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Branding Strategies of Latvian Balsam

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Latvijas Balzams is one of the oldest and therefore best known brands in Latvia. Nevertheless it is using different branding strategies, which help to experiment in developing new product and evaluate how well it can compete in the market. Latvijas Balzams shares its mission with overall society and has high social responsibility. It has good overall external communication, which welds the positive attitude towards the company. This makes the brand strong in the market. Although being alcohol producer nowadays is a very risky business from people’s possible negative attitude perspective, Latvijas Balzams stands for beliefs that moderate and responsible alcohol consumption does not interfere with harmonious and healthy lifestyle. What causes the problem and undermines the quality of life is alcohol abuse. More over, thinking of today, the company is looking towards tomorrow with the sense of responsibility as mentioned before. Latvijas Balzams support projects aimed at improving the alcohol consumption culture in Latvia. Being the alcohol producer, they state that they would like to see their customers as responsible alcohol consumers able to take the responsibility for their actions. They have also supported the campaigns such as: “Drink, Drive, Die”, which might bee seen unusual to the alcohol producer. But inevitably this is a part of its mission. As a consequence, one will never see the advertising of Latvijas Balzams promoting drinking, or consuming alcohol as such. It is all about the values, quality, responsibility, know-how to enjoy.
Transcript:

Lecturer: Hilde Eeckhout

BRAND REVIEWLatvijas Balzams (Latvian Balsam)

Laura Krasovska MoCoMa

June 14, 2007 Belgium, Gent

Brand Review

Latvijas Balzams

Table of Contents 1. General Information on the Company 1.1. History 2. Mission ` 3. Positioning 3.1. Strategic Positioning 3.2. Psychological Positioning 3.3. Communicative Positioning 4. Objectives 4.1. Company Objectives 4.2. Marketing Objectives 5. Market Situation and Competitors 6. Marketing Mix 6.1. Product 6.2. Price 6.3. Place / Distribution 7. SWOT Analysis 7.1. Strengths 7.2. Weaknesses 7.3. Opportunities 7.4. Threats 15 8. Analysis of Different Communication Strategies and Applied Tools 8.1. Case 1; Brandy Bonaparte 8.2. Case 2; Riga Black Balsam 8.3. Case 3; New Packaging of LB Vodka 9. Media Strategy: which media are used? 10. Conclusion 11. References 12. Bibliography 3 4 5 5 5 6 7 7 7 8 10 10 10 12 13 13 14 14 15 15 17 18 19 20 21

Laura Krasovska

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Brand Review

Latvijas Balzams

1. General Information on the Company 1.1. HistoryThe origins of Latvijas balzams mastery can be found back in 1900, when the first Riga State Spirits Warehouse No.1 started its operations. World War I stopped the trade of spirits for some time, however, already at the very beginning of Latvia as an independent state, the operations of spirits distillery were resumed. The production output at that time amounted 25 000 26 000 bottles a day. According to the information provided by Riga City Bureau of Statistics, in 1924 Riga Spirits Warehouse employed 24 employees. In 1940 the distillery was nationalized and named as Rgas spirta un degvna rpnca (Riga spirits and vodka distillery). In 1949 the distillery started producing liqueurs and was renamed accordingly, i.e., Rgas liieru un degvna rpnca (Riga liqueur and vodka distillery). In 1960 the company started export production. In 1970 the company acquired its present name. But a few years following the resumption of national independence of Latvia, Latvijas balzams became a state-owned joint stock company. In 1997, the company was privatized and in 1998 A/S Latvijas balzams shares were listed in Riga Stock Exchange. In 2000, as the result of acquisition, Latvijas balzams joined with A/S Rgas vni, which enabled LB (Latvijas Balzams) to acquire a substantial market share in the growing wine segment and develop the production of light alcoholic drinks. Since 2001, one of the top priorities set by the company has been the development of new products. New brands have been created both in the segment of strong and light alcoholic beverages, enabling the company to strengthen its competitiveness. In 2002, the company celebrated the 250th anniversary of Riga Black Balsam. Riga Black Balsam is an ancient drink, created in the middle of the 18th century, as the first written evidences of the unique mixture date back to 1752. This brand carries a very special meaning to the company, which actually bears its name. Riga Black Balsam is made by JSC Latvijas Balzams and the traditional recipe invented by Abraham Kunze, a pharmacist living in Riga, is based on a composition of 24 different ingredients like plants, flowers, buds, juices, roots, oils and berries prepared in oak barrels. It is sold in ceramic hand-made jugs. According to legend, Empress Catherine the Great of Russia, became ill during a visit to Latvia, but was cured after drinking Riga Black Balsam. Over time experts from many countries have highly regarded the outstanding quality of Riga Black Balsam. It is the visiting card of the company in Latvia and abroad where Riga Black Balsam has received more than 30 awards at various international fairs.1 In 2002, the company celebrated the 50th anniversary of the sparkling wine brand Rgas ampanietis (Riga Champagne). In late October 1952 in the wine production facility (which is still located in the same place - the industrial part of Riga city centre at Aristda Brina Street), LB produced the first 300 bottles of a new product. It was created on the basis of an ancient and well-known French method double fermentation of bottled wine. Today A/S Latvijas balzams is the largest manufacturer of alcoholic beverages in Latvia and in the Baltic states. According to the information of the SRS Excise GoodsLaura Krasovska

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Brand Review

Latvijas Balzams

Administration, in 2003 the market share of the company reached 43% in Latvia. By today the market share of the company is not less than 48% in Latvia. Latvijas balzams is a wideranging producer of alcoholic beverages, manufacturing more that ten product groups, including Riga Black Balsam, different brands of vodka, liquor, sparkling wine, gin, brandy, whiskey, cocktails, in total more that 115 brands. Today the majority shareholder of Latvijas Balzams is S.P.I. Distilleries.B.V. Since S.P.I. Group has become the majority shareholder extensive investments have been made to the company. Over the last two years more than 8 million lats have been invested towards increasing of production capacity and development of operations. Due to substantial export, the company has doubled its production capacities.2

2. MissionCompany has developed number of points, which emphasize its mission, but no particularly one mission statement is highlighted in one concise formulation. According to accessible information in companys web-site, their mission is: To be the leading producer of alcoholic beverages in the Baltic region, consolidating the traditions preserved over the centuries and modern manufacturing practice. To supply consumers with high quality alcoholic beverages employing the traditions and experience preserved over the centuries. To ensure unchangingly high quality of products and compliance with the international quality standards through regular modernisation and upgrading of technologies. To understand and satisfy the needs of consumers in line with the market development. To form the cooperation with the shareholders, personnel, customers, consumers, so that the operations of the company meets the interests of all stakeholders and the general public. To develop the alcohol consumption culture that would be in line with public health interests. To stress the importance of personal responsibility for moderate usage of alcohol. We would never support the situation where people addicted to alcohol are seen as a model for others. As the history of a/s Latvijas balzams dates back to more than hundred years, while the origins of its historic brand Rgas melnais balzams (Riga Black Balsam) is more than 250 years old, we must preserve the values that are important to the history of Latvia.3

Laura Krasovska

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Brand Review

Latvijas Balzams

3. PositioningFurther, couple of positionings is going to be analyzed. As Latvijas Balzams is the brand (and also the name of the company), which is so called mother-brand and uses multi branding and line extension brand strategies, these positionings are mostly concentrating on overall company profile itself. There are some small positioning modifications for some particular products, in order to differentiate them according to target group needs and preferences, but generally this divided positioning affects all the Latvijas Balzams products and profile actions.

3.1. Strategic PositioningLatvijas Balzams has acquired big market share in Latvia, and is expanding to Baltic States and other EU states continuously. Their position relative to other competitors and their production is that Latvijas Balzams is the largest producer of alcoholic drinks in Baltic countries as well as the most contemporaneous alcoholic production in Latvia. A share of enterprise at Latvian market of alcoholic products amounts to almost 50% and, therefore, has great availability and also respect among other competitors. Latvijas Balzams is an open stock company and since 1998 its shares are quoted on a stock exchange, which is highlighted by companys transparency policy. The company is a member of Association of Latvian Spirits Producers and Distributors, whereas the Association, in turn, has joined the European Confederation of Spirits Producers, which gives the reliability and assurance of quality standards of their production: The quality plays the leading role in our operations. High and consistent quality standards have been implemented in our day-to-day production business and apply as well to the purchase of raw materials, packaging and the culture of work. For Latvia and Riga we are significant tax - payers. Here, in the country we are working in, we strive for growth and development in order to be able to create jobs for more and more people. The companys extended statement, which also presents their positioning they state themselves as valuable force in the society.

3.2. Psychological PositioningPsychological positioning of the organization is about the position the organization wants to occupy in the mind of the target groups and also overall publics. According to the information accessible about Latvijas Balzams, their statements show what they want the society to know about them and think about them. Company is also concerned about internal matters, so their publics are also their employees; Our work is aimed at satisfaction of every single customer and every single employee of the company. Thinking of today, we are looking towards tomorrow with the sense of responsibility. We support projects aimed at improving the alcohol consumption culture in Latvia. Being the alcohol producer, we would like to see our customers as responsible alcohol consumers able to take the responsibility for their actions.4Laura Krasovska

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Brand Review

Latvijas Balzams

This shows their position, what they want the publics to know about the company. Because the alcohol issue is very s

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