Post-Crisis, Life Goes On

Before the complete self-destruction of the Russian banking sector,
my ex-flatmate Ann and I bought a $12 (yes, twelve dollars!) box of Rice
Crsipies for this very purpose. Then, when we couldn’t find marshmallows
anywhere in Moscow, Ann’s brother brought them from America. Just as all
the ingredients were ready, the crisis struck, and in the resulting
chaos, the dream Ann and I had was put on hold.

Now, life is returning to some sense of normality, but it will never
be the same. Ann is gone; having decided that the party is over in
Moscow and the grass is greener in other pastures. There are no more
Rice Krispies in Moscow (at any price), but I am relaxed enough now to
spend an evening making (and eating) a quintessential American desert
with a Russian friend of mine.

I have a whole new Post-Crisis Life today. Monday to Friday is spent
working, with the privacy of my apartment as welcome cocoon to crawl
into at 8 pm, not to leave till 9 am the next day. Friday nights I go to
one of the many going-away parties hosted by expats who are leaving
Russia for the West. Recently, the PW expats have started a great
tradition; renting out a near-by bar for a night of debauchery supported
by free drinks and no inhibitions. Good thing I am such an angel.

Saturday mornings I have a Russian lesson either in my home, or at a
non-touristy Moscow attraction. Saturday afternoon, I return to my Peace
Corps shopping style, and go to the rinoks to squabble over every ruble
when buying food. There are still Western supermarkets, but they all
jacked up their prices to astronomical levels, and I just cannot justify paying $5 for tomatoes when the
rinoks have them for 5 rubles (big difference when its 15 rubles to the
dollar).

With my current non-existent dating life, I formed a group of club
kids who I spot-hop with on Saturday nights. Last weekend we were at Propaganda,
and two nights ago we were at Pilot.
Next weekend, we have already made plans to check out another place
called Garage.

Sunday is always a good day to sleep in and play video games till
four in the afternoon, especially when you flat mate buys a playstation,
new games are $3, and it rains all day.

Yes, life is returning to normalcy, with the twist only Russia can
provide. Nice to see the ruble is slowing its decent again, the first
boxes of Granola cereal reappearing at the local grocery store, and the
clubs are still full of the young and fun, but everyone wonders when
Yeltsin will croak and I don’ think my local kiosk will ever stock
Planters Cheese Balls again.

— Update! —

Today, November 1, I saw Planters Cheese Sticks in the kiosk! Ok,
so they aren’t actual Cheese Balls, but close enough for my 23 rubles to
purchase!

Christian Science Monitor December 3, 1998

Despite it all, Russian firms do well

By Fred Weir

The evidence is still scattered and sparse, but amid Russia’s
blizzard of economic woes, a few rays of light might just be breaking
through. Just watch Masha Ratinova, a graphic artist use her computer to
put the final touches on a new label design for an old brand of Russian
cooking oil. The label, which includes Van Gogh’s
‘Sunflowers,’ a crispy head of lettuce, and a smiling
housewife, is a part of a new marketing pitch by an agricultural
enterprise hoping to compete against imported cooking oil.

The imports were highly favored after the collapse of the Soviet
Union, when foreign goods flooded Russia. But in August, imports
suddenly became expensive when the Russian currency fell to barely a
third of its previous value. Now Russian products have a chance to
compete. ‘Russian sunflower oil was considered too dark and heavy
for cooking and was just sold in bulk for industrial purposes,’
says Ms. Ratinova.

Half the price

Now, with a little dash of Western marketing style – provided by
Ratinova – plus a whooping great price advantage, the home-grown product
may do well. The Russian product can now be bought in local shops for
less than half the price of its foreign-made competitors. Currency
devaluation has also proved an unequivocal boon for a few key Russian
exports, which are produced in rubles but sold on the international
market for dollars, such as oil, gas, and steel.

But most companies producing for the domestic market have been sorely
buffeted by bank failure, inflation, and the uncertainty that swept in
with the August crisis. After nearly a decade of economic depression and
political turmoil, few today feel like looking on the bright side.

‘It’s reasonable to expect benefits from the massive devaluation
of the ruble last summer,’ says Andrei Neschadin, an economist with
the Union of Industrialists and Entrepreneurs, a private-sector group.
‘But in fact we see very few domestic producers actually making any
headway,’ he says. ‘We seem to have a
worst-of-all-possible-worlds scenario unfolding here.’

The Soviet Union is usually depicted as a vast industrial rust bucket
that churned out tanks and machine tools, and little else. But its
factories also produced a vast array of consumer goods, from hairpins to
automobiles – often, admittedly, of atrocious quality.

Post-Soviet hopes dashed

Many Russians hoped the post-Soviet transition would bring
investment, new technology, and better management to enable domestic
companies to take their place as competitors on the global economic
stage.

Instead, they lost most of their home market to aggressive foreign
imports. Mr. Neschadin estimates that by the middle of this year, about
60 percent of the consumer goods on sale in Russia were foreign made. In
wealtheir markets, like Moscow, the figure reached 80 percent.

Russia’s gross domestic product has plummeted to about half its 1991
level, and the Finance Ministry recently forecast that it will slip
again by 3 to 9 percent next year. ‘Most Russian industries did not
reform themselves,’ says Vilen Perlamotrov, an expert with the
independent Institute of Market Problems. ‘They were slow to
introduce new product lines. They didn’t make use of advertising to
overcome the negative image of Soviet goods in the minds of Russian
consumers. So, they were easily squeezed out of the market.’

Neschadin, whose center organizes an annual contest to select the
best Russian consumer products, says those few companies that did
undergo painful restructuring in recent years are now surviving.

Some are prospering.

He cites the Cherkisova and Tsaritsino plants, Moscow-region dairy
producers, which upped quality control and introduced Western-style
packaging a few years ago. Even without the relative price boost
conferred by ruble devaluation, their milk, yogurt, sour cream, and
processed-cheese products had pushed most foreign brands off Moscow shop
shelves by this year.

Green Mama, a line of soap and beauty products, has been aggressively
grabbing market share away from imports since devaluation gave it a huge
price advantage, Neschadin says. ‘This is particularly encouraging,
since the reputation of Soviet-made cosmetics and bath products was the
most dismal of all,’ he says. ‘If they can come back in this
field, anything is possible.’ Dumplings snatched up

Another example is the Biryulevsky meatpacking plant, which began
producing frozen pelmeny, traditional Siberian-style meat dumplings, a
couple of years ago. Seldom seen in Soviet times, except in homemade
form, pelmeny served with sour cream is an ample meal in itself.

‘There aren’t many good quality frozen or tinned Russian foods
on the market, but when they appear people snap them up,’ says Vera
Khaliulina, manager of the Shabalovka grocery shop in downtown Moscow.
‘It shows Russian products can compete.’

But some foreign companies that started operations in Russia are now
cutting back or leaving altogether. One of the Gorbachev-era pioneers in
the new Eastern market, Pizza Hut, announced recently that it will sell
its two downtown Moscow outlets and pull out by the end of this year.

One exception to this trend – which might prove the rule – is the
hamburger giant McDonald’s, which has opened four new restaurants in
Russia since the August crisis and plans to more than double the total
number to 100 by the turn of the century.

Buying in rubles

‘When we entered this market a decade ago, we realized we had to
integrate into the domestic economy and find Russian sources for
everything we make,’ says Glen Steeves, the Canadian managing
director of McDonald’s-Russia. Today, he says, about 80 percent of the
chain’s products are grown and processed locally.

‘The fact that most of our inputs are measured in rubles has
insulated us from the shock of devaluation,’ he says. ‘Our
prices have risen somewhat, but in dollar terms they have fallen.
Business is only marginally lower than pre- crisis levels.’