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    International Journal of Emerging MarketsBeer in the Ukraine: consumer choice criteria

    Ol'ga Khmel'nyts'ka Jonathan S. SwiftArticle in format ion:

    To cite this document:Ol'ga Khmel'nyts'ka Jonathan S. Swift, (2010),"Beer in the Ukraine: consumer choice criteria", InternationalJournal of Emerging Markets, Vol. 5 Iss 1 pp. 78 - 101Permanent link to this document:http://dx.doi.org/10.1108/17468801011018275

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    Claudio Vignali, Demetris Vrontis, (2000),"Survey research in the UK beer industry", British Food Journal,Vol. 102 Iss 5/6 pp. 371-380 http://dx.doi.org/10.1108/00070700010329191

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    Beer in the Ukraine: consumerchoice criteria

    Olga KhmelnytskaKrym Beer & Non-Alcoholic Drinks Plant OJSC, Simferopol, Ukraine, and

    Jonathan S. SwiftSalford Business School, University of Salford, Manchester, UK

    Abstract

    Purpose The purpose of this paper is to examine the attitudes and behaviour of Ukrainianconsumers in terms of the purchase of beer (both foreign and domestic brands). There is an emphasison the relative importance of the country of origin (COO), when compared to other factors.

    Design/methodology/approach Primary research is based on a convenience sample of 774 beer

    drinkers in the city of Simferopol, Ukraine, surveyed through face-to-face questionnaires.Findings Findings suggest that the COO are important to consumers, as is image, and the role ofadvertising in the creation of this image and in informing as to product availability. However, the COOwould appear to be of lesser importance than quality, taste, brand and availability. Respondentscommented on the image of foreign beers and the excellent advertising campaigns created byinternational companies. The Ukrainian consumer is brand conscious and also displays intensepatriotism-reflected in the popularity of local beers. However, consumption patterns are changing, andthe demand for foreign beers are growing rapidly.

    Practical implications This would suggest that any foreign company developing a marketpresence in the Ukraine, should seek to buy outright (or at least acquire part ownership) of a Ukrainianbeer producer. This will provide an entrance into the market, and a production/distribution channel forinternational brands produced under licence. Ownership will also facilitate the importation anddistribution of foreign-produced branded beers.

    Originality/value There has been relatively little published research on the newly independentUkraine, yet it has a sizeable population, and as such, represents attractive business opportunities.This attraction will increase with the countrys likely accession to the EU in the near future.

    KeywordsUkraine, Beer, Consumer behaviour, National cultures, Brands

    Paper typeResearch paper

    IntroductionSince the collapse of the Soviet Union, eastern Europe has provided Western companieswith new opportunities, especially in those countries that have just joined the EU orthat are likely to join in the near future (Papadopoulos et al., 1990). However, as writerssuch as Ettenson (1993, pp. 17-18) have observed [. . .] virtually no information existsconcerning the manner in which these consumers use brand name information and the

    value it possesses in the evaluation of products and services. Moreover, some 15 yearslater, despite their increasing integration into the world economy, many of thesecountries still remain relatively unknown to most Western firms (Schuh, 2007, 2008).As Schuh and Holzmuller (2003, p. 176) note, despite an increasing focus onmacroeconomic considerations, comparatively little attention has been paid to whatthey term the [. . .] consumer revolution [. . .] This study is, therefore, designed toaddress this deficiency with regard to one country the Ukraine and the purchase of oneproduct category-beer.

    The current issue and full text archive of this journal is available at

    www.emeraldinsight.com/1746-8809.htm

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    International Journal of EmergingMarketsVol. 5 No. 1, 2010pp. 78-101q Emerald Group Publishing Limited1746-8809DOI 10.1108/17468801011018275

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    The study is based within the broad context of consumer choice criteria and therelative importance of the country-of-origin (COO) concept. It explores the extent towhich the COO is a determinant of consumer purchasing behaviour, and compares therelative importance of other factors that influence the purchase decision of the

    Ukrainian beer consumer. The paucity of specific data relating to Ukrainian consumerbehaviour meant that, rather than seek to test a hypothesis, an exploratory approachwas adopted. It is hoped that the findings will be used as the basis from which toidentify the key criteria, which can then be used as the basis of a more focused surveyin the future.

    Whilst the beer sector is dominated by multinationals with their global brands, thereremains considerable demand for traditional, local brews, produced by much smaller,independent breweries. Added to this, the COO effect and nationalism are bothinherent in the purchase of beer, which adds an interesting complexity to the equation,as in many instances these factors may be mutually opposing. The Ukraine was chosenas both a beer producing and consuming nation, with a relatively large population(some 48 million) and a large demand for beer. This makes it an attractive (butcompetitive) market for the major international brewers, especially in view of thechanging political climate within the Ukraine, and the increasingly Westernorientation of both its political affiliations and its trade focus. It is likely that theUkraine will soon become a member of the EU, and this will open the doors to furtherinternational involvement. Foreign brewers must, therefore, fully understand theUkrainian consumer; by the same token, domestic brewers should consider how tocompete against the multinationals that have already started to encroach upon theirterritory.

    The Ukrainian beer marketOverview

    Sun Interbrew Ukraine (SIU) is the largest group, with some 35.8 per cent of marketshare in terms of consumption (SUN Interbrew, 2007). The group was created in1999 after a merger between Interbrew S.A. and SUN Trade Limited, an Indian-ownedtrading company with interests in the Russian Federation and the Ukraine. SIU ownsthree large breweries the Desna, Yantar and Rogan: the groups main brands(as measured by sales volume) are Chernigivske, Rogan and Yantar, and each breweryhas its own brand, which is produced only at a particular plant. Additionally, the groupoffers a large variety of international beer brands from the InBev range, such asStella Artois, Brahma, Becks, Staropramen, Taller, Leffe and Hoegaarden (SUNInterbrew, 2007). The company has invested heavily in promotion and themodernisation of its breweries, and this has contributed to the significant increasein sales of both Ukrainian and foreign brands. For example, sales of Chernigivske grew

    by 44 per cent from 2004 to 2005, whilst sales of Stella Artois registered a 57.7 per centincrease in the same period (Machinskaya, 2006). Whilst individual breweries realisemost of their sales in their respective geographical regions, SIU has a well-developeddistribution network that allows it to transport beer produced by any of its plants tomost parts of the country (SUN Interbrew, 2007).

    Obolon is the second largest group, and comprises five breweries: the Obolon (whichaccounts for some 90 per cent of the groups output), Fastiv, Sevastopol, Akhtyrka andthe Kolomiya (Obolon, 2007). The groups market share stood at just under 30 per cent

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    in 2006 (Vlasenko, 2004), and just under 40 per cent in 2007 (Pivnoe Delo, 2007).The group brand portfolio includes Obolon, Desant, Zibert Collection, Hike and Pills.Despite the fact that Hike and Pills have foreign (non-Ukrainian) names, they aredeveloped and produced in the Ukraine, and represent a move by the company to cash

    in on the demand for foreign-produced beers: they suggest that these products have aforeign pedigree. The main geographical market for Obolon is Kiev, where thecompany controls a large share of the local market (Murina, 2004).

    Baltic Beverages Holding (BBH) owns the Slavutych breweries in Zaporizhe and inKiev, and the Lvov brewery in Simferopol (BBH, 2007). Significant investment in thebreweries gave the group sales of 5.07 million hectoliters in 2006 an increase of25 per cent on 2005, which placed it in third position (Ukrpivo Association, 2007).Nowadays, it controls just under 20 per cent of the market and is planning to investabout e4 million in the Slavutych brewery in Kiev (Pivnoe Delo, 2007). BBHs brandportfolio includes both local Ukrainian brands such as Slavutych, Slavutych Ice,Arsenal and Lvivske, and foreign brands such as Tuborg and Carlsberg (bothDanish), and Baltika (Russian). The most important brand is Slavutych, sales ofwhich account for 45 per cent of total sales volume in the Ukraine. The Western andSouth-Eastern, regions of the Ukraine are the groups main geographic markets(Vlasenko, 2004).

    Sarmat is the fourth largest brewery group, with around 9 per cent of the market(Pivnoe Delo, 2007). In general, the intense competition between the largest brewinggroups, in addition to the growing production and advertising costs, has made itdifficult for the smaller breweries to compete, which is why their market share isgenerally decreasing (Murina, 2004). Despite the competitive pressures faced, goodacquisitions and a well-developed distribution network, have allowed the group toretain significant market shares in Eastern, Southern and Central regions of theUkraine (Murina, 2004). Sarmat incorporates four Ukrainian breweries: Sarmat CJSC,

    Lugansk Brewery OJSC, Krym Beer and non-alcoholic drinks plant OJSC, PoltavpyvoCJSC. In addition, the group owns a malt production plant: CJSC Dnepr DnepropetrovskBrewery (Sarmat, 2007). All Sarmat group breweries are equipped with the latestEuropean equipment, allowing the production of high-quality beer. The main brandsinclude Sarmat, Dnipro, Krym, Poltavske and Lugan Pivo (Sarmat, 2007).

    Foreign involvement in the Ukrainian beer marketThe increase in demand for beer in general has been of great benefit for foreign beers,as they can compete favourably on image if not on price. The high-profit margins in thebrewing sector, coupled with the large market and the growing demand for beer,means that many foreign companies have found the Ukraine an attractive country forexpansion. International brands such as Stella Artois, Brahma, Becks, Staropramen,

    Taller, Tuborg, and Carlsberg are produced under licence in the Ukraine, making thelicensed beer production sector one of the fastest growing segments of the beer market.In 2006, it represented 7.5 per cent of the market, and it is expected to have reached9 per cent by the end of 2008 (Mezenzeva, 2007). After this, some estimates evensuggest an increase of 50 per cent year on year (Chernyavskaya, 2007).

    As domestic production under licence is the most popular way for multinationals toenter the market, and statistics point to a growing demand, there is a high level ofcompetition amongst domestic manufacturers to produce these international

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    brands domestically. However, whilst licensed production is important for foreignbrewing groups trying to heighten their presence in the Ukraine, it is expensive for thelocal producers. In addition to the purchase of a licence to produce foreign brands,Ukrainian brewers will have to spend around US$7-8 million per year on advertising

    and promotion (Mezenzeva, 2007). Moreover, to maintain the high quality of thebranded products, special equipment and raw materials must be bought, and this willalso increase the cost of production Therefore, it is generally only the largestcompanies, with the greatest resources that can afford to produce foreign brands underlicence.

    The Obolon group does not produce any foreign licensed beer, as it would appearthat the company has decided to buck the trend, and opted to focus instead on theproduction of domestic brands. Despite this, the company has recently produced twobrands (Hike and Pils) that have foreign names, suggesting that it is trying to competewith the international licensed brands of beer, without having to become involved inexpensive licensing agreements (Obolon, 2007, Mezenzeva, 2007). It is an interestingbut risky strategy, but if demand for domestically-produced foreign beers increases at

    the predicted rate, then it is likely that Hike and Pils will be able to take advantage ofthis increased demand. It all really depends, as always, on the vagaries of consumerbehaviour. Conversely, if Hike and Pils are thought of by consumers as being of aninternational standard, it is probable that they will compete against brands such asStella. By contrast, if consumers perceive some extrinsic advantage in the purchase offoreign-licensed beers, then the Hike and Pils strategy will fail, as they are not reallyforeign. There is, however, a third possibility. In the short- term, Obolon will looseout, as consumers demand real foreign beers. In the medium to long- term, however,a combination of expensive production costs (including licenses), nationalism (seeprevious comments), and an increasing acceptance of domestically produced goodsbeing the equal of those produced abroad, will prove beneficial to this strategy. Onlytime will tell.

    Consumer behaviourAs a nation, the Ukrainians consume large quantities of alcohol generally spirits and especially in the winter months. However, drinking habits are changing asevidenced by the increasing popularity of beer. According to Vladimir Petcher, thePresident of Lvov brewery, per capita beer consumption (among the over 218 s) inthe Ukraine was 12 litres in 1996, and by 2007 this had risen to 50 litres per capita(Vgolos, 2007). This reflects a steady increase in consumption, generally at the expenseof pure alcohol a likely consequence of globalisation and the spread of a Europeanbeer-drinking culture, making beer now the most popular alcoholic drink in theUkraine (Belanciuc, 2006). However, despite the growing cosmopolitan preferences ofthe Ukrainian consumer, there are aspects of consumer behaviour that remain unique.

    Income. The income level of the average Ukrainian consumer is much less than thatof an average West European (Schuh, 2007): the average monthly salary in 2006 wasUS$211, an increase of around 6.0 per cent from the previous year (Expert Center,2007). In addition, around one-third of Ukrainians live below the poverty line, and therelationship between the incomes of the richest to those of the poorest was 30:1 in 2006,as compared with 5.7:1 in the EU as a whole (Kommersant, 2007). The Ukrainianmiddle class accounts for some 9 per cent of the population, compared with50-70 per cent in most European countries. Schuh (2007, p. 277) comments that, whilst

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    faced with [. . .] an excessive supply and variety of products [. . .], Ukrainians are [. . .] constrained by their low-disposable household incomes. However, as Resnicoff(2007) noted, despite the overall low levels of income, there is a (growing) segment ofthe market in particular in the large cities that has the disposable income to pay

    premium prices for foreign beers. Despite foreign beer being priced higher than localbeers, consumers are ready to pay more in order to experience the European lifestyle.

    Distribution. The distribution of alcoholic drinks in the Ukraine is generallyundertaken by specialist distribution companies, although some breweries supplydirectly to shops and bars. The growth of the modern supermarket culture means thatthe Ukrainian consumer is increasingly accustomed to buying the same products astheir counterparts throughout the rest of Europe. Recently, they have the choicebetween local brands of beer, and a large variety of foreign brands produced both inthe Ukraine and abroad. One distinctive habit of Ukrainians is to drink alcohol(especially beer) in the streets.

    Promotion. It is essential to support the launch of a new beer with extensivepromotion especially in the Ukraine, where advertising exerts a considerableinfluence on the majority of consumers. As a consequence, Ukrainian consumersassociate some brands with particular themes or events; for example, Tuborg Greenhas become increasingly popular among Ukrainian youth, because the brand sponsorslocal and international music events. Ukrainians are more inclined to regardadvertising as an important source of information about products, than are theircounterparts in the West (Andrewset al., 1994). Despite this, there exists something ofa paradox with regard to consumer attitudes. On one hand, it is true that the Ukrainianconsumer generally prefers western products brands and products, and that they aremore easily impressed by European or American style advertising. Conversely, as theUkraine was a closed economy for over 40 years (Schuh, 2007), the population hasdeveloped distinctive tastes, and a unique perception of advertisements that are based

    on national humour (Sangwan and Golovkina, 2005). It is important, therefore, forforeign companies to fully understand the specific mentality and attitudes of theUkrainian consumer towards advertising in general, and foreign products inparticular. The COO of a brand influences its popularity in the market: brands fromcountries with a long brewing history such as Germany, and the Czech Republic areusually perceived as being better than those from other countries.

    The COO effectIntroductionDichter (1962, p. 16), was one of the first to comment on the COO phenomenon, sayingthat [. . .] the little phrase made in can have a tremendous influence on the acceptance

    and success of products. Some 40 years later, Phau and Prendergast (2000, p. 159)observed that the [. . .] sheer volume of country of origin (COO) research in the lastthree decades is a good indication of the importance of country images in internationalmarketing strategy. Bearing in mind this observation, it is obvious that there is notsufficient space in this current article to present a thorough review of all the literaturerelating to the role and importance of the COO, and the findings from the empiricalresearch undertaken in the Ukraine. As the empirical data were felt to be of greaterinterest to the readership ofInternational Journal of Emerging Markets, the traditional

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    literature review that generally precedes the presentation of new data, has beensignificantly reduced, and comprises a short review of key areas relating to the COO.

    To begin with, despite such a wealth of available material, there is, paradoxically,a comparatively high degree of confusion as to the precise nature and importance of

    the COO effect. The reason being that the volume of published works to whichPhau and Prendergast refer, has tended to approach the topic from a multitude ofdirections, incorporating a variety of comparative variables. For example, someauthors focus on comparisons of COO perceptions in a single market, as it relatesto certain product categories, whilst others have looked at single products fromdifferent countries, and others have compared different countries in terms of differentproduct categories. Whilst possibly indicative of the importance of the COO, this tendsto make it difficult to compare the relative importance of the COO with other factors in particular, those that influence the consumer decision-making process. In theirreview of COO-related studies, Bilkey and Nes (1982) point out that the consumerdecision is influenced by many variables in addition to COO considerations. They citebias in relation to the COO status (developed vs developing nations) and the fact thatthis is perceived differently depending on the status of the consumer. They also pointto demographic and personality variables, the role of advertising and promotion, andperceived risk.

    Product qualityThe most widely studied aspect of the COO concept is that based on the consumerbelief that particular product categories are superior when they come from countriesthat have a good reputation for the manufacture of those products (Haubl, 1996;Leonidouet al., 1999; Kaynaket al., 2000). These associations represent the consumersstereotypical perceptions of the product, in conjunction with their knowledge of wherethe item was made (Romeo and Roth, 1992; Heslop and Papadopoulos, 1993, p.52;

    Kaynak et al., 2000). A well-known example of this phenomenon is that Frenchperfumes and German cars usually receive higher ratings than do French cars andGerman perfumes. There is, however, a degree of uncertainty as to the importanceof the COO when compared to the brand. For example, do consumers place morereliance on the brand or the COO as an indicator of quality, and if so, under whatcircumstances, and for which products or product categories? A study by Schaefer(1997, p. 68) found that: Objective product knowledge appears to lead to an increasedreliance on COO in product evaluations if the brand name is unfamiliar, but not if thebrand name is familiar. This suggests that it is the brand, rather than the COO, thathas the greater influence on purchase decisions.

    Theoretically, the COO informs the ignorant as to the particular level ofquality/reliability associated with a particular product. However, the COO is an

    extrinsic product characteristic, which is generally not as important as intrinsicproduct cues such as design, quality and taste. Whilst extrinsic and intrinsic cues areboth important in the decision to purchase a particular product, the single mostimportant factor is the consumers personal knowledge (or experience) of the productcategory or brand. If the consumer has extensive knowledge of the product, then theCOO will be inversely less important, as the consumer makes use of their ownknowledge and experience to judge quality (or whatever the desired attribute).As Schaefer (1997, p. 58) puts it [. . .] it seems reasonable to assume that consumers

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    who are familiar with a particular brand will not rely on country of origin [. . .] inevaluating that brand.

    Some studies that have compared the relative importance of the COO across a rangeof product categories: Bilkey and Nes (1982), whilst others have examined it from the

    point of view of a number of markets: Ettenson (1993), Haubl (1996), Hui and Zhou(2003), and Pappuet al.(2007). Others have focused on the perceptions of the COO froma single market in relation to products from different countries: Chryssochidis et al.(2007). Some have used COO perceptions from a single market to assess products fromdifferent countries, whilst focusing on specific product attributes (Bannister andSaunders, 1978), or on brand equity (Yasin et al., 2007). Some studies have comparedattributes and brands: Blackett (1988), Ambler (1997) and Holt (2002). Others havelooked at consumer associations of brand name, COO, and perceived quality, usingproducts from two or more countries: Manraiet al.(1998), Thakor and Lavack (2003).Other studies have compared consumer perceptions of product attributes in terms ofcountry of design and country of assembly, across different product categories fromdifferent countries: Ahmed and dAstous (1995). The effects of home country bias(ethnocentricity), have been studied in terms of different products, across a number ofmarkets (Bruning, 1997; Balabanis and Diamantopoulos, 2004; Verlegh, 2007), or inrelation to one specific product category (Brodowskyet al., 2004). Rather than examinethe relationship of the COO to the consumer, some studies have examined it in thecontext of the company, in particular, the internationalisation strategy: Chen andPereira (1999) and Harzing and Sorge (2003).

    Developed vs developing countriesWithin the COO-quality construct, some research has posited the existence of a two-tierapproach in terms of assessment. Despite the reputation that a certain country mayhave for the production of a particular product, there also exists a tendency to evaluate

    products based on the level of development of their COO. Many studies have foundthat products from developed countries are more favourably evaluated than are similarproducts manufactured in developing countries: Bilkey and Nes (1982), Haubl (1996),Manrai et al. (1998, p. 611), dAstous and Ahmed (1999), Kaynak et al. (2000) andOzretic-Dosen et al. (2007). Renwick and Renwick (1991) suggest that the COOmight also be used by consumers as a means of country stereotyping. Accordingto Papadopoulos et al. (1990, p. 33) [. . .] people do hold stereotyped images aboutvarious countries and [. . .] these images affect the way in which the countriesproducts are evaluated. Pappuet al.(2007, p. 727) have identified two types or levelsof association with the COO the macro- and the micro-image: Country-of-originassociations may refer to the economic stage of the country (macro) or productsproduced in the country(micro).

    NationalismNationalism is referred to by Petersen and Jolibert (1995) as Domestic Country Bias,or Home Country Bias, and by others as ethnocentrism (Papadopoulos, 1993, p. 33).Nationalism is a sub-segment of the wider COO concept, and is based on theassumption that the patriotic feelings of the consumer have a significant positive effecton their attitudes and purchase intentions (Baughn and Yaprak, 1993, p. 98). However,as nationalism lacks a quality assurance basis, it does not work in exactly the same

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    way as the COO. For example, whilst a nationalistically minded consumer mayconcede that another country has a higher reputation for the production of a particularproduct, they might continue to purchase the domestically made version fornationalistic reasons (Bruning, 1997). Evans et al. (2006) found that less nationalistic

    and ethnocentric buyers are more likely to prefer foreign goods to local products; bycontrast, more nationalistic consumers often reject products manufactured inculturally dissimilar countries.

    Other considerationsdAstous and Ahmed (1999) found that when asked about the COO in their purchasingdecision, consumers tended to minimise its relative importance: when buying atelevision, for example, intrinsic product cues such as design, guarantees and qualitywere apparently more important than extrinsic product characteristics such as theCOO. However, they also reported that, when information relating to the COO becomesavailable, it does appear to be important in the context of the product evaluation

    process Heslop and Papadopoulos (1993) also found that the COO was less importantthan other product attributes, and a survey by Hugstad and Durr (1986) found that70 per cent of consumers aged under 35, did not consider where the product was madewhen making their purchase decisions.

    The out-sourcing of much of the worlds manufacturing has meant that the situationregarding the COO is no longer as clear cut as it once might have been. Even when aparticular brand is still made (manufactured or assembled) in a particular country,it is unlikely that all the component parts will come from that same country. Thus,whilst a brand name might still be an indicator of quality (in terms of the reputationof the manufacturer), it may no longer have the strength of association it used to havewith its original COO. However, as brands are still heavily associated with their COO(for example, Dior is associated with France, and Marlboro with the USA), similarly the

    country of manufacture can be associated with the brand name. For instance, it couldbe argued that it was Mercedes, BMW, Audi and VW that largely created the imageof Germany as the leading car manufacturing country.

    However, the contrary view is expressed by Samiee (1994), who claims that brandssuch as Sony, Coca-Cola and Revlon are so global that they no longer tend to beassociated by consumers with their original COO. Whilst the basic point might bevalid, the examples cited are perhaps less so, as Coca-Cola is inextricably linked tothe USA and the American lifestyle, despite being manufactured in different varietiesthroughout the world. As Papadopoulos (1993, p. 18) notes, even global brands [ . . .]have difficulty shedding their national images [. . .] This would appear to be confirmedby the study undertaken by Tse and Gorn (1993, p. 71), who concluded that:

    [. . .

    ] even in the era of globalization [sic], CO may remain a salient factor in consumer productevaluation [. . .] CO seems to be a more enduring clue, exhibiting an influence even afterproduct experience.

    The issue of brands being produced abroad under licence is of particular relevance tothe current study, as the brewing industry is a good example of foreign licensedproduction. Carlsberg (originally from Denmark), Fosters (Australia), Guinness(Eire), Heineken (The Netherlands), Kronenbourg (France) and Stella Artois(Belgium) are national beers that are brewed locally throughout much of the world.

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    Whilst the major breweries may argue that the beer they produce is of the same qualityregardless of the country in which it is produced, many consumers claim that the tastevaries considerably. And taste is a major consideration when purchasing beer. Thebreweries would appear to have accepted this reality, and exploited it to their

    advantage, importing a certain percentage of their production (sold at a premiumprice), into markets in which they already produce under licence. They deliberatelydistinguish between the two types of beer, by printing imported from Germany, orbrewed in the Czech Republic on the packaging and/or labels of the imports.

    The studyRespondents and data collectionCraig and Douglas (2000, pp. 235-36) suggest that a convenience sample can be used inemerging markets [. . .] given the difficulties and costs of developing samplingframes in such countries [. . .] As the current study is of an exploratory nature, theconvenience format was used, and respondents were selected at random in the centre ofSimferopol, in the Crimea. As beer is a mass-market product, and the Ukraine hasa relatively large population, in-depth interviews were considered impractical;consequently, data were collected via a short questionnaire, administered face-to-faceto 774 respondents. Questions were mostly closed, and prior to administration, thequestionnaire was piloted amongst ten Ukrainian beer drinkers.

    Research findingsIntroductionAs a piece of exploratory research, it was felt sufficient to report the initial findings anddiscuss their implications using basic univariate analysis. Some key factors were alsoexplored further using basic correlations. In view of the relatively small percentage ofthe population involved, to subject the findings to in-depth statistical scrutiny, would,

    in our view, have made little sense, and in any event was not the purpose of theresearch. As previously noted this was to identify key factors, with a view to pointingthe way for more comprehensive future research, the findings from which could thenbe subjected to more rigorous statistical testing.

    Sample sizeOf the 1,000 people approached, 201 refused to take part, and another 25 were not beerdrinkers and were excluded, giving a total of 774 respondents. It had been hoped tocompare these figures with Ukrainian national statistics for beer consumption, to seehow representative the sample was. Unfortunately, whilst statistics are available forper capita consumption, there is no data relating to the number of drinkers as apercentage of the total population.

    International reputation for beer productionAs already discussed, a key issue with regard to the COO is the reputation of a particularcountry for the production of a particular range of products. It was, therefore, importantto see which countries Ukrainian consumers perceived as the best beer producers.

    Unsurprisingly, Germany and the Czech Republic came first and second,respectively. What is surprising, however, is the high-ranking received by Russia perhaps a consequence of the familiarity with Russian brands such as Baltika,

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    or the geographic proximity to Russia. It is also surprising to see the relatively lowranking of Ireland, when compared to Mexico and Israel. That the Ukraine is ranked asthe third best beer producer in the world suggests more than a passing nod in thedirection of nationalism. Although best is a qualitative judgement, the ranking order

    (with the exception of the first two countries), would probably be considered unusual bymost Western beer drinkers.

    Imported versus local beersThe implication from Table I was that Ukrainians are proud of their domestic beers,and this was tested by asking the extent to which respondents agreed with thefollowing statement:

    Foreign imported beers are better than those made in the Ukraine.

    More than 65 per cent disagreed with the statement. Whilst this could be interpreted asa vote of confidence in the quality of Ukrainian beers, it does rather conflict with theprevious findings (Table I), in which 53 per cent cited Germany or the Czech Republicas better beer-producers than the Ukraine. Consequently, it might be speculated thatthe level of disagreement in Table II may have more to do with nationalistic pride thanobjective analysis. To check this further, respondent attitudes towards foreign beersproduced under licence in the Ukraine were examined. Respondents were asked theextent to which they agreed with the statement (Table III):

    RespondentsCountry Number Percentage of total

    Germany 217 28.0The Czech Republic 197 25.5

    The Ukraine 148 19.1Russia 89 11.5UK 52 06.7The Netherlands 19 02.5Belgium 17 02.2Denmark 11 01.4Mexico 11 01.4Israel 7 00.9Ireland 6 00.8Total 774 100.0

    Table I.Which country produces

    the best beer?

    RespondentsExtent of agreement Number Percentage of total

    Strongly disagree 158 20.4Disagree 350 45.2Neither agree nor disagree 23 3.0Agree 147 19.0Strongly agree 96 12.4Total 774 100.0

    Table II.Foreign imported beers

    are better than thosemade in the Ukraine

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    Foreign beers made under licence in the Ukraine are better than local beers.

    The number disagreeing with this statement fell by some 10 per cent suggesting thatproduction in the Ukraine is viewed as a positive factor by more than half of those

    surveyed, even though the number that agreed has also fallen by some 6 per cent to191. The number unsure increased from 3 per cent (Table II), to some 19 per cent asignificant increase, suggesting greater uncertainty as to the superiority of domesticproduction. All of which must surely add weight to the suggestion that there is adegree of nationalism influencing product choices? At the very least, it is somethingthat should be borne in mind by foreign beer manufacturers seeking to enter theUkraine, and one that is reflected in the growing number of foreign beers producedunder licence there.

    Foreign vs domestic beer consumptionHaving examined attitudes towards foreign and domestic production, it was nextuseful to have an idea of foreign versus domestic consumption patterns: just over

    60 per cent usually drink domestic beers, some 33 per cent drink either or both, and only7 per cent drink only foreign beers. Despite the professed qualities of foreign beers,and the widespread availability of foreign brands within the Ukraine, the majority ofconsumers apparently prefer domestic brands. This might be a consequence of:

    . the lower price of domestic brands;

    . the wider availability of domestic brands; and

    . the fact that the Ukrainian consumer tends to stick with that to which they arealready accustomed.

    Alternatively, it might also be a reflection of a level of nationalism. To investigate thisfurther, it was decided to see whether consumer preferences were changing, and if so, in

    which direction. Interestingly, the preference for domestic beer would appear to be onthe increase, with 511 respondents (66 per cent) claiming that their preference hadshifted in favour of local brands. This compares with the 71 (9.2 per cent) who claimedthat they now prefer foreign brands. At first sight this might appear to be at odds withthe research undertaken by Papadopouloset al.(1990), who found that East Europeanconsumers prefer foreign products. However, the Ukraine gained its independencesome 18 years ago, and since then has become increasingly familiar withimported goods. Such familiarity is likely to have reduced the attractiveness ofthose products-based purely on novelty: a product that is attractive because it is newand different, will loose its attraction as it becomes increasingly familiar.

    RespondentsExtent of agreement Number Percentage of total

    Strongly disagree 142 18.3Disagree 291 37.6Neither agree nor disagree 150 19.4Agree 139 18.0Strongly agree 52 6.7Total 774 100.0

    Table III.Foreign beers madeunder licence in theUkraine are better thanlocal beers

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    Changing qualitySupport for domestically-produced brews is, apparently, based on a conviction that thequality of domestic production has improved (Table IV).

    In total, 86 per cent agreed that the quality of beer produced in the Ukraine has

    improved, an important finding as quality is the premier consideration whenpurchasing domestic beer and the second most important criterion for the purchase offoreign beer. This increase in quality is undoubtedly a consequence of the growingcompetition between beer producers over recent years. Most breweries have beenforced to increase quality standards in response to the arrival of foreign brews fromcountries with strong national reputations, and that are backed by sophisticatedadvertising campaigns.

    Despite this, opinion was more divided as to whether quality had now improved tothe extent that domestic beers were considered superior to foreign brews. Whilst asignificant number (46 per cent agreed), 31 per cent were uncertain, and just under23 per cent disagreed. This may be a consequence of a number of factors, not least ofwhich is the sheer variety of beers available today, and the fact that some foreign beers

    are produced under licence, all of which makes it difficult to compare quality.On balance though, it would appear that the quality of Ukrainian beer is generallyperceived as being at least as high as that of foreign competitor beers.

    Factors influencing purchase choice (domestic beer)Having examined attitudes to foreign and domestic beers in general, the focus thenswitched to the factors that exert the greatest influence on the consumer purchasedecision. Respondents were asked to rate price, quality, taste, brand, image,strength, COO, and availability, in terms of their relative importance in thepurchase of a domestic beer (Table V).

    These scores were then weighted to reflect the degree of importance attached toeach factor for each factor: of great importance (multiplied by 3), important (2),of little importance (1), and of no importance (0). For example, price was ofgreat importance to 233 respondents, important (169 respondents), of littleimportance (124), and of no importance (248). These respondent totals weremultiplied by 3, 2, 1 and 0, respectively, giving weighted scores of 699, 338, 124 and 0.These scores were then summed: 699 338 124 0 1,161 (Table VI).

    Price is relatively the least important factor when purchasing a domestic beer possibly because such beers are considerably cheaper than foreign imports, and income

    Over the last five years, thequality of beer produced in the

    Ukraine has improved

    The quality of Ukrainian beeris now better than that of most

    foreign beers

    Statement of quality Respondents RespondentsLevel of agreement Number Percentage of total Number Percentage of total

    Strongly disagree 16 2.1 0 0.0Disagree 72 9.3 175 22.6Neither agree nor disagree 24 3.1 243 31.4Agree 245 31.7 224 28.9Strongly agree 417 53.9 132 17.1Total 774 100.0 774 100.0

    Table IV.The quality of Ukrainian

    beer

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    levels are growing. By contrast, quality, taste and availability (in descending order ofimportance) are the three most important factors. It would appear that it is the quality ofthe beer that is the most decisive factor in influencing purchase. It is also interesting tonote that, whilst brand is important, it is of lesser importance than quality and

    taste. Another significant finding is that the COO does not rank as highly as mighthave been expected-bearing in mind the potential for nationalism. Indeed, theavailability of the beer is rated as being more important than both COO andimage-suggesting a high potential for product substitution in this market.

    Factors influencing purchase choice (foreign beer)The same question was asked in relation to the purchase of foreign beers, and aspreviously, the totals were weighted; only the final weighted scores are shown inTable VII.

    Whilst price still remains the least important factor, the relative importance of themost important factors has now changed. For domestic beers, the top three factorswere quality, taste, and availability, respectively; this has now changed, withtaste, quality and image now in the first three places, respectively. The COO hasnow become more important, and availability has now been replaced by image confirming the importance of advertising and promotion for foreign beers.

    The COO and purchase decisionTo confirm the importance of the COO when making a purchase decision, respondentswere asked to indicate their level of agreement with the following statement (Table VIII):

    The country of origin is important when deciding which beer to purchase.

    Of great

    importance(%) Important (%)

    Of little

    importance (%)

    Of no

    importance (%)Price 233 (30) 169 (21.8) 124 (16.0) 248 (32)Quality 530 (68.5) 244 (31.5) 0 0Taste 514 (66.4) 234 (30.2) 26 (3.4) 0Brand 356 (46) 324 (41.9) 94 (12.1) 0Image 429 (55.4) 257 (33.2) 88 (11.4) 0Strength 448 (57.9) 201 (26) 110 (14.2) 15 (1.9)COO 394 (50.9) 316 (40.8) 63 (8.1) 1 (0.1)Availability 520 (67.2) 212 (27.4) 41(5.3) 1 (0.1)

    Table V.How important are thefollowing factors whenpurchasing domesticbeer?

    Factor Of great importance Important Of little importance Total score (weighted)

    Quality 1,590 488 0 2,078Taste 1,542 468 26 2,036Availability 1,560 424 41 2,025Image 1,287 514 88 1,889COO 1,182 632 63 1,877Strength 1,344 402 110 1,856Brand 1,068 648 94 1,810Price 699 338 124 1,161

    Table VI.Relative importanceof purchase factors domestic beer (weighted)

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    Some 69 per cent felt that the COO of a beer was important to a greater or lesser degree.Whilst this confirmed the importance of the COO, it did not explain why it wasconsidered important. As a key factor in the purchase of the beer was quality, it wasdecided to see the extent to which the COO was perceived as an indicator of quality.

    The COO and qualityRespondents were asked to indicate the extent to which they agreed with the followingstatement (Table IX):

    To make sure that I buy the best quality, I look to see where the beer comes from.

    It would appear that the COO is considered an important indicator of quality by480 (62 per cent) of respondents sufficiently high to allow for a claim as to thelink between COO and quality. This is further supported by the fact that only some13.2 per cent disagree.

    Of great importance Important Of little importance Total score (weighted)

    Taste 1,572 466 17 2,055Quality 1,548 480 18 2,046Image 1,527 374 37 1,938COO 1,332 524 22 1,878Brand 1,284 522 25 1,831Availability 1,059 540 67 1,666Strength 804 402 257 1,463Price 582 384 160 1,126

    Table VII.Relative importance

    of purchase factors foreign beer (weighted)

    RespondentsExtent of agreement Number Percentage of total

    Strongly disagree 0 0.0Disagree 78 10.1Neither agree nor disagree 160 20.7Agree 388 50.1Strongly agree 148 19.1Total 774 100.0

    Table VIII.The country of origin is

    important when decidingwhich beer to purchase

    RespondentsExtent of agreement Number Percentage of total

    Strongly disagree 0 0.0Disagree 102 13.2Neither agree nor disagree 192 24.8Agree 330 42.6Strongly agree 150 19.4Total 774 100.0

    Table IX.To make sure that I buy

    the best quality, I look tosee where the beer comes

    from

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    The COO in the decision-making processWhilst replies so far have implied the importance of the COO in the purchase decision,and as an indicator of quality, they have not suggested at what stage of thedecision-making process it exerts most influence. The next question attempted to

    identify this, by placing the COO as the first purchase factor.The COO is the first criteria of choice for nearly half of all respondents (47.7 per cent),

    as compared with the 27.9 per cent who disagreed, and the 24.4 per cent who wereunsure. Although a higher percentage agreeing with the statement might have beenanticipated, this could be partially explained by reference to Tables IV and VII inwhich quality and taste were identified as key criteria. Also, as Schaefer (1997)found familiarity with a brand is likely to preclude reliance on the COO as a majormeasure of quality. Whilst Table X refers to a new brand (for which we can assume noprior personal experience), the new brand may be associated with an existing brandproduced by a company (or country) with which the consumer is already familiar.Under such circumstances a new brand might be assumed to be of a similar quality tothose already produced by the same manufacturer.

    PriceIn terms of price, respondents were virtually unanimous, with 98 per cent agreeing thatdomestic beers are cheaper than foreign beers. Interestingly, however, when thestatement was reversed (foreign beers are generally more expensive than domesticbeers), the level of agreement had fallen to 93.4 per cent (723 respondents). Thatforeign beers are more expensive is beyond dispute what is interesting is that thispresumably includes those foreign beers manufactured under licence in the Ukraine.As these are made with local ingredients, and produced at local wage levels, withoutadditional costs such as import duties (but including licences and related costs), it doessuggest that the percentage profit for such brews must be considerably higher than

    that of their domestic competitors. Yet, the respondents in this survey appear to acceptthis which suggests that they perceive foreign beers (despite their higher price) to bebetter value for money. One possible explanation relates to the image that theconsumer associates with foreign beers. Respondents were asked the extent to whichthey agreed with the following statement (Table XI):

    Foreign beers have a better image than local beers.

    Some 85 per cent of respondents agreed, suggesting that it is the up-market positioningof foreign beers that allows manufacturers to charge premium prices. As image isessentially a consequence of manufacturer promotion and consumer perception,

    RespondentsExtent of agreement Number Percentage of total

    Strongly disagree 0 0.0Disagree 216 27.9Neither agree nor disagree 189 24.4Agree 318 41.1Strongly agree 51 6.6Total 774 100.0

    Table X.When I buy a new beer,the country of origin isthe first thing I consider

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    consumers would also be more likely to give high ratings to excellent advertisingcampaigns of foreign manufacturers. This was tested by asking respondents toidentify which of the three statements most closely reflected their personal view offoreign and domestic beer advertising (Table XII).

    Just over 66 per cent gave more credence to foreign beer advertising than they did tothe adverts produced by local manufacturers, suggesting that the higher quality imageof foreign beers is at least in part a product of the way they are advertised. However,despite their appreciation of the superiority of foreign advertising over its domesticcompetitors, Ukrainian consumers display a decidedly cynical appreciation of thereason for this difference-citing the wealth of the companies involved as the majorreason for their success. In total, 693 respondents (85.7 per cent) felt that the superiorityof foreign advertising was largely a consequence of the money that foreign companieshad to spend.

    Place of consumption

    It was important to understand where most consumption takes place, as this can thenbe used to inform advertising and distribution strategies. Unsurprisingly, the largestgroup (nearly 53.5 per cent) drink in bars, cafes or restaurants; after this, consumptionat home was the second most popular answer (28.4 per cent). Somewhat unusually from a West European perspective nearly 10.6 per cent claimed that they usuallydrank in the street, in addition to another 7.5 per cent who claimed that they drinkanywhere (which presumably includes the street). These findings tend to confirm thesomewhat distinctive drinking habits of Ukrainians, aspects of which are in starkcontrast with many European countries where drinking in the street is either frownedupon, and/or prohibited by law.

    RespondentsExtent of agreement Number Percentage of total

    Strongly disagree 0 0.0Disagree 95 12.3Neither agree nor disagree 22 2.8Agree 411 53.1Strongly agree 246 31.8Total 774 100.0

    Table XI.Foreign beers have a

    better image than localbeers

    Respondents

    Statement Number Percentage of total

    Advertisements made by foreign beer producers areusually more believable 514 66.4Advertisements made by local beer producers areusually more believable 118 15.2There is no difference between advertisementsmade by foreign and Ukrainian beer producers 142 18.3Total 774 100.0

    Table XII.Advertising credibility

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    Respondent demographicsThe age profile of respondents generally matches that of the national average; thelargest group (290-37.5 per cent of the survey) are in the 18-25 years old group, whichbroadly matches national statistics (The World Factbook, 2007). The next largest

    group is that aged 41-50 years old (196-25.3 per cent), followed by the 31-40 years old(124-16 per cent) and the 26-30 years old (95-12.3 per cent of respondents). The age group51-60 years old (62 respondents) represented 8 per cent of the total, while the sevenrespondents aged 61 or older accounted for less than 0.9 per cent of respondents.

    The male-female balance was 465 females (60.1 per cent of the survey), and309 males (39.9 per cent), which is unusual for a survey relating to the consumptionof beer. This may suggest a slight gender imbalance in the findings, although it shouldalso be understood that the fact that there are more women than men is not necessarilyunusual for the Ukraine, where women outnumber men a legacy of horrendouslosses during the Second World War, and Stalins post-war persecution of minoritygroups within the former Soviet Union.

    The highest level of respondent education was a postgraduate degree: achieved by295 respondents (38.1 per cent of the total). The next largest group was those currentlystudying at University (220 or 28.4 per cent), then the 192 (24.8 per cent) who wereonly educated up to Upper School level. Finally, there were 67 (8.7 per cent), who alreadyhad an undergraduate degree. This means that 362 (or 46.8 per cent) of respondents havea university degree perhaps making them unrepresentative of the Ukrainianpopulation as a whole. Whilst it might be argued that this represents a weakness in thesurvey, we would suggest, conversely, that this group are the likely future high-incomeearners, and as such will be a key target group for any foreign company wishingto capture the lucrative foreign/premium beer market. Their opinions are, therefore,of exceptional interest.

    In terms of respondent occupations, there were a wide variety of responses, so they

    were grouped into broad categories where possible. The largest group of respondentsare students (at 195 or 25.2 per cent of interviewees this explains the relatively highlevel of education), or work as managers in business (159 or 20.5 per cent). After these,the next largest group was mechanics (14 per cent), and business professionals(13.7 per cent). Between them these top four groups (which might be loosely describeas educated professionals), account for over 70 per cent of respondent occupations.Again, whilst perhaps not representative of the Ukrainian population as a whole, thesegroups are likely to be the future targets of foreign beer manufacturers. The next factorof analysis was income: almost one-third of respondents (34.5 per cent) earnUAH1,000-1,499 per month whilst the monthly income of 20.7 per cent of respondentsis around UAH. However, as an average monthly salary in 2007 was UAH1,277(Rezonans, 2007), this shows that some 51.5 per cent of respondents earn above the

    average wage for the Ukraine as a whole. This, as with level of education, suggests thataround half the respondents are amongst the more wealthy and better-educatedmembers of Ukrainian society the ideal target market for premium and importedbeers.

    Data analysisCorrelation was used as the simplest and quickest means of indicating the likelihood ofany relationship. As Miller et al. (2002) note, the data used in correlation analysis

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    should be interval or ratio data, therefore, only certain variables were chosen for thecurrent correlation analysis. Age, the level of education and the level of monthlyincome of beer drinking respondents are important characteristics that affect the othervariables, and were chosen for correlation analysis. Only statistically significant

    relationship are reported.

    Age group and quality of beer usually drunkThis suggests a very weak (20.06) negative, but significant (0.05) relationship betweenthe age of the respondents and relative importance of the quality of beer that theyusually drink. This is interesting, as the research has already shown that consumersclaim the quality of the beer to be a key consideration, yet based on the above, it wouldappear that it is the younger consumers who are generally more concerned about thequality of the beer they drink. This may be because the older the consumer, the morelikely they are to have started drinking beer during the communist era, when theyhad little or no choice as to what they bought. Respondents aged 18 or over in 1990,

    would today be in their late-30 s and above, and as previously indicated, the groupaged 41 and over, represents 34.2 per cent of respondents approximately one-third(Table XIII).

    Age group and brand of beer usually drunkPerhaps, unsurprisingly, there is also a statistically significant but very weak negativecorrelation between the respondents age group, and the importance of the brand ofbeer that they usually drink (Table XIV).

    As already noted, the older the respondent, the more likely they are to haveexperienced beer brands under the communist economy. Ukrainian consumers tend tostick with the brand to which they are accustomed, and as the older generation hadcomparatively little choice of brands, these are comparatively less important than they

    are to the younger generation, for whom choice is an expected consumer right.

    Level of education and price of foreign beerThe positive (but very weak) correlation means that the higher the educational level ofrespondents, the more important they rate the price of foreign beer. Whilst there wasno way of knowing whether this referred to a high- or low-price, it is assumed that itrefers to a high price, as well educated people usually earn larger salaries. This is,

    Variable Cases Correlation coefficient (Pearson) Significance level (two-tailed)

    Age group 774 20.06 0.05

    Importance of beer quality 774

    Table XIII.Respondents age group

    by level of importance

    of usual beer quality

    Variable Cases Correlation coefficient (Pearson) Significance level (two-tailed)

    Age group 774 20.07 0.03Importance of beer brand 774

    Table XIV.Respondents age group

    by level of importanceof usual beer brand

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    however, only an assumption, as there was no way of checking this after the researchhad been completed (Table XV).

    Level of education and brand of foreign beerAs previously, this suggests a very weak but significant positive relationship betweenthe level of respondent education, and the importance they attach to the brand as afactor in the selection of a foreign beer. A likely explanation is that well educatedconsumers are more likely to be exposed to a variety of foreign brands (includingthrough foreign travel), and consequently are more likely to rate this factor as being ofsignificant importance in their decision-making process (Table XVI).

    Conclusions and managerial implicationsThe growing demand for foreign licensed beers in the Ukraine (Murina, 2004; Vlasenko,2004; Sivak, 2005; Nugent, 2005; Belanciuc, 2006; Chernyavskaya, 2007) creates greatopportunities for foreign beer producers, especially as this growth runs in parallel

    with growing income levels. Taken together, the synergy they create means that theUkraine will be very attractive for foreign producers over the next five-ten years.However, the balance of informed opinion suggests that levels of competition in thelicensed beer sector will also grow over the next five years. This being the case, it isfelt that those foreign brewing groups already in the Ukrainian market are likely towant to improve their position in the market before the (inevitable) arrival of newforeign multinationals. Furthermore, it is not just the level of competition that willincrease overall marketing costs will also grow, probably at a rate exceeding that ofdeveloped markets. The increasing costs and growing competition, will presentsignificant barriers to entry to those companies not already established in the market.The obvious conclusion, therefore, is that those foreign companies that are planning toenter the Ukrainian market should do so as quickly as possible.

    Second, companies from Germany and the Czech Republic have a distinctadvantage, as beers from these countries are highly rated by Ukrainian consumers.However, the COO, whilst of great importance, is not the only area that should beaddressed. Despite the fact that the average income levels of most Ukrainians aregrowing steadily, they still remain considerably lower than that of most Europeans.Price was consistently rated as the least important consumer choice criterion, but as

    Variable Cases Correlation coefficient (Pearson) Significance level (two-tailed)

    Level of education 774 0.06 0.05Importance of beer price 774

    Table XV.Respondents levelof education by levelof importance of foreign

    beer price

    Variable Cases Correlation coefficient (Pearson) Significance level (two-tailed)

    Level of education 774 0.07 0.02Importance of beer brand 774

    Table XVI.Respondents levelof education by levelof importance of foreignbeer brand

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    the majority (60 per cent) consumed domestic, not foreign beer, and as domesticbeers are considerably cheaper, this may be the reason. It might also be the casethat those who said that price was the least important factor when purchasing foreignbeers, might have said this because they are sufficiently wealthy for price not to matter

    to them. The implication, therefore, is that whilst price is relatively unimportant atthe moment, this may be a consequence of current consumption patterns, and need notbe taken as indicative of the future. If foreign companies restrict their operations to aniche market, consisting of the more wealthy segments of the Ukrainian population,then current pricing strategies are appropriate. However, should they wish to capturethe mass market (a likely prospect), then they will have to reconsider their currentpricing strategies. Thus, whilst maintaining the quality image associated with theirrespective COO, foreign companies should also be sensitive to pricing levels.

    The research also confirmed the importance of advertising, principally in terms ofimage creation, but also to inform people of product availability. It will be recalled that

    just over 66 per cent of respondents rated foreign adverts as more believable than

    domestic adverts, and that 53 per cent said that foreign beers had a better image.To reinforce image, therefore, it is essential to promote new brands heavily, usingtelevision, radio, magazines and sponsorship. Moreover, as Ukrainian consumers relyheavily on WOM as a source of product information, foreign companies should identifyand target the opinion leaders in society, as they will help to create a positive imageof the foreign brand. One such group might be students, especially those who havestudied abroad, as they have had exposure to foreign brands and consumer behaviour,and are likely to be amongst the opinion makers (and high earners) of the future.

    Finally, companies should consider their distribution networks, to guarantee a highlevel of product availability throughout the country, as this is, apparently, a key factorin consumer choice. Some of the big breweries have their own networks, and this is anattractive option. It was noted earlier that a significant number of consumers drinkbeer in the streets, which might suggest that companies should not only concentrate onmore usual outlets (bars, cafes and restaurants), but might also consider small shops.A thorough investigation of licensing/distribution laws would be needed prior to anysuch venture.

    To achieve all these conditions, we would suggest that there is only one course ofaction: foreign companies should consider some form of joint venture, or the purchase ofan existing large Ukrainian brewery or brewing group. This would allow them to enterthe market quickly, and in addition, provide an established distribution network. Thesubsequent product strategy should be based on a mixture of the foreign companysglobal brands (both produced in the Ukraine and imported), supplemented byproduction of the existing variety of local brews produced by the company they have

    purchased. Locally, brewed foreign brands will be considerably cheaper to produce, yetcan still be sold at a premium price. This would give a wide base on which to workinitially, and from which to develop in the future. If, as seems likely, demand for foreignbeers will grow (but only at a relatively slow pace), then it would be advisable tomaintain an interest in domestic beers in the meantime. It would also be necessary tore-position some of the current domestic beers, and/or to develop an additional range ofnew brands that both reflect the increasing sophistication of the Ukrainian consumer,whilst at the same time, cater to their significant nationalistic feelings.

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    About the authorsOlga Khmelnytska has worked as a Market Research Executive for the Krym Beer &Non-Alcoholic Drinks Plant OJSC, Simferopol, Ukraine. She has an MSc in International Businessfrom the University of Salford, Manchester, and is currently involved in market research inthe UK. Her main interests are in the area of business development in the Ukraine in particularthe Ukrainian beer market, and how national producers can increase their competitiveness in the

    international arena.Jonathan S. Swift has managed market research projects in Southern Europe andLatin America where he has also lived for many years. He is currently Senior Lecturer inInternational Business and Marketing, at the Salford Business School, the University of Salford,Manchester, where he teaches international business, international marketing and internationalmanagement. He has a PhD in Applied Linguistics, and in addition to international consumerbehaviour, his main research interests in the development and maintenance of cross-culturalbusiness relationships. Jonathan S. Swift is the corresponding author and can be contacted at:[email protected]

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