Heinz eager to catch up with Russian condiment

July 29, 2006|By ERIKA NIEDOWSKI | ERIKA NIEDOWSKI,SUN FOREIGN REPORTER

MOSCOW -- When most Russians think ketchup, they think of Baltimor.

Not Baltimore the American city, but the maker of the condiment generously smothered here on foods that most Americans wouldn't care to use it on, including rice, bread and boiled meat dumplings.

It turns out Russians think ketchup a lot: Average annual consumption is estimated at more than three pounds, more in Moscow and other big cities.

This has laid the groundwork for a kind of ketchup war.

The producer of America's best-selling ketchup, Heinz, has launched an effort to squeeze more of its brand onto Russians' dinner plates and challenge its Russian counterpart -- Baltimor -- as king of the condiments.

H.J. Heinz Co.'s European division finalized a deal in April to buy a majority stake in Petrosoyuz, a privately owned St. Petersburg food manufacturer that is a major player in the world of ketchup, mayonnaise and other spreads.

Heinz sells 650 million bottles of ketchup worldwide every year. Its name, to many, has become synonymous with the stuff -- except here, where 80 percent of Russians associate ketchup with Baltimor, according to the company. The firm controls about half the market.

Still, officials at Baltimor -- whose name comes from a combination of the Russian words for Baltic Sea -- are keenly aware of the selling power of Heinz. The American firm recently became the ketchup of choice for the nation's perpetually packed McDonald's restaurants and is sold -- even in the new "top-down" plastic bottles -- in many large grocery chains.

"Of course, we are preparing," Milada Gudkova, Baltimor's general manager, said in an interview, declining to offer clues. "It always has to be a surprise. We don't want Heinz to read it."

Everything edible

Earlier this year, Gerard Depardieu starred in a TV commercial for Baltimor's "classic" ketchup, Tomatnyi. In it, the famous French actor is challenged to a game of pool in a bar by a buxom woman who says that if he wins, she'll kiss him, and if he loses, he has to eat his hat.

He's no match for her, of course, and the defeated Depardieu asks the barman for a bottle of Baltimor to make his hat tastier. Some squirts onto the front of the woman's shirt and the announcer intones: "Ketchup Baltimor Tomatnyi: Makes Everything Edible."

Russians love their spreads; ketchup and mayonnaise are employed here like salt and pepper in the United States.

According to Euromonitor International, Russians spent about $2 billion on sauces, dressings and condiments last year. Mayonnaise and sour cream are used on -- or in -- practically everything, including soups and salads that might be perfectly good without them. And ketchup is poured on eggs, fish and all kinds of meat.

Ketchup was widely introduced in Russia in the early 1990s, by way of imported brands, including Heinz, which is more expensive than domestic brands.

But Baltimor, founded in St. Petersburg in 1995, was the first to produce ketchup domestically and, the company notes, to offer it in glass containers (some brands come in flimsy plastic pouches, which can be messy).

Pineapple, too

The company produces about 15 varieties, including ones flavored with chili peppers, garlic and pineapple -- though to a Westerner reared on Heinz, some do not qualify as ketchup at all, but rather a cousin in the tomato-sauce family.

For more than a decade, Heinz has manufactured baby food at a plant in Georgiyevsk in southwestern Russia. Now, it will merge that operation with the three manufacturing facilities run by Petrosoyuz -- which, with 24 percent of the market, is No. 2 in ketchup.

In an interview with the newspaper Kommersant, Dmitri Filatov, a Petrosoyuz founder who is now co-managing director at Heinz-Petrosoyuz, said the expansion of Heinz production here was prompted by a "significant surge in consumption." Sales, he said, grew more than 60 percent in the past quarter compared with the same period a year ago. The result should be a 10 percent drop in prices.

According to Gudkova of Baltimor, the company has cornered the market because it has created a range of flavors tailored specifically to appeal to the Russian palate.

"We were the trendsetters in this market," said Gudkova, who said she never eats in a restaurant without asking what kind of ketchup it uses.

"Companies that come to this market, they're copying our taste, our names for ketchup, the design and everything."

Restaurant fare

In a nation where dining out is becoming increasingly common but is not the norm among the masses, many restaurants still make their own ketchup. The result is sometimes an unsatisfying watery concoction or a mixture without the right balance of flavors -- making the commercial market attractive for ketchup manufacturers.

Still, people eat it with everything.

"It's surprising that in such a short time, the consumption in Russia increased without any advertising or anything," Gudkova said.

"I think people were quite eager to try this product. It became part of daily life."

There has never been any confusion with Baltimore, though company officials say that when they went to register it, they were urged to choose something else lest customers be confused.

Said Gudkova: "The first association is with ketchup, not the American city."

erika.niedowski@baltsun.com

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