Baltika Brand Rejuvenation
Case study prepared for Adam Smith Conferences 3rd International Forum forThe Russian Food and Bev erage Industry
Andrey Rukavishnikov, Marketing Director, Balt ika Brew ery
Size that matters. Baltika is as big as Russia
1
2
34
6
7 8 910
11 1213
1415
1617
18 1920 2122
2324 25
26 2728 29
31 305
BreweriesBreweriesDistribution Distribution centerscenters
• Russia:– Approx imately 1/6 of the land mass– Covers 11 time zones– Stretches across almost half of the
circumference of the globe
• Baltika:– 1st Russian domestic brand– Market leader since 1996– Sells every 4th beer bottle in Russia– 5 breweries & 31 sales rep offices– Owner of 2nd beer brand in Europe
Facts and figures
25 % market share – Company sales11% Baltika brand share
Brews biggest Russian brand ever –Baltika
Distribution 97%Everywhere in Russia
24 mln HL per y ear, 0.33 bottle per each human being per y ear in the w orld. Biggest and the most profitable brew ery in Europe
Biggest production capacity
32 beer brands / v arieties on saleSuits every consumer taste
Ov er 2000 mln USD capitalisationTop Russian FMCG company
35 countries serv edWorldwide operations
FiguresFacts
185
296650
1583
2076
0
500
1000
1500
2000
2500
Baltika Sun Interbrew Wimm Bill Dann RBC Kalina
Mln
USD
Top companies in Russian FMCG sector(capitalization, mln USD, Oct 2004)
* Including Ukrainian operations
*
*
0
10
20
30
40
50
60
70
80
91 92 93 94 95 96 97 98 99 00 01 02 03 04 (F)
27,4
(-12%)25,7
(-6%)
23,9
(-7%)
23,9
(0%)
28,1
(+23%)22,9
(-4%)
35,8
(+27%)
44,1
(+23%)
52,4
(+19%)
63,5
(+21%)
68,8
(+8%)
73,3(+6%)
14,0(+32%)10,6
(+62%)6,6(+34%)4,9
(+62%)3,0(+73%)1,7
(+54%)1,1(+27%)
0,9(+46%)
0,6(+85%)
0,3(+22%)
16,0(+14%)
BALTIKA
16,1 (+1%)
19,8 (+23%)
81,0 (+11%)
MARKET
((mhlmhl))Baltika and Russian beer market development
Production leadership
Quality leadership
National distribution leadership
Distribution refinement
Marketing driven company
Baltika market leadership
6.7%6.9%7.3%
14.8%
25.0%
6.1%6.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Baltika Interbrew Heineken Efes Red East Yarpivo Ochakovo
%
Source: BBH
Baltika segment leadership
Baltika share in Russia, vo lume
Baltika
BBH, 2004
25%
Baltika share in mid - price segment
Baltika
Baltika share in premium seg me nt
Baltika
33%
22%
Market segments
Beer market
Business - Analytica, Sep 2004
Baltika brand before 2004 –action required
• Maximum awareness• Huge share• Extremely high distribution• Quality (perceived and actual)• Baltika 3 sub-brand - the biggest beer brand
in the market (2 times bigger than the closest competitor)
• Dated packaging• No restyling / innovations during past years• “ Old – fashioned” perception• Unclear brand equity• Lack of clear positioning for sub-brands
• Positioning clarification• Offer diversification (sub-brand positioning)• Brand rejuvenation
• Competitive communication increase• Competitive portfolio diversification• Competitors gaining share• Proliferation of emotional benefits
Solution at sub-brand level
To rejuvenate the Baltika brand via:1. Development of an effective positioning strategy2. Diversification of the Target Audiences3. Rolling out striking creative executions4. Relaunch along the lines of innovation and premiality5. Sub-brand specific support6. Further sub-brand reinforcement through umbrella
communication
• Top Russian beer brand• Over 5% SOM, market leadership• Price benchmark for the market• Major volume driver• Highest distribution level• The only single SKU (0,5L bottle) sub-brand in the
market
Baltika 3 sub-brand background
Baltika-3 sales development in RussiaJan-Oct 2004 vs 2003
78%
-9%-13%
-27%
-35%
-15%
55%47%
25%
20%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Jan F eb Mar Apr May Jun Jul Aug Sep Oct
mon
thly
gro
wth
2004
vs.
200
3
Change perception –new bottle and label
Added modernity –can launch
Build emotional link - New ATL series
Relaunched products promo • Increase nterest among existing consumers• Stimulate trial among new consumers
“Future” umbrella support communication
Relaunch support campaign
Baltika 3 can launch
TeaserMoscow, S.Petersburg
RevealFederal outdoor campaign
Back
Baltika 3 bottle relaunch
Back
ATL Campaign “Baltika Express” series
Back
Umbrella communication “From Heritage to the Future”
Back
Baltika 3 promo campaign: +78 % sales growth
Back
Next steps
• Premium line upgrade• Packaging consistency
– Restyling of the whole SKU range• New communication strategy
– Separate sub–brands media strategy and advertising support
• Aggressive NPD
Baltika Brewery sales development in Russia – Jan-Oct 2004 vs 2003
47%
3%
13%
4%4%
10%
38%31%
27%
26%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
mon
thly
gro
wth
200
4 vs
. 200
3
Thank you!