: we utilize the multi-step quality management system that is improving on a permanent basis. In addition, by developing our own distribution system we ensure that the quality of our products is preserved through to the store shelf.
Damir IMAMOVIC, Vice-President, Produkty Pitania