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Growth Amid Legistlative Restriction: The Rise of Russian Private Label Beer

08 August 2013

New Canadean statistics reveal triple-digit growth in the Russian Private Label beer market in 2012. These are surprising results following strict legislation on the prohibition of beer advertisements in Russia.

The increase of almost 150% comes as an unexpected boon to the beer market, which saw overall stagnation in 2012, following the introduction of new legislative initiatives which prohibited beer advertising. While these measures stemmed the influence of big brands, the restrictions paved the way for the lesser known Private Label segment to grow.  

Private Label beer has been growing in popularity since its first appearance on the Russian market in 2007. While initially attracting consumers through its competitive price, Private Label beer additionally gained a reputation for quality. Growing consumer trust helped to gradually drive growth in the years succeeding its introduction. Following several years of strong, double-digit growth (though from a small initial base), the segment saw the additional push it needed to develop in 2012 in the unlikely form of the legislative restrictions on beer. The almost total ban on beer advertising in all communication channels (including TV, mass media, the internet and outdoors) placed Private Label beer products in an advantageous position. As a result of the restrictions, competing branded beers lost their major competitive edge in advertising. Consequently, original designs and merchandising techniques in retail outlets were left as the most effective marketing instruments for attracting consumers and generating additional sales. The Private Label segment, with its competitive pricing and already well-established reputation for quality, therefore finally had the chance to gain prominence.

Further success for the Private Label beer segment is expected for 2013. Following the additional introduction of increased taxes and restrictions on distribution, branded beers are likely to drift even further from the consumer mindset to be replaced by cheaper Private Label alternatives. This trend may even extend into the long-term. With the aim of the Russian government to reduce annual per capita alcohol consumption significantly by 2020, underdeveloped segments such as Private Label may become what one Canadean Analyst has termed “the only glimmer of hope” for the beer industry within this undoubtedly hostile regulatory environment.

This information is based on findings from the Canadean Russia Beer report published in July 2013.

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