Hello everybody! Hope you're doing well:) Today let me introduce the Market analysis: Carrots in Russia
1) Demographics
In Russia
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Hello everybody! Hope you're doing well:) Today let me introduce the Market analysis: Carrots in Russia
1) Demographics
In Russia
Population approx. 143
mln: more males at birth, more women above 40
Approx. 30 mln – kids
and teenagers
74% of overall
population lives in urban areas
Birth rates have
been growing since 2000
2) Needs. Today's urban
consumers' needs can be described in two words: "FASTER! HEALTHIER!"
3) Defining market
growth rates:
a. Extrapolating
historical data (good for the start, does not predict important turning points)
b. Studying
the growth drivers:
i. Demographic
information (see above)
ii. Sales
growth in complementary products
c. Product
diffusion curve (constructed through studying the characteristics of the
adoption rate of a similar product in the past)
Final outcome of this
evolutionary process: maturity and decline of the product life cycle.
Indicators of the decline phase: price pressure caused by competition,
decrease in brand loyalty, the emergence of substitute products, market
saturation and lack of growth drivers.
4) Market segmentation
The segments, first of all, should meet the following criteria:
- Identifiable
The differentiating attributes of the
segment must be measurable so that they can be identified
- Accessible
The segments must be reachable through communication and
distribution channels
- Substantial
Should be sufficiently large to justify the resources
required to target it
- Unique needs
To justify separate offerings, the segment must
respond differently to the different marketing mixes
- Durable
There have to be relatively stable conditions to minimize the costs of frequent changes
There have to be relatively stable conditions to minimize the costs of frequent changes
Characteristic
|
|
Demographic
|
·
Age: youth
Generation: current borns Generation Z
·
Gender: primarily male for youth, definitely female
target for women above 40 (parents of
silent)
·
Income
Forth quartile and higher 
·
Education: high school, Bachelor degree, advanced degree
·
Religion
Orthodox (carrots are allowed during fast)
Buddhist (often vegetarian)
Hinduisms (meet is avoided)
·
Family
Full-nest
|
Geographic
|
·
Region: Russia
·
Area: Moscow metropolitan area, Saint-Petersburg
for the entry; for further expansion: Kazan, Rostov-na-Donu, Nizhniy
Novgorod, Yekaterinburg
·
Population density: high (urban areas)
|
Psychographic
|
Tool: AIO surveys (activities, interests, opinions)
Activities: work, travelling, sport, self-education, hanging out with family Interests: science, religion, languages, fitness, other countries’ cultures
Opinions: family values, healthy lifestyle, high productivity,
self-development
|
Behavioristic
|
Usage rate: everyday
Brand loyalty: moderate
User status: potential/first-time
Readiness to buy: high (curiosity)
Occasions: fasting periods, spring (fitness season)
|
4) Production. Russian market of carrots
· Russia
- 8% of global market
· 50% of all Russian carrots are gathered in
Central and Volga federal districts:
·
Cultivated area (2013) ~70 100 ha
·
Carrots gathered In 2013
~ 1500 000 tonnes
·
Per capita production ~10.9 kg/year
· Main importer to Russia –
Israel (also China, Belgium, Belarus). Import is seasonal, primarily in March-July
· In 2012-2013 export of
carrots from Russia almost didn't exist, all the produced volume went to internal consumption
·
Among federal districts
only in two regions (central and Volga) production exceeds consumption. So from
these regions the carrots are transported to all the other
·
Prices 14 RUB/kg (sensitive)
Opportunities on Russian Healthy Food Market
Today we are going to analyze the opportunities on healthy food market in Russia. Of course the population of 146 million people is a tempting target for any product, but is there really a need for healthy snacks or do Russians prefer junk food options? Let us take a look. Data we are using are from several reports that were made in last years.
According to Health and Welness Trends report done in 2011, Russia has strong potential for healthy product and it is actually experiencing dynamic growth. According to Euromonitor International, Russians are very concerned about their health and prefer high-quality products with additional nutritional value. The spending power is growing which is a postitive driver and we can see that manufacturers switched toward healthier products. Health and wellness became a credible trend and retailers across the board are adapting their shelf space to improve the visibility of these products on the shelves.
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |
|---|---|---|---|---|---|---|
| Health and Wellness–Nutritionals | 721.04 | 888.3 | 1088.0 | 1352.3 | 1691.2 | 1,913.7 |
| Health and Wellness–Food and Beverages | 5,318.7 | 6,402.6 | 7,401.4 | 8,891.2 | 10,319.8 | 11,232.2 |
The desire to look good is common to all consumers and is especially important among Russian consumers. According to a Neilsen study, nearly three quarters of Russian consumers are committed to looking their best in day-to-day life, and nearly two thirds of Russians (65%) told Nielsen in 2007 that they try to look stylish at all times, which was above the global average.In April 2009, 73% of all Russian respondents to a survey by Datamonitor stated that: "looking your best in day-to-day life" (an important aspect of health and wellness) was either 'important' or 'very important' to them personally. Almost half (48%) stated that they "feel under pressure to look good" when surveyed in August 2008.
The main consumers of healthy products are in the middle-class income category, who are willing to buy healthy food at higher prices for themselves and their family.
However, there are various sectors, categories and regions and they are of course developing differently. Naturally healthy (NH) food and beverages is the largest and accounts for more than half of total health and wellness food and beverage value sales.
The health and wellness food and beverage sector, will expand over the short and long term, and products will become cheaper and more affordable to a larger segment of the population. The wealthiest consumers will search for premium and/or organic food.
Because of some historical quality issues and problems also with counterfeited products, Russian consumers read product labels carefully and are ready to pay more for branded products, according to studies and surveys done by Western manufacturers. The result is that innovative packages and visual labelling have become very appealing to consumers. Buyers prefer convenient and healthy variants of the products.
Other interesting facts were revealed in Market Opportunities for Key U.S. Products in Russia (2012) that focused also on packaged food and igredients. According to this report, Russia´s packaged food is among the fastest growing in the world. reaching $100 billion by some estimates. In 2011 this market was boosted by steady growth in almost all categories of packaged food. Sales in this sector are expected to increase 16 % in 2011 supported by rising incomes as well as the availability of imported products on the market. This growth of packaged products follows overall growth of retail food sales, which grew to $250 billion in 2010 and is estimated to have exceed $300 million in 2011.
Health is also expected to be a major focus for packaged food manufacturers in the near future. With consumers leading busier and more stressful lifestyles, many have become unwilling to invest time in cooking healthy meals or exercising. Therefore, many are seeking shortcuts in packaged food.
"With growing demand, Russia is increasingly dependent on imports of retail and packaged food products, and this presents opportunities for U.S. suppliers. In 2011, the most dynamic growth of U.S. products in the high-value sector was food preparations, pastry and cakes, vinegar and soy sauces, pasta, tomato ketchup and other tomato sauces, mustard, and nonalcoholic beverages such as waters (including mineral). Given the potential of the Russian agricultural market, U.S. high value products can penetrate some niche markets, especially for those products which are not produced in Russia or are produced in limited quantities. In many cases, Russian agriculture is not yet producing products of consistently high quality (e.g. high quality beef steaks). There are markets for baby food or for specialty products including low-fat, low-salt and sugar-free products, cake and bread mixes, corn meal, and chocolate chips. U.S. exporters could also supply new market segments that are just beginning to develop. This includes organics, microwaveable and semi-prepared food as well as TV-dinners."
What are the main conclusions for us from these reports?
- Russians are very concerned about their health and health and wellness is becamong a credible trend,
- healthy products are more affordable and accessible and the main consumers of healthy products are in the middle-class income category,
- Russian consumers read product labels carefully and are ready to pay more for branded products,
- innovative packages and visual labelling have become very appealing to consumers,
- Russia´s packaged food is among the fastest growing in the world,
- Russia is increasingly dependent on imports of retail and packaged food products.
Sources:
http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Market%20Opportunities%20for%20Key%20U.S.%20Products%20in%20Russia_Moscow_Russian%20Federation_3-20-2012.pdf
http://www5.agr.gc.ca/resources/prod/Internet-Internet/MISB-DGSIM/ATS-SEA/PDF/5696-eng.pdf
[UPDATE]
Hello everyone! Amazing May holidays have passed, and it's time to get back here :) This is an update post to let you know our progress.
Hello everyone! Amazing May holidays have passed, and it's time to get back here :) This is an update post to let you know our progress.
First of all, we are thanking our consultants for the feedback: we'll take everything in consideration during future project development.
We are also thanking Anna and Vibeke - for the ideas you came up with during the last class in April:
1) to place carrots plantations in the neighbor countries;
2) advice on one of the elements of marketing mix: placement
Today we came together and discussed our future steps. Along the week each of us will be working on the own particular piece, and somewhere on Friday - Saturday we are meeting for some profound brainstorming. I will look for our potential partners - healthy food chains and distributors, Hana will study consumers behavior and Zaneta's going to focus on strategy implementation.
See you all later!
And, once again, we need your comments and feedback:) If you have ideas, speak up!
[SWOT, 4P, 5 FORCES]
As for the mesolevel of our analysis, we apply the Porter's Five Forces framework:
Here are the 4 Ps
Product: Baby carrots ShakeDowns (seasoning includes dill, chervil)
People: Our target group is young energetic people caring about health. Those who the following commercial created for:
Baby Carrots ShakeDowns Entering Russian Market.jpg)
Just shake´em
and crunch your cravings !
We suppose there is a specific consumer's need in a Russian market right now - the need for a quick and healthy food under vigorous megapolis lifestyle conditions.
To prepare for market enter, we have conducted a SWOT analysis of Russian green fast-food market:
Strengths
- Growing popularity of organic products
- Existing need for quick and healthy food under vigorous megapolis lifestyle conditions
- Unrecognizable brand
- Unconventional usage
Opportunities
- Occupy market segment using the first mover advantage
Threats
- Low price of traditional fast food
- Unexpected consumers’ perception (“carrots?”)
- Internal rivalry - low/nonexistentThe segment is in a process of a formation
- Bargaining power of suppliers – lowBolthouse owns the farms
- Bargaining power of buyers - moderate
- Threat of new entrants – moderateWith development of a segment the ultimate profitability will grow, which will attract new players
- Threat of substitutes - highCheaper and more accessible burger is always an option
Here are the 4 Ps
Product: Baby carrots ShakeDowns (seasoning includes dill, chervil)
People: Our target group is young energetic people caring about health. Those who the following commercial created for:
Promotion: slogan - "Eat them like a junk food" Price: competitive in a comparison with fast-food
Place: big supermarkets - Lenta, Dixi, MarketPlace
Our main concerns about the enter:
- Free-rider effectInnovation costs (buyer's education, infrastructure development) exceed severely imitation costs of late movers
- Possible issues with quality control on a plantations during further development and expansion in case the raw carrots growing will be transported to Russia.
[TEAM]
We are International Marketing students working on a course project. There are Hana Stavikova, Lilya Obmorsheva and Zaneta Svickova.
Hana is a student at University of Economics, Prague. She is interested in Management and Music. Hana had previously an internship at Wm. Bolthouse farms in Bakersfield, California. The initial idea to bring seasoned carrots to Russia came from her.
Lilya is a Master student at Graduate School of Management, St. Petersburg University. She is interested in Digital Marketing and Behavioral Economics. Lilya is an external development coordinator at Green Campus GSOM - students organization which promotes sustainable development.
Zaneta is also from University of Economics, Prague. She speaks few foreign languages and has strong academic background in Management.
We are welcoming everybody to read our blog and contribute with your ideas :)
We decided to introduce new concept of healthy eating in Russia: Eat them like junk food. Our product is a baby carrot pack that goes with seasoning in it in USA called "Shakedowns". Inside each pack there is a very small pack with seasoning. A person releases seasoning and then shake the whole pack. Then enjoys a healthy and tasty snack.
The concept of product in the USA:
Give it up for fresh cut baby carrots* with natural ranch seasoning, y’all. These single serve packages are single-handedly turning on-the-go lifestyles into flavor-filled lifestyles. Blowing up snack scenes in select markets. (http://www.bolthouse.com/product/babycarrotshakedownsranch).
About Bolthouse Farms:
http://www.bolthouse.com/about
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