What is the status of Western brands in Russia? Many claimed to leave to protest the invasion of Ukraine and to comply with sanctions. But did they?
The American Marketing Association New York interviewed Konstantine who runs the YouTube channel Real Reporter. The channel provides an up-close look at life in Russia since the start of the war.
Here are some insights he shared with us straight from Moscow on how Western brands have been handling business. You should watch “How Western brands ‘left’ Russia” in its entirety..
Transcript:
Lisa Merriam:
0:05 When Russia invaded Ukraine, Western Brands announced that they were exiting the Russian market. But did they?
0:09 Konstantine runs a remarkable YouTube channel Real Reporter that gives people an up-close view into life in Russia since the sanctions. In an episode called “How Western Brands ‘Left’ Russia,” he explains the various ways brands are handling business in the market.
0:30 Konstantine sat down with the American Marketing Association New York to talk about brands in Russia today, how sanctions are affecting reputations, and what the long-term implications for brand value might be.
Konstantine
0:43 This is an interesting topic but because a lot of people talk about it especially in the west but not a lot of people know all the details of what’s you know really happening here so I just thought it’s a good idea and I just you know take a walk around the small in Russia and I just you know pointed to certain Western brands that said that they would leave but they actually stayed and the video took off.
Clip from Real Reporter
1:08 I went to a typical shopping mall in Moscow suburb to see what’s really been going on since foreign companies announced their Exodus from Russia.
Konstantine
1:23 You can talk about different groups and categories of brands, depending on how they reacted to the conflict and to the sanctions that followed it. We have brands that left completely. There are not many of them. There are many brands that said that they’re suspending sales in Russia and now they’re open again, and their stores are up and running.
Clip from Real Reporter
1:46 Some of these companies are just pretending that they pulled out, while still quietly making money in Russia. A French company that owns this brand vowed to leave Russia. At first, l’Occitane didn’t want to pull out, but after public outcry, it made a u-turn and closed this Russian stores. The company also released a statement condemning the unjustified invasion of Ukraine. l’Occitane specifically stated that they will no longer supply products to any Russian retailers. But if you take a look at the shelves right here, somehow it’s still present.
Konstantine
2:20 Then we have another group of brands that left Russia technically on paper, but they’re still supplying their products to the country.
Clip from Real Reporter
2:30 One of Levi’s stores in Moscow is also reopened under a different name JNS. It has a new owner, new sign, but the same iconic American jeans on the shelves.
Konstantine
2:41 News came in recently about a deal between Inditex and a Lebanese company and the latter is going to open at least four Zara stores in Moscow in 2023 under a different name. A different name but it’s going to be the same Zara clothes. Nike also after the war started, they closed their shops across the country. But now their first store in Russia reopened. It happened a couple of days ago also under a different name. It’s now called MSP which stands for “Nike Special Projects,” as far as I understand.
3:21 McDonald’s and Starbucks. Well, they left the country all together and they sold their restaurants to Russian business owners. So those chains have new owners.
3:35 When it came to McDonald’s, as far as I understand, like 90% of the of the food came from Russia anyway except for French fries. So French fries we had to import and at first there were disruptions in supply of the French Fries in in Russian McDonald’s. We didn’t have it. Now I think it’s back on the menu. Now it’s called differently. The new Russian McDonald’s is now called “Tasty M period.” And it’s owned by Russian company.
Clip from Real Reporter
4:03 This one is really funny. So they still have the old sauces right, but they now scribble over the M-letter on every packet. I think it’s hilarious. So now it’s someone’s job to you know cross out the M-letter on every packet of ketchup or mayonnaise.
Konstantine
4:31 People kind of re understand that they’re not doing this intentionally. Or maybe a lot of people think that they’re forced to do so. But I guess it’s safe to say that those brands had a big and loyal pull of loyal customers in Russia. And those people, they still find ways to buy these products. In terms of whether their reputations were damaged, I don’t think so.
5:07 I have a feeling that if you know the slightest opportunity arrives to get back to Russia and operate as they used to, they would you know seize it and they will do it. It’s just too big of a market to lose and you know it’s pretty obvious that they hate to do so. So I’m pretty sure that if it’s possible, they will come back as soon as an opportunity arises.
Lisa Merriam
5:40 Russians still want Western brands. So strong is the marketing, sanctions or no, they’ll still do what it takes to get them–and that’s Brilliance in Marketing.