Analyst Insight by Maryna Nazarenko - Contributing Analyst
The political upheaval of late 2013, escalation of the conflict with Russia, coupled with current political instability, significant budget deficit and weakening banking sector, have had an unfavourable impact on consumer confidence and spending power in Ukraine. In 2015, retail sales of tissue and hygiene in Ukraine are expected to see, once again, a value decline of 1% in constant terms (US$ fixed 2014 exchange rate). Volume is projected to decline at a faster rate across all but essential categories, like toilet paper, reflective of price increases across product categories to cover the cost of imports and subsequent decline in consumer consumption.
While a difficult operating environment opens up a window of opportunity for domestic manufacturers, in view of significant price increases on imported brands and popular resentment that has led many Ukrainians to boycott products imported from Russia, taking advantage of this opportunity is not an easy task. Weak domestic supply chain and shortage of raw materials, coupled with unstable political situation, have hampered investment in local production, presenting a significant challenge to growth of domestic industry.