Dippin Dots is a very successful company in the USA. Entering Russian market it’s important to understand that there is a huge difference in the consumption patter of the Russian consumers.

Here is an interesting article about main trends in Russian ice cream markets:

The study is made by holding group Romir based on the survey of 1600 respondents represents the following results:

Current capacity of Russian ice-cream market accounts for about 400 thousand tons of manufactured and consumed product annually. Considering 150 million population every person in the country eats three servings of ice-cream per month. If we consider that only half of population consumes ice-cream, then we have over 5 kg or 76 servings of ice-cream per one consumer annually. Sounds impressive, but other economically developed countries demonstrate higher consumption level – 6 to 12 kg per person. So, has Russian ice-cream market any growth potential?

Any market has a relatively small group of active consumers providing major share of consumption volume. In case of ice-cream market share of active consumers constitutes 10% of population or 20% of consumer base; consumers of this group like ice-cream so much that purchase it quite often – 3-5 times a week or even every day.

 Consumption frequency group

The review product is believed to have young consumers base – kids, adolescents and the youth. This is partially true. Almost one third of active ice-cream consumers are younger than 25 years yet we’d like to highlight the fact that practically 30% of those consuming ice-cream at least 3 times a week are older than 45 years.

Thus, consumption can grow on quantitative increase of active consumers – especially in middle and middle-up age groups. For instance, increase of this group by 15-20% (which equals 2-3 million people) is quite possible and can provide another 30-40 thousand tons of ice-cream consumption annually.

 Next consumption frequency group accounts for 14 million people: they eat ice-cream twice a week and this makes 100 servings or 7 kg annually per person. This consumption rate is close to average consumption in European countries. Increase of consumption frequency in this group to three times a week can give additional 50 thousand tons to the market annually, and quantitative increase of the group by 15-20% may account for another 15-20 thousand tons of market volume per year.

Third consumption frequency group is constituted by those eating ice-cream once a week on the average; the group accounts for over 20 million people with consumption rate of 3.5 kg annually.

Finally we come to the group of inactive consumers – people eating ice-cream 1-2 times per month which corresponds to average 1.25 kg per person annually. This group is over 40% of consumer base.

Good news

The research results brought some good news for ice-cream manufacturers. First, the great majority of consumers – 80% – think that prices for ice-cream are reasonable and affordable, and 7% even said the prices are low. Only 11% of consumers think that prices for ice-cream are high. Important to mention, 70% of consumers with relatively low income – under Rb 6 thousand monthly per family member – also find prices affordable. This means that actual consumers have no price limits in their consciousness.

Second, for the majority of consumers ice-cream is rather an everyday than festive product. The fact that 73% of consumers purchase the review product in small “round the corner” food stores proves this statement. Considering the above, manufacturers should provide regular presence of their products in habitual for consumers purchase places to have good sales.

Third good news is that today about 10% of consumers buy family-size ice-cream. Thus a new growth opportunity can be found in increasing weight of one-time purchase

HoReCa channel (Hotel, Restaurant, Cafe/Catering) also provides growth opportunities for the review market. Today on-trade channel accounts for no more than 1% in volume and 3% in value (retail prices) of total ice-cream sales.

Bad news

However, half of consumers said they do not care for product brand and would choose an unknown brand of ice-cream to save several rubles. This trend is indirectly proved by very low awareness indices of the largest manufacturers – even of market leaders and their brands.

A quarter of consumers understand importance of the brand though would not pay extra for it; 15% of consumers would pay some extra for the well-known brand and guaranteed quality and only 3% of consumers are loyal to certain trademarks and would pay extra money for the brand.

 Summary

 It is obvious that the largest manufacturers should think not only about consolidation but also about development of the industry. Consumers of ice-cream – just like consumers of any other “optional” product – need to be permanently reminded about this product; they always need new reasons to buy it.

Some “educative” job should also be done to explain importance of ice-cream brands and advantages of branded products. This looks quite important if we think about consumers with middle and middle-up incomes who as a rule opt to pay more for their favorite brands.

Certain attention should be paid to the group of non-consumers of ice-cream which accounts for about 40 million people not eating ice-cream due to various reasons: they do not like sweets, or they are concerned about weight control and thus avoid high-calorie and fat-rich products; or maybe they dislike dairy products, etc. Such people can be involved into consumption of fruit ice and/or frozen yoghurt, or of low-calorie ice-cream.

 Igorr Berezin Review of Russian Ice-Cream Market. Research of the holding Romir

http://www.foodmarket.spb.ru/eng/archive.php?year=20&article=606&section=4