In 2012 value of global market of frozen products was estimated at $234.9 billion. According to experts, this market is forecasted to continue the ascending trend with the average annual growth by 3.7% to reach $ 261.9 billion by 2015.

Though frozen food market in USA is pretty large, it is still only second large in the world after EU. Meanwhile EU countries demonstrate uneven sales of frozen products. Sales are mainly driven by countries in North Europe and Scandinavia while southern countries like Spain and Italy show quite unimpressive sales of frozen products. Besides, it should be mentioned that though East European markets are not too large by now, increasing affluence of population and changing lifestyles (growing share of employed women) underpin sales of frozen foods.

Surprisingly, among Asian markets the leader is Japan and not China. However, in the future this can change because of impressive growth of population in China and changes observed in economy of the country.

Russian market of frozen product is still smaller in comparison to North America and EU. In 2012 sales of the review category in Russia constituted $ 4.2 billion or 1,950 thousand tons. Per capita consumption constituted 14.04 kg (compare: this index in USA constitutes 57 kg/person annually, in EU – 25.3 kg/person). Consumption is mainly driven by Moscow and Saint Petersburg. Urban consumers as a rule buy products of standard and expensive price categories paying attention to product quality and health benefits. When taking purchase decision consumers are also ruled by product functionality and innovativeness; from time to time consumers choose chilled products, deep frozen products or imported products. In the periphery consumption of the review category is lower; consumers mainly choose traditional brands of economy and standard price categories. However, this situation can change in the future.

It should be also mentioned that unlike EU or USA, Russian market of frozen products offers a wide choice of meat-based frozen foods like pelmeni.
Market development is mainly related to changing and increasingly hectic lifestyles and growth of disposable incomes. Core consumers of frozen products are young men under 35 years facing lack of time for cooking. The number of employed women buying frozen foods on regular basis is also growing.
Some slowdown of the market in 2011 related to decline of consumer incomes was followed by growth again. In 2012 the market increased by 6.6% in value and by 4% in volume.

In 2012 the largest market segment was ready-to-cook meat products and meat cuts – 44.6% of market volume. More than half of this segment falls on poultry perceived by consumers as good for health dietary product. Second large segment – 27.4% of sales volume or 535.08 thousand tons – was frozen ready meals including crepes/pancakes and vareniki. Third and fourth large segments of the review market in 2012 were frozen vegetables/fruit (12.7% of sales volume) and fish/seafood (9.8%). It should be mentioned that the category of frozen vegetables/fruit includes berries and mushrooms; sales in this category are mainly driven by vegetables mixes.

Most impressive growth (by 10%) was demonstrated in 2012 by the category of other frozen products comprising frozen soups, ethnic meals, frozen baked products, desserts, pizza and other products. This impressive growth was mainly driven by sales of frozen soups (mushroom soup, broccoli soup, rassolnik with dill, tomato soup) and of frozen baked products.

One of market leaders is “Kachestvennye Produkti (Quality Products)” CJSC (Moscow) – large distributor and manufacturer of frozen foods under the brands “Mama Doma (Mother Is At Home)”, “Russky Hit (Russian Hit)” and “Shamakhanskie”. Currently this manufacturer works on launch of a new brand aiming to help the company settle on Russian market of frozen ready-to-cook products.

The group of market leaders also includes “Talosto” CJSC (Saint Petersburg, ТМ “Bogatyrskie”, “Masteritsa (Light Hand)”, “Sam Samich”) and “Daria” LLC (Saint Petersburg, TM “Legkaya Zhizn (Easy Living)”, “GrandChef”, “Daria”).

Consumption of frozen products in Russia is still low, so development potential is great. According to “Finam Management”, in 2013 the market can grow by 5-7% in value. In the future dynamics of the review market will be determined by many factors including:
* change of prices for raw materials;
* increase of consumers’ incomes;
* change of consumer lifestyle as it gets more hectic in the province;
* switch of consumers to higher quality products and added value products;
* development of fast food market;
* WTO membership, change of meat production volume, regulation of some agricultural sectors especially of pig growing;
* consolidation of market players, M&A activity, forcing of small manufacturers off the market.

Development of Russian market of frozen products will be also driven by launches of new products and new varieties of existing product families, improvement of product quality and active promotion as the companies actively explore the market and thus increase investment activity and promo budgets.

Besides, development of modern retail formats will also stimulate sales of the review category, because in supermarkets and hypermarkets frozen products is the fast selling (in 8 days maximum) and most profitable product group: providing 5% to 8% of total turnover frozen foods bring up to 13% of gain.

The review market has low barrier to entry, so currently market operators – both local and federal – are numerous and thus competitive landscape is quite crowded.

Manufacturers aiming to improve their positions on Russian market of frozen products should thoroughly choose marketing strategies and position their products correctly. In short term perspective consumers will pay increasingly high attention to product quality, package, added value, functionality, calorie value, good choice of varieties (various processing grades from “needs cooking” to “heat and eat”, chilled and deep frozen products). 
 
Research of the Company "Euroresearch & Consulting"