Russia: a pulse on the consumer products market
Key questions for management
It’s not a crisis; it’s a new reality. How will the new realities influence business?
Most executives point toward the resilience of Russian consumers. They have absorbed the price increases but are cautious with spending.
Companies have taken cost control measures as they experience pressure on their revenues and profits. Most have reduced their advertising spend and staff, and all are removing non-value added costs.
The majority of companies are satisfied with how they survived 2015. In ruble terms, their business is still good. They expect 2016 to be more of the same. The Russian economy continues to be strained by numerous factors though the ruble seems to have stabilized at better-than-expected levels.
The environment is challenging and highly unpredictable but Russia continues to be an attractive market. Companies need to change their approach to strategic planning and adapt to new realities. They need to optimize their portfolios, fine-tune their pricing, tap the preference for local products and realign their distribution models.
Pricing is a key issue for executives. Balancing the price and value equation has become critical. Executives acknowledge that retaining market share is a key priority right now.
Brand value has gained more prominence. Companies continue to invest in brand, which allows them to gain a sustainable market share.
Most executives are concerned about their relationship with distributors. Distributors are getting squeezed, and both big and small ones are going bankrupt. They suffer from high leverage and face working capital issues. As a result, companies are losing access to retail chains.
Executives believe they need to collaborate with governmental authorities. Executives are worried about the constant regulatory changes in the industry and the resulting lack of clarity.
Companies have retained the best talent. They have resized their teams and now have better-performing teams, who are highly motivated and result-oriented.