Russian Standard attacks global market
multi-million euro bid to conquer the rest of the world
This month, the company launched marketing campaigns in France, the UK, Germany and Spain, which Russian Standard has targeted as either the largest or fastest growing markets in Europe. Russian Standard's marketing strategy is tied into its operational setup. It is an example of a vertically integrated company that controls all aspects of production and distribution, ensuring full traceability and the right to market its three vodka brands as "Pure Russian". The push into the European market follows the marketing investment Russian Standard made in the US last year, said Carlo Radicati, the company's chief executive. He was speaking to BeverageDaily.com earlier this month at a swank press reception at the George V Hotel in Paris, held to launch the campaign in France. The company is spending €4m in France alone over the rest of the year, emphasising that its three brands are "Pure Russian" - with ingredients sourced and manufactured in its home country. Advertising is modified to each target market - the one in France based on landmarks such as the Eiffel Tower and the Arc de Triomphe buried under mounds of snow. The rest of the budget is being spent on blanketing the market with 1,500 sponsored events by the end of the year. Russian Standard currently sells 2,000 to 3,000 cases of nine litres each a year in France. France has big potential as a vodka market, Radicati said, describing the country as "Russophilic". While the French are the top whisky consumers in the world per capita, the market for vodka remains a small category. Whisky holds a 38.8 per cent share of the spirits market, while vodka holds another 7.2 per cent. Still vodka sales in the country grew by about 17 per cent last year to be worth €115.4m. By contrast, vodka holds top spot in the UK market and consumption is still growing. "We are conviced that the French market is moving toward vodka," Radicati said. "It's a generational change. Whisky appeals to a more mature crowd, while vodka has a younger image." The company has geared up to meet what it hopes will be an increase in global demand by building a new distillery, which went into production last year at its home base in St. Petersburg. The distillery handles production of Russian Standard's entire vodka portfolio globally, producing 12.5m litres or 1.4m cases in 2006, with four lines operating at a rate of up to 22,500 bottles an hour. The €42m plant has a capacity of 4m cases, or 36m litres, so the company has planned ahead for a boom in demand for its three brands, Radicati told BeverageDaily.com. The company claims to hold a 60 per cent share of Russia's premium vodka market. About 20 per cent of production was exported last year and Radicati expects that share to rise to 35 per cent this year. With the building of the plant, Russian Standard now controls all aspects of its vodka production, from the wheat farms it owns, to transport, to distillation, to distribution. "We are the only vodka producer to control 100 per cent of production," said Roustam Tariko, who heads the family conglomerate that owns Russian Standard. Russian Standard is made up of a domestic alcoholic beverages distribution arm, a bank, and an insurance company, in addition to the vodka manufacturing unit. Tariko says that with the current marketing campaign worldwide Russian Standard wants to boost exports to between 200,000 to 300,000 cases a year. Russian Standard targets three price segments of the market with its Original, Premium and Imperial brands. Purity and quality control is emphasised. Winter wheat is cultivated on the company's farms located in Russia's steppes. Water is taken from Lake Ladoga, a glacial body of water known for its softness. The Original and Premium brands undergo four filtrations through charcoal, while Imperial goes through the process eight times, using technology Russian Standard developed in partnership with a France-based company. Normally distillers only filter four to six times. However, increased filtration to purify the sprit can end up reducing or destroying the more subtle tastes. Russian Standard's technique uses quartz crystals and charcoal to purify without destroying the subtle tastes, the company claims. The current marketing campaigns in Europe are already riding a wave of success the company experienced last year in a growing global market for vodka. Impact magazine ranked Russian Standard as the fourth fastest growing premium spirits brand worldwide in 2006. Russian Standard, which grew by about 30 per cent in 2006, ranked ahead of two of its top competitors, Grey Goose and Stolichnaya, according to the magazine. Globally the vodka category continues to thrive throughout the world led by the Russia-based Sojuzplodimport's Stolichnaya, and Diageo's Smirnoff, the leading international vodka brand. In June this year Russian Standard filed a lawsuit against Sojuzplodimport in the US, alleging its rival's advertising campaign, entitled "Choose Authenticity", was "false advertising" related to the Russian provenance of its Stolichnaya brand.
