ST. PETERSBURG ?€” Andrei, a blond professional in his mid-30s, was lying in his berth on the Moscow-St. Petersburg overnight train.
"What about Slavutich?" he said.
"Baltika," replied Andrei Chervonsky, a PR representative at Pleon, a firm that represents Baltika.
"Tuborg?" asked Andrei.
"Baltika," said Chervonsky.
"Asahi?" asked Andrei, with confidence.
"Baltika," said Chervonsky, with a mixture of boredom and pride in his voice.
Andrei, who shared a compartment with a reporter on a Baltika-sponsored trip to its St. Petersburg brewery this week, may not be alone in being unaware that Baltika is behind all these brands and more. Baltika, the country's largest brewer, is investing heavily into niche beverages as it tries to grab a bigger slice of the ever-growing beer market, and other brewers are following suit.
"The beer industry is now trying to find niches in the market," said Daniil Briman, Baltika's vice president for corporate communications.
This is in sharp contrast to Soviet times, he said, when "we had two kinds of beer: piva nyet [there is no beer] and pivo yest [there is beer]."
The whirl of beer bottle shapes, colors, gimmicks and prices now weighing down shop shelves from St. Petersburg to Sakhalin belies the consolidated nature of the market and shows that this is no longer the case in Russia.
Today, besides the Baltika standards running from Zero to Nine, the firm also manufactures Baltika Lite and Baltika Cooler, as well as licensing and producing foreign beers such as Asahi, Tuborg, Carlsberg and Kronenbourg 1664. The company also produces regional Russian beers such as Yarpivo and Samara.
One of Baltika's main competitors, Sun InBev, whose best-known brand is perhaps Klinskoye, has a range of brands just as broad, encompassing everything from the Russian Sibirskaya Korona and Tolstyak to licensed brands like Stella Artois, Beck's, Hoegaarden, Staropramen, Tinkoff and Lowenbrau.
"The market is open for new innovations and varieties. The Russian man likes to try new innovations and flavors," said Alexei Shavenzov, corporate affairs manager at Sun InBev.
The profusion is a mirror of the growth of microbrews and niche products in the West and seems to be an effective strategy.
During the first half of 2008, Baltika reported that brand sales grew by 25.2 percent, particularly because of the growth of sub-brands Baltika 7, Baltika Cooler and Baltika Lite.
Sales of Tuborg grew 33 percent in the first half and increased market share in the segment up to 19.3 percent. Kronenbourg 1664 saw sales grow 55 percent. The brewer reported that its share in the licensed beer segment reached 28.4 percent.
"The development of new brands and new tastes of beer is one of the main trends of the market," said Olga Samarets, a retail and consumer analyst at Prospect Investment Company.
This "makes sense because the beer market in Russia is highly competitive. Companies need to maintain the loyalty of customers and win new ones, and one way to do it is to introduce new products," she said.
Besides a wide assortment of flavors and licensed beers, beer makers also use price and functionality to get more out of the market.
"The beer market is segmented by both price and functionality," said Maria Shevtsova, an analyst at MDM Bank.
Functionality is the tactic of attaching gimmicks to kinds of beers ?€” like the "no-label look" on Baltika Lite, the pop-off top for Tuborg Green and the bottle opener cast into the bottom of Carlsberg ?€” in other words, the gadgets.
Functionality, like niche beers, is another of the tactics used to get more out of the market.
"You have the low-end target consumers who are only price sensitive, and on the other end you have a rising sophistication from consumers who seek value-added qualities in what they purchase," Shevtsova said. "Consequently, to satisfy the latter's demands, producers like Baltika are offering spinoffs such as Lite and brands that offer both taste and the look."
For example, expensive imports such as Corona, make up just 0.4 percent of the market, Briman said. Premium labels, such as Baltika's Nevskaya and SUN InBev's Hoegaarden, make up 18.4 percent of the market. Around one-quarter of the market is controlled by "mainstream" beers, such as Klinskoye and Yarpivo. "Discount" or "economic" beers make up between 18 percent and 20 percent.
"We are trying to find added value in an already strong market," Briman said.
The strong market is a result of changing drinking habits in Russia as the way of life in Russia changes.
"The middle class is growing, and they are spending more free time relaxing ?€” bowling, or billiards, going to restaurants," Briman said. "The new generation has been faced with a choice between vodka and beer, and they have chosen beer."
"What about Slavutich?" he said.
"Baltika," replied Andrei Chervonsky, a PR representative at Pleon, a firm that represents Baltika.
"Tuborg?" asked Andrei.
"Baltika," said Chervonsky.
"Asahi?" asked Andrei, with confidence.
"Baltika," said Chervonsky, with a mixture of boredom and pride in his voice.
Andrei, who shared a compartment with a reporter on a Baltika-sponsored trip to its St. Petersburg brewery this week, may not be alone in being unaware that Baltika is behind all these brands and more. Baltika, the country's largest brewer, is investing heavily into niche beverages as it tries to grab a bigger slice of the ever-growing beer market, and other brewers are following suit.
"The beer industry is now trying to find niches in the market," said Daniil Briman, Baltika's vice president for corporate communications.
This is in sharp contrast to Soviet times, he said, when "we had two kinds of beer: piva nyet [there is no beer] and pivo yest [there is beer]."
The whirl of beer bottle shapes, colors, gimmicks and prices now weighing down shop shelves from St. Petersburg to Sakhalin belies the consolidated nature of the market and shows that this is no longer the case in Russia.
Today, besides the Baltika standards running from Zero to Nine, the firm also manufactures Baltika Lite and Baltika Cooler, as well as licensing and producing foreign beers such as Asahi, Tuborg, Carlsberg and Kronenbourg 1664. The company also produces regional Russian beers such as Yarpivo and Samara.
One of Baltika's main competitors, Sun InBev, whose best-known brand is perhaps Klinskoye, has a range of brands just as broad, encompassing everything from the Russian Sibirskaya Korona and Tolstyak to licensed brands like Stella Artois, Beck's, Hoegaarden, Staropramen, Tinkoff and Lowenbrau.
"The market is open for new innovations and varieties. The Russian man likes to try new innovations and flavors," said Alexei Shavenzov, corporate affairs manager at Sun InBev.
The profusion is a mirror of the growth of microbrews and niche products in the West and seems to be an effective strategy.
During the first half of 2008, Baltika reported that brand sales grew by 25.2 percent, particularly because of the growth of sub-brands Baltika 7, Baltika Cooler and Baltika Lite.
Sales of Tuborg grew 33 percent in the first half and increased market share in the segment up to 19.3 percent. Kronenbourg 1664 saw sales grow 55 percent. The brewer reported that its share in the licensed beer segment reached 28.4 percent.
"The development of new brands and new tastes of beer is one of the main trends of the market," said Olga Samarets, a retail and consumer analyst at Prospect Investment Company.
This "makes sense because the beer market in Russia is highly competitive. Companies need to maintain the loyalty of customers and win new ones, and one way to do it is to introduce new products," she said.
Besides a wide assortment of flavors and licensed beers, beer makers also use price and functionality to get more out of the market.
"The beer market is segmented by both price and functionality," said Maria Shevtsova, an analyst at MDM Bank.
Functionality is the tactic of attaching gimmicks to kinds of beers ?€” like the "no-label look" on Baltika Lite, the pop-off top for Tuborg Green and the bottle opener cast into the bottom of Carlsberg ?€” in other words, the gadgets.
Functionality, like niche beers, is another of the tactics used to get more out of the market.
"You have the low-end target consumers who are only price sensitive, and on the other end you have a rising sophistication from consumers who seek value-added qualities in what they purchase," Shevtsova said. "Consequently, to satisfy the latter's demands, producers like Baltika are offering spinoffs such as Lite and brands that offer both taste and the look."
For example, expensive imports such as Corona, make up just 0.4 percent of the market, Briman said. Premium labels, such as Baltika's Nevskaya and SUN InBev's Hoegaarden, make up 18.4 percent of the market. Around one-quarter of the market is controlled by "mainstream" beers, such as Klinskoye and Yarpivo. "Discount" or "economic" beers make up between 18 percent and 20 percent.
"We are trying to find added value in an already strong market," Briman said.
The strong market is a result of changing drinking habits in Russia as the way of life in Russia changes.
"The middle class is growing, and they are spending more free time relaxing ?€” bowling, or billiards, going to restaurants," Briman said. "The new generation has been faced with a choice between vodka and beer, and they have chosen beer."
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Not ready to support today?
Remind me later.
Remind me later.
×
Remind me next month
Thank you! Your reminder is set.
We will send you one reminder email a month from now. For details on the personal data we collect and how it is used, please see our Privacy Policy.