'Crazy' Sells

Chernyshov Backs Wild Ideas:
Success Saluted, Flops Forgiven

By Scott Lewis
Managing Director  Willard PR, Kyiv

t can be rough selling beer in a country where brand loyalty is elusive, distribution is problematic, the weather is a factor, and where pricing is crucial.  Even so, Peter Chernyshov, managing director of Slavutich, part of the Carlsberg group, is upbeat:  He's focused on finding and implementing the marketing initiatives that will push his brands ahead in a market where sales charts tend to look like amusement park roller coasters. 

"Ukrainian beer drinkers are bloody switchers," Chernyshov says, explaining why a brand can show great results one year, just to have sales go as flat as a glass of stale brew the next. "Any beer will sell here if it tastes good, is advertised well and is priced right."

"People here have a Soviet mentality," he explains, adding that during the Soviet era, people had one or two brand choices - and sometimes no choice at all.  Even young Ukrainians with scant memories of life in the USSR share the mentality because they were raised by families that shared it.  Besides, he notes, restrictive visa regimes and low salaries continue to keep young Ukrainians at home, denying them the chance to travel and see how the rest of Europe and the world live.  Chernyshov calls the result "oppressed consumer behavior," which results in people being "overwhelmed by the choices in the market.  They are eager to try them all." 

That behavior impedes the development of brand loyalty, and requires brewers to continually provide incentives.  That, in turn, creates a constant demand for new marketing ideas.   

Chernyshov is the company's first point of contact for marketing people with new initiatives or slogans. 

"We don't punish people for their mistakes, provided they discuss the conclusions with their bosses.  In marketing, we're ready for crazy ideas," he says.

Those 'crazy ideas' become actual promotions through an established process that applies logic to creativity.

"I'm a very logical person, but that's not to say that I'm limited to numbers.  Numbers can flow in incremental volumes and prove anything.  Marketing innovations involve new costs: equipment, advertising, packaging.  We say, 'OK, calculate how much more we need to sell to get to zero.'  If the answer is that the marketing campaign needs to create a seven percent increase in sales in order to pay for itself, we take it to the top managers, and we ask whether they believe the idea is attainable and realistic." 

The company's top managers aren't overly conservative, Chernyshov says, because they understand that their bonuses are tied to the company's profitability.

Slavutich, Carlsberg Group produces Lvivske, Arsenal and all other Carlsberg brands (except Corona), actively involves employees at its breweries in Kyiv, Zaporizhiya, and L'viv in marketing.  One initiative calls the workforce to become 'beer ambassadors.'

"There are some who want to blame beer as an industry for problems like teen drinking," Cheryshov says.  "Internally, we created a document summarizing 23 beer myths, and we sent it to all employees with instructions to read it and learn it.  We said that there would be an examination to ensure that it was done."

He said that though it is too early to gauge results, people are reading the documents, and several have sent e-mails asking points to be for clarified. 

Cheryshov said that it is vital that employees support the company's efforts. "We created a message for workers:  'In every bottle, there's a drop of my salary'," he said.

He observed that because the nation's brewers have increased their production capacity, what had been a seasonal marketing effort is now a year-round endeavor.  He said that 2008 was the first year in the country's history that brewers had enough capacity during the summer months.  Previously, summer marketing wasn't crucial because stock would be sold out. 

Pepsico's purchase of Sandora means that Slavutich will be discontinuing its production of Pepsi and 7-up soft drinks soon.  That will leave the company with yet more capacity - and opportunity.  That opportunity may lie in the marketing of traditional soft drinks like kvas. 

In an example of entrepreneurial chutzpah, the company introduced a new kvas line branded Kvas Taras in May 2008. 

"The supply chain vice-president and I realized that the kvas market was growing.  Kvas is a fermented malt-based drink," Chernyshov said.  "We asked, why not sell it?"  Barely three months after that initial conversation, the first bottles of Kvas Taras were on supermarket shelves.

It wasn't an immediate success.

"The first batch was wrong - the supply chain based taste on a pure production approach," Chernyshov recalled. "We used a quantitative blind test of 600 consumers, and based on the result, refined the flavor.  The second batch was better."

The unsold bottles from the first batch were recalled and replaced with the improved product.  Today, Chernyshov says, Kvas Taras is the top brand in a crowded kvas market.

"There aren't many companies making real fermented kvas from grains. It's usually made from powdered concentrate or carbonated soft drink base with kvas aroma added," he said.  The beverage, which contains up to 1.2 percent alcohol, is being sold in half-liter bottles to compete with other soft drinks, as well as in one- and two-liter bottles. It is also available on draught. 

For a manager with a financial background, Chernyshov has a taste for marketing and an eye on every sales opportunity.  As our interview concluded, he made a final, heartfelt pitch: "You've taken so much of my time today,

I want you to buy a case of Slavutich on your way home," he says.
And we knew that he meant it.