THE CONFERENCE PROCEEDINGS - IFEAT

ingredients are in demand. The average price for a flavour or a fragrance in this segment is USD10.00/kg. Dumping is a popular pricing policy.Middle-class 18%. Needs of the middle class are still mostly covered by imported niche goods, butsome local brands are also present in the market. Producers are ready to pay higher prices for qualityingredients, but their production size is usually very small.Luxury/organic/naturals 2%. The previous paragraph also holds true for the luxury segment.Organics and naturals are a small but growing segment covered by private farming and importedbrands. Another example: local flavour producers express vivid interest in natural aroma chemicals.Though demand is limited, their ability to formulate and offer natural flavours improves their imageand raises customers' confidence.The luxury and natural segment is slowing, gaining back its share lost during the crisis of 2008 – 2009.Local consumers and producers warmly welcome modern world trends.Some market information for the most important flavour/fragrance-containing products follows.FRAGRANCE CONSUMPTIONWhite cosmeticsFacial creams and lotions are the main cosmetics items produced in Russia. Other goods comprisedifferent skin care products like body care creams, tan lotions, make-up removers and facial cleaners.Products of this type comprise more that 90% of all cosmetic output in Russia. The remaining 10%include make-up, hair-care etc. The production volume of cosmetics of all types (including creams,mouth- care products, shaving, make-up and deodorants) increased by 23% in 2010. In 2011 there wasa slight decline. The cosmetics manufacturers are mostly located in the Central and Urals FederalDistricts. Russia’s largest cosmetics producer is Concern Kalina which was bought by Unilever in2011. Other important producers are Nefis-Kosmetics, Nevskaya Kosmetica, Novaya Zarya, Svoboda(listed in alphabetical order).Makeup74% of the make-up market is covered by imports 4 . Local producers take up the remaining small sharesupplying the low-price market segment.PerfumeryPerfumery is a huge market in Russia with a peculiar structure. Almost 100% of perfumes areimported. There is only one perfume producer located in Russia now – Novaya Zarya, – with a verylimited range of traditional and new aromas because of the time and money-consuming ethanolregulations. The integrated automatic state informational system of ethanol accounting was introducedin 2006. Under this system, perfume production is subject to licensing with the same requirements asspirits production. The difficulties and costs are so great that even the largest cosmetics producerKalina (belonging to Unilever since 2011) decided it was not worth the effort and closed theirperfumery division, when the new regulation system was introduced.As for alternative perfumery solvents, there is no real market for them. The public taste in perfumerygenerally follows European and US trends; all major and niche brands are available in the retailmarket. There is no substantial demand for perfumes based on other solvents, like Arabic oil-basedperfumes that form a small niche in the market.263