Dairy firms operating in Russia have spent a lot of time and money testing the viability and consumer reaction to various functional products since a serious sales decline persuaded the Ochakovo dairy to stop producing vitamin milk in 1998.
Now, Russia's number one dairy firm Wimm-Bill-Dann (WBD) has led a new wave of functional food research in response to a sizable gap in the health foods market.
"Food Institute research showed that the vitamin deficit in Russians' food is about 50-65 per cent below the recommended level with vitamin C intake about 90 per cent under.
"Nine out of ten Russians suffer from intestine dysbacteriosis and this, together with our market research, confirmed to us that consumers are ready to purchase enriched products," said the firm.
WBD is the leader in the functional sector. According to information from the Russian Institute of Marketing Research, about 32 per cent of consumers prefer its kefirs 'Doctor Bifi' and 'BioMax', and about 40 per cent prefer its yoghurts.
A lot of industry research initially focused on kefir, and especially how to attract young people. Firms found that talking about environment, ecology and cellular immunity in the intestines worked best and young people began to drink kefir, and then moved on to yoghurts.
Andrey Stasi, general director of marketing company A2Z Marketing, said the growing popularity of functional products was down to a combination of health concerns and affluence.
"Functional products are appearing because now there are people who value their health and who are ready to pay more money for keeping their health. Among them are businessmen, then their wives and then also women generally," he said.
French dairy firm Danone, which has a portfolio where 40 per cent of milk products are enriched, last year doubled its presence on the Russian market from 9 to 14 per cent.
Around 15 per cent of Danone's Russian sales volume belonged to its "Activia" trademark, which contains a unique element called Bifidus Essensis.
However, the expense and time needed to launch a functional product range may put smaller companies off, especially as the average income across Russia was only €19 per month at the start of 2005, lower than all the 10 countries which recently joined the EU and brought down by poorer areas outside the major cities.
Ochakovo dairy said it spent about $2.5 million launching its Actilife trademark, yet poor sales meant the project lasted only nine months.
"Setting up manufacture of functional products is a lasting process, tiresome and expensive. You must invest in new technologies, equipment and lots of market research. If it takes four to six months to create a usual yoghurt, then our milky-fruit cocktail Magitelle was in development for more than a year," the firm said.
Even so, interest has grown significantly in Russia's functional dairy market. A few days ago, Petmol launched a new production line for functional drinking yoghurts and will market functional milk products under the Liasson brand.
Petmol wants to place the new yoghurts in the premium segment, moving up from its normal middle price position, and hopes that it can catch the market leaders Danone and WBD.
Petmol's general director Valentin Polyakov said the new yoghurts would be sold in packages of 250g and 600g. "The company plans to create a series of products under the Liasson trademark, which would include yoghurts with juice and cheese deserts", he said.
Representatives of the company want the new trademark to acquire about 25-30 per cent of the premium yoghurt sector within a year. In the last year, Petmol's premium yoghurt sales volume increased with more than 10 per cent, and the capacity of this market is evaluated at 600 tons monthly.