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Campbell’s Salivates over the Russian Market, but Will the Brand Hit the Spot?

This fall, the American icon Campbell Soup Company will be making its first foray into the Russian and Chinese consumer markets, starting off by selling Domashnaya Klassika (available in chicken, beef, and mushroom broth) in Moscow.

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Like many retailers and consumer financial service companies (Coca-cola also just purchased major Russian assets), Campbell’s believes that Russia represents one of the most irresistible emerging markets for future growth. Unlike minerals or other strategic industries, the state has largely shown no interest in interfering with consumer products businesses, so it remains a tremendously rewarding sector for foreign investors (unlike the experience of Highland Gold Mining, which just today came under attack by Oleg Mitvol). According to their press release, “Our timing is right. Income levels are rising in both countries, and consumers are increasingly time pressed and seeking more convenient ways to prepare nourishing meals while maintaining their central role in family meal preparation. Campbell’s new products can play a key role in minimizing the time it takes to prepare homemade soup, a staple of peoples’ diets in both countries.” Undoubtedly Campbell’s carefully researched these new markets and adapted the products to local tastes and customs. They also are partnering with an impressive local distributer called Bridgetown Foods, which is always the most important step in doing business in Russia. However the only concern that seems apparent to me is that Campbell’s signature red-and-white brand, inspiration for Warhol and as American as cherry pie, could possibly be interpreted negatively in these days of heightened state-encouraged nationalism. In the updated edition of Kremlin Rising by Peter Baker and Susan Glasser, it is argued that the predominant consumer culture in Putinist Russia looks inward, and seeks to emphasize the local:

As a country, Russia was tired of being what sociologist Masha Vokenshtein called “the brand that lost its identity.” Her firm, Validata, specialized in advising Western corporate giants like Procter & Gamble and Coca-Cola on how to compete in the evolving Russian market. In one survey, they tried to indentify what characterized countries as brands. Russia’s “brand essence,” they found, could be summed up in one word: pride. But it was the pride of a wounded and humiliated former power, one with no present-day heroes and few historical ones. Russians had latched on to brand “icons,” such as homemade vodka, black bread, the Kalashnikov rifle, and Gagarin, the first man in space, but it was the lack of identity that troubled survey respondents most. “Russia is looking to completely reinvent their brand identity,” Validata concluded. “Until a new identity is created, Russia is ‘stuck’ with an image of poverty, alcoholism, and Mafia – an image they are very unhappy with … leading them to latch onto ‘old’ assets such as ‘Victory in WWII.’ Despite this, Russians still view their country positively, especially the bond between people in their country. …. Eager to compete with Wimm-Bill-Dann, the international dairy firm Danone invested millions of dollars in local plants and embraced the buy-Russian hook, even marketing its own brand of “Classic Russian” kefir, a sour, yogurt-like drink that is a Russian staple. “Made in Russia” was stamped prominently on its bottle, but Danone’s kefir cost more than its competitors’ and didn’t taste classic enough for the purists. “The ‘Made in Russia’ label is an affirmation we belong here,” said the company’s local marketing director, Mark Putt. But he acknowledged, as we spoke in his office at the famous Soviet-era Bolshevik Biscuit Company factor that was the first state firm sold off in the post-Soviet privatization period, “Danone will never be the leaders in kefir. It’s a very traditional Russian thing.” On the other side of Moscow from the Boshevik factory, the cash-strapped teachers of School Number 1280 offered us a private after-school seminar in the psychology of buying Russian, and it was a refrain we were to hear across Russia in the coming years. For them it was all about identity – a realization that while they were now free to choose Coca-Cola and McDonald’s, they really preferred the strong black tea and omnipresent sausages of the Soviet past. “I try to avoid foreign products,” said Tamara Filatova over an afternoon snack of homemade wine and sweet Russian cake. Her colleague Yelena Pavlovskaya grimaced when offered a Pepsi, as fellow teacher Svetlana Yevlash threw in, “Our products are better than foreign ones.” Like the others, Filatova recalled her first infatuation with Western goods, going to the supermarket “like it was a museum.” But she laughed about her one and only time trying a Snickers (“too sweet”) and drew the line at just about anything foreign for her home, even resisting her friend’s pleas to try a German-made toothpaste. Later, on a trip to the market together, she put only imported product in her modest basket – a $1.45 can of cat food. And that only because there was no domestic alternative her cat would eat. Pointing to a carton of Wimm-Bill Dann’s yogurt, Filatova said she chose it over Danone’s version. “It tastes better,” she said. “It’s nashe.” (Kremlin Rising, by Baker and Glasser, pp. 65, 71)

So as these two reporters tell it, Campbell’s mission of becoming a central staple of the Russian diet may face a few challenges. Perhaps they should’ve taken note from some local companies on how to hit it big.