Ceepackaging

Analysis

Private label likely to boom in Russia

From September 26 – 28, The Moscow International Private Labels Manufacturers Exhibition (PLMC) will bring together various delegates from the industry to promote non-branded products towards a market relatively unaccustomed to them.

However, despite the market may be very much in a fledgling stage, the conference is part of a growing awareness of non-branded goods throughout Eastern Europe.

Russia is already seeing an increase in the demand for private label products, it may be sometime yet before the country’s consumers are ready to forgo their favourite brands.

“The demand in Russia for private label products has increased from last year by 100 per cent, though this means it still only accounts for just two per cent of the market share,” Said Michlis Chrstou, of Market researchers ACNielsen.

Private label goods are already a massive industry in Central Europe, with Germany boasting around a 30 per cent market share, and even growing markets in Eastern Europe having around a 15 per cent share.

Michlis Chrstou believes that this growing trend can in part be linked to the increasing number of heavy discounters like German retail chain Aldi that have been expanding throughout the EU and Eastern Europe.

“There is a correlation between higher levels of discount stores and stronger market shares, and this is particularly relevant in Russia’s case as it does not have any major international discounters operating in the country, -though they will come,” said Chrstou.

With the base market for private label goods remaining low in Russia, the market is potentially open for heavy investment, however not all non-branded goods are experiencing such popularity.

Goods like refrigerated foods have a much lower number of branded goods have seen much greater expansion than products like cereals which have greater label recognition and stronger “brand loyalty”.

“Consumers may be willing to except cheaper, less image driven food products, but they still like to treat themselves with the odd luxury product,” said Michlis Chrstou.