"Mars Inc.'s withdrawal of chocolate bars following their dispute with X5"
In a significant development for the confectionery industry in Russia, Mars, a multinational corporation headquartered in the United States, is embroiled in a price dispute with X5 Group, the country's largest retail group. This conflict has led to Mars products being removed from X5's retail chains, including Pyaterochka and Perekrestok.
Reasons for the Conflict
The crux of the issue lies in X5 Group's contention that Mars's prices for confectionery products are excessively high. As a global brand, Mars commands a premium, which adds to the cost burden for Russian retailers. Additionally, Mars has suspended investments in its Russian production facilities since 2022, reflecting the geopolitical and economic challenges the company faces in Russia. Mars is also planning to gradually stop producing some brands like Daf and Korkunov, which may be related to changing market strategies.
Impact
The removal of Mars products from X5's retail chains presents an opportunity for domestic Russian manufacturers to increase production and supply lower-cost alternatives. Russian confectionery factories are ready to fill the gap left by Mars, producing affordable alternatives to Mars’s premium products. Experts note that the cost of confectionery products consists of production cost plus a brand premium; Russian producers can offer lower prices by excluding the brand premium.
This could lead to a boost in Russia's chocolate bar production and a shift towards more locally produced confectionery in the retail market.
Current Status
As of late July 2025, X5 Group continues to refuse to stock Mars products due to high prices. The conflict remains unresolved, with ongoing negotiations or market adjustments possible. Mars is reducing its brand presence by stopping production of some brands in Russia. Russian market players are reacting by preparing to expand local production, potentially replacing Mars products on Russian store shelves.
Future Implications
The Mars-X5 conflict could have long-term implications for the retail confectionery landscape in Russia. The shift towards locally produced confectionery could become a trend, potentially reducing Mars's market share in the country.
Meanwhile, the Mars "Odinovskaya Confectionery Factory" has ceased production of "Korkunov" and Dove chocolate bars. However, the factory will now focus on producing chocolate confections and mini-bars of Dove Promises and "Korkunov Pure Choco". There are no reports of Mars planning to exit the Russian market, and the supply of pet foods produced by Mars, such as Pedigree, Whiskas, and Kitekat, will continue.
In related news, Mars and Mondelez have increased prices on popular sweets in Russia. X5 has launched "phygital" stores with small footprint and no cashiers to adapt to the changing retail landscape. Interestingly, unlike other foreign food and pet food producers, Mars continues to operate in Russia, owning its own production facilities and logistics in the country. Mars is currently considering buying the Pringles maker, but there is no confirmation if the brand will return to Russia.
As the situation unfolds, it will be interesting to see how this conflict affects the confectionery market in Russia and whether Mars can navigate these challenges to maintain its market presence. Mars has yet to comment on the conflict with the retailer X5. The supplier's proposed purchasing conditions do not align with the principles of fair pricing, according to X5.
- The disagreement between Mars and X5 Group, stemming from high prices of confectionery products and diminishing investments in Russian production facilities, has led to a potential shift in the Russian confectionery market, with domestic manufacturers ready to fill the gap left by Mars and offer more affordable alternatives.
- As a result of the ongoing conflict between Mars and X5 Group, and the possible market adjustments, there could be long-term implications for the retail confectionery landscape in Russia, including a trend towards locally produced confectionery which may reduce Mars's market share in the country.
