Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Smaller Products Mean Better Sales in Crisis




Russian consumers might be surprised when they open a box of Lipton tea and find half as many bags as there used to be.


Likewise, hunting for a snack will now turn up lighter Steff-Houldberg hot dogs, smaller Prichuda wafer cakes and tiny cans of Pringles potato chips.


Adjusting the size and weight, and thereby the price, of food products is an emerging strategy of big producers to encourage consumers to buy products that would otherwise be unaffordable amid Russia's financial turmoil.


Popular hot dog vendor Steff-Houldberg, with 200 red-and-blue-striped kiosks in Moscow, saw sales plummet when the prices of its imported Danish sausages soared. The company initially fought back by introducing two new hot dogs, Goroskoi and Stolichny, using domestically produced sausages. With a retail price of about 15 rubles, the dogs cost about 40 percent less than the imported ones.


However, Steff officials decided that the two new offerings didn't quite cut the mustard. So late last year they launched the Stop Hot Dog with a price tag of only 10 rubles. A Stop Hot Dog weights 30 grams, compared with the usual 60 grams for a normal sausage.


"Since the beginning of the crisis, we examined the many ways we could cope with the ailing purchasing power of customers," said Steff's deputy commercial director, Igor Sadofiyev. "Decreasing the weight of the product proved to be the best solution."


The Stop Hot Dog is a sizzling success, he said, adding that after two short months, it accounts for a whopping 20 percent of company sales.


Sadofiyev said Stop Hot Dog's main consumers are students, children and blue-collar workers, who grab a dog to accompany a bottle of beer.


The Danone-Bolshevik confectionery has also adopted a less-is-better tactic for Prichuda, a multilayered wafer cake covered with a coat of chocolate. The bakery, whose smallest Prichuda weighed 300 grams, knocked a few more crumbs off the cake, making it 280 grams. The cake's price fell from 33 rubles to 27 rubles.


"The price was too high" for Russian consumers, Prichuda's brand manager Anastasia Popova said. The smaller version helped sales take off, she added, declining to give exact figures. Lack of demand forced Danone-Bolshevik to halt production of its largest 500-gram Prichuda earlier this year.


Prices on international brands, which have long been popular among Russian consumers, also shot out of the reach of many consumers after the ruble devaluation in August.


"Many people here like to buy quality products made by international companies," said Dmitry Markov, the Russian product manager for multinational giant Unilever. "However, they often seem to be too expensive for our consumers."


Faced with falling sales, Unilever, along with other food giants such as Procter & Gamble and Nestl?, embraced the product downsizing strategy.


There is a growing demand for Unilever goods packaged in smaller quantities, Markov said.


Unilever recently started selling smaller boxes of Lipton tea bags, each containing 10 bags instead of 20. Boxes retail for 60 cents, in comparison to about $1 for the bigger boxes.


Sales appear to be booming. Shop owners estimate that the smaller packages account for two out of every three boxes they sell.


Markov declined giving any numbers, confirming only that the retailers' figures are "close to reality."


Unilever expects to launch 50-gram versions of its well-known international tea brand Brooke Bond and local trademark Beseda this month. Currently, the tea is only offered in 100 gram boxes and larger.


Bernard Meunier, commercial director with Nestl? Russia, said the Swiss food giant is also seeing more interest in goods in smaller quantities. To satisfy this need, Nestl? has introduced smaller packages of Maggi bouillon cubes and Rossia chocolates. Plans are under way to offer 50-gram cans of Nescaf? coffee, half the size of what is now available.


"There is logic in this [downsizing products]," Procter & Gamble spokesman Yury Molozhatov said. "If people like our product, we must make it available to them."


Procter & Gamble is running a television advertising blitz promoting its new 56-gram containers of Pringles potato chips, which hold less than a third of the traditional 191-gram size.