EY - Russia - a pulse on the consumer products market

Russia — a pulse on the consumer products market

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EY - Key economic indicators

What to watch for

  • Pressure on consumer demand from debt levels and increasing focus on “value for money”
  • Impact of price increases on volumes
  • Further weakening of receivables

How long can consumer products companies rely on pricing to drive growth in Russia?

Companies have experienced growth better than expected over the last six months. Most senior executives are happy with their results. They are anticipating steady single-digit sales growth in the coming years.

 

Margin has been under pressure with the cost of business rising. Senior executives find it difficult to wean global headquarters away from very high profit levels.

 

Companies have increased their prices, which have been broadly accepted, and are focusing on efficiencies. They are “using” the crisis to implement necessary changes.

 

Russia is seen both as a premium and value market.

 

Companies need a regional presence. There is no longer a single national strategy.

 

Traditional trade (kiosk and small stores) has shrunk rapidly in recent months, to the surprise of most senior executives. The slack has been taken up by the modern trade.

 

Companies are still confident about the Russian market and investing in it. It is recognized that it will “just” be a good, steady market.

 

5 questions for management

  1. Changing consumer demand — how do you meet the need for personalized offerings?
  2. Single-digit growth expected — how do you adapt your business operating model to a moderate growth environment?
  3. Evolving route to market — how do you overcome the key challenges of the Russian regions?
  4. Structural changes — how do you address the impact of salary growth and new incentive plans?
  5. Russian Retail Trade law (in force since 2010) — what do you expect from the new law amendments and how will they affect your relationships with retailers?

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