Boston, MA -- (SBWIRE) -- 01/23/2015 -- Executive Summary Despite being conservative Russians are changing their attitude towards cheese consumption, choosing soft cheese or more sophisticated hard cheese. This trend is taking place alongside increasing incomes and growing interest in European cuisines, where cheese is one of the main ingredients. Salads, starters, main courses and desserts with mozzarella, blue-veined cheese and mascarpone have become common dishes for inhabitants of big cities. On the other hand, interest in processed cheese is easing, due to growing health concerns and accessible alternatives.

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Competitive Landscape

Valio St Petersburg ZAO remained the leading company in Russian cheese in 2013, accounting for an 8% value share. In the face of strong competition from both local and international manufacturers Valio was able to ensure high levels of trust among consumers. Despite foreign origins, Valio has its own manufacturing facilities inside the country, which allow it to provide accessible solutions. The portfolio of Valio cheese is rather diverse and offers very specific products, such as low fat cheese Oltermanni and lactose-free cheese, etc. Valio products are associated with high quality and are strongly promoted within retail and mass media. Hochland Russland OOO, known for its processed cheese, was ranked second.

Industry Prospects

The consumption of cheese will continue to rise in Russia in the forecast period. The perception of cheese as a non-essential ingredient will gradually change, along with the increasing international cuisine culture. More often cheese will be perceived as an independent product, with more sophisticated products emerging. The transformation of the category will see a shift from traditional yellow hard cheese to more sophisticated hard and soft variants. Processed cheese will continue to lose share.

Drinking Milk Products The review period showed that Russians had become more accustomed to products beyond traditional cow?s milk. With changing living standards and the expanding range of innovative products from leading players, Russians are choosing new products in the category. More are tending to consume flavoured milk drinks that allow parents to stimulate milk consumption in children. Convenience and changing perceptions also pushed sales of long-life/UHT milk, while strengthening private label presented favourable conditions for establishing new products.

Competitive Landscape

PepsiCo Inc leads retail sales of drinking milk products in Russia in GBO terms, posting a 26% value share in 2013. The leadership of the company is characterised by its diverse brand portfolio that has a strong presence within the main retail chains across the country. Operator of PepsiCo?s brands in Russia, the leading NBO Wimm-Bill-Dann Produkty Pitania OAO, has production facilities within Russia?s territory, a situation that makes logistical organisation simpler and cheaper. The company invests significantly in marketing and supports its brands with various marketing tools. Groupe Danone is ranked second in GBO terms, a position achieved through the activities of the NBOs Unimilk Kompania OAO and Danone Industriya, which accounted for a combined share of 21% in 2013, with the former remaining the strongest competitor of Wimm-Bill-Dann Produkty Pitania.

Industry Prospects

The consumption of drinking milk products will continue to show positive growth over the forecast period. Growth will be generated by yet underdeveloped niche products, such as flavoured milk drinks, while the growth of standard cow?s milk will be more restrained. Demand for drinking milk products will be heightened by growing health concerns, driven by government and commercial promotional activities related to promoting milk as a healthy option. In addition, the subsidised School Milk campaign will be supported by its expansion into more schools. Over the long term, such a move will boost the number of adults accustomed to drinking milk every day. Despite being interested in novelties, Russians are not expected to adopt non-dairy milk alternatives. The conservatism of consumers will also be reflected in their relatively low take-up of low-fat milk variants, with a preference remaining in place for full fat milk.

Yoghurt and Sour Milk Drinks

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