Russian market of canned fish and marinated preserves moving towards premium segment (full story)
Delicatessen red fish, caviar (red and that of other fishes) and non-finfish aquatic products are the fastest growing categories of the market of canned and marinated fish preserves. According to the deputy director of Russian Sea Company Vitaliy Azhnin, quoted by the report, recently the consumption of salmonids (Atlantic salmon and trout) and red caviar has increased considerably. The market of marinated fish preserves is growing due to introduction of new products. The turnovers in the market segments of capelin roe, Alaska pollock roe and cod roe are also growing. According to Nielsen Russia Company, the growth of retail sales of red caviar in Moscow, Saint-Petersburg and Yekaterinburg in February-September 2007 amounted to 48% by volume and 91% by value in comparison with the same period in 2006. The growth of sales of marinated salmon preserves during the same period totaled 59% by volume and 64% by value.
As compared to these segments, Russia's bestseller herring with a 13% volume increase and a 10% value increase remained far behind in terms of growth rates. At the same time the volume of herring sales has substantially exceeded such salmon figures. In February-September 2007 the herring sales were 63% greater than those of salmon and trout. But owing to much higher price and the growth of packed delicatessen red fish consumption (in 2006 the ratio of red fish to herring was 1:4, and for the first 9 months 2007 it was already 40% of total marinated fish preserves by volume) the volume of retail sales of marinated red fish preserves in value terms surpassed those of herring by 47% in three largest Russian cities.
As the experts state, the reasons of such shift on the market of canned fish and marinated fish preserves are driven by income growth and the tendency to healthy life style under an increasing lack of time.
For the market of canned fish and marinated fish preserves as well as for many others markets, the income growth of Russians means first of all good prospects for the development of high price segments.
According to the President of Ledovo Group (Russian major frozen foods producer with headquarters in Moscow) Mrs. Nadezhda Kopytina, quoted by the magazine, the dynamic customer demand is being observed in the middle-end market and in the middle-plus market. That is why the Group intends to develop these sectors. Because of the income growth per capita ever great number of consumers is turning their attention to more expensive segment.
If speaking about the majority of population, the most successful is considered to be the positioning in the segment of average price, confirms Olga Tsios, brand manager of Mistral Trading Company.
The share of average price segment, which shows the highest rise, totals 70-75%, according to the data about sales volumes of ABK retail chain.
Many experts think that to develop the premium segment is the most profitable business direction as premium products have the longest-term potential. A consumer is ready to pay the high price for unusual and exotic products. Moreover, this trend is typical of the segments of canned fish and marinated preserves.
Other analysts also acknowledge that the market is developing in this direction. There is a shift in priorities from traditional products to more exotic ones.
The typical way of acquaintance with a new product will be as follows: a buyer tastes it, reads the information about product benefits, tastes once again, makes sure of its acceptability, buys again and enters target group.
On the other hand, Russian end consumers now better understand the quality of fish and this is a good trend as premium products in attractive premium packs can be sold at a higher price.
It is the opinion of a department manager of STK FS Wester Fedor Zabara that a consumer is showing interest in more conceptual products. As a result, the production of marinated fish preserves has jumped for the last 12-18 months. The producers abandoned cheap raw materials in favour of high-quality and expensive ones such as Atlantic salmon, trout and coho. Now on the market a consumer can find fish slices, pieces in oil, in vinegar, squids in exotic sauces, shellfish/mollusks and etc.
According to the leading PR-specialist of Meridian Company Sergey Kovalenko, quoted by the magazine, more often such products will be bought not only for decorating festive table but also for the purpose of diet diversification. Thus the main aim of a producer is to diversify its range attracting in such a way different consumers.
Shellfish and mollusks
Exotics and variety are reflected most of all in the segment of shellfish/mollusks/seaweed. In 2007 this segment developed very dynamically. The end of 2006 - the beginning of 2007 saw a great number of products in brine entering the market: squids, mussels and shrimps. Even the producers, who before had dealt with only frozen products, joined this business.
Today the market of non-finfish aquatic products, such as shellfish and mollusks, is still one of the dynamically growing among all food products. According to the President of Ledovo Group Nadezhda Kopytina, quoted by the magazine, this trend is determined by rising affordability of such products. On the one hand, the increased competition among producers has led to significant diversification. On the other hand, the growth of shellfish/mollusks market is connected with general improvement of the well-being of Russians. According to the experts' data, in 2007 the level of real incomes of Moscow residents increased by 10%, and 48% were spent on food including shellfish/mollusks.
Characterizing consumer audience of marinated fish preserves, it is worth noting their financial stability. This group consists of young men and women aged 25-40, who have already achieved certain success in the career and who have the possibility to indulge in their tastes. That's why marinated fish preserves distribution is oriented on the regions of high population density with higher than the average income and growth prospects such as Moscow, Saint Petersburg, their suburbs and large Russian cities with developing business and industry.
As a result, when introducing a new product line under sub-label Bon Appetit! on the Russian market in spring 2007, Ledovo Group focused on growing demand in large cities for high-quality marine delicatessens which can easily be used at home for cooking restaurant class dishes.
The new range under sub-label Bon Appetit! includes 19 products from three main categories: ready-to-eat marinated shellfish/mollusks for salads, ready-to-eat exotic shellfish-based salads in sauces and laminaria-based salads ready-to-eat. Besides traditional recipes such as "Shrimps in karri-orange sauce", "Mussels in tomato-spicy marinade", "Seafood cocktail in Swedish-style marinade", Ledovo Group in autumn 2007 added to its range black tiger prawns and white prawns. There are also warm water shrimps (TM Salmon) in the Group's range.
The leading PR-specialist of Meridian Company Sergey Kovalenko believes that the highest growth is noted in the sector of marinated shellfish/mollusks with oil. The main development of product range is observed due to introduction of new marinades and recipes. Recently Meridian Company has introduced on the market marinated shellfish/mollusks in brine. This product line includes squids, shrimps, mussels and seafood cocktails in brine, all packed in plastic jars 430g.
Marina Company has introduced on the market a wide range of shellfish/mollusks under MarinaR label in various marinades (squid in olive oil "Ellada", seafood cocktail in oil with spices "Mexicano" and so on) and sauces (squid and cocktails in milk sauce Béchamel and etc.)
According to the deputy director of Russian Sea Company Vitaliy Azhnin, quoted by the report, the Company positions its products as very useful and natural without GMO and with low vinegar content in shellfish/mollusks. For example, Mediterana-labeled seafood cocktails and squids are produced with lower vinegar content, mussels and shrimps are produced without vinegar at all.
As the President of Ledovo Group Nadezhda Kopytina supposes, very soon there will be changes in shellfish/mollusks distribution system. Firstly, regions are becoming a very promising market. Besides, while now the bulk of shellfish/mollusks is sold on the food markets and in supermarkets, in the future there will be specialized sales outlets where a consumer will have the possibility to buy not only chilled fresh products but also marinated seafood preserves.
Tuna is considered to be an exotic product on the Russian market but it is becoming very popular at present. According to Olga Tsios, brand manager of Mistral Trading Company, this fish is not a traditional product on the Russian market, while in America and in Europe it is the main consumed species. In 2006 the share of tuna in total import volume of canned products (200 000 tonnes) amounted to only 1.78%. Tuna is positioning in the high-end and the middle-end segments but in fact it is a premium product. Firstly, the tuna market is 100% import market. Secondly, as price-quality ratio of this product is adequate to premium class, the questions about price range choice are not arising. Since it is very difficult to find fresh tuna in Russian shops or it is very expensive and requires special cooking, consumers prefer to buy canned tuna and use it as an ingredient of various dishes. Tuna is one of a few species which don't loose useful properties when being canned. Tuna has a very low fat content that's why it is considered to be a dietary product. Canned tuna is produced from frozen fish, so blast freezing is another competitive advantage and tuna-labeled canned products of Mistral Trading Company are produced in this way. At present the range of Mistral Trading consists of two fish brands: Fortuna and John West. TM Fortuna includes tuna pieces in oil and own juice, chopped Skipjack in oil and own juice, yellow fin tuna fillets in own juice.
Salmon delis and caviar
Unlike non-finfish aquatic products and tuna, the salmonids (Atlantic and pacific salmon) and red caviar are considered to be traditionally Russian products, but noticeable increase of sales volume in these segments has occurred not so lately. One of the reasons behind has to do with high price, and Russian consumers can't always afford to buy them very often, particularly delicatessen salmon products and caviar. Now when income of the population has increased, such products are becoming more affordable for people, especially for those who live in Moscow and Saint Petersburg. In 2006 the annual market volume of salmonids totaled 600 million USD.
In Russia some 99% of all salmonids are caught in the Far East, with pink salmon accounting for 70% of the catch or 180 000 tonnes. From this number 30% are exported to Japan, China and South Korea. 70% of pink salmon or 126 000 tonnes are consumed locally as fresh fish, caviar, canned fish and marinated preserves. In 2005 the annual salmon consumption in Russia amounted to 0.29 kg per capita, describes the situation on the Russian market of salmonids the brand manager of Mistral Trading Company Olga Tsios.
Canned salmon is produced from pink salmon, chum salmon, sockeye, coho salmon, king salmon and Atlantic salmon. More traditional products for the Russian market such as pink salmon and chum salmon are placed in the medium segment. The canned products from these species are mainly bought by the middle-income consumers. If income level rises, they either automatically switch to a new, higher-priced kind of canned products or tend to discontinue their consumption proceeding from a general notion that canned fish products means something cheap and third rate.
Marinated preserves from Atlantic salmon or Pacific salmon are much in demand among consumers in spite of the fact that their price is much higher than the canned fish products price. In the consumers' opinion, the most convenient forms of packaging for delicatessen salmon products include a vacuum pack (85.1% by volume and 91.9% by value among all types of packages in February-September 2007, according to the data of "Nielsen Russia" in total volume of retail sales in Moscow, Saint Petersburg and Yekaterinburg). This category is followed by portion packs 300-399 g (50.1% by volume and 55.2% - by value) or packs 200-299 g (26.5% by volume and 25.9% by value). Another popular item is one-piece fillet (54% by volume and 59.7% by value). Slices are very popular too (30.8% and 33.1% respectively).
According to Tamara Rodionova, the expert of "Nielsen Russia" Company, quoted by the report, for this segment the sales in super-, hypermarkets are extremely important. In Moscow the share of these sales totals 87% by value (without taking open markets and pavilions into account). In Saint Petersburg this share is even more - 93% by value. The market leaders are well represented in sales outlets and compete successfully owing to a good variety of offered products. According to "Nielsen Russia", the market leaders (by sales volume) in Moscow, Saint Petersburg and Yekaterinburg are "Asto", "Marina", Fish Processing Combine "ROK", "Russian Sea", "Northern Company" and private labels chain stores. In February-September 2007 their total share amounted to 75.7% by volume and 79.1% by value. According to TNS Gallup Media's data for the 2007 third quarter, in Russia the most well-known and consumed brand in this segment is "Russian Sea". About 47% of Russian consumers aged 16 and over are aware of the label while some 27.8% of the population consume the products under this TM.
The situation on the red caviar market is similar to that in the segment of delicatessen salmon products. The growth rate has hit 91% (the data provided by "Nielsen Russia" for the period of February-September 2007 according to sales volume in Moscow, Saint Petersburg and Yekaterinburg). Now the red caviar is an indispensable item in chain stores' range. According to "Nielsen Russia", the most common packages for red caviar are tins (55% by volume and 48% by sales value), glass jars (about 40% by volume and 47% by sales value) and jars 100-199 g (65.46% by volume and 60.2% by sales value). In Moscow the largest selling item is caviar in tins (53.6% by volume and 48% by sales value). In Saint Petersburg the share of tinned caviar totals 47% of sales volume in terms of value, and the share of caviar in glass jars amounts to 53%. In Yekaterinburg the caviar in tins is the best seller (78% of the total sales in terms of value). Firstly, it results from the income level of consumers and strong positions of the local market players such as "Medved" (Bear), "Shalanda-M", which specialize in the caviar production.
It is indicative that the share of glass package is growing, and in February-September 2007 it increased by 7% in comparison with the same period of 2006 (the data provided by "Nielsen Russia").
As a result of the growing consumer interest in caviar, almost all producers have included this product (not only red caviar but also other species' roe) in their product line portfolio. For example, recently Russian Sea Company has introduced a new product from capelin roe under Ymaisagi label along with premium salmon caviar under Zlatoglavaya label.
Moscow-based Meridian Company also started selling red caviar in November 2007.
According to "Nielsen Russia", in Moscow, Saint Petersburg and Yekaterinburg the leaders on the red caviar market in February-September 2007 were Asto Company, Russian Sea Company, Fish Processing Combine "ROK", Northern Company and North-Eastern Company. Their total share amounted to 59.4% by volume and 65.1% by value.
All experts admit that the situation on the market of canned fish and marinated preserves, particularly in the segments of salmon products and caviar depends on the season: the busiest months are November and December because of Christmas and New Year holidays. In this period the sales volume increases by 20-25%.
Speaking about the market of canned fish and marinated fish preserves, all experts point to the growing number of branded products because of their stable quality. TM Santa Bremor appears to be the leader on CIS market followed by TM Russian Sea, Meridian and Marina.
In general, the market specialists note that in Russia the demand for fish products is growing. That's why the market of canned fish and marinated preserves has good prospects.