Russia: "Ochakovo" announces "Stolichnoe" beer’s relaunch

The last large Russian beer manufacturer “Ochakovo” does not lose hope to be positioned in a premium segment of the market, according to Russian beernews, December 8.

For this purpose, in February 2007, the company will try to restart beer "Stolichnoe" production, removed from production in 2002 because of low sales volumes.

About "Stolichnoe" restart Alexey Frolov, “Otchakovo” marketing director has told: ‘’The brand will go on sale at a federal level in February, 2007 then the advertising campaign will begin’’. In the first half-year "Stolichnoe" will allocate $3m for promotion. The beer retail price will be 25-30 rbl and will become the most expensive “Ochakovo” brand — licensed Alstein is five roubles cheaper.

“The average price segment on which the basic part of “Ochakovo” portfolio is positioned, is gradually reduced”, — Mr Frolov has explained the reasons of brand re-launching. By the end of 2007 “Ochakovo” is expecting to expand "Stolichnoe" sales share to 30% of its total beer sales. The market participants estimate a turnover of $260-300m for “Ochakovo” in 2006.

MPBK “Ochakovo” was created in 1978. According to Rosstata, its market share was of 5,7% in 2005. Besides beer, “Ochakovo” produces low alcohol and soft drinks, vodka and wine. Total sales for 2006 nine months constituted 5, 7734b, net profit - 31,5m rub.

"Stolichnoe" beer was launched on the market in the beginning 90’s and, as well as “Ochakovo”, was positioned in the bottom price segment. In 2001 the company has restarted the brand production in a bonus segment. It was supported by the mass advertising campaigns on TV. However, the campaigns have not leaded to success because of the advertisement itself and of the people not readiness to accept the local premium beer.

Participants of the market consider “Ochakovo” actions justified. According to “Business Analytics”, for nine months 2006 the average price segment was reduced from 47,9 % to 43,2 %, and the bonus segment has grown from 27,3 % to 28,4 %.

“Now the market does not have a qualitative bonus or sub bonus domestic brand, Samvel Avetisjan, the partner marketing company "Arhideea" director considers. However, the sales manager of distribution company "Megacity" Vyacheslav Sultanov doubts that “Ochakovo” will have $100m sales from "Stolichnoe". “It corresponds to 6,5 % of all bonus segment that is comparable to leaders’ shares sales ( “Baltica "," Sibirskaia Korona" or “Starii Melnik’’ ). It’s hard enough to reach such results in just one year”.

There are other reasons which can prevent the brand’s launching. The rights owner of vodka brands "Stolichnaia", "Moscovskaia", etc. FKP “Soiuzplodoimport” has recently started to demand royalties from adjacent categories producers. In the end 2004, FKP has demanded from factory “KiN”, the producer of cognac "Moscovskii", to pay a royalty, and in the beginning of 2005 KiN has agreed with FKP requirements.

“We do not have any aggressive intentions regarding “Otchakovo”, but we will study the situation”, — FPK general director Vladimir Loginov has declared.

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