Mars looking to longer term Russian sales rebound
Global Confectionary brand Mars has seen a Russian sales growth slowdown. But Richard Smyth, President of Mars Russia and the CIS, says the company is preparing for a rebound.
RS: “Our total turnover in Russia is $2 billion. If you look back over the last 10 years, and you look at our global performance, Russia has contributed 20% of our total growth worldwide. So it's a very important market for us. And if we're to look forward next 10 years we expect a slower rate of growth, but nevertheless the same level of contribution as we found in the last 10 years.”
RT: What implications caused the world financial crisis for your global business, and in Russia?
RS: “The change we've seen – if I look at the growth rate during the boom years we were growing between 20 and 25% a year. Last year during the crisis our growth slowed down to 12% as a corporation. So what we effectively saw through this crisis period was a slowdown of around 10% in the growth rate.”
RT: What are your expansion plans in Russia?
RS: “We're building one of our largest factories in the world in Ulyanovsk, which we expect to come on stream in 2012. The first line will probably be a 25 thousand tonne bar line. So we are continuing with the investment, we've got two very big factory projects in Ulyanovsk. The chocolate factory, in the end, will be a $200 million investment, initial investment is $130 million.”
RT: Do you think the consumer demand has passed its peak in Russia?
RS: “No, definitely not. Obviously we expect consumer demand to grow in the medium to longer term. What we're very interested in at the moment is what happens in the short term, and most commentators are expecting a reasonably strong recovery in the second half of this year. But we don't see that as yet, so we're not as yet seeing many signs of a recovery in consumer demand, and we don't expect a sharp acceleration in growth, we expect a slow steady recovery. The kind of assumption that we're working on is that we will not return to the boom years, pre 2008, but we will return to a healthy level of the GDP growth around 4-5%, which will support continued growth in consumer demand.”