Consumer Electronics in Russia positively moving ahead

Thursday, August 30th, 2007
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The Russian economic growth hit a six-year high of 7.9% year on year in the first quarter, propelled by strong growth in construction, manufacturing and trade. The result is particularly impressive in light of the small contribution made by oil and gas. Although economic growth is likely to ease during the rest of the year, robust domestic demand may ensure that the full-year rate does not slow appreciably from the 6.7% outturn seen in 2006. With real disposable incomes up by 13%, private consumption develops positively.

Supported by the favourable economic trend and driven by innovative technologies the Russian market for Consumer Electronics rose by a 10 % value growth in the first half year of 2007.

Russian TV market

With around 7 million TV displays sold last year Russia and the UK remains being the largest TV markets in Eastern and Western Europe. GfK expects a stable unit based demand in 2007.

As in other regions the Russian TV market has entered a new area. The new Flat Panel TVs (Plasma, LCD) enjoy high growth rates and compensate the sharply shrinking CRT-TV sales:

1 Half Year 2007 vs. 1 Half Year 2006 (value is US-D based)

  • TV Display Total: – 5 % in units, + 30 % in value
  • LCD-TV: + 142 % in units, + 159 % in value
  • Plasma-TV: + 44 % in units, + 96 % in value
  • CRT-TV: – 32 % in units, – 27 % in value
  • Rear Projection TV: + 8 % in units, – 6 % in value

7 out of 10 television sets sold to consumers are still traditional CRT-TVs; however in value terms it is the opposite way round and Flat Panel TV accounts for 70 % of the market value.

Different from Central and Western Europe small and medium sized TV Displays (i.e. 21 Inch and below) remain important and still take 67 % of the total unitbased TV demand (Western Europe: 40 %). The majority of consumers still can afford only a medium sized (20/21 Inch) or portable (14/ 15 Inch) TV.

DVD players/DVD recorders

After several years of high growth the market for DVD devices slipped into a decline (-6 % in units, – 10 % in value). This year a sales volume of around 6 million DVD Players and Recorders is expected.

The market still concentrates towards the basic DVD Player (95 % in units). It seems that a majority of consumer is not willing to pay a three times higher price for a recording function. Another reason for the low impact of DVD Recorders is the spreading of low priced and pirated DVD software. On the other hand the sales of advanced DVD Hard Disc Recorders doubled on year-on-year basis. Consequently the value share of DVD Recorders develops positively.

Camcorders

The market trend for Camcorders is again positive with a 9 % growth in units and a 13 % growth in value in the first half of 2007. For the total year a demand of round about 820 thousand Camcorders is estimated. DVC Camcorders represent still half of the sales in units but face a declining demand which is more than compensated by the growing sales of DVD and HDD Camcorders.

Home audio

As in the other regions the Audio Home Systems market is facing a declining demand (- 28 % units, – 31 % in value). All relevant segments (Micro, Mini and Home Theatre) are suffering. For 2007 a sales volume of 2,7 million Audio Systems is forecasted.

Portable audio equipment

The Portable Audio market went up by 12 %. This positive development is solely driven by the Digital Portable Audio and Video Players (MP3 and MP4) which turned into a mass market. The unitbased demand for MP3/ MP4 Portables increased by 51 % in the first half of 2007. For 2007 a sales volume 3,2 million MP3/MP4 Players is estimated.

In-car electronics

The Russian Car Radio aftermarket has developed moderately with + 3 % growth in units and + 7 % in value. CD Tuners with MP3 Playback make up more than 80 % of the value and unit based consumer demand.

Outlook 2008

For 2008 we expect that the Consumer Electronics market in Russia will continue to grow with a rate of + 11 % driven by the innovative technologies and the comparatively low household penetration in less developed regions.