We got an expert’s perspective on Eastern European markets, looking at how they are impacting the wider EMEA and global industry.
Here, we consider growing concern over the side effects of beauty and personal care products being seen in Russia, with exclusive insights from Euromonitor International, market research provider.
Private label gains momentum in Russia
As stated by the Federal Service of State Statistics, Russians’ disposable incomes decreased by 6% in 2016 compared with the previous year.
According to figures from the World Bank, gross domestic product in Russia decreased from USD2.23 trillion in 2013 to USD1.33 trillion in 2015; a staggering 40% drop.
Russian economic output is expected to contract by another 2% in 2016, whilst the poverty rate is set to rise from 13% to 14% over that period.
Worse economic conditions forced some Russians to shift their purchases towards the most favourable offers.
Reduced disposable incomes
As a result, private label products had higher appeal to most Russian consumers in 2016, amidst the continuation of economic instability in Russia and the reduction in consumers’ disposable incomes.
The key reason for the growth in the popularity of private label is the competitive prices of such products, which attract bargain-hunters.
A significant increase in private label sales was observed in mouthwashes/dental rinses, women’s razors and blades, intimate washes, liquid soap and toothpaste. Bar soap accounted for the biggest private label value share in overall beauty and personal care in Russia in 2016.
This can be attributed to a number of factors. First, private label in bar soap was amongst the first to develop.
Second, consumers do not usually set high requirements regarding bar soap intended for daily hand washing.
Lastly, in terms of price, consumers are more likely to opt for the most affordable offer within bar soap.