According to the INFOLine news agency, industrial production of bread has been in decline since 2015 but currently, there is a notable growth in bread production by chain and in-store bakeries. Russians have become pickier when it comes to baked goods, which affects the offer of products on the shelves as more new varieties become available that contain cereal, seeds, less salt, sugar and fats, and so on.
INFOLine has noted an increase in the production of cooled semi-finished baked goods (+18,5%) and frozen goods (+36%) amid the growing demand by end consumers, chain bakeries and big stores alike. Major producers have responded to the growing demand from consumers. Karavai launched its own production of frozen bread in 2022. Bushe also opened its own semi-finished product workshop earlier this year.
Several major M&A deals were closed in the food industry in 2022, including two in the baking industry. Kolomensky acquired Khlebny Dom (earlier Fazer), the Russian subsidiary of Finland’s Fazer. Now the familiar Fazer bread (especially common in the Northwestern Federal District) is branded Khlebny Dom.
“Competition for buyers in the baked goods category continues to grow. In addition to industrial bread, consumers have a wide choice of chain bakeries that have been springing up for a few years now, and in-store bakeries. At the same time, if fresh bread baking used to be a prerogative of hypermarkets and supermarkets, discount shops also started offering freshly made pastry and other products recently. For example, Magnit announced that before the end of the year, it will open 2,000 bakeries in its neighborhood shops and will also develop a chain of very cheap stores, branded as either B1 or First Choice, with their own bakeries,” said INFOLine Consumer Market Research Director Svetlana Silenina.
“The output of bread and other baked goods grew last year and the situation on the market can be described today as rather stable, despite challenges that producers and companies had to overcome in 2022, including the rising prices of ingredients, equipment, materials and packaging. The facilities in the Central and Volga federal districts continue to supply the bulk of baked goods while large retail companies are launching their own production in response to this trend and higher consumer interest. The current economic situation and departure of many foreign companies made certain adjustments but the overall vector and dynamic on the bread and baked goods market reflect the steady trend for growth and wider variety,” Director of the WorldFood Moscow 2023 trade fair Alexander Yezhov commented.
There have been no drastic changes in Russians’ diet and most of the social categories continue to consume all the staples like bread, milk, meat and processed foods. However, they started to turn their attention to cheaper alternatives, including stores’ own brands. INFOLine estimates that the share of store brands reached 9% as of the end of 2022, due to several factors:
- Lower real income (1.4% decrease);
- Rational consumption model (for example, lower interest in modern dairy products such as yoghurts or cocktails because they have become significantly more expensive; however, consumers are still interested in products with longer expiry dates in view of current uncertainty);
- Foreign suppliers changing or departing from the Russian market;
- High levels of stress.
Food is the easiest and most accessible way to comfort oneself; therefore, sweets, delicacies and snacks remain in consumer baskets.