Russia's bullish food supplements market

By Shane Starling

- Last updated on GMT

Related tags Food supplements Russia functional beverage beverage

Investment from local, Western and Chinese companies as well as wealthier, increasingly well-educated consumers are driving rapid growth in the Russian food supplements market.

Better quality products, user-friendly regulations and more realistic consumer expectations are feeding a market that is showing little sign of being hit by the recession that is creeping into many global markets.

A 2007 survey conducted by Nutrition Business Journal​ and IADSA (International Association of Dietary Supplements Associations) found Russia accounted for 38 per cent of the $1.8bn (€1.25bn) Eastern European nutritional products market, or €475m.

Growth rates vary depending upon which product criteria are used and which outlets monitored but is generally thought to be in the region of 15-20 per cent.

Foreign companies accounted for about a third of the market, according to IADSA.

Western suppliers such as Chr Hansen, Orafti, Roquette, Solae, Ocean Spray have established businesses in Russia supplying foods and supplements markets.

New horizons

Dr Alexey S. Petrenko, technical regulatory manager with the Russian arm of Californian-based direct selling company, Amway, told food supplements in Russia had become an important market for the diverse consumer goods company, accounting for 10 per cent of its Russian turnover.

Although Amway traditionally operates as a direct selling company without a physical retail presence, it has been forced to open retail stores in Russia, because selling food supplements via multi-level marketing is forbidden under Russian law.

It has 18 SKUs including vitamins and minerals, omega-3s and herbal supplements.

Altered expectations

“We opened our first store in Russia in 2005 and have 12 stores now in Moscow, St Petersburg and in the regions,”​ he said.

The market had changed considerably since the 1990s as Russian consumers ceased expecting them to perform in the manner of pharmaceuticals.

“A lot of effort has been put in by food supplements organisations and companies to educate consumers about what food supplements are and what they do,”​ Petrenko said. “That work is paying dividends now as increasingly wealthy Russians seek out food supplements for a range of health conditions.”

Quality control

He said the market was characterised by varying quality with Russian demanding, and being willing to pay for, better quality food supplements from the likes of Amway, Vitiva, Herbalife, Seven Seas and Vitabiotics

Cheaper Chinese material that had flooded market in the past decade was being brought under increasing regulator and public scrutiny, he said.

“There are 5000 registered products on the Russian market and many of them are from all over the world including. The trend is toward better quality products,”​ he said.

It is estimated that of those 5000 products, about 800 are non-Russian, with about 500 coming from China.

He said Russia’s notoriously tough product registration procedures were easing and negotiable with enough homework and sensitivity to working with the Russian regulator – Rospotrebnadzor and praised a system that had proven effective in protecting consumer safety.

“Although we have had to open stores here which is not something we normally do – we understand that the system is in place to protect consumers,”​ Petrenko said.

“Products that have the necessary product data that is similar to requirements in other European states should have no problem gaining registrations in Russia. Sound products are not being kept off-market.”

An Amway Russia representative will present more insights at the Healthy Foods European Summit in London on Monday and Tuesday next week. To find out more about that conference click here​.

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