Baby FoodRussian MarketGroupe 5

Ophélie Toulet Margaux Mesurat Emmanuelle Friedlander Tamara Khismatulina Christopher Tang

Size of the market

● Package food in Russia: +9,2% (2007-2011)

● Baby food: +24,02%

● Russia: Birth rate is picking up

More than 1 million babies born in 2002 in Russia

Market volumes and sales❖ 2 major segments:

➢ infant formula: 21% of the market➢ complementary food: 79%

❖ 1st months of life: puree❖ Then juices and cereals for 36 months❖ Other segments after 2nd year❖ The growth rate of baby food was 19,3% in 2012 comparing to 2011

Source: Euromonitor, USDA study

Regulation and Certification ● Prior to 2012, no certification for organic products in Russia. Many products carry

the labels “organic” or “bio” without certification.

● Ministry of Agriculture: “On the production of organic agricultural products and amendments to legislative acts of the Russian Federation,” dated 26 November 2012.

● Regulate the relationship between agricultural producers, other citizens, legal entities, and public authorities in regard to manufacture of agricultural products.

● Expected to come into full effect in 2015

1. Agricultural products that meet the requirements established by the articles are recognized as organic in the Russian Federation: 2. A national standard for organic agricultural products 3. An international standard for organic agricultural products4. A certification system for organic products. 5. Organic products are certified in accordance with the requirements of the laws of the Russian Federation on technical regulation. 6. Assessment to confirm that agricultural products conform to the specified documents is carried out voluntarily based on the agreement between agricultural producers and certification authorities in accordance with the laws on technical regulation.

Regulation and Certification

Impact on Business

Opportunities ● Rise of disposable income creates significant number of consumers who can afford purchasing

high-quality food products. → Larger potential market

● 60% of customers in Moscow supermarkets are willing to pay more for products if their packaging contains a special “organic” sign. → Larger potential profit

Possible barriers● Until legislation is in place, any product launch that claims to be bio or organic will be mixed

with those that are falsely advertised / following less strict restrictions → Profits

● Russian consumers lack knowledge of what exactly organic products are → Education

Competitive set

❖ Over 40 brands➢ 3 leading companies

■ Wimm-Bill-Dann Produkty■ Istra-Nutricia■ Progress

➢ price/quality

❖ Market led by Wimm-Bill-Dann Produkty➢ 25% market share in 2011➢ Diversified portfolio

❖ Importance of international producers ➢ Nestlé, Danone, International Nutrition Company, Heinz...

Sales channels & Geography areas1. Specialized stores 2. Supermarkets 3. Internet 4. Pharmacies

Ad-hoc research

ObjectivesWe want to check if yes or not, it would be interesting from a financial point of view, lauching our range on the russian market.

→ knowing if there is or not an opportunity on the market.

We need to check if the potential customers have an awarness of the brand, the image of the brand, if they are ready to buy the product on the long term regarding some aspects such as the price, the quality, the competitors’ products etc...

Ad-hoc research

Methodology

Focus group: It is a really useful tool that allows to test the product that is going to be launch with an overall point of view.In our case, would be probably efficient because parents like talking about their babies so, a lot of information would surely be spread.

Face to face: A could alternative because some parents could fell they are judjing if they are in a groupe and regarding the personalities some are going to be influenced by others.This method allow more honesty and less influence between people

Internet: In Russia, the number of user of the internet keeps growing up, between 2008 and 2012, the number of users has raised of 42%.This tool would be really relevant to collect information.