Soft drinks: what’s in store for the Russian market in 2024?
Talked about trends and future of the soft drinks market on the WorldFood Connect webinar
On 9 November, the WorldFood Connect business community hosted a webinar "Trends and Future of the Soft Drinks Market in 2024". The speakers were Svetlana Silenina, Head of Consumer Markets at INFOLine Group of Companies, and Dmitry Bogdanevich, Head of Analysis and Project Management at the Beer & Soft Drinks Plant “KRYM”.
Speaking about the state of the food market, Svetlana Silenina noted that today new opportunities are opening up due to the departure of foreign brands and the availability of raw materials base. At the same time, producers are facing a number of challenges: regulatory pressure, stagnating household incomes, rising production costs and declining investment activity. Soft drinks production in Russia grew by 13% in the first nine months of 2023 compared to the same period in 2022, but the overall growth seen after the pandemic is now levelling off.
The experts paid special attention to competition with imported products. One of the most striking cases in this regard is cola. If until March 2022, 80-90% of the cola market was occupied by only two brands, today there are many more. "There has been a great domestic brand substitution," said Svetlana Silenina.
But imported cola can be found on shop shelves more and more often. Thus, Russian producers, who are already working in quite difficult conditions, are forced to compete not only with each other, but also with imported, often cheaper products. It turned out that brand strength in some categories is very strong, and it is not easy for the Russian consumer to adjust to new brands.
This was also noted by Dmitry Bogdanevich. In 2020-2021, it was hard for consumers to accept Krym-Cola, which is produced by the Beer & Soft Drinks Plant “KRYM”. With the brands departure, customers became more loyal, which caused an explosive sales growth rate. But in 2023, the excitement began to subside, partly because the market had become saturated, but also because cola returned to the Russian market from other countries.
In addition to brand substitution, there are several other current trends in the soft drink market, including:
- healthy lifestyle (including the growing popularity of functional beverages),
- labelling,
- fermented beverages,
- portioning,
- private label development.
According to Svetlana Silenina, the dynamics of private label sales is 2-3 times higher than the market dynamics. In 2022, total sales of private label goods increased by 32%, and in 2023, according to analysts' estimates, will grow by 33-35%. It is expected that in the next 2-3 years the share of private label in the turnover of the largest chains will amount to 20-25%.
Among the key consumer expectations in 2023, the speaker highlighted:
- Search for an ideal price-quality ratio (development of hard discounter formats and development of the private label segment).
- Closing the needs of the assortment matrix (brand substitution and import substitution).
- Convenience of purchase (development of online segment).
The webinar also touched upon issues of industry regulation. In particular, the law in force from 1 July 2023, according to which sugar-containing drinks will be subject to an excise tax of 7 roubles per litre. Svetlana believes that under the effect of this law, manufacturers will develop drinks with a lower sugar content. In addition, from 1 September 2023, the Russian Government Resolution No. 887 of 31.05.2023 on mandatory labelling of certain types of soft drinks, including juices, fruit drinks, kvass, energy drinks and drinks based on vegetable raw materials came into force.