The position of leader is currently vacant on the juice market. It will go to the producer able to gain better insight into mass-market consumers.

Anastasiya Matveyeva

After discussions at the spring meeting of the Russian Union of Juice Producers (RUJP), the leading companies calculated their market shares based on results for 2003. They decided that the biggest producers, Wimm-Bill-Dann (WBD), Lebedyansky, and Multon, hold equal positions, or 25.5 percent each. The fourth largest Russian company – Nidan – has 14 percent.
Observers believe that this configuration is not typical for Russian consumer markets. Other markets have a leading player, while all the other players strive to overtake the leader. This suggests that the current equilibrium on the juice market will not last long. And this time, the new leader will be chosen by mass-market consumers oriented toward the lower-medium price range of juice products.

The picky masses

“Wimm-Bill-Dann is losing ground on the market because of its key brand – J7”, says Sergei Ikatov, an analyst at Business Analytica. “There are two main reasons. One is an objective reason linked to the specifics of the market’s development. Lower price segments are growing at a faster pace now. The other is a subjective reason concerned with the brand’s age: it’s one of the oldest brands in its price segments. Consumers are tired of its image and this image has become fuzzy.”
Indeed, according to data from marketers, in 2003 J7 lost market share not to other brands in its segment (the upper-medium price range) but to mass brands. The explanation is simple: new juice consumers have appeared, people with moderate incomes living mainly in Russia’s regions. The growth of incomes has enabled them to improve the range of products they buy, although not to the extent that they immediately share the middle class’s consumption standards. Thus, the mass regional market has become potentially more attractive to juice producers than the mainly metropolitan middle-class market. According to Business Analytica, the average Russian nationwide consumes as little as 12 liters of juice and nectar a year, whereas an average Muscovite drinks 35 liters and a resident of St. Petersburg 30 liters.
Each producer has a brand targeting those of modest means. Nidan has Moya Semya (My Family; 70 percent of its output), Multon has Dobry (Nice; 50 percent) and Lebyadinsky Fruktovy Sad (Fruit Orchard; 60 percent). Wimm-Bill-Dann hasn’t passed over this niche, either – it produces juices under the brand Lyubimy Sad, or Favorite Orchard.
The reason why WBD’s rivals have been successful seems to lie in the fact that they turned out more sensitive to lower-income consumers’ needs. For example, Moya Semya was the first to offer a 2-liter package. Nidan’s marketers realized in time that one liter is not enough for a family of several people. The 2-liter package immediately produced a considerable increase in sales.
Also, specialists point to differences in creative advertising. In their opinion, commercials for such brands as Fruktovy Sad and Moya Semya are brighter, more interesting, and more dynamic than the rather standard commercials for Lyubimy Sad.
A brand’s emotional charge is a decisive factor, since all brands seem to have been promoted in the same way – in full conformity with advertising canons.  “Juices in the lower price segments target consumers who feel the so-called great need to join,” Alexei Yurov explains. “In other words, they need to feel they belong to a social group with a higher ability to succeed.  Commercials for juice in this category produced by all manufacturers bar none appeal to this feature of the target audience. Both the main and supporting characters are either members of the same family or work together.” 
Lyubimy Sad is represented by an old man who tells now a grandson, now a neighbor that it is more economical to buy this brand than others. The advertising appeals to one of the motives behind the consumer behavior of people with modest incomes, their efforts to save. However, to all appearances, Russians, even those of modest means, emotionally don’t want to join the stingy. WBD considers so-called premium juices (the premium and upper-medium segments, also known as “Russian premium”), the most promising niches where the company remains the leader. “We’ll concentrate our efforts there,” stated Alexander Malyutin who was appointed Director of WBD-Soki (WBD-Juices) earlier this year. Indeed, J7 was primordially regarded as a brand targeting the middle class, which differs from mass consumers not only in terms of income but also in terms of personal characteristics (“they have high motivation to achieve,” as Alexander Yurov put it in). 
This viewpoint is arguable. Marketers’ observations show that consumption in this niche is increasing in absolute terms, but not in relative ones.  On the contrary, the market share of the upper medium segment has dropped 7 percent – from 38 to 31 percent, since the mass segment is growing at a faster pace. According to Nidan representatives, the premium segment is growing “but not very fast.” Those at Multon believe that “paying attention to the premium is quite logical, as this segment has the highest profit margin. However, the premium is quite a limited segment with a certain, limited number of consumers. One should not expect an explosion of consumer interest there.”
In any case, whether the premium segment niche is promising or limited, one specific feature of the moment is that WBD will never be as carefree in this segment as it used to be.
WBD has to catch up with its rivals in the premium segment in the area of packaging. J7 has been in traditional packages too long, which evidently has done no good to the brand’s image. Since other producers have changed their packaging to more attractive designs and made it easier to manufacture as they have installed new production lines. WBD doesn’t deny the need to give its juice a new look: “Our rivals have put out all of the innovative solutions in cardboard packaging before us,” admits Alexander Malyutin. This year WBD has begun to produce J7 juice in plastic bottles.
The market has responded positively to the change. According to WBD, sales of bottled juice are increasing 50 percent a month. In the opinion of Valery Ostapets, President of RUJP, WBD is creating a new image not only for its brand but also for the plastic bottle, traditionally the package for cheap drinks. The bottle currently used by WBD is made of special, opaque plastic to ensure the safety of the contents.
However, the head start the new package gives WBD is not great. For example, Lebedyansky plans to spend part of a $35-million loan from the International Financial Corporation (IFC) to install plastic bottling equipment.

Betting on individuality

Like the mass segment, brand image is crucial to the premium segment. For example, all brands hammer away at the drive to achieve. “This target audience’s preferences are reflected in commercials with characters who demonstrate certain features like individuality, freedom, and independence (Ya, Rich, and J7 in the Last Hero reality show); leadership abilities and opposition to the crowd (Rich’s commercials); desire to achieve goals (the slogan of Champion Juice: “You just have to want it…”),” notes Alexei Yurov.
Once again, WBD’s rivals boast a greater sensitivity to the market. With premium brands, this is reflected by the fact that producers don’t let their brands go out of style. J7 on the other hand has only changed its image once since 1995. In the Last Hero advertising campaign, it turned from merely high-quality juice into a drink for active people who don’t yield to challenges. Champion (Nidan), which emerged on the market much later than J7 in 1999, has already had time to become a “wholesome juice” and a juice for active and independent women. In 2003, the brand began to attract male consumers, and to this end, the company shot a commercial featuring the female pop group Blestyashchie. Rich Juice (Multon) was initially presented simply as a stylish brand, while now emphasis is on the individual style inherent in a person who drinks it.
The difficulties of the premium niche are aggravated by the fact that more and more new brands are making a claim for this market. (For example, Nidan recently launched Caprice Juice). Global brands are getting more active, too. Tropicana is being advertised extensively. Nidan bottles juice under this brand name at a plant in Kotelniki under an agreement with Pepsi Bottling Group. One of the most popular brands in Europe – Granini – has become more conspicuous on Russia’s retail shelves and the German company Eckes-Granini has its own production facility near St. Petersburg. Finally, well-known Russian ketchup producer Baltimor has entered the struggle for the middle class on the juice market. The company has launched vegetable juices on the market (the 8 Ovoshchei, or 8 Vegetables, brand). Until recently, only tomato juice was offered on the domestic market, but now Baltimor is promoting a range of vegetable juices, from pumpkin to celery. When Baltimor’s new facilities reach full capacity, it will aim for 2-2.5 percent of the market, comparable to the current market share of Rich Juice. Looking at indicators for juice consumption worldwide, where Japan and Poland are leaders with 20 percent and 15 percent of the market respectively, the company has very good prospects.

Pressure from both sides 
    
Wimm-Bill-Dann is in a tight spot. Rivals’ mass and premium brands are putting on the pressure via brands. In production and distribution, the areas where WBD’s rivals have lagged until very recently, the leading players are approximately equal for the time being. This means that professionalism in brand management will decide the outcome of competition.
It seems WBD is aware of the problem. When asked by Expert about efficiency in advertising, Alexander Malyutin answered, “Efficiency in advertising lies in the balance between cost and results. We are trying to keep our balance.” Until recently, the company has been confident that there was a direct relationship between the size of its advertising budget and sales. Now, it seems their confidence has diminished – on markets with tough competition, where the number of consumers is limited, the slightest miss with the target audience immediately affects a brand’s financial results. 

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