The (other) Great White North

Starting next week, I will be posting from my old ‘stomping ground’ of Russia.

Specifically, I have accepted a consultancy appointment with a drinks company in St. Petersburg, and will be primarily focused on business in the “regions.”

In Russia, the “regions” is everything outside of Moscow and St. Petersburg.  I will be spending time in the Ural Mountains (Yekaterinburg, Tyumen, Chelyabinsk, Ufa), the Far East (Vladivostok, Khabarovsk), Siberia (Novosibirsk, Krasnoyarsk, Irkutsk), the Volga region (Samara, Volgograd, Saratov, Nizhniy Novgorod) and the South (Rostov, Sochi, Krasnodar).

I have spent time in all these cities, and because packaged drinks occupy the same retail shops as tobacco products, I will be able have a look first hand at how that business is doing.  At last glance, Russia had a 360 billion stick cigarette market.  Once, the Big Boys competed with over 60 local factories, of which perhaps a dozen still exist today.  JTI leads the market after its acquisition of Gallaher in 2007, followed by Philip Morris, BAT and Imperial.

The last great local fighter, “Donskoitabak” missed out on all the fun in the 1990s (BAT bought ‘Yava,’ Liggett bought “Ducat,” (and Gallaher then bought “Liggett-Ducat,” the reason for the brand-name ‘LD’ I kid you not).  JTI bought the largest factory in St. Petersburg, and PMI built from scratch.  Donskoi continues to work on reduced local share in Rostov and the South, and a few factories still churn out non-filtered traditional products.

Snus is available in outlets all over Moscow, St. Pete’s and the western half of the country, and I will do my best to send in reports from time to time as to what is going on in this turbulent industry.  What I know now is that, after a mass consolidation of hundreds of local wholesaler/distributors in the early 2000’s to three, the Great Recession has given rise to an unraveling of this secure environment.  Small distributors are popping up again, and the cash-driven open markets or “bazaars” which were so prevalent in the 1990s have begun re-appearing.

Russia lives in “interesting times” and I am happy to be going back.

Желаем всем вам мои наилучшие пожелания,

ANDREW ROMEO
Soon Reporting from Russia for SnusCENTRAL.org