Rostov-on-Don Market of Meat and Sausage Products
In September-October 2005 the company "Alliance Major" executed integrated research of Rostov-on-Don market of meat and sausage products. The research included expert interview, consumer poll and monitoring of 179 retail outlets. Experts were stock managers of retail stores. Sample of consumer poll constituted 813 buyers of meat and sausage products in the age of 16 and older; sample represented gender and age of city population. The research covered the following kinds of meat and sausage products: boiled, boiled smoked/semi-smoked, and summer sausage, small/big sausages, hams and meat delicacy.Market capacity
According to research data, in 2005 in Rostov-on-Don monthly per capita consumption of meat and sausage products constituted about 7.5 kilograms or 8 thousand tons in terms of the universe of population. This level of consumption remained the same during the recent 2-3 years though the market experienced some changes.In the future consumption of meat and sausage products will grow though slowly approximately by 1.9% annually. Most of all this process will relate to population income level.
Expert interviews and stability of consumption rate observed during the recent years let us make the conclusion that actual capacity of the market of meat and sausage products is very close to implicit index the difference hardly exceeds 15%. It should be noted that implicit consumption is understood here as a maximum consumption of the review products under conditions defined by marketing as "normal". In other words, with the current welfare and prices advertising and promotion could increase Rostovites consumption of meat and sausage products no more than by 15%. In this context the main possibility of manufacturers to increase their markets shares lays in re-distribution of the market which means acceleration of competition where such factors as level of consumer satisfaction with the product, clear positioning of brands/manufacturers and standing out among competitors will become decisive.
Retail offer
During the time of monitoring the total range of meat and sausage products offered by Rostov-on-Don retail included 500 names. The most widely distributed kind of review products was boiled sausage it was sold in 99% of trade outlets, and its share in total retail offer constituted 30.6% in terms of volume. Boiled smoked sausage is the second in distribution and share of retail offer respectively 92 and 20.5%. Third line in distribution rating belongs to small/big sausages with the index of 86.1%. But the third large share of retail offer has summer sausage 12.7%. Share of small/big sausage in total retail offer constituted 10.6%. It should be mentioned that retail offer here is equal to SKU. Lower SKU index of small/big sausages as compared to summer sausage is the result of difference in size of product lines. In other words, names/brands of small/big sausage used by different manufacturers are very often the same and are not too numerous, while names/brands of summer sausage are very often unique for every manufacturer.The structure of retail offer according to kinds of meat and sausage products is not identical to consumption structure in consumption frequency and purchase size ratings the first and the second positions belong respectively to boiled sausage and small/big sausages. This is determined by shorter shelf life and more frequent purchases/supplies of these products as compared to boiled smoked sausage. In general on Rostov market there are a lot of kinds of meat and sausage products and their manufacturers. Yet the major part of this product range does not differ in taste and has low distribution. Inventiveness of manufacturers of the review products about recipes, package and advertising is also very poor. The market is practically unbranded thus the major part of retail offer lays beyond relevant reception, i.g. the majority of consumers can recall without prompt at best a dozen of different names/brands. So, range of meat and sausage products presented in Rostov retail is oversized pertaining to other market parameters.
Consumption and choice characteristics
On the average Rostovites purchase a little more than 0.5 kilogram of meat and sausage products at a time. This index for small/big sausages constitutes 740 grams, for boiled sausage 560 grams, for boiled smoked / semi-smoked sausage it is a little more than 500 grams, and for summer sausage and hams / meat delicacy it constitutes respectively 450 and 400 grams.The most habitual purchase frequency for small/big sausages is once a week about one third of respondents answered so and about a quarter of pollees buys this product 2-3 times a week. Boiled smoked and semi-smoked sausage is usually purchased by Rostovites once a week and 2-3 times a month respectively 29.4 and 18.3% of answers. Summer sausage is never purchased by 40.7% of pollees. Hams are never bought by 47.5% of respondents and 12.4% purchases them rarer than once a month. Meat delicacy is purchased with the same frequency by 19.2% of respondents and 60.6% never buys it.
Consumption frequency of meat and sausage products is slightly different from purchase frequency. As a rule, consumption is more frequent than shopping, i.g. one-time purchase makes some stock of the review products. The most habitual consumption frequency for small/big sausages, boiled, boiled smoked / semi-smoked sausage varies from 2-3 times a week to everyday consumption. Hams are consumed 2-3 times or once a week, and 44.3% of pollees never consume them. Summer sausage is consumed mainly once a week or 2-3 times a month, share of non-consumers constitutes 39%. Meat delicacy is consumed by 16.5% of respondents rarer than once a month and by 9.6% once a month. Non-consumers are numerous 57.1% of respondents.
As for the purchase places of meat and sausage products, boiled, boiled smoked / semi-smoked sausage and small/big sausages are most often bought in supermarkets correspondingly 28.7, 28.2 and 28% of respondents answered so. Summer sausage, hams and meat delicacy are purchased in supermarkets respectively by 20.4, 18.2 and 14% of respondents. Second popular place of purchase of boiled, boiled smoked / semi-smoked, summer sausage, and hams is regular food store. For small/big sausages and meat delicacy the second popular shopping place is market. The peculiarity of Rostov-on-Don market is that for purchase of meat delicacy, summer sausage and hams respondents relatively rare choose supermarkets where they can find the widest choice of these products. The said products are presented almost in every kiosk, pavilion and mini-market. And the assortment is formed by consumers because small traders offer exactly what is in demand. Besides, prices in kiosks and pavilions are usually lower.
The most important criteria for choice of meat and sausage products named by Rostovites are quality, ingredients and gustatory qualities respectively 79.1, 77.4 and 75.8% of pollees answered so. Significantly smaller group of respondents 41.8% is above all price-oriented.
We should mention about rather low loyalty of Rostovites to manufacturers and brands of meat and sausage products. In case the product of the preferred manufacturer/brand is out of stock in habitual place of purchase significant part of respondents would buy the same kind of product made by other unknown yet brand for small/big sausages, boiled, and boiled smoked / semi-smoked sausage shares of such answers constituted respectively 28.5, 26.6 and 25.5%. Another notable part of pollees in the described situation would choose products of the known manufacturer/brand so answered correspondingly 25.7, 26.9 and 22.3% buyers of the above mentioned products. The most important reason to choose some other manufacturer/brand is higher quality as compared to ever tasted products this was the answer of 41.3% of respondents. Lower price in this case is less important only 22.5% of poll participants said it would be a good reason to change preferred manufacturer/brand.
Manufacturers
In 2005 Rostov-on-Don retail presented over 100 manufacturers. According to data of monitoring, only one fifth of them had more or less notable over 5% distribution in retail.Market of meat and sausage products of any large city usually has 1-2 strong leaders local manufacturers. Such leader on Rostov market is the group of companies "Tavr (Taurus)". At the time of monitoring the products of this manufacturer with the widest distribution were: boiled sausage "Lyubitelskaya (Favorite)" and "Doktorskaya (Doctors)", cervelat "Finsky (Finnish)", and small sausages "Gannoverskie (Hannover)". This market operator has the highest indices in awareness, purchase and consumer preference ratings: 82.2% of respondents recall it spontaneously, and 94.3% with prompt; 87.2% of poll participants purchased products by "Tavr" at least once, and 73.4% prefers them. The leader is followed by "Mikoyanovsky Meat Processing Plant" CJSC (Moscow) but the indices of this manufacturer are more than twice as low. At the time of monitoring the product of this manufacturer with the widest distribution was boiled sausage "Lyubitelskaya". This manufacturer was recalled spontaneously by 31.7% of respondents, and with a prompt by 60.3% of pollees. Indices of purchase experience and preference equaled respectively 33.8 and 11.6% of respondents.
Then go such players of the market of meat and sausage products as "Cherkizovsky Meat Processing Plant" OJSC (Moscow), "Rodionovsky Meat Processing Plant" LLC (Rostov region) and "Sochinsky Meat Processing Plant" OJSC (Sochi) with almost equal indices of spontaneous knowledge from 21 to 23%. Indices of purchase experience of these manufacturers vary from 34% (Cherkizovsky Meat Processing Plant) to 22% (Sochinsky Meat Processing Plant). Yet in preference rating the order of manufacturers differs from the order in other ratings. Thus, products of Rodionovsky and Cherkizovsky meat processing plants are preferred respectively by 12.4 and 10.7% of pollees. "Krasnodarsky Meat Processing Plant" CJSC (Krasnodar) with spontaneous knowledge index of only 15% in preference rating leaves behind with 7.4% Sochinsky Meat Processing Plant and "Kanevskoy Meat Processing Plant" CJSC (Krasnodar region), preferred correspondingly by 6.4 and 6.2% of pollees.
It could be assumed that the manufacturers with higher positions in preference rating as compared to knowledge rating have the chance to re-distribute market shares in their favor by mere increase of distribution. But for the players whose positions in preference rating are lower than in knowledge rating simple increase of distribution and product output would lead to increased transaction expenses and even if gross earning increases profitability will go down.
In conclusion we can mention that Rostov-on-Don market of meat and sausage products is close to saturation point. Raise of sales volumes could be achieved rather by re-distribution of market shares between operators than by increase of consumption of the review products by Rostovites. In this context manufacturers should take a number of steps aimed at attraction and holding of buyers, and also at increase of consumer loyalty. Efficiency of these steps is directly related to formation and improvement of competitive advantages the most important of which are quality, ingredients and taste of the product.
Alexandra Romashova,
Nina Krympenko
The article was published in Russian Food&Drinks Market magazine in May 2006 and can be found in on-line archive: http://www.foodmarket.spb.ru/eng/archive.php?year=2006&number=41&article=421