UK confectionery giant Cadbury told just-food today (24 October) that it is looking to drive profitable growth in the Russian market, where it is currently making a loss.
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The UK company said that, as one of its 12 focus markets, it has identified Russia as “turnaround market” – a country that is currently “loss making” but has “a lot of potential”.
“The reason we highlighted Russia is because we want to make it more profitable going forward,” the spokesperson said. “It is a high potential country and we’re in a good position now to turn it around.”
As part of this turnaround strategy, Cadbury said that it is focussing on improving distribution.
“Russia is a strong gum and candy market, and what we’re looking to do is a change to one of our distributors. We have difficulties in route-to-market as Russia is such a massive place and that is one of the areas we knew we weren’t strong at. That is one of the things we’re trying to do to turn it around. It’s early days and we’re starting to put in changes now.”
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By GlobalDataCadbury announced its 12 key focus markets last year under a new category management structure. They represent around 70% of the company’s total revenue and are forecast to account for over 60% of expected category growth over the next five years.
Cadbury said their focus markets include the UK, US, Australia, Mexico, Brazil and India. Of the focus markets, the loss-making turnaround markets are Russia, China and Nigeria.
One of the challenges Cadbury faces is a tidal-shift in Russian spending, with consumers increasingly turning to premium confectionery.
“We are a global company with a presence in over 60 countries but in Russia consumers are turning more to the premium end of the market and that’s not where we’re at at the moment,” the spokeswoman commented.
Cadbury said it had no plans to launch any premium products into the Russian market in the immediate future.
However, the company added that its chewing gum brand Dirol was particularly strong in Russia. The company purchased the brand in 2002, making the company number two in European chewing gum.
