The Russian pet market remains an extreme challenge and lucrative opportunity for the industry. With a growing pet population (54+ million dogs and cats) there is gold to be struck. But how do you change the heart of traditional ‘table scrap’ pet owners?
Pet food market
In 2018 pet product sales in Russia grew by 1.2% in volume and 3.7% in value, at constant 2018 prices. The pet food market was valued at an estimated €2.4 billion ($2.8 billion). Prices went up an average of 6–10% with growth in some categories up 30% during the year. All of this growth occurs while Russia is officially going through a 2.7% inflation.
While dog and cat food sales stayed consistent, other categories like cat litter and anti-parasite products experienced modest growth. Bird and rodent food sales even changed to a positive dynamic growth rate, for the first time after several years of decrease. At the same time aquaria product sales continued to decline, as did the accessory categories, for example grooming.
The premium food category decreased in value, but not in volume, as consumers switched to cheaper products, for example private label products or premium products at promotional sale prices.
Some key figures in the Russian pet market are:
- 33% of households in Russia own a cat
- 15% of all dogs are fed with industrially made food
- 75% of the dog food market is dry food
- Dry dog food is on average 22% lower in price than wet dog food
- Cat food makes up for 67% of the petfood market
Russian pet retail has been facing significant changes. In 2018, large and financially strong non-specialty players entered the market with specialised pet-projects. Detsky Mir (the largest children product retailer), Lenta (a large grocery player) and pharmacy businesses are opening pet stores. Powerful national specialty players like Bethowen, Four Paws and Petshop keep strengthening their positions by increasingly opening stores in the regions.
Russian pet food consumption
Some major trends are:
- The structure of the Russian pet industry will continue to change, not only within retail but also in the supply chain. Wholesalers will lose importance as manufacturers are increasingly able to directly supply retailers and end consumers.
- The Russian market is supplied by 80% domestically produced pet food, that is increasingly replacing imports. Multinational corporations are building more and more facilities on Russian turf. Mars and Nestlé have local Russian factories. And international manufacturers like Aller Petfood, which focusses on private label production, are also following suit.
- Online sales increased by 55% in 2018 and continues to increase rapidly.
Despite the modest growth of the whole pet market, major distributors with strong strategies and mature marketing policies announced an average of 10–15% growth in sales, some of them even growing 36%. This illustrates that the Russian market is experiencing share redistribution between future oriented companies and companies that have not managed to adapt to change.
The Russian market potential is huge and is expected to grow to €10 billion ($11.3 billion). Entrepreneurs are looking for opportunities to enter the Russian market and to launch their products. To succeed they need:
- a qualified local partner who is aware of the administrative and legislative environment
- a very clear strategy to actively contribute to the business process, and
- to understand – and not underestimate – the power of promotional and marketing support from the Russian partner.