Natural ingredients pushing Russian health food growth

Wimm-Bill-Dann (WBD) began importing food additives about 8-10 years ago, and since then it claims everything has been better. The firm now has 27 dairies and is the leading manufacturer of milk products on the Russian market.

When asked why the firm wouldn't use Russian-made food ingredients, WBD said that there were not enough quality products available in large enough quantities to satisfy its high production standards.

The company claims to use only natural additives and dyes in its products, yet most ingredients in Russia are made using chemicals.

That is partly why WBD has chosen to import additives from natural ingredients manufacturer Chr Hansen. However, the dairy firm also believes that importing these ingredients gives it access to a wider range of new product formulations, and can therefore help it tap into growing consumer trends for premium health and enriched products in Russia.

"If it wasn't for Chr. Hansen, we would still be drinking kefir, milk and eating cheese. Due to modern, different additives, the product portfolio of our company contains about 300 names",​ said Nickolay Konovalov, leading specialist at the Lavazonovsk dairy, which is a part of WBD Group.

Earlier this month Chr Hansen visited Wimm-Bill-Dann near Moscow to unveil new product ideas and discuss market conditions with the dairy firm as part of its magical sensory tour across Eastern Europe.

WBD specialists were especially interested in the assortment of enriched products, including: an aromatised drinking yoghurt containing around 30 per cent whey; a grainy cheese stuffed with blue cheese; and a black yoghurt, achieved using black dye, thought to hold special potential for the children's sector.

"The market of enriched products is young and is developing"​, said Olga Linnik, leading brand manager on enriched products of WBD.

Her comment was backed up by research from ACNielsen​. It found the enriched products segment in Russia grew by 65 per cent in the first half of 2002, with a growth rate of 45 per cent in Moscow.

WBD said it thought this trend would open a brand new product market over the next few years and was being driven by the rising popularity of 'health' products in Russia.

The firm said health was now a very popular product sector in Russia, with more manufacturers ready to invest money in the trend and more consumers ready to pay extra money for the products.

Vitamins, minerals and other useful bacteria are now added in many foods and drinks, such as ice-cream, kefir and margarine, and demand for functional products is growing as well.

WBD believes its use of natural ingredients goes hand in hand with this emergent health trend, justifying the higher cost of such ingredients.

ACNielsen figures show that biokefirs now have about 35 per cent of kefir market, while drinking bioyoghurts have a quarter of the yoghurt sector. Enriched milk is lower with only a three per cent market share.

Analysts believe this fashion emanated from the West, yet functional and enriched foods were also consumed in Soviet times.

"Big dairies and flour grinding factories specially added different ingredients for inhabitants of northern regions,"​ said Mikhail Gapparov, vice-director of the Food Institute at the Russian Academy of Medicine.

The USSR also called such products "dietary" or "enriched", he said.

Many present products differ from the Soviet ones only by positioning: they are not targeted at sick people, but at people who care for their health with average income.

And evidence so far suggests customers are very glad to have new products, new tastes and at the same time keep their health in a good state. This is why they are not scared by the higher prices of enriched products.