Beer king Oleg Tinkov simultaneously mass-produces and hand-crafts consumer style

Vera Krasnova

When I said goodbye to Oleg Tinkov and left his office, I couldn't help but think that he was sticking his tongue out at me behind my back. That's the kind of person he is. When he isn't engrossed in his business, he is like a kid, and an unruly one at that. It's as if Tinkov can't decide whether to disgust or delight his audience.

"When people ask me what I do, I tell them I am the director of marketing," Tinkov stated, being straightforward for once. At some point in the nineties, this miner's son dropped out of the Petersburg Mining Institute after his third year and started to import calculators from Singapore. They were in high demand, and Tinkov ended up flying to pick up more goods twice a week. As soon as fax machines appeared in Russia, he began like a normal businessman to fax orders and receive boxes full of home appliances. His looks haven't changed much since that time. In his jeans, he resembles some guy from a suburban market stall, not the owner of a chic and elegant office downtown.

Yet the key words in Tinkov's life appear to be marketing and style. He loves to compare his work to show business, in that talent means nothing (or close to nothing) and image is all. He started to blow his "soap bubbles," as he refers to his business, when he founded one of the first chain stores in Russia, Technoshock. This venture, however, failed to bring him the pop-icon fame he associates with good marketing. Then came Darya Dumplings, which are apparently also waiting for their moment to shine. Only Tinkoff Beer managed to set off the desired extended craze.

Tinkoff is the most expensive beer on the Russian market. "I always said that the more expensive, the better!" Oleg shouted when he heard that a bottle of Tinkoff costs several times other respectable Russian beers. After that, he called in a company manager and after hearing a five second report on how demand was three times supply, commanded dramatically that the price be raised ten cents.

The secret to Tinkoff's success has been explained in different ways. Some point to the flawlessly stylish advertising. Oleg himself swears by the legend of the beer's ancient recipe and his own noble roots. And Tinkov's St. Petersburg restaurant, to be completely honest, is impressive. The brewery restaurant resembles a strange mix of a stock exchange, a factory cafeteria, and a dance hall. Yet this style overload mixes well with the murky beverage served there. Apparently, the local elite has basically moved in to the place, and president Putin, when in St. Petersburg, always stops in for a bite.

The way the beer behind the restaurant's glass walls is brewed is no secret. Based on technology developed in Bavaria, the beer is produced in small batches, "hand crafted" by the brewer's hand pushing the buttons. After fermentation, part of the beer is served to restaurant patrons and part is filtered and bottled. Every piece of equipment and ingredient is imported from Germany.

- Oleg, you are basically making a decent German beer, which anyone with the equipment could brew. Does that mean that your success is purely based on good marketing?

- Without a doubt, this kind of beer is brewed everywhere you look in Germany and it would be stupid to claim the contrary. But we are the only ones who brew this beer in Russia. However, if you look closer, you see that the important thing is the emotional wrapper, the legend, the image of the brand. I think that this gives us our competitive edge. It's not that hard to start a brewery like ours, though it is expensive, but still nothing a large company couldn't handle. I mean, Baltika is actually in the process of building a microbrewery like ours right now, but the question is, will people go there. Because we already have a history, some kind of heritage. Moreover, we are the first, and the first have it easy.

So, yes, the whole thing is not technology but marketing. It's just like show business. People go to hear the name, not the singer. That's the way things work.

- Have you known this for a long time?

- I think this understanding is innate for me.

- Tinkoff is not your first brand, right?

- My first was Technoshock, a chain of stores selling consumer electronics in St. Petersburg. I hyped it up and then sold it right before the economic crisis to people who wanted more than anything to express themselves. In other words, they bought a soap bubble. Actually, Dovgan is the best at this. He really knows how to blow those bubbles.

- How did you create Technoshock as a brand name?

- Back then it was easy. Back in 1993 to 1997, just name recognition was enough. People wanted to show off to each other that they had spent more money and bought something at Technoshock. It emphasized their social status.

- Why did you sell it?

- Because the electronics market stagnated.

- Was it a fast and easy decision to make?

- It took about a second. I am the kind of person who takes the money and runs.

- Did you already know your next project would be Tinkoff?

- Of course, I was already building the restaurant.

- How did you come up with the idea to brew beer?

- I went to America. America is a veritable smorgasbord of ideas! In my favorite city, San Francisco, there is this microbrewery where a friend took me. He said, "Look, all America is coming here, all the young people. Demand for the big brands is falling, but for this stuff, it's expanding." I took a look and was also impressed by the concept. I understood what I needed to do, meaning blatantly copy. Maybe this will destroy my image but if I said I thought it up that would seem too brilliant.

- Did you also copy the sushi bar?

- With the little boats? Now that, by the way, was a failed idea. I spent a hundred thousand dollars for that and had no clue. I really lost, not in terms of money; Japanese restaurants make good profits. It was a failure conceptually. The little boats float by, and customers take sushi right from the boats. It's a mix of Japanese fast food, which is all the rage in the U.S., and the business lunch.

But what happened? No one does the business lunch thing in St. Petersburg. And after swimming around for an hour or two, the fish dries out and you have throw it away. Then we stopped putting the sushi out in little boats. The second problem is the feeling, the experience of the restaurant. I didn't understand this because I can never fathom what goes on in the minds of New Russians. They are difficult people who, it seems, don't eat, but bask in sensuality. They all know that Japanese restaurants are supposed to be the most expensive. You should be seated at your own private table by an attractive young woman who then gracefully pours you some sake. In our case, we had all this metal, all this stuff floating around which you had to take yourself, like from a conveyer belt or something.

This concept just didn't work. That was my problem because a businessman should be able to foresee these things. Though I am sure that in a couple years all this will change and people will go to Japanese restaurants just to eat.

- Have you had a lot of ideas that didn't work out?

- I wouldn't say a lot. I have some ideas that are interesting but I don't have the money for them. For instance, I want to build a factory. The demand for our beer is three times the supply, and we have to keep raising the price.

- You are considering mass-producing your beer?

- Not like Baltika, much less, just five to six million bottles a month. To build a smaller factory like that costs in the tens of millions of dollars. I am sure we would get it back in two years, but where do we get the money in the first place? I am also thinking about a chain of coffee houses. I have a friend who worked at Starbucks. It shouldn't be the Perfect Cup in St. Petersburg where you sit and chat. The cups should be paper so that you can get your coffee and go. Another really fantastic idea is a proper chain of gas stations with a solid brand name. We don't have any gas stations oriented at particular market segments here. Pelmeny or dumpling joints are also promising, very promising. Playing on our Soviet past and our general love for dumplings.

- Why does that interest you?

- It's fast food, but Russian style. A direct alternative to MacDonald's.

- It seems a bit strange that after stylish Tinkoff, you are now drawn to fast food and paper cups…

- It's not contradictory. Style means something is sexy. I think that paper cups are sexy if you put the right, attractive logo on them. It's really cool: you are walking down the street, sipping. It looks good. We seem to think that style means a Mercedes or Ferrari. But actually style is something you feel. You go into a cool looking place where the server smiles at you and quickly hands you a quality paper cup with steam rising out of it. Now that's stylish.

There's no need to talk about packaging. The brand is what matters. If you present things properly, you can name your price. I've never been interested in offering sales or discounts. Those are the kind of competitive strategies anyone can use. But not everyone can afford to sell for more and that thought excites me. We mark up our product and make a lot of money off our beer.

- Where is Darya Dumplings in your scheme of things?

- If anyone would want to buy Darya, I'd sell it in heartbeat and do something else. Darya Dumplings are super popular and have a thirty percent market share in Moscow. We have just bought a factory and are modernizing it this year, to the tune of big bucks. Soon, we'll be making all kinds of different frozen foods. We are inventing a new category, convenience foods. We want to get a patent for it. The old word for frozen foods and such in Russian-"semi-prepared" -is too unwieldy and sounds German or Soviet. We want to make a new category, where Darya become synonymous with convenience. Darya helps people save time, makes life easy. "Feel free!" is the concept. We are filming a commercial now in the States with this very message.

- So you are interested in the process of creating a brand in and of itself?

- Yes, and we're currently working on two. One is for frozen foods which is aimed at all of Russia so the price needs to be lower. First we conduct some in-depth, expensive market research. Then we either order the product from someone or make it ourselves. We think up a brand and register it, then design the brand logo and packaging. After that, we think up slogans and an advertising strategy and marketing plan which we then implement.

- Do you have a lot of people working for you?

Only four including me. Samvel Avetisyan is our idea man, Mikhail Gorbuntsov works with the media and PR, and Nikita Volkov takes care of sales promotion, regional issues, and the merchandising department. That is made up of around forty people and is like an internal advertising agency. We only use outside ad agencies to help buy media slots and produce ads, but all the creative work is done here.

- You seem to do everything by the book, and yet that's not easy. I mean, you say you went to the States and just copied things, but how come no one has copied your restaurant?

- I didn't copy the style at all. I managed to pull off a mixture of styles because that was the way the building was on the inside. It would have taken an insane amount of money to change it. So I looked at the budget and thought why not just leave things as they are? So I ended up with a mix of things.

- Are you an admirer of more than one style? Do you think that there is such thing as a Russian style in design?

- Scandinavian or French style is closer to our hearts here in St. Petersburg than what they are trying to do in Moscow. I don't really care for elaborate opulence. I prefer Scandinavian style. Or sometimes Italian.

There is definitely a Russian style. Designers like Ralph Lauren have noticed it and been affected by it. Our culture is strong, and Western designers try to exploit it by commercializing and making a profit from it. Contemporary Russian style is a big question. We are living off our past by copying it. In terms of something new, I think there's no money and therefore no style. Because style is also a product and like any other product, you have to advertise it, promote it, and make it a household name.

- Do you hire professional designers to work on your projects?

- Yes, but they worked on the St. Petersburg restaurant in a technical capacity. But now at the Moscow restaurant, it's just the opposite. I'm trusting the whole thing to Vasili Shpritz, the best designer in Petersburg. Of course, he also consults with me.

- Will the Moscow restaurant resemble the Petersburg one?

- They will be connected but Moscow is a different city and needs to be wowed in a different way. You have to show Moscow your money. Otherwise, Muscovites will come and say, oh, this guy didn't spend a cent on this. Though they come to our place in Petersburg and like it. In Moscow, I'm serving them marble and gold leaf. Actually, I'm joking a bit. If I could have simply copied the Petersburg restaurant, I would have, but the architecture of the Moscow building wouldn't allow it. In Petersburg, the ceilings were higher and there were all sorts of nooks and crannies, but the Moscow place is all straight lines. But we're trying to keep the same spirit so that a person will walk in and say, oh, it's a chain restaurant.

- What about a restaurant chain? How do you envision it?

- Right now, it's only an idea and we haven't draw up any kind of business plan. In Moscow, I'm sure we'll be successful. Because Muscovites have already started making a pilgrimage to our restaurant and leave notes for the wait staff begging for us to open in Moscow. People from Ekaterinburg, Samara, and some other cities have contacted me and offered some kind of partnership, not having a clue what they're talking about. I would like to develop a plan for a chain in major cities but I still don't have a strategy.

- Large chains in Russia often have serious problems with management. Did you encounter this with Technoshock?

- I would be joking if I said there were no management problems. The bigger issue was the market. Only really strong companies can survive in a stagnant market and if your management is just so-so but the market is stagnant…Well, let's just say we didn't have geniuses for managers. In terms of the restaurant business, there are excellent restaurateurs in Moscow but they aren't in a position to keep an eye on things and service gets worse and worse. They open a couple more restaurants and suddenly, it's not a family business anymore where the owner comes in every day and says what isn't being done right, but it's not a chain, either, because there are not overall quality control standards.

- What defines a business' quality?

- Professionalism. Well, why mince words? Here's a good example. I reserved a table for four at a good, meaning well designed, restaurant in Moscow. Then I got a call back saying, sorry, we actually don't have a table for you. The manager said, "Please ask for me next time you come and I will arrange a special treat for you." I answered, "In about three months I'll do the same for you," because I am their direct competitor. They want to charge me two hundred dollars to sit in their restaurant, and he wants to give me a special treat?

- Is service better in St. Petersburg?

- Petersburg's market is limited, and a waiter can make good money. So there is a lot of competition for those jobs. Moscow, on the other hand, has lots of money and lots of migrants. People are fighting over workers. Anybody with half a brain is instantly promoted to some ridiculous wage, while everyone else gets a hundred bucks or so. Not to say that our Petersburg waiters are something special. They are average, okay. But compared to Moscow, they win.

- How do you plan on hiring in Moscow?

- We think about that morning, noon, and night, until our heads are pounding. Probably we will import our staff from Petersburg at first: two managers, about ten waiters, and a head chef. We'll rent them apartments here and keep them a couple months or half a year. They will create the right atmosphere and train new staff properly.

- What is your personal management style?

- There are two problems in business: people and money. I can't think of any others. I do a bit better with the people part because I don't work with divas, but with workhorses. I think that it's five percent strategy and ninety five percent day-to-day schlock work. I like to hire average, straightforward folks who know how to work. I myself don't manage; that's boring for me. I have about six people interested in profit who run things.

- Does your team ever tell you that you are wrong about something?

- They are a bit shy about it, but some do. As a rule, I listen but won't necessarily follow their advice. Sometimes, but very rarely. But sometimes I catch myself thinking, this unsolicited business advice and democratic thinking should stop. I don't like having a lot of business partners. I want to say, no, do this, and don't talk back.

I think that when a director has a vision, other people understand it in slightly different ways. They listen and draw their own conclusions. If five different people try to put together a strategy, they will most likely fail. They may all have the same goal but see the way there differently.

- Do you take back people who have quit your company?

- Everyone quits and then comes back. I'm hard to work with. I guess I really like the liberal, American approach to management. There's no wall between boss and employee. They can go and have a beer together, though when it comes to work, the boss demands full cooperation. It's not like here in Russia, where people are divided into clear classes.

- Can you describe your mission in all this?

- I won't go into detail and give away all my business secrets. But I can say that I don't really have a mission. The only mission I can sort of envision is that I need to teach my children well, as well as possible, and take care of my family. I guess this really isn't a mission, and I wouldn't really try to make this into a mission. Maybe I have yet to have my mid-life crisis, God forbid. I basically believe that God gave me talent, and any missions will come from above.

- So, you basically see yourself as striving for the same things as the average Russian man?

- Yes, in general. Back in 1993, I told a journalist that I wanted to be the richest man in Russia. Hey, I was young. But I don't want that anymore. I want to be free. I want money to increase my freedom. I don't want to depend on anyone and don't want to ask for any favors. If I need something I want to go and buy it myself with my own money. That's my very primitive philosophy.

- If the market for beer dried up, would you sell Tinkoff?

- In a heartbeat. If an artist makes a painting, he sells it and forgets about it. It's hanging somewhere and making someone else happy. He worked all night on that painting, but then he just up and sells it. I'm the same. I get money for my art and my time, and that's completely normal.