What do we really know about Russian consumers?

For a country that spans 10 time zones, borders 14 countries from Norway to North Korea and straddles 2 continents, it’s amazing that so little is really known about Russian consumers beyond the beloved cliches of Hollywood films and newspaper tabloids. We are of course aware of the few thousand mega rich Russians (seen on a yacht off Antibes or in a 5* Monegasque casino) and we’re aware of the classic stereotype Russian – bottle of vodka in 1 hand, bear-shooting rifle in the other. But what of the other 144 million Russians that sit between these two groups?

Above: All you need to know about Russia from the bible of global stereotypes. (Image: babbel.com)

The 16th largest consumer market and the average Russian is 1/3 richer than the average Chinese.

According to BCG, Russia is the 16th largest consumer market in the world and with a per-capita income around one-third higher than China’s. Not a day goes by without a Western company talking up the opportunity China offers, but what is it (politics aside) that make the Russians so enigmatic? We’ll definitely keep politics aside in this article but try to look at one of the interesting characteristics of Russia – its perception of conservatism versus its insatiable appetite for innovation in consumer goods.

Looking beyond the stereotypes is hard, but necessary

Stereotypes will often hold a grain of truth, but for a relatively closed culture like Russia where tourism is at such a low level, it can be highly misleading. Very few Westerners visit the country and as such, form most opinions based on Western media, popular culture and historical perceptions rather than personal cultural experiences*.

In 2016 only 177,000 Britons visited Russia, compared to 270,000 who visited Pakistan. A quick google search of ‘Russia’ will likely lead to memes of Putin, stories of military activity (legal and otherwise) and images of scantily clad femmes. Many Westerners will be aware of Russia’s attitude to same sex marriage or it’s leader, but almost none will have any idea on the name of it’s 3rd largest city, the number of ethnic-nationalities within the country or indeed it’s racial make-up. So we have a lot to learn, but where to start?

*The 2018 World Cup will have changed this stats somewhat but are yet to be comprehensive enough to draw conclusions upon.

Socially conservative doesn’t mean conservative consumption.

Full Reach spoke to Elena Marchenko, Global Brand Director – Lurpak, part of Arla foods. As a leader from a $10bn business with global operations, Elena has observed the differences between Russians and West Europeans with her own commercial experience. Having previously managed global brands such as Tuborg and Kronenbourg 1664 both within Russia and globally, she’s observed certain characteristics.

Image: Not just vodka drinkers, Source: BBC

Russian consumers are definitely more open and even demanding in terms of innovations and new product innovations. Let’s look at the context; the USSR market was based on a central planned economic system – everything was planned unilaterally. Then a period of painful change – “perestroyka”- when the market had to be built from scratch in a very short time. During this period there was deficit of even basic products. And then finally, the market came into the point when consumers were able to have a choice – consequently this hunger for choice was extremely high.

A new society with an open mind for new consumer products

Image – even local power brands with traditional positioning need to constantly innovate packaging and line extensions to stay relevant

Elena observes that the taste for innovation is not simply a generational one – all segments of society are open minded to try new things because its a choice that is, in relative terms, still quite new. Whereas a British man might buy Fairy liquid, ‘because that’s what mum used to buy’, it’s less likely a Russian would have the same cognitive reflex to purchase:

It created a generation with a different consumption habit, a generation of consumers which are perceiving the choice as a must and even demand it, as well as demand innovation – there is a hunger for variety.

Russians to consumer brands – ‘Give me something new!’

Image – a selection of Russian supermarket promotions all from the yogurt category.

Whereas a Dane or a Portuguese might cherish the ‘same old recipe’, Russians will often take the opposite view. Being the ‘same as 100 years’ ago does not mean the same to a Russian – this impacts how they see new products and flavours in their supermarket basket. As Elena adds:

The differences were formed based on the different environments and historical attitudes. EU consumers are very cautious towards products/brands in terms of quality, ingredients, sustainability, animal care, responsible production, etc. It can be called ‘less, but better’. While RU consumers require a variety of choice, where quality and consistency is a secondary purchase factor. Where an EU consumer might have a choice of 5 yogurts, 2 mayo brands, 10 beers brands, a Russian would find this is very limited assortment.

Image – even in smaller format mini-markets, Russians will expect multiple facings and variations of choice to meet their expectations.

Is convergence on the cards – are Russians becoming ‘European’?

Well, let’s remember that 60% of Russia is in fact, in Asia. Making a simplistic assumption that Russia will evolve consumption habits just like Germany would be as naive as to assume that it would evolve like China. However as the novelty of choice wears off, Russians are definitely becoming more savvy shoppers – placing less emphasis on newness as the differentiator in making a purchase. As Elena notes:

Variety of choice, bringing new news, bringing innovations was always a driving force for Russian category growth. Though there is change – the requirement for quality is playing a bigger role in this equation from year to year. Consumers are becoming not only more demanding, but more educated, more “spoiled” in a good way.

As BCG observe from their analysis, Russia’s once-strong devotion to famous brands is fading. Only 24% say that brands are a good reflection of themselves or their values. The recent (present) sanctions on food and agricultural products for example, has invited Russians to take another look at domestic brands that they used to see as sub-premium. Many Russian brands have successfully positioned themselves as ‘natural’ and authentic. For global players, this is an important development that could affect fat margins they used to enjoy simply because they were foreign.

What we can all agree on is that Russia changes, and it changes fast. Any consumer brand operating in this market needs to embrace change with speed, closely monitor the market and stay away from the internet memes to make informed opinions. Russia really is one of the markets of the world where the best way to learn is to visit, get out of the 5* hotel and get into the provincial supermarkets and see what’s happening with one’s own eyes.

The author of this article, Martin Best worked in Russia for Baltika Breweries within the Modern-trade Channel Marketing function – covering 26,000 supermarkets with a yearly promotional budget of EUR 50m. He is the former Marketing Director of Carlsberg Group and has launched multiple innovations in the Russian market. Martin is presently Managing Director of Full Reach, which has most recently created go-to-market innovation projects for Danone and Coca-cola in Russia.