Autumn is a hot time for confectionery factories and wholesalers who want children to receive their gifts at the New Year trees. The market for New Year's sweet gifts, the capacity of which experts estimate at no less than $65 million, exists only three weeks a year, but during these hot days, suppliers of sweets earn from 10% to 100%.

By the beginning of November, the market for New Year's gifts - specially packaged confectionery - is already quite active. "Tenders are held in every Moscow palace of culture, and you have to compete with 7-8 applicants," says Sergei Pasko, CEO of Babaevskoye-Invest, a subsidiary of the Babaevsky confectionery concern. According to the State Statistics Committee, there were 21,201,000 children aged 5 to 14 in Russia in 1999. Younger children - from about 3 years old - also get caught up in the "Christmas tree" whirlwind. The average child receives two New Year's gifts, each costing about 30 rubles.

The country's main Christmas tree in the Kremlin Palace attracts about 250,000 children, and the main Christmas tree in St. Petersburg, which takes place in the Anichkov Palace, is visited by more than 23,000 children during the holidays. More and more companies compete every year for the right to bring more of their products "in one door." If previously, confectionery companies were mainly involved in the formation of gifts, now they compete with packers specializing in the formation of New Year's gifts, as well as with their own dealers who also want to pack and sell gifts. Money is spent on gifts for children from the city budget, from the funds of organizations and, last but not least, from the parents' pockets. "A child from a prosperous family receives on average five gifts: at school, at the Palace of Culture, from parents, from grandparents," Pasko calculates. Each gift that a child brings from the "Christmas tree" contains a profitability of 10% to 100% (however, the latter figure is only achieved by fly-by-night companies that are created specifically for the New Year holidays to sell off stale goods).

New Year's gifts guarantee large sales volumes in just three festive weeks. "No other time does anyone buy sweets in such volumes as before the New Year," notes Elena Mokrova, advertising and marketing manager at the St. Petersburg company Megamart, which includes five cash & carry stores. According to Megamart, confectionery sales in December last year increased fourfold compared to October.

The main suppliers of New Year's gifts in Moscow are Krasny Oktyabr, Rot Front and the Babaevsky confectionary concern. According to Olga Martynova, head of the marketing department of Krasny Oktyabr, the parent company, including production facilities in Ryazan and Kolomna, has already received orders for 2 million gifts.

Competition is intensifying, new players are taking market share from traditional suppliers of New Year's gifts. Lyubov Ivanova, economic director of the Krupskaya Confectionery Factory, reported that in 1998 the factory sold 150 tons of gifts, and in 2000 it plans to sell 80-100 tons.

Competitive advantages in the fight for a place under the tree are the variety of the set, its price and non-standard packaging. On the one hand, the most common are gifts for 30 rubles, on the other hand, gifts that include a toy in addition to confectionery are in demand. The price of exclusive sets reaches 6,000 rubles. And respectable customers usually demand an exclusive gift with a guarantee that something similar will not appear in retail.

Suppliers of inexpensive gifts try to offer original packaging. The St. Petersburg Samoylova Confectionery Factory (Red October Group), which won the city tender this year for the supply of gifts for municipal Christmas trees (the amount was 5 million rubles), offered "creative" packaging from which a child can make a Christmas tree toy himself. In addition to increasing sales, New Year's gifts are an excellent image promotion. The Samoylova Factory includes coupons with an announcement of a competition held by the factory in its gift sets. In 2000, the St. Petersburg Krupskaya Confectionery Factory will supply 10,000 gifts to order from Surgutneftegaz, which in addition to sweets will also contain a soft toy - a polar bear with the factory logo on its paw.

For a place under the tree