25 Apr 2011

Refreshing Kvas - traditional Russian summer soft drink

According to market research, soft drinks are one of the most growing and promising segments in Russia. Kvas is a promising niche product that is extremely popular among Russians and Russian speaking audiences (very popular in Ukraine, Poland too). The traditional Russian drink kvas, made from rye bread, is considered to be a safe and healthy product. Some kvas even contain vitamins.
Some Kvas drinks do not contain alcohol but usually it contains a small % of alcohol similar to kefir (see link). You can drink it when thirsty or make an 'okroshka soup' - summer cold soup (other kvas recipes here, see link). 
During the USSR times, kvas was usually was sold on the streets via a yellow tank trailer by small/medium and large glass, see picture. These days you can buy kvas from any retail store in a bottle or a can. Some bars and cafes also offer kvas and kvas based summer dishes.

For the last several years kvas in Russia became a more and more popular drink. The reason behind kvas' popularity is that it is a natural product. Nowadays, there are more than 200 kvas producing companies in Russia.
These kvas brands - 'Blagodei', 'Nicola', 'Ochakovsky', 'Pershin', Stepan Razin' have 60% of the market share in the category 'cities Russia' (see link). On a hot summer day, in a city of more than a million citizens, from the retail stores people sell 50 ton of kvas drink every day. The  market share for kvas among other soft drinks has grown from 4% to 14%. For the last 10 years the kvas market has grown 10 times (source).

According to this source (see link), in 2010 'Ochakovo' was the leader in kvas market and had 32% of market share, brand 'Nicola' - 20% , 'Krujka i bochka' by Coca-cola - 7%.

Competition for kvas
In the Russian soft drinks market there are two main players - PepsiCo and Coca Cola. In the kvass niche, first PepsiCo entered the Russian market in March 2010 - with the brand Russky Dar (see link).  Coca Cola has also entered the market and registered several kvas brands.

Here is a video about Coca cola and kvas brands

Other kvas competitors
Kvas brands such as Ochakovsky, Nicola, Russky Dar, Krujka i bochka, Opohmeloff, Hlebniy krai, Moskvas are presented in table below.

Please note: this is not an exclusive list of kvass producers in the Russian market.


Nicola brand advertising strategy
Nicola has two meanings. First meaning - as a male name (working class), second meaning can be translated from the Russian language as "Not as Cola". In an ad campaign they use both meanings, "Drink natural, Drink Nicola = Not as Cola".

Propaganda 'No! to Kvass'
The commercial titled as Hat/Шапка, Propaganda Kvasu Net (see link), was done by Instinct advertising agency for Deka company, Nicola brand, in Russia. It was released in the May 2008.

Last summer, I have tried all the popular brands that are producing kvas and my favorite is Ochakovo (see link) because it is not as gassy as the others and has more natural rye bread taste. Kvas 'Russky dar' (see link) is quite gassy and does not have an organic bread taste. Nicola (see link) is somewhere between Russky dar and Ochakovo with some notes of yeast to my taste. Overall, my first choice is Ochakovo then Nicola then Russky dar.

11 Apr 2011

Fashion Marketing

Last week, I visited 'Practicum: British Fashion-2' an event that was organized by the British Council in partnership with the 'Local fashion' and Center for contemporary culture 'Garage' (see link). 
Very talented designers presented their work and creative approach. The event program is here (see link). Here is a list of the young designers brands that were presented during the fashion event:
Michaela Mazalanova from Slovakia
MAREUNROL'S from Latvia 
D.EFECT from Lithuania 
m*faganel from Slovenia
R/H from Finland
Soulland from Dania
Kristian Steinberg from Estonia
Lisa Shahno from Russia
Nadia Nurieva from Russia
[Пять Пять] from Russia
FortyTwo from Russia
The UK fashion marketing experts  Toby Meadows, Janine Passley, Amelia Gregory, Clare Lopeman, Michael Salac raised some marketing general questions that are relevant for the young up-and-coming designer to go through and they shared their UK business experience with the creative young audience. Their speech was not tailored specifically to the Russian market but to the UK and how things are done in the West for Western customers.

Some observations relevant to the Russian market raised during discussions

"What are the challenges designers face when entering the Russian fashion market?"

Finding the right fabric can be challenging for a designer in Russia
Moscow is not as developed in terms of international fabric supply as it is in London, where you can buy almost any kind of fabric by visiting shops on a  single street. While some designers use locally produced fabrics, most Russian designers import  good quality materials from abroad in small quantities. Ordering and delivering materials to Russia can be pricy.  For that reason, some Russian designers offer their 'Limited edition collection' for a small or even 'elite' audience.

Location. Location. Location - finding the store to place your collection can be difficult in Russia
In Russia, designers face the retail distribution issue. I would say that in Russia there are three main types of outlets.
First are retail chains such as Zara, Gap and other mostly Western brands, second is a private small Russian boutiques shops that are already selling Russian designer brands to the public.  Some stores are willing to take just small orders for sale. Even though there are lots of shopping centers in Moscow and other Russian cities, I still think that most lower middle class Russians go to the market to shop for clothing. The question is that if you are a starting designer, how will you find place to sell your collection? Will you open a new store? That can be a challenge.

The educational gap can be a big issue for a designer
In Russia, it is quite difficult to find fashion education that is in-tune with the global fashion market and also have affordable fees.
There are a few institutions in Russia to study fashion such as the Moscow State Textile University 'A.N. Kosygin' (see link) and a recent entry the British Higher School of Art & Design (see link).

The confidence issue
There are many talented designers who have creative vision but how many of them make this vision happen? How many are there  who can make it happen by staying in the market for at least three years? Not so many. Apart from other obstacles the designer faces, the psychological barrier is just one of the strongest ones and it concerns self-confidence and having the tolerance to wait sometimes while you are establishing your name as a brand.

NO money for marketing? Free press, advertising and the word of mouth.
How do you advertise your brand in Russia if you have limited financial sources ?
The main trend these days is doing free social media marketing ("SMM"). This doesn't  actually work for every brand that implements it. SMM is not about sales but about buzz and connection and also a conversation between the brand and potential client. SMM is about strategy not 'shouting in the space' about your product. It takes time and a good craft.
Online marketing in Russia compared to the UK is a bit different. There are some issues that are relevant to the Russia - for example, in Russia online stores exist but not as many as you see in the UK. Part of the problem is that there are not many people ready to pay online in Russia. It is an issue of trust and also online banking development across the whole country.

There does not yet exist 'a signature Russian style' that can recognized internationally
At the conference, UK fashion marketing experts asked designers to consider the following questions:
What is Russian fashion?
What is the Russian identity? Is it a folklore?
What is unique about the Russian fashion identity ? How is it different from the rest of the Fashion world?
Will your "Russian brand" will be recognized abroad because it is Russian?
How would you position 'Russian brand abroad' ? Will you position it to the Russian people living abroad or to the locals?

One question was about the future of the ethical brand development in Russia. One designer half- jokingly said that it won't work in Russia and we are not ready for it. Let's define what an ethical brand is.
TERM: Ethical brand is associated with minimal harm to or exploitation of humans, animals and/or the natural environment. From the expert fashion presenters I get that by talking about 'ethical brands' they were talking about  'green and organic brands'.
(I think that, the word 'ethical' can  be perceived as confusing word for Russian business environment, instead of using 'green').

Is there a future for the 'green' brands in Russia?
I personally believe that green brands should exist in Russia. Many think that Russians are  'living in the past' and are not concerned with being green. On the other hand, from the global/planet point of view, Russia is one of the biggest countries on planet and with  awareness and education  the Russian consumer will want to be green too. Of course it will take time to do. I think that you might be surprised by the positive outcome  - 'if you don't create the change first - than change will create you' - meaning that becoming a pioneer in the green brand establishment in Russia - will almost definitely have a positive impact on your customers.
I just came across this Russian brand "Low Fat" (see link) that positions itself as 'green'. 'Low Fat clothing uses eco-friendly materials like organic cotton, hemp, and fabric from recycled plastic. They also focus on natural dyes such as powdered natural minerals, juice, fruit, and pollen. They stick to recycled materials for their packaging and marketing, as well' (source). The Body Shop Russia (see link) is doing it. It's only a matter of time.
Source: PRACTICUM: BRITISH FASHION-2, image source, Personal observations

Additional readings - The Russian Fashion Retail Market.pdf (see link)
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