Predicting Russia's Future Growth
By Marc Lagrois, Group Managing Director, Custom Analytics, Nielsen Europe
Russia’s macroeconomic landscape is enviable. Comparatively lower inflation and unemployment and a higher GDP rate than the rest of Europe has collectively contributed to Russia’s fast-moving consumer goods sales value growth of 11 percent over the past two years (2011–2012), according to Nielsen. But while economic factors will continue to contribute to Russia’s growth story over the next two years (2013–2014), it will slow, forcing companies to rethink how to grow revenues and profitability.
Achieving future double-digit growth will be a challenge. Marketing programs will have to work harder to sustain robust expansion. Pockets of opportunity are available, but knowing where to find them is the key to ongoing sustainability.
Sourcing Future Growth
By measuring the relationship between marketplace variables and sales to identify the key growth triggers today, we can predict how to drive growth in the future. An analysis of four key categories in Russia reveals where future growth will source from and outlines the marketing strategies necessary to ensure ongoing success.
Collectively, the non-alcoholic beverage and confectionery categories constitute about 80 percent of food sales and the personal care and home care categories represent nearly 100 percent Russia’s drug category sales. Non-alcoholic beverage and confectionery categories have enjoyed relatively robust sales growth of about 12 percent over the past two years, but predicted sales value growth over the next two years (2013–2014) will grow at a slower rate of 8–10 percent.
Likewise, while recent growth in the personal care and home care categories has been quite strong over the past two years, ranging from about 12–14 percent for personal care, and nearly 20 percent for home care, that growth will also slow to much lower rates. For personal care, predicted sales value growth will slow to a 9–10 percent range, and home care will drop to nearly half (10%) the growth rate of 2011–2012.
As macroeconomic factors to drive future sales growth slows, marketing factors, such as assortment, promotions and retail distribution, will become increasingly important to fuel future sales development.
Driving Future Growth
To make your marketing programs work harder, develop and strengthen your presence in key account chains. The development of modern trade will be an important driver of growth at the macro-category level. Just as important are developing assortment strategies with the right value equation. Optimize your product range through innovative products that meet consumer demands with products delivered at the right place at the right price. Doing so will help create and strengthen competitive advantage and increase share, which will drive longer-term growth. Lastly, promotions will continue to drive market share for brands at a stable rate, but creating advantage through efficiency will deliver the most benefit.