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Russia: Consumers Rediscover Domestic Products

In recent years, the Russian economy has seen a mini boom in the production and availability of domestically manufactured consumer goods. RFE/RL correspondent Sophie Lambroschini reports that many Russians see the trend as a sign that their market is gradually becoming better adapted to their pocket books.

Moscow, 23 December 1999 (RFE/RL) -- In 1995 and 1996, one of the Communist Party's favorite epithets for reformers was to call them the "Snickers generation," implying they had sold out Russia to the West.

And for many Russians, the charge had resonance. Thanks to the opening of the Russian market, every store from the humblest corner kiosk to the newest supermarket was flooded with imported foodstuffs. To find a domestic product amid the Western labels was so rare that many Russians considered it a small triumphant sign that somewhere, despite everything, the Russian economy was still working.

Today, that situation has dramatically changed. Russian-made goods are increasingly in evidence, looking and tasting just like their Western counterparts. And being a domestic product has become a positive selling point.

"Shock -- that's ours" is the slogan of a chocolate-covered caramel bar suspiciously akin to an American one. It is as proudly home-made as another product -- "Indian Tea" -- which is suddenly back after disappearing from shelves for almost a decade following the collapse of the Soviet Union. The familiar tea is being promoted by an ad promising that it is "the very same" as before.

Economic experts say that the growing presence and success of domestic products on the Russian market is the result of both renewed patriotic feeling and simple economic logic.

Oleg Panoff is the executive vice-president of Maxima, one of Russia's main advertising and communications firms. He says the locally produced goods -- and in particular fast moving consumer goods -- are increasingly becoming the advertising industry's best business in Russia. He says the products are booming because they are cheaper than Western goods and they appeal to Russians who are becoming increasingly brand conscious.

"The brands that go into this category promise the biggest part of all advertisement investments. You still have the mass markets where you buy things in big quantities and where the main thing is to buy as cheap as possible. But the structure of consumption is changing right under our eyes, from month to month. People try to buy familiar brands because they trust them. Those that go to the market always buy one vendor's [products]. The role of a brand is then played by the vendor. But there will be a moment when someone won't want to go to the mass market every time and will go and buy the product in a store." Economic studies show that foreign brands are steadily losing market share to the new domestic production. According to a survey of 14 Russian cities by a German consumer institute, Gesellschaft fuer Konsum, the share of foreign brands fell by half over the first nine months of this year.

Analysts say this is the consequence of the August crisis when the food market shrank by about 20 percent. While the hardest hit Russian consumers relinquished all but bare necessities, another group looked for cheaper goods and often found them in Russian products.

Some Russian products benefited strongly from the switch. Russian toothpaste sales boomed 130 percent while imported brands crashed. And while consumption of imported yoghurt brands fell by almost 90 percent, Russian yoghurts saw their sales slide by just 17 percent.

But some studies indicate that the move to Russian brands is not just price driven. A recent survey by another research group, F-Squared Market Research, found that Russian consumers turn to domestic products when they are looking for "wholesomeness" as their top priority. By contrast, they turn to Western imports when they are looking for qualities such as "dynamism" or "solidity" or "uniqueness."

Meanwhile, Russian advertising agencies say they are racing to catch up with the new consumer mood. Panoff says agencies are still far behind their Western counterparts in creating ads that appeal to their own countrymen. He says part of the difficulty lies in the fact that consumers themselves are still in the process of defining what they want from Russian goods -- and from the advertisements which sell them.

"In Russia advertisements either show a kind of cheap popular side, a complete archaism, [such as] jumping, dancing [and] playing the balalaika. Or, in other cases, they just copy the worst international advertisements."

The experience of Wimm-Bill-Dann shows how important being a "Russian" product is in the new Russian market. The company started out a few years ago as one of the first juice-producers in Russia using the brand name "Tetra-Pak." At that time, the English sounding name was considered to inspire trust.

But now, Wimm-Bill-Dann is behind a series of dairy products running under homey sounding names like "A House in the Country" and "Dearest My Dear." And the company is doing well. The daily Moscow Times recently quoted marketing agencies as saying Wimm-Bill-Dann now accounts for almost 50 percent of juice sales while its milk is popular in 47 percent of the households in larger cities.

Wimm-Bill-Dann's press-secretary, Yulia Belova, tells RFE/RL that while the Russian economic crisis hit the company hard in 1998, today its sales are going well. She says in the first half of this year it sold almost as much juice as during the whole of 1998. The company also started exporting its products to the Netherlands and Israel.

A growing chain of popular restaurants are using similar marketing tactics. The warm interior of a Russian izba (log cabin) greets patrons to steaming borsch and to pelmeni (Russian ravioli) with sweet cream or vinegar.

For many Russian consumers, the Russian menus and the Russian ingredients spell an affordable evening out.

Arina Slepova goes to one of the chain restaurants once a month with her husband. With their young baby and earnings the equivalent of four hundred dollars a month, they can't afford big outings. But the "Russian" restaurants offer them a chance to treat themselves.

Slepova says that three years ago for ordinary people "the only alternative to a depressing stolovaya (cafeteria) was MacDonald's". She says the new, affordable restaurant chains mean that she and her husband can "really going out, with wine glasses, a tablecloth, and metal forks and knives."