Red October, Moscow's premier chocolate maker, has already survived one revolution in its 127-year history. Now it is leading a second.


At the end of this month, Red October will float new shares that will represent 55 percent of its total stock. Much more than a vehicle for attracting much-needed capital, the sale represents a step into a new and frightening financial reality for some 3,000 workers, and heralds a resounding victory for Russia's privatization program.


Critics of Russian privatization have long warned that the sale of shares for vouchers, which turned about 70 percent of Russian industry over to private hands in less than two years ending last June, failed to bring in new capital to the companies and left many of them in the hands of red directors and workers' collectives, neither of which were likely to make the tough decisions needed to survive in a market economy.


To some extent, such premonitions have proved true. In Yekaterinburg, for example, workers of the Confi candy factory recently rejected a $15 million investment from Philip Morris division Kraft Jacobs Suchard that could have brought them new equipment in return for a 35 percent stake. Without the infusion of capital, the company's president says, the workers will be doomed to kneading caramel by hand for the next three to four years, after which he predicts Confi will fold.


Hundreds of other companies, however, have realized that Russia's nascent stock market and post-voucher privatization program are the keys to vast financial resources. The number of cash auctions and investment tenders has swelled across the country, attracting millions of dollars in new capital.


Red October is riding that wave, and will be a radically different enterprise as a result. The 51 percent stake that went to workers when the company went private last year has fallen to 30 percent as many have turned their shares into cash. And when the company floats its new shares later this month, shooting for $30 million to help it buy new equipment and increase production, the workers' collective will fall further down the list of major shareholders, giving up a large share of control to a strategic foreign investor.


How Red October will deal with its new partners remains to be seen. But at the very least, with the help of the British Know-How Fund and foreign financial experts, the share issue will set an example for more privatized Russian companies to follow.


It seems only too appropriate that a chocolate factory will be the first publicly to profit from Russian privatization. The smell of success, after all, should be sweet.