Executives are concerned with the quality of local raw materials. Companies are still heavily sourcing from abroad in the current economic environment, and this has an impact on production costs. Executives are considering investing into the Russian local suppliers market.
Russia: a pulse on the consumer products market
Key questions for management
How will new trends in consumption impact business?
Consumer confidence is under pressure – the barometer fell to -32 in 2015. Most executives sense a new trend emerging in consumption: consumers are now more careful with spending. Striking the right balance between responding to changing consumer behavior and maintaining profitability has become the new challenge.
Most consumer products companies reported an excellent first quarter, although May 2015 turned out to be disappointing; the expectations for the end of 2015 are quite positive.
Managing the brand portfolio is highly important. While the middle market is shrinking slightly, premium brands are holding up. Companies are investing in brands and advertising campaigns, including digital advertising.
The Russian economy continues to be strained by numerous factors in 2015, though the ruble has stabilized somewhat and is in better shape than expected.
Some consumer products companies are looking to invest further in regions outside Moscow and St. Petersburg, relying on the support of regional authorities.
The era of double digits is over — it’s time to focus more on margins, operating efficiencies and optimizing costs.
Pricing is now more important than ever. Maintaining the right balance between price and value is critical, but it isn’t easy; executives acknowledge that retaining market share has now become a key priority.
Managing salary expectations has come to the forefront. Companies are trying to retain talent and are eager to compensate for the current situation by aligning salaries with the inflation rate; some are not even cutting training programs.