In 2022, shoppers and industry observers were surprised by the abundance of goods lining Russian store shelves. International sanctions and the separation of major foreign brands did not disrupt the availability of items. Retail chains pivoted to alternative markets, local products, and private labels to keep inventories robust.
NielsenIQ, a global authority on retail, fast-moving consumer goods and consumer behavior, notes that food sales from retail chains climbed 35 percent in 2022. The previous year saw a rise of 18 percent, reflecting a notable acceleration in private-label adoption amid economic pressure.
Industry experts from NielsenIQ describe a marked shift during the economic downturn, highlighting a new wave of development for private label offerings in the Russian FMCG landscape. They point to March 2022, when many shoppers avoided brand loyalty, as a catalyst for expanding private brands.
Consequently, the share of private brands in Russia grew from January to April 2022 by 13.2 percent in volume and 9.4 percent in value. In certain non-food categories, April 2022 saw sales rise by about a third.
Not just savings
Private brands have long evolved across Europe, where they now account for a significant portion of sales in some countries. Sweden leads with about 52 percent, Spain around 41 percent, and Belgium near 38 percent. For Russia, private label represents a growth trend, yet its overall share remains below 5 percent of total consumer-goods sales, according to NielsenIQ experts.
The rising appeal of own brands is driven largely by affordability. As real incomes decline, price-conscious shoppers rely more on private labels as a cornerstone of savings strategies. Through streamlined logistics, simpler packaging, high turnover, and lower marketing investments, private-label products often cost up to 30 percent less than comparable branded goods.
This trend spans beyond the economy tier. European retailers have expanded private-label lines into mid and premium ranges, and Russia has shown a similar trajectory. INFOLine notes a related shift, with Pyaterochka early in 2020 signaling a change in procurement criteria.
Elena Rudova, director of Pyaterochka’s private-label department, told Gazeta.ru that the chain now operates more than 50 own brands across all price segments, offering over 2,800 high-quality products. The strategic aim is to steadily grow the private-label share so that nearly no category remains without private-label offerings.
It’s all about quality
Roskachestvo ratings often show that private-label products from retail chains deliver strong price-to-quality value. In markets with robust consumer testing, the results are favorable. Yet Roskachestvo also notes a risk: a retailer may source hundreds of products under a single brand from multiple suppliers. In such cases, quality control rests with the retailer, and tender processes may involve several manufacturers, which can complicate consistency.
A recent Roskachestvo survey of 97 categories found only two brands with no low-quality products, with a score above a three. Those brands are Global Village from Pyaterochka and Our Family O from Auchan networks. Pyaterochka emphasizes strict oversight of Russian manufacturers and a federal-level responsibility for private-label quality, including end-to-end checks from raw materials to laboratory testing.
Private-label items are typically produced close to the markets where they are sold, supporting fresh delivery and local adaptability. Rudova notes that stable supply chains and distribution centers enable rapid replenishment while preserving product freshness. The quality-control framework also allows recipe adjustments to meet regional preferences.
Today more than 90 percent of Pyaterochka’s private-label products receive high marks in practice. The retailer uses a rating system to flag underperforming items and to work with suppliers or drop products as needed.
Growth prospects
With NielsenIQ data, the growth of private labels represents a win for consumers, retailers and manufacturers alike. Russian experts forecast a rapid expansion of private brands across both food and non-food categories in the coming year. Analysts call for ongoing evolution as many categories shift away from established brands in response to price pressure and reduced purchasing power.
Success for independent private-label programs will hinge on delivering strong price-to-value, offering competitive assortments, and building shopper awareness of these brands. Analysts from VELES Capital suggest that private-label shares will remain meaningful. Pyaterochka aims to raise the private-label portion to 27 percent by the end of 2023, while intersections plan to reach 26 percent by 2025 and Magnit 25 percent.
Private labels have become standard for essential goods and major categories in many carts. In a market facing crisis conditions and uncertainty, shoppers are shopping more rationally and intentionally. Yet private-label offerings also provide flexibility in pricing strategies and allow retailers to sustain a favorable price-quality balance across all segments. This makes private brands an increasingly important competitive advantage for Russian retail networks.