Practically everybody loves chocolate, everywhere in the world. Demand for this product is high and retail offers a wide choice of tastes and brands. Russian chocolate market is highly concentrated – sales are almost completely controlled by five largest players, mainly transnational holdings with production facilities in Russia.

Like on any FMCG market, price is important for consumers. Chocolate market splits into three price categories: economy, standard and premium.

Major part of demand – 63% – falls on standard category comprising most of traditional chocolate offerings, something consumers buy because of habit. Besides, this category is dominated by domestic products. One third of demand belongs to economy category – mainly products of local manufacturers. Premium category has just 4% of demand. This category includes elite products purchased by appreciative consumers.

Recent market trend is slowed down growth of premium category. Many companies had to revise their product portfolios in order to reduce premium products in favor of standard and economy, and also to introduce economy package formats. Thus, offered product range increased while revenue of manufacturers declined which underpinned competition in standard and economy categories. Currently premium category is coming back to pre-crisis level.

On Russian chocolate market import exceeds export in volume. According to customs statistics, in 2011 Russia imported 174 thousand tons of chocolate, plus 8.4% over 2010 when import volume constituted 160 thousand tons.

In January–November 2012 import of chocolate increased by 7.5% in volume and constituted about 168 thousand tons.
In value terms chocolate import increased by 25% in 2011 over 2010 and reached $ 795.5 million. In 11 months of 2012 chocolate import accounted for $ 744.3 million, plus 3.9% over 2010.

In 2012 the largest importer of chocolate to Russia was Ukraine – 75% of import volume. Other supplying countries with relatively large shares of import volume were Poland (8%), Germany (4%) and Italy (3%).

Export of chocolate constituted 81 thousand tons in volume and $ 304.7 million in value in 2012. Russia exports chocolate mainly to CIS countries with Kazakhstan having 39% of export volume. Second large destination was Ukraine with 15% of export volume; third large share of export volume went to Azerbaijan – 9%. Supplies to Tadjikistan and Mongolia were also significant – respectively 6% and 5% of chocolate export volume.

In general, volume of Russian chocolate market demonstrates steady growth.

Russia is one of the most promising chocolate markets in the world. According to "Euromonitor International", in 2012 value of Russian chocolate market constituted about $ 8 billion; by 2016 the market is forecasted to increase by 45% in value and reach $ 11.6 billion. According to "KPMG", growing demand for quality and expensive products will stimulate development of artisan chocolate segment.

Meanwhile "Sweets Global Network" and "Nielsen" estimate value of chocolate sales in Russia at 4.5 billion euros in September 2012 – plus 15% over same period 2011.
Pralines are the largest segment of Russian chocolate market providing more than half of sales value. However in 2012 this category demonstrated far lower growth rate in comparison to the average market index. Second large category was chocolate tablets (1.2 billion euros) with two-digit growth rate. Chocolate sweets were the third large segment of the review markets with performance indices exceeding the average market level.

As it has been already mentioned, Russian chocolate market is highly consolidated. In 2011 seven largest operators controlled about 66% of chocolate retail sales in value.
According to "Euromonitor International", the largest player of Russian chocolate market is "Objedinennye Konditery (United Confectioners)" with about 20% of market value in 2011. Holding unites such confectionery factories as "Rot Front" OJSC, "Krasny Oktyabr (Red October)" OJSC, "Babaevsky" KK OJSC and others.

However, major part of the market is actually controlled by foreign players – Russian facilities of transnational giants. So, second large share of sales value – 15% – is controlled by "Mars-Russia". The company manufacturers well-known brands of chocolate bars and boxed chocolate (ТМ "Snickers", "Mars", "Bounty", "Nuts", "Dove", "A.Korkunov" and others).

"Nestle" controls about 15% of chocolate sales value in Russia. In 2007 the company acquired Ruza confectionery factory with its brands "Comme Il Faut" and "Ruzanna" and thus "Nestle's" market position got even stronger.

Share of "Mondelez International" ("Kraft Foods") in chocolate sales value is about 11%. The company produces such well-known chocolate brands as "AlpenGold", "CoteD'Or", "Milka", "Toblerone" and "Vozdushny (Airy)".

According to "Sweets Global Network" and "Nielsen", during October 2011 – September 2012 per capita consumption of confectionery products in Russia constituted 11.7 kg where 5.3 kg were provided by chocolate. So, Russia gradually approaches consumption rates of European countries – about 8 kg/person annually on the average.

According to "VCIOM" consumer poll, almost three fourth of respondents – 72% – consider domestic chocolate to be better than imported, 15% of pollees would prefer imported chocolate, and 13% of respondents hesitated to answer.

It should be mentioned that consumers are often confused about referring product to domestic or foreign: in consumer mind chocolate traditionally manufactured by Russian confectioners is domestic though many Russian production facilities now belong to large foreign operators.

The highest consumer preference was registered for "Nestle" products – 23% of respondents. Second popular manufacturer was "Kraft Foods Inc.", brands of this company were named by 20% of respondents. The most popular brand of "Kraft Foods" was "AlpenGold" preferred by 16% of respondents.

Thus, the most popular chocolate products in Russia are brands manufactured by Russian facilities of foreign companies.

In general, Russian chocolate market demonstrates stability and moderate growth. Entry of new players to this market would be hard due to its oligopolistic character. Besides, the market tends to higher concentration as smaller companies are acquired by or merged with large ones to form larger holdings. Major part of Russian chocolate market is distributed exactly between large confectionery holdings. Demand for chocolate is settled and tends to moderate growth. Consumption rate of chocolate in Russia is getting closer to European consumption rates; consumers will give more preference to the products of domestic origin.

Research of the Company "Market Analytics"