Despite the geopolitical situation and various sanctions, the World Bank has promoted the Russian economy to the top income category, ramping it up from a middle-income economy before the war to a high income economy.
The classification is updated annually in July and is based on the gross national income (GNI) per capita of the previous calendar year, with factors like economic growth, inflation, exchange rates and population growth considered.
One market that has remained resilient despite the restrictions is Russia’s snacks sector, with sales of potato chips up by 14.7% since April 2023, according to business tabloid Kommersant.
Potato chips account for 43.5% of the total snack market, which, in 2022, was valued at approximately $9.3bn.
Despite tensions, consumer demand for convenient and indulgent snacks remains strong and local producers have jumped in to fill the gap left by international brands. Producers have also adapted by sourcing local ingredients and adjusting their supply chains to ensure a steady supply of treats.
One such manufacturer is Chernogolovka, the new owner of Kellogg’s Russian business, which produces potato chips under the Chels brand at its factory in Pskov.
Russkaya Kartoshka has gained significant popularity in Russia, strengthening its market position by leveraging local production and sourcing. Available in supermarkets, convenience stores and local markets across the country, the brand uses cultural elements in its marketing and branding, which resonate with citizens and is building loyalty.
Moscow Chips is another brand to capture a larger market share by filling the gap with its locally produced products. It, too, often incorporates elements of Russian traditions in its branding and highlights its use of locally sourced potatoes, which supports local agriculture and ensures fresh ingredients.
Refusing to crumble
Some international brands still maintain a presence.
While PepsiCo announced a reduction in its product range, it continues to sell Lay’s and Doritos in Russia, which continue to be popular with consumers.
In June, the KSE Institute (Kyiv School of Economics) said the American snack maker had stopped making Pepsi, 7UP and Mountain Dew in Russia after Moscow sent tens of thousands of troops into Ukraine, but had not taken any visible steps to exit and continues to sell chips and dairy products in Russia. It added the company saw a 5% increase ($223m) in revenue volumes in 2022 vs 2021.
Mondelez International remains active in the market with brands like Oreo, TUC, Milka and Toblerone. The snack giant has scaled back its operations in the country and split its Russian subsidiary into a separate entity, selling its products through third-party distributors, according to reports. In 2023, Mondelez’s sales in Russia pipped $1bn – slightly down but above historic levels – accounting for about 3% of the company’s total revenue.
Mars Inc maintains a strong presence with brands like M&M's, Snickers, Twix and Bounty, as does Nestlé with KitKat and Nesquik; Unilever with Magnum ice cream; and Ferrero with Kinder and Ferrero Rocher.
These brands justify their continued presence by emphasizing the provision of essential and high-demand products.
"We have been operating in Russia for more than 60 years, and we have a place in many Russian homes.," said CEO Ramon Laguarta in an open letter sent to PepsiCo associates.
"Now more than ever we must stay true to the humanitarian aspect of our business. That means we have a responsibility to continue to offer our other products in Russia, including daily essentials such as milk and other dairy offerings, baby formula and baby food. By continuing to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and uncertainty ahead."
A Mondelez spokesperson said, “Suspending our full operations would mean cutting off part of the food supply for many families who have no say in the war and create great uncertainty for our 3,000 colleagues and more than 10,000 farmers who depend on us.
“Products sold in Russia are now produced and distributed locally, with no imports of finished goods from Europe into Russia or exports from Russia into Europe. We are continuing to comply with all applicable sanctions.”
A descendant of John Cadbury who founded the chocolate brand in 1824, however, has voiced his disappointment that Mondelez hadn’t severed ties. James Cadbury said the group’s actions go against the chocolate brand’s core values.
Campaigners have also urged King Charles to revoke the royal warrants of Cadbury, Unilever, Nestlé and Bacardi over their Russian links.
A vibrant and dynamic sector
The Russian snacks market has demonstrated resilience despite geopolitical tensions, attributed to the ability of local producers to fill the gap left by international brands.
Like the West, there is a trend towards healthier snack options, with Russian consumers increasingly demanding treats that are made with natural ingredients, have a lower fat content and added nutritional benefits. This has seen a growth of granola bars, fruit and vegetable chips and yogurt-based snacks.
Ready-to-eat and on-the-go snack options continue to be popular, driven by busy lifestyles and the need for quick, portable food solutions.
Consumers are also willing to pay more for premium products, while the younger generation is open to trying new flavors and snack formats, thus driving innovation.
Immensely popular are traditional snacks, such as dried, salted or smoked fish and squid strips, roasted and salted sunflower seeds (semechki), breadsticks (solenye palochki), a small, crunchy ring-shaped bread roll called sushki, cold meat jelly (kholodets), blini (thin pancakes), various types of snack sausages (kolbasa) and pickles (ogurtsy).
