Russian Consumer goods industry

CONSUMER GOODS INDUSTRY RUSSIA'S POSITIVE FUTURE PROSPECTS 1 AND GROWING MIDDLE CLASS WILL BOOST CONSUMPTION CG&S Market Size SHARE OF RUSSIA'S INCOME Value Retail Selling Price (USD bln) MIDDLE CLASS POPULATION 47% Top group of earners (20% of the population) +8.5% 318 +4.7% 211 174 48% The middle group of earners (60% of the population) contributes 48% of Russian income 2008 2012 2017 >5% Bottom group of earners (20% of the population) +16% 121 104 THE MIDDLE GROUP OF EARNERS WAS TO INCREASE SPEND 16% BETWEEN 2013 AND 2020 TO A TOTAL OF $1.3TRILLION IN CONSUMPTION. 2013 2020 THE CONSUMER GOODS INDUSTRY 2 IN RUSSIA IS EXPECTED TO GROW FASTER THAN WESTERN EUROPE. TO ATTEND THE POTENTIAL DEMAND, THERE ARE FEW CHALLENGING INFRASTRUCTURE MARKET AND COMPETITIVE Insufficient roads and rail links; CHALLENGES THAT lack of facilities and unreliable INDUSTRY PLAYERS and expensive logistics providers HAVE TO ADDRESS CONSOLIDATED MARKET MNCS who have focused on MANAGING hypergrowth now must refocus on operations to mitigate slowed growth UNCERTAINTY Continued macroeconomic pressure and intensified WIDE-SPREAD INEFFICIENCY regulation Companies are saddled with inefficiencies as a result of the mad drive for growth prior to the recession BRAND LOYALTY IS 3 STILL IMPORTANT 60% Russian consumers have to constantly weigh their choice of brand versus private label. Currently, the consumer would rather choose a well-known brand, and his/her intentions have become stronger during the last period. Of respondents have already decided on the brand to buy before they go to the store DIGITAL OFFERS A NEW AND EXCITING 4 VENUE FOR CONSUMER ENGAGEMENT +35% Russia has the largest online population in Europe and internet penetration continues increasing at 35% annually Consumers are using a very multi-channel approach to learning about, engaging with, and purchasing products and services In 2012 Russia overtook Germany as the European Country with the most online users, with more than 50m adults daily