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Thursday, July 12, 2007

Russia is a Sick Society, There's Just no Two Ways About it

Can you imagine how Russians would react if Germans were buying consumer goods named after a modern neo-Nazi who proclaimed that Russia would have been better off if it had been conquered and subjugated by Hitler? The International Herald Tribune reports that, just when you think Russia can't get any more outrageous, it gets so outrageous that you can't believe you thought it was outrageous in the past. Only a truly sick society could generate a story like this one. No society can survive generating stories like this for very long.

The name has the ring of virulent nationalist politics, yet buyers should be prepared to pay a fortune for the brand. The trademark Zhirinovsky is up for grabs, and the current owner says he wants 77 million rubles, or $3 million, for the right to stick the name of the flamboyant and populist politician on a bottle of vodka. The seller is a Moscow businessman, Sergei Kuznetsov, who says Vladimir Zhirinovsky, head of the Liberal Democratic Party, gradually gave him rights to use his name on a variety of products beginning in 1994. "I got it for a symbolic price," Kuznetsov said, explaining that Zhirinovsky did not need money at the time and had wanted his name to become more popular. The license, Kuznetsov said, was recently renewed for about 10 years.

Besides vodka, the products bearing Zhirinovsky's name include cigarettes, after-shave and even mayonnaise. There also is an extra-rich ice cream called Zhirik, the popular diminutive form of Zhirinovsky, Kuznetsov said, though it is a separate brand and is not for sale. "Zhir" in Russian means "fat."

It might seem strange consumers are willing to buy household goods under the name of a boisterous politician who has been involved in sometimes bloody fistfights in the State Duma, but Zhirinovsky, who has been in Russian politics since the early 1990s, is popular. His party won 11.5 percent of the vote in 2003 Duma elections and 10 percent in regional elections this past spring. Zhirinovsky declined to be interviewed for this article, but he told a newspaper, Vedomosti, that he had allowed Kuznetsov to register his name as a trademark to avoid its abuse. "If businesspeople want to use the brand, they should do without eroticism and exotics," he said, adding that he would not approve of toilet paper or condoms bearing his name.

The businessman is offering eight trademarks bearing Zhirinovsky's name, but he said the vodka was by far the most attractive. Kuznetsov said he wanted to sell because he was frustrated with the vodka factories and wanted someone to invest in marketing the brand. "You do not earn much with the brand, but money is made from the production," he said, explaining that he receives just 88 kopeks, or 3.4 cents, for each half-liter bottle with a wholesale price of 68 rubles. "Producers are not willing to invest in a brand they do not own."

So far, Zhirinovsky products are far from best sellers. The vodka is among the country's lesser-known spirits and, Kuznetsov said, production runs at 200,000 to 300,000 bottles a month. LR: Maybe there's a little hope for Russia after all! Then again, there's no active protest against the sale of these products, either -- and maybe the limited distribution is simply due to utter incompetence on Zhirinovsky's side.

Competitors in the vodka business said they were not impressed by Zhirinovsky's performance. "This brand has been around for some 10 years now, but it never achieved a prominent position in the market," said Dmitri Dobrov, a spokesman for Kristall, the state-controlled distillery. Kristall makes a highly successful brand of vodka called Putinka, which bears more than a slight resemblance to President Vladimir Putin's family name. The brand was introduced in 2003, three years after Putin was first elected. Putinka and Zhirinovsky, however, have nothing in common, said Stanislav Kaufman, marketing vice president of Vineksim, the distributor for Putinka. "Putinka is a sympathetic nickname, while Zhirinovsky is an exact copy of a family name plus the man's portrait," he said.

The art of just sticking a family name on a product has also been perfected by several businessmen, including Oleg Tinkov, a St. Petersburg entrepreneur, who made a fortune with a brewery named after him. Vladimir Dovgan created a small empire of foods bearing his name in the 1990s. Although the brand has been discontinued in Russia, it is currently selling well in the sizable Russian-speaking market in Germany. But consumer goods analysts say this is becoming a method of the past. "This worked well in the 1990s, but it won't work today," said Mikhail Terentyev of Troika Dialog, a Moscow brokerage.

Brands with prominent family names could sell in markets with low levels of consumer sophistication, typical of the years after the Soviet breakup, he said. Today, buyers are more concerned about lifestyle, health care and the quality of ingredients, and this is not conveyed in a family name, he said. Furthermore, a famous name alone does not guarantee long-term popularity, said Alexandr Pismenny, general director of the Russian office of the A.C. Nielsen marketing company. "Apart from a brand that consumers can associate with, other factors like pricing, distribution and packaging are important for success, too," he said.

Zhirinovsky is about the only prominent Russian politician to have endorsed the use of his name on consumer goods. But that has not stopped other companies from following Putinka's lead. A factory in Astrakhan is selling pickled peppers and eggplants under the brand Puin. A sword inserted between the "u" and the "i" makes the word appear to be "PuTin."

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