Russian diary market

Wimm Bill Dann is a pioneer of Russian diary market. Having started when the Soviet Union broke down, the company had used all the existing opportunities to become the leader of the market and to expand its operations abroad. It is important to notice that Wimm Bill Dann emerged on the favorable conditions even thopugh the political and economic instability were taken place. However, it is due to the process of this instability that chaotic business enterprises were possible to create.

Thus, the founders of Wimm Bill Dann took an excellent advantage of the time and created a powerful company that completely overtook national market. In fact, the conditions of external environment of the early 90s were the following: • “shock therapy” undertaken by Government, which meant decontrol of the prices and the absence of subsidies to firms; • high inflation; • changing monetary policy. Such poor economic conditions undermine the purchasing power of the majority of Russian citizens. Yet, they also favored the emergence of so-called chaotic money, which could be invested in virtually anything.

That is exactly how the company Wimm Bill Dann appeared in 1992 when several entrepreneurs bought diary plant in Moscow. Considering the fact that Russia is one of the biggest market in terms of value, the main goal of the company fathers was to enhance the diary product consumption above the existing level. It is important to notice that Russia consumed just one fifth of the European consumption of diary product. Therefore, the main goals of the company were: 1. To ensure availability of the product; 2. To ensure quality of the product; 3.

To make product affordable. By pursuing these objectives, the company hoped to create a high demand for diaries and win large share of the market accordingly. Thus, the main objectives in order to achieve goals had become: • To form reliable resource base; • To build new facilities; • To upgrade existing diaries. Considering the fact that the purchasing power of the Russian people wasn’t high, the company initially decided to base its strategy upon thorough cost-control to achieve cost leadership and thus to make diary products more affordable for the population.

It was a smart decision, since it allowed Wimm Bill Dann to penetrate the market and to get larger share of it. It is important to say that Wimm Bill Dann was a pioneer of Russian diary products market. It is the given company that made the sector attractive to such competitors as Danone, Campina, Ehrman and Parmalat. While WBD dominated the market, the main thing to be successful was to offer product for a reasonable price. However, when companies mentioned above entered the market as well, the competition had become more tense.

Thus, Wimm Bill Dann had to think about more effective strategy to win. During this period the main competitive advantages were: ? Access to financial resources; ? Wide product range; ? Efficient distribution. Considering those factors, Wimm Bill Dann decided to pursue the generic strategy of differentiation. Moreover, having operating for a certain period on the market, the company had enough financial resources in order to provide new technologies to improve the quality of the product making it serve longer.

Furthermore, it had establish a reliable chain of supply in the main regions of milk production – far East, Siberia, Central and Southern Russia. Thus, with acquiring of supply plants, Wimm Bill Dann could now control the quality of the product, which facilitated for the company the process of providing high quality products and enabled the company to pursue its differentiation strategy. In fact, with the differentiation strategy Wimm Bill dann aspired to create a strong brand and ultimately to form sustainable and strong customer loyalty.