FinNode Russia 2012 - Russia's future middle class
Short description of the topic
Pre-election street protests revealed that Russia's middle class, which made up biggest share of the protesters in big cities, is evolving from haotic consumerisms into a European-like civil society.
Middle class in Russia is the backbone of clients for finnish products and services, hence it is crucial to monitor and analyze the tendencies in its lifestyle which inluences consumpton models and social behaviour. The more Russians travel abroad the more we observe signals of european-mindness that start to pop up.
Some of early signals include:
1) Long term love for luxury and even out of the league expensive goods is turning out of fashion. More and more Russians are becoming rational with their spendings, be it cars or clothes or anything else.
2) Re-vitalizing. Increasing number of middle class professionals becomes food consious and sports-oriented. First signs of interests towards biologically pure (bio) products appear even in big retail chains, where only few weeks ago first shelves with "bio" goods were opened.
3) Middle class Russians are becoming more ecologically concious and responsible. Ecologist movements is a hot topic in Russia and their leaders make up significant share of political opposition. Energy efficiency, renewable energy and energy independency are fast growing trends among mid-class and upper-mid class Russians that opt to leave in own houses.
Naturally, Finnish industries that may be influenced the most from the changes in Russian middle class consumption behaviour are tourism, eco(organic) food production and healthcare.
Input of Russian tourism in Finland GDP has dramatically increased lately, with over 1,2 mln visas issued in 2011 in St Petersburg alone, thus generating new significant niche in Finnish economy with very good growth potential. Shopping trips is one of the major activities of Russians in Finland. In tax-free sales Lappeenranta is already approaching Helsinki. Over the period from January through October, the tax-free sales increased by 62 % from the corresponding period last year. In terms of value, the sales rose to EUR 32 million, while in the capital the value of tax free sales was EUR 42 million during the same period.
Less is known about market potential and trends in eco or organic food. But it is evident that ”ecologically pure food” attracts drastically increasing number of clients among middle class, that can actually afford a much better quality and diverse food basket . As an example S.Peterburg inhabitants make freequent shopping trips to Finland in search for high quality goods, especially food.
Economically able Russians, that express an increasing awarness about staying healthy are not satisfied with domestic healthcare services. Medical trips to the West (especially Germany, US and Israel) are a constantly increasing trend. Finnish healthcare is known in S.Petersburg but for the rest of Russian mid-class, especially in Moscow it remains completely unknown eventhough it may represent a good alternative, especially in terms of travel time to other western countries. A number of Russians in Finnish hospitals staff is another asset.
Still our knowledge and assumptions abou mid-class Russians and their future are very limited. More background information, complemented by identification of trends in these 3 focus areas will help strategic planning for Finnish products and services to better match their future clients.
Rationality, health, food and eco - conciousness go very well in line with Scandinavic tradition. So if these trends are proven it may result in natural growth of interest towards Finnish products, services and lifestyle in general.
Understanding and describing new trends, values, behavourial and consumption models of Russian mid-class applied to three focus areas: tourism, eco(organic) food, healthcare and wellbeing is dedicated to provide corresonding Finnish Industry clusters with food for thought for their future strategies towards Russian clients in Russia and in Finland.
Goal and strategic compliance
Russian mid-class lifestyle changes and it already infuences consumption behaviour.
The goal is to identify most pronounced and disruptive trends and values in middle class lifestyle and attempt to convert them into business leads for Finnish companies with the focus in three major areas: tourism, food, healthcare and wellbeing.
There are also threats for the mid class in Russia as a whlole. First it is expected slow down of the economy, decrease of income due to depreciating oil and even crisis. Second, it will be fair enough to say that it is mid class that is least satisfied with the return of Mr. Putin for the next 6 or even 12 years. Many people are doubtfull about their future in Russia and may opt to leave the country. And current trendsetters may very well be the first to do so. So general perspectives for Russian mid-class as a whole shall be outlined in 5 years horizon.
Strategic compliance: Industries that may be influenced: Food industry, Healtcare and Wellness. Relevant OSKEs and SHOKs.
Bio (organic) food starts to appear on the shelves of big retail chains in Russia. Moscovites diet has been reported to undergo significant change, decreasing in bread and potato consumption and increasing in fruits and vegs.
City biking is increasingly popular in megapolices. First electric cars appear and hybrid cars are becoming quite common in Moscow.
Project manager: Daria Ivanova
Project team: Elisa Karvonen, Ekaterina Malevskaya-Malevich, Ekaterina Reizman.
1) To describe Russian middle class in general figures (number, aver income, age, family status, etc) and estimate potential and threats for its growth in number in the next 3-5 years, including demographics.
2) To identilfy and forecast most pronounced and disruptive trends that will be shaping Russian middle class lifestyle in the next few years (like switch to more sustainable/eco living, work/life balance, etc)
3) To assess the influence of this lifestyle chages on consumption behaviour and sketch potential business opportunities for Finnish companies and industry clusters.
4) To summarize findings in a report (final report in word & ppt in English) and disseminate via signal session or seminar.
Main focus of the study will be done on St.Petersburg and Moscow as the most sensitive regions for changes and representative in the area of middle class changes.
•desk study (analysing information from open sources)
•expert interviews (with experts from key sectors)
•consumers study (quantitative research and qualitative studies)
•visiting relevant conferences and exhibitions (list of events will be generated in the begining of the project)
1) July 2012: initialization of the project
2) August 2012 – December 2012: Market study and interviews
3) November 2012 - December 2012 : Future session with Finnish companies: discussing intermediate results and ideas for further studing
4) January 2013 – April 2013: finalizing results and preparing the final report
5) May - June 2013: Dissemination
Finpro St. Petersburg
Bolshaya.Konushennaya str. 4-6-8 Suomi talo, office A 101
191186 St. Petersburg, Russia
Office phone: +7 812 325 4483
Office fax: +7 812 325 4482
Direct phone: +358 20 469 5773