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Russia: Entrepreneur Taps Into 'Buy Russian' Mood

Moscow, 2 March 1998 (RFE/RL) -- Over the past two years, Russian supermarkets have undergone a subtle transformation. Foreign consumer goods, that flooded into the country after the collapse of Communism, are still available, but Russian products bearing the smiling face of entrepreneur Vladimir Dovgan have slowly elbowed their way onto the shelves of shops and kiosks. Vodka, ketchup, tea, chocolate, toothpaste - you name it, Dovgan has it.

Dovgan, a 33-year-old businessman from the city of Togliatti, started his company a little over two years ago with a simple idea that tapped into Russians preference to "buy Russian." Dovgan saw how Russians were eager to buy the new and colorful Western consumer goods that suddenly appeared on the market, but they were frustrated that the packaging was all in a foreign language. At the same time, he realized that there were many Russian companies producing quality goods, but that they lacked the marketing expertise and distribution contacts to compete with foreign producers.

Dovgan saw a niche to start his own distinctly "Russian" brand name to market a variety of products, along the lines of the British drugstore Boots, or, the multi-national powerhouse Nestle. He began targeting Russian enterprises that produced high-quality goods, like vodka and champagne, and offered to market and distribute their products for a two percent fee.

The key was the packaging - Dovgan attached his face to every product. Dressed in a tuxedo, Dovgan beams out from jars of mayonnaise and bottles of cooking oil, looking like a 19th century Russian entrepreneur who has been selling his products for more than 100 years. The message: I've been around, trust me.

The strategy was an instant success. In two years, he has built up a company with more than 400 million in revenue annually, selling about 250 different products. The goal this year is to expand the selection of products on offer fourfold and launch a distinctly non-Russian item - wine.

Many of the major multi-national companies operating in Russia have dismissed Dovgan as a fad soon to die out, but some are realizing that the "buy Russian" trend is here to stay, with the help of some high-level backing. President Boris Yeltsin in a radio address last April called on Russians to buy domestic products to help spark an economic recovery. "Do you want fewer unemployed?" he asked. "Do you want to help Russian enterprises? Do you want us to stand on our own feet and work at full strength? Then I say to you, buy our goods, our Russian goods and you won't regret it."

Many Russians have linked the country's economic troubles to the flood of foreign imports, which has added fuel to the "buy Russian" campaign. First Deputy Prime Minister Boris Nemtsov last month inaugurated the "Buy Russia" association, which is designed to support domestic producers and fund a multi-million dollar advertising program.

Some of the more successful Russian food and beverage companies have backed the project, including the popular St Petersburg brewery Baltika and the Red October Chocolate Factory. It has even enlisted the support of the controversial producer of Smirnov vodka, the Russian company that has battled with the U.S.-based company Smirnoff for the right to the famous name in Russia. Smirnov has made remarkable inroads into the Russian vodka market by emphasizing its Russian roots, and trying to portray Smirnoff as a foreign imitator.

In a bid to tap the nationalistic feelings of Russians, foreign producers are trying increasingly to disguise their products as "Russian," developing special packaging and even product lines.

The U.S. consumer goods giant Proctor & Gamble, for example, has revived a Soviet-era detergent called Mif, hoping that a little nostalgia and smart advertising will prompt Russians to buy.

Major international tobacco firms have used this strategy most successfully. British-American Tobacco has taken over the old Russian cigarette, Yava, and created an up-market brand called Golden Yava. Billboards around Moscow show a package of Golden Yava cigarettes flying over New York City accompanied by the slogan "counter strike." RJ Reynolds has created a special cigarette brand, Peter I, designed to appeal to the patriotic sentiments of Russians. It appears to be working - Peter I is the company's most successful brand launch since Camel.

It is not just major multi-national companies that are trying to tap into consumers' desire to "buy Russian." The New Zealand butter industry has heeded the 'buy Russian' call, packaging and marketing its butter to make it appear Russian and to remove any trace of its foreign roots.

Even some of Dovgan's goods are imported from abroad, but presented like domestic products. As more foreign companies set up production facilities in Russia and tailor marketing to local tastes, the line between what is Russian and what is not will blur. But for now, Dovgan is likely to continue to prosper.