Shaken, Not Stirred - Russian Standard Vodka: Strategies for Global Branding and Expansion into the US Market

Russian Standard may not be a household name in trendy New York bars yet, but Roustam Tariko would like it to be. When Tariko introduced Russian Standard Vodka in 1998, he wasn’t interested in just vodka. The young entrepreneur established Russian Standard to become a high-quality international multi-category icon of the new Russia, the Virgin of Russia. As a result, Russian Standard is not only a vodka, it is now a thriving bank. In this new case study, Professor Pierre Chandon and Vadim Grigorian ask us to consider the value of horizontal brand extensions across widely different product categories (e.g., banking and vodka) and to examine how Russian Standard can compete in the vastly different US market.

by Pierre Chandon, Vadim Grigorian
Last Updated: 23 Jul 2013

The era of perestroika created a whole new breed of entrepreneur in Russia: aggressive, hardworking and creative. Roustam Tariko was one of them. From humble beginnings in Tatarstan, one of Russia’s republics, he started a small firm acting as a liaison between an Italian business travel company and a Russian hotel-booking agency. About the same time (1992) he made contact with Italian chocolate maker, Ferrero, and started importing Italian candies to the Russian market. As in most success stories, one thing led to another and by 1994 Tariko was distributing products for Martini & Rossi in Russia and heading his own company, Roust Inc.

With his company now Russia’s leading importer of upmarket alcoholic drinks, Tariko set another goal: to make his firm a “billion dollar company within 10 years.” To do so, he understood that he could no longer be just the middleman between producers and their markets. He wanted to own his own spirits brand. But in creating Russian Standard vodka, Tariko not only had the intention of producing a great product, he wanted to create a world-class umbrella brand, like Virgin or Sony, that would offer products and services from differing categories under the same name all over the world.

In the first half of this case by Pierre Chandon, Assistant Professor of Marketing and Vadim Grigorian (INSEAD MBA 2000), we learn about the birth of Russian Standard vodka and the development of its brand identity. After its successful introduction in Russia and in several European markets, Tariko sees an opportunity to fulfil his dream of creating a global brand and makes an unlikely choice for his next venture: banking. It may be hard to imagine putting money away at the “Absolut Savings & Loan” or drawing money from your “Bank of Smirnoff” checking account, but the connection to Russian Standard Vodka didn’t seem to deter new customers of Russian Standard Bank. In fact, its connection to the brand might have helped with consumer adoption: established in 1999, the bank already ranked 45th out of 800 banks in Russia in terms of capital by early 2000.

In the second half of this case, the authors provide an overview of Russian Standard (its brand identity and marketing mix) and of the vodka industry, consumer behaviour, and competition in Russia and in the US. Armed with this information, the authors ask us to consider the viability of an expansion into the US. What decision criteria ought to be used to determine an international expansion strategy? Should the successful positioning of the brand and marketing mix used for Russia be directly applied to the US market or should a custom approach to the US market be favored? What would be the implications of the chosen strategy for the equity of the brand in Russia, both for its vodka and banking customers?

This case is particularly useful in MBA courses on brand management to discuss brand extension and global branding strategies. It can also be used in an international marketing course or in an entrepreneurship course to illustrate the international expansion of small private companies.

INSEAD 2002

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