how large is the consumer market of russia

how large is the consumer market of russia插图

Russia consumer spending for 2021 was$886.41B, a 17.11% increase from 2020. Russia consumer spending for 2020 was $756.91B, a 13.36% decline from 2019. Russia consumer spending for 2019 was $873.63B, a 4.66% increase from 2018.

What is happening to consumer spending in Russia?

Still, consumer spending remains substantially below precrisis levels, and purchasing power has weakened due to the devaluation of the ruble. Russian consumers have been adjusting to this new economic reality. They’ve become more selective and discerning in their purchases.

Do consumers in Russia still shop around?

In a recent consumer survey, a majority of respondents—57 percent—said they more often shop around to get the best deals. But they still buy their preferred brands, albeit in smaller quantities; only about 17 percent of Russian consumers said they have traded down to cheaper options.

What is the current state of consumer confidence in Russia?

Russia’s consumer confidence index rose to -13 in the third quarter of 2019 from -15 in the previous period, due to an improvement in expectations over the next 12 months regarding the economy (-9 vs -10 in Q2) and financial situation (-5 vs -6). Also, consumers felt less pessimistic about making large purchases…

How has the Russian economy been affected by the crisis?

In the past three years, declining oil prices and international sanctions have taken their toll on the Russian economy, plunging the country into financial crisis. Between 2014 and 2016, GDP fell by 1.5 percent per year on average, and private consumption by 7.1 percent.

What is Russia’s GDP in 2021?

Russia’s GDP was forecast to increase to roughly 1.6 trillion U.S. dollars in 2021. Energy sector is crucial to the Russian economy. Having the largest natural resources value worldwide, Russia was highly dependent on its energy industry. The country was among the leading oil, gas, coal, and steel producers.

What is the impact of sanctions on Russia in 2021?

In 2021, the United States placed sanctions on Russia’s government debt, prohibiting financial institutions from purchasing Russia’s newly issued sovereign bonds. Furthermore, Russian counter-sanctions in the form of an agricultural embargo from Western countries also had an impact on its economy.

What was Russia’s major contributor to the federal budget?

Furthermore, earnings from foreign sales of energy commodities were a major contributor to Russia’s federal budget, as mineral products occupied one half of total exports. However, that also made the economy conditional to crude oil prices.

Which country is ranked 92nd in the world?

In the global ranking by nominal GDP, Russia was positioned between the Republic of Korea and Brazil. At approximately 27.4 thousand U.S. dollars, the average wealth per capita in Russia ranked 92nd highest worldwide in 2019, far behind the United States and most European countries.

What is the effect of promotions?

With analytics, companies can model the net effect of promotions (incremental net sales and incremental margin). They can also make fact-based estimates with regard to a variety of critical factors, such as pull-forward effects (when shoppers stock up on a promoted product, “pulling forward” purchases that they would otherwise have made at a later date); cannibalization (when customers opt for a promoted product instead of a full-priced product, resulting in lost margin for the retailer); and the halo effect (when shoppers buy additional products at the same time as a product on promotion—for instance, shoppers buying ice-cream cones when ice cream is on sale).

How to prevent leakage of CPG?

CPG companies can take steps to prevent such leakage. For one, they can craft tighter trade terms that make it unprofitable for retailers to leak products. They can closely monitor sales volumes by benchmarking both regular and promotional sales across key accounts, taking into consideration seasonality and price elasticity. They can track their own sales activity as well as competitors’ by acquiring transaction-level data from retailers and by having their merchandisers conduct regular checks of sales in and sales out. They can also strengthen their relationships with the traditional trade—perhaps by offering nonmonetary incentives (such as retail equipment) and loyalty programs—to stimulate direct purchasing.

What happens when the ruble is weaker?

For one, a weaker ruble buys fewer raw materials, causing the cost of goods sold to rise. Retailers have substantially stepped up their promotional activity. Companies have been unable to pass on higher costs to consumers, and any price increases are outpaced by inflation.

How does a CPG company cut costs?

Many CPG companies also look at their route-to-market model as an area in which they can easily cut costs, whether through outsourcing the sales force, sharing coverage with exclusive distributors, or migrating to lower-cost service models for lower-priority customers. For example, a large CPG manufacturer in Russia has improved its route-to-market decisions and refined its service model by conducting large-scale surveys among the outlets it serves. Depending on the outlet characteristics, the company tailors every store visit—from the type of representative who visits to the frequency and duration of the visits.

What are the strategies that consumer packaged goods companies can employ to win in Russia?

The strategies that consumer-packaged-goods (CPG) companies can employ to win in Russia are similar to those in other emerging markets: active management of pricing and promotions, cultivation of the traditional trade, and careful attention to costs. But the specific tactics they should use are somewhat different due to the particular context of the Russian economy.

What is the new trade law?

Further complicating matters for manufacturers, a newly introduced trade law puts restrictions on the producer-retailer commercial relationship. The law places a 5 percent cap on the volume discounts that manufacturers can give retailers, thus limiting manufacturers’ flexibility in offering pay-for-performance trade terms.

How have sanctions affected Russia?

In addition, international sanctions have negatively affected certain parts of the Russian economy. That said, the Russian government’s countermeasures have provided a stimulus for local suppliers: across multiple categories, particularly those affected by sanctions, local sourcing is becoming more pervasive. From coffee to furniture, companies are finding Russian suppliers to meet local demand. The Russian agricultural sector has stepped up production, and in many categories, locally grown food has completely substituted for imports. In poultry and pork, for instance, Russia is expected to become almost entirely self-sufficient by 2019.

Why do people not buy prescription drugs?

Thirty-three percent report they sometimes don’t buy prescribed medicines at all because they unaffordable. And 74% of those with chronic diseases say they would consume more medicine if it were subsidized by the government—which suggests they take less than the recommended dosages. This is primarily because drug prices are highly influenced by currency fluctuations, forcing patients to pay more for medications or do without.

What do consumers use to book travel?

Consumers also said they commonly use websites and phone apps of airlines, hotels, and car rental agencies to book personal travel. While airline offices and travel agencies remain popular, roughly the same percentage of travelers say they now book through online aggregators.

What do Russians cut back on?

While most Russians are cutting back on goods they perceive as nonessential, such as alcohol and ready-to-eat foods, nearly half intend to spend more in product categories they regard as important for health and the well-being of their families, such as fresh foods, education, and travel.

What is Boston Consulting Group?

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.

What are the three sectors of Russian consumers?

To better understand how Russian consumers plan to buy what they need and want, given their financial circumstances, we explored three sectors in-depth: health care, travel and tourism, and automobiles.

How much did Russia consume in 2016?

Russia consumed $700 billion in goods and services in 2016, and it remains a heavy importer of finished goods. Moreover, Russia’s urban areas—where 74% of the population of 147 million resides—comprise rich opportunities for outside companies. In fact, around one-quarter of Russians live in cities of 1 million or more.

Do Russians spend more than they have done in the past?

In fact, many Russians are ready to spend more than they’ve done in the past on goods and services that matter most to their quality of life. At the same time, however, the financial crisis left its mark on Russian households—personal finances are tight and inflation has outpaced income growth.

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