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Private Label Market in Russia to Grow to RUB 950Bn by 2014 Finds PMRCorporate - Private labels represent a relatively new phenomenon in Russia. Combined with the low concentration of retail chains, this explains the modest level of private labels penetration - PMRCorporate.com
Private Label Market in Russia to Grow to RUB 950Bn by 2014 Finds PMRCorporate

 

NewswireToday - /newswire/ - Cracow, Malopolskie, Poland, 2012/05/11 - Private labels represent a relatively new phenomenon in Russia. Combined with the low concentration of retail chains, this explains the modest level of private labels penetration - PMRCorporate.com.

   
 
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While private labels are associated with the quality and even brand identity on the mature European markets, in Russia they signify only lower prices compared to manufacturers’ brands.

According to estimates presented in PMR’s latest report entitled “Private label in Russia 2012. Market analysis and development forecasts for 2012-2014”, in 2011 the market of private labels in Russia reached over RUB 474 ($16bn), which was a 20% increase compared to the year before.
In recent years, the Russian market of private labels demonstrated active development. The most dramatic growth was evidenced in 2008 when the market more than tripled in value terms. It was a result of the financial crisis of 2008 which became a serious driver for private label sales. As the purchasing power dropped in Russia, consumers turned to private labels in search for lower prices.

While in 2008 the growth of the discussed segment was a result of changes in consumer behaviour, further development is expected to be driven by the activity of retailers which tend to improve their efficiency using private label tools. PMR envisages that by 2014 the market will grow to about RUB 950bn ($31.4bn), revealing stable and high growth rates of 26% annually.

Tander gave up its leadership to X5 Retail Group
The retailers in Russia have a short history of private label development compared to the leading retail companies on the mature European markets. The X5 Retail Group, Metro Group and Tander are among the first to introduce private labels in their offer in Russia.

While in 2010 Tander was the leader of the private labels market in terms of sales and was followed by the X5 Retail Group and Auchan Group, the situation on the market changed in 2011. In 2011, the X5 Retail Group managed to earn RUB 50.7bn ($1.7bn) due to private labels sales, overtaking Tander by RUB 3.9bn ($132.9m) and becoming the official leader in value terms of the private label market in Russia.

One of the most active players on the market was the Kopeyka retail chain which in 2010 boasted the largest share of private labels (23%) in the total revenue. However, in 2010 the chain was acquired by the X5 Retail Group. Thus, the X5 Retail Group expanded its portfolio by such labels as Romashkino (dairy products), Sladograd and Korolevskiye traditsii (confectionery), Eco and Sunway (juices), and Brigadirskoye (beer).

The majority of the leading retailers have ambitious plans of further private label development. The X5 Retail Group plans increasing its labels’ share up to 50% in Pyaterochka stores (now the share is estimated at 17%), as well as in its other store formats. Auchan, which launched private labels straight after entering the Russian market (in 2002), intends increasing their share in its total sales, introducing 500-700 SKUs under private label annually.

The O’Key Group plans to increase the share of its private labels up to 70% in the future. Achievement of this goal would mean approximation of the hypermarket chain to a hard discounter format.

The regional retail operators, namely Tatarstan-based Bakhetle and Siberia-based Maria-Ra retail chains, managed to become the leaders by private labels share in their total sales. In 2011 private labels accounted for 35% of Bakhetle’s and 20% of Maria-Ra’s sales, which was more than in case of other grocery retail companies. However, relatively low total sales did not allow Bakhetle and Maria-Ra to join the key players in private labels sales.

On the other hand, Tander believes that the Russian market is not exactly prepared to accommodate private labels as it is not saturated with manufacturers’ brands. The company does not plan to considerably increase the private labels share in its product range and expects a rather slow pace of growth in the future. Sedmoy Kontinent is also very cautious about increasing the share of private labels in its total offer believing that manufacturers’ brands should be well represented on the chain’s stores shelves.

This press release is based on information contained in the latest PMR report entitled “Private label in Russia 2012. Market analysis and development forecasts for 2012-2014”.

 
 
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Private Label Market in Russia to Grow to RUB 950Bn by 2014 Finds PMRCorporate

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