Russia: Category diversification and differentiation
The Essen Production AG group of companies is one of the largest food manufacturers in Russia. The annual turnover in 2018 amounted to RUB 20.9 billion (US$ 228 mio). To the group belongs discount retail chain 'Nahodka' and 'Maheev', the number 1 brand in Russia in the categories: mayonnaise, ketchup, jam, marinade, mustard.
Confectionery production was launched in Naberezhnye Chelny in 2012. At the moment, the plant has 13 lines. In 2018, the company's confectionery production produced 29 thousand tons of products (in the first half of 2019, 15.5 thousand tons): candies and bars based on hollow wafers, crispy snacks, candies with jelly, fondant, combined fillings, Truffle, Marmalade, candies in boxes. The company produces confectionery products under the brands 35, Cho Ko-Te and ESSEN.
Igor Ozerov, Essen: "We are helped to grow and develop in the confectionery market with new products that our competitors do not have." The change in the ruble exchange rate, the crisis consequences of the pandemic, the increase in prices for imported raw materials and equipment led to the fact that the volume of sales of confectionery products in Russia decreased compared to 2019. According to analysts, those companies that have a wide distribution network and are ready for investments, new products and high-tech solutions will survive on the market.
Igor Ozerov, Essen: "We are helped to grow and develop in the confectionery market with new products that our competitors do not have." This year Essen launched one new production line and now we are developing sales of new products. By the end of the year, it will launch 2 more new lines. The results of last year are also good, sales in 2019 increased by 30%, and in monetary terms by 41%. The sales volume has doubled compared to last September.With an important sweet season ahead, New Year Essen expects that the sales volume will increase by an average of 2.5 - 3 times compared to the first half of 2020.
Essen launches innovative products that are fundamentally new for the market and which competitors do not have. This allows us to increase sales, set the right price and since we do not have a direct competitor for a new product, there is no need to launch a large number of deeply discounted promotions.
The share of chain sales of the total volume is 40%, in the confectionery business it is slightly lower, 32%. Therefore, both channels are important for us, we take into account the interests of both networks and our distributors. There are good precedents when federal chains turn to us for exclusive products, we take into account their interests, launch new products, tastes, but under our trademarks.
Essen recently launched a new production line, and launched 2 new products - chocolate bar "Raspberry-mango" and stick with bubble gum flavor and explosive caramel brand CHO KO-TE. In general, the sales volume of this brand for 8 months of 2020 increased 3 times, and these two new products accounted for 35% of this volume. That's how much innovation help Essen grow.