Economy

How Russian Brands Are Cashing In On Buyers' Patriotism

Man wearing a Putin T-shirt in Moscow's underground
Man wearing a Putin T-shirt in Moscow's underground
Oleg Khokhlov, Nina Vashaeva

MOSCOW — When Russian President Vladimir Putin's approval rating began to rise last year, patriotism crept into Russian consumer preferences, branding experts say, so much so that companies are now catering to this newfound domestic pride.

Branding agency Depot WPF recently developed a new design for a juice brand, using elements of traditional Russian painted wood as part of the packaging, says the agency's director Aleksei Andreev. The traditional painted wood is supposed to represent the "richness and warmth of the Russian soul," according to Depot WPF's website.

But it turns out that it's not just purely Russian-owned companies playing up the "Russianness" of their products. The juice brand in question, Dobri, is actually a subsidiary of Coca-Cola.

"We regularly follow the performance of goods that are related to "Russianness," but until the beginning of last year, those goods didn't do so well," Andreev says. "Over the last decade, domestic producers have called on consumers to "buy Russian," but the effect was the opposite. At most, there was local patriotism: People would buy goods produced in their region. As a result, many companies released products that emulated local products."

Nikolai Itarov, press secretary of a marketing company called PR2B, says that every third client now wants to stress their "Russianness." That's despite the fact that PR2B's most famous campaign was for the canned vegetable brand Corrado, to try and establish it as a foreign luxury brand. "The branding of Corrado was based on the status associated with foreign goods," PR2B's website explains. In reality, Corrado is entirely Russian-owned. But when the company was founded 15 years ago, 99% of consumers associated foreign products with higher quality.


Photo: polinamagdalina via Instagram

"Russians are used to beer that is Czech or German, cosmetics that are French and clothes that are also foreign," explains Sergei Kalinchuk, strategic planning chief for SPN Communications. "When you're starting a new brand, you don't need to break those stereotypes. On the contrary, you should actively use them, because they will affect the price point."

For example, no matter the political situation, Russian or Belarusian mozzarella will be sold under Italian-sounding brand names such as Bonfesto or Unagrande. "There hasn't been imported cheese in Russia since last spring, and many Russian companies have taken advantage of that and released similar products of perfectly good quality," explains Yulia Markova, the former manager of an Italian supermarket in Moscow.

"We really have witnessed the appearance of consumers who are prepared to make their buying decisions based on patriotism, but it's not yet clear what that price point should be," says management consultant Sergei Mitrofanov. "But regardless, you can only sell patriotism for a short period of time, and I think that the patriotic uprising of the past year is already subsiding."

Face of a cash cow

Though food industry companies have managed to capitalize on the nationalistic pulse of the nation, foreign companies dominate the fashion, technology and automotive industries so strongly that it would take a huge effort to compete with them, Andreev says. But he cites two interesting examples: "T-shirts with Putin's face printed on them were a local phenomenon, and the company making them sold as many shirts as they could print," he says. "There is another example of a startup that is having a lot of success with "Putinphones," which are patriotic cases for iPhones."


Photo: www.iphone-caviar.ru/Worldcrunch

Those two projects are the most obvious examples of companies trying to make a buck on Russia's current mood. And while both were extremely successful when they were released during the summer, demand has since slowed.

Another project that could be called patriotic is a fashion line started by popular Russian television personality Anna Chapman. About half of the women's clothes line feature motifs taken from Russian culture and history, and the brand was doing well even before the geopolitical situation created a wave of patriotism.

But profiting from public spirit is complicated. First of all, though production is in Russia, the fabric for Chapman's line is imported from abroad. Secondly, all of the seamstresses are immigrants who are interested in making money and sending it home. Chapman explains that there simply aren't enough qualified seamstresses who are Russian citizens. With the plunge in the ruble's exchange rate, many of these are leaving. Even those who are willing to work are periodically deported from Russia. "The government could at least start its import substitution program by stopping the deportation of seamstresses," Chapman says.

Traditional values

Outside the grocery store and a couple of viral souvenirs, Russian brands are holding steady. "Demand for our products is stable," says Vyacheslav Dolgov, general director of a factory that produces traditional embroidered scarves. "If the rise in patriotism means that we sell more scarves, of course we'll be happy. But considering the difficult economic situation, if we maintain the same sales in 2015 as last year, that would be an excellent business outcome."

Another question is whether the geopolitical situation will lead to a boycott of Russian goods overseas. Many Ukrainians have long been boycotting Russian products, cultural events and websites, but Russian brands don't appear to be threatened in other countries.

"It's hard to talk about the fate of Russian brands in the West, because there are practically no Russian brands in the West," says Rustam Salimzyanov, director of strategic planning for an advertising company. "It’s true, ironically, that some Western brands of products associated with Russia have suffered," he says. For example, gays and lesbians in the United States boycotted Stoli vodka, which belongs to a company headquartered in Luxembourg and is bottled in Latvia, because of offensive anti-gay statements made by Russian politicians.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Future

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.


But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

commons.wikimedia.org

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ