Wimm-Bill-Dann Foods OJSC was founded in 1992 and is the largest manufacturer of dairy products and a producer of juices and beverages in Russia and the CIS.
Its principal dairy products include sterilised and pasteurised milk, along with butter, cheese and cream, as well as sour milk products such as kefir and cottage cheese, and also yogurts, dairy desserts and liquid dairy products for infants under the age of three.
As by far the largest dairy company in Russia, with a leading position in most categories, how do you view the market for dairy?
Silviu Popovich: The Russian dairy market continues to have great potential, with consumption per person still below that of many other markets in Europe. As the economy recovers, we’ll see strong growth across all categories.
Competition is increasing across traditional dairy categories and value added ones. Players who have been operating mainly in one category are now entering others. Smaller players are continuously improving the quality of their products and packaging. Regional players are expanding their coverage. Following the recent acquisition of Unimilk by Danone, the fight at the top is becoming more exciting.
As in any emerging market, private label will play a more significant role, though recently retailers’ brands have failed to attract significant share. Major retailers will continue building their brands and will do it in a more efficient and sophisticated way.
Innovation remains the key to drive growth in the dairy category. Russian consumers are always eager to try new things. We will see a greater number of product, packaging and technological innovations in traditional and value added dairy.
You’re gaining market share in value added dairy. With which products have you been most successful so far?
Popovich: First, we’re very pleased with our functional drinks business with Imunele. Over the last year, we improved the product with a new ‘3 Active’ proposition (a combination of minerals, vitamins, L Ramnosus and L Casei bacteria), we improved in-store presence and we improved our communication. Consumers are responding very well by rewarding us with great sales.
Our second success is with our kids brand Zdraivery. We created it 18 months ago for mums and kids. For mums, our R&D team created a unique range of completely natural products, the first in the Russian market. For kids, Zdraivery is an exciting brand with a diverse portfolio covering eight categories (juices, nectars, yogurts, cheese, smoothies, functional drinks, milk and aroma milk), lots of toys and magnets, innovative pack solutions, such as yogurt in flexible packaging – another example of WBD’s pioneering in Russia.
We have also made progress with our flagship brand, Chudo. For two years, we have been improving our recipes, design and packaging. And now, although we’re just halfway through our journey, the results in some categories – drinkable yogurts, for instance – are outstanding.
You have also gained success in pasteurised bottled milk. How have you achieved this?
Popovich: We were second to enter the PET pasteurised milk market, so we had to find ways to differentiate ourselves. We came up with an excellent bottle design, making it look traditional and premium. We also came up with the first micro-filtered milk in Russia.
Our Domik v Derevne milk was very well received, not just by Russian consumers, but also by the dairy industry. We have won two awards: one at the Annual Dairy Forum for the ‘Best Fresh Milk’ and another one from the Russian Retailers Association for the ‘Best New Launch in the Dairy Category’.
What about dairy baby food and infant foods? What was the gap in the market and how have you met consumer demand in this sector?
Popovich: The baby food category is the most exciting part of our portfolio. Category growth has been tremendous, driven by several factors such as changing lifestyle, increasing disposable income, and, specifically in Russia, favourable legislation (Russia is one of the few markets that have clear regulation for baby and infant dairy products).
An increasing number of working mothers have less time for cooking and a higher disposable income, which is driving more families to convenient meal solutions. As higher quality products become available, more mums are confidently diversifying their babies’ menu. This category isn’t just about meeting consumer demand, but also about creating demand by bringing to market new healthy, tasty, convenient and high-quality products.
Our latest innovation in this area is the first spoonable yogurt for babies. The product can be consumed by babies after eight months and is already showing great results.
How do you see the Russian consumer today?
Popovich: Although consumer confidence hasn’t reached the pre-economic crisis level yet, there was a significant improvement before the extremely hot summer. We see good growth prospects for traditional dairy products and even better ones for value added dairy and baby food.
Serving 280m customers, what are the main challenges you face?
Popovich: Our challenges in Russia are similar to those of my colleagues in other markets, irrespective of geography. Our brands should be relevant to our consumers, supported by our consumers and profitable for our shareholders. So far, our strategy is working and we don’t intend to change it.
We will continue to build strong brands by combining great marketing, smart innovation and excellent in-store execution across all geographies in which we operate. We will consolidate the position we have currently and will enter new categories.
We aim to become not just the biggest dairy company but also the fastest growing and the most innovative company in the dairy market in the next five years.
What is your view of innovation and what success are you aiming for by 2015?
Popovich: We look at innovation as one of the main growth pillars for our company. By 2015, we expect more than $650m to come from products launched after 2009.
We continuously improve our products, packaging and production technology. In 2010 alone, we launched over 70 new SKUs. What is important is to bring to the market really significant innovations with a big impact on our consumer and our bottom line. Our kids brand Zdraivery got off to a good start in 2009. In 2010, we launched a new cheese brand called Granfor. In 2011, we’re launching a product for blood pressure control. Each year, we target one major innovation to bring $50m in three years after launch.
Please give a few examples of the company’s corporate social responsibility programme.
Popovich: We have several programmes aiming to give something back to the community and to minimise the impact we have on the environment.
We’re paying a lot of attention to CO2 footprint reduction. We have enlarged our production infrastructure and as a result we transport less of our products and at the same time provide fresher products to our consumers.
Over the last few years, we have demonstrated good progress in reducing water consumption by 25% and electricity usage by 15% per production unit. Intensive work on packaging has helped us to reduce the weight of our bottles and thickness of other packaging materials generating 5-7% reduction.
While we have demonstrated good progress here, we’re just at the beginning. Our plan is to accelerate this work to make our business more sustainable.
Claire Phoenix is managing editor of Beverage Innovation magazine. Subscribe here.
© FoodBev Media Ltd 2024