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Cracking Russia: Optimism growing for second half of 2011 - EY - Global

Cracking Russia: consumer product approaches in 2011

Optimism growing for second half
of 2011

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Executives are still reasonably optimistic that the second half of the year will prove stronger.

Value is strong but volume remains a challenge

The first half of 2011 brought good growth in value, but smaller volume growth for consumer products companies. This is making it hard for companies to achieve the budget numbers they predicted.

Companies are optimistic that the second half of the year will show improvements, but some hurdles lie ahead:

  • Inflation is rising
  • Operational and input costs are rising
  • Logistics costs are high
  • Disposable income and real wages are growing just above flat, or even negative, year on year
  • The retail environment remains tough — and private label is becoming a real threat

Executives are considering:

  • How long price rises can continue
  • How premium will play
  • How to adapt the premium offering to upper mainstream consumers
  • How to build better appreciation of brand value


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