GLOBAL TRENDSETTERS: Latvia

Tradition & Erudition

Latvian Luxury Brands Regain
Their Independence and Allure

By Gregory Grishchenko

After the collapse of the Soviet Union in 1991, the most developed Baltic region republic, Latvia, gained independence. Since then, the pace of economic reforms in this small, newly sovereign country was mostly defined by the strength of its attachment to the old regime.

The Baltic States of Estonia, Latvia, and Lithuania had been forcibly included into Joseph Stalin's U.S.S.R. in 1939. Despite 52 years of Communist rule, they have rebounded rapidly, developing a strong market economy and joining the European Union in 2004.

In the last 15 years, Latvia has been privatizing state owned companies and implementing market economy models with an emphasis on Western style banking, tax laws, and global trade. The results were positive from the beginning, despite the loss of some industrial capacity that had been formerly integrated into the Soviet Union.

According to an estimate by Greol Engineering, an emerging markets consulting company based in New Jersey, the Latvian packaging market for consumer goods had reached over $150 million in 2005. This expansion can be partly attributed to traditional specialty brands that have taken back their rightful place with alluring packaging.

In present day Latvia, where capitalism and national identity are taking root, there are numerous companies using old and new symbols and struggling to compete with the world brands on store shelves. However, only a few of them stand out with the trade names that are gaining recognition both in the old markets like the countries of the former Soviet Union and mature markets of the Western Europe and the U.S.

Latvijas Balzams procured a specialized ceramics manufacturer who mingles old practice and modern technology to produce over two dozen sizes of clay bottles.

Balzams' towering presence

According to legend, Empress Catherine the Great of Russia was once cured by drinking Black Balsam brew after falling ill during a Baltic trip. The recipe was originated by Abraham Kunze of Riga, who, in the mid-18th century, blended it from the medicinal recipes of 16th- and 17th-century local pharmacies. The liquor has always been-and still is-the best-known Latvian product across the world, garnering more than 30 awards in global liquor contests.

Black Balsam includes 24 ingredients, including linden blossom, birch bud, valerian root, raspberry, bilberry, and ginger, as well as traces of nutmeg and black peppercorn. The herbal essence infuses for 32 days and is kept in large double-bottomed oak tree barrels that were made over 70 years ago. The unique bittersweet taste of Black Balsam is obtained during the cooperage process when distilled sugar is added to the herbal essence.

The leader of Latvia's liquor industry, Latvijas Balzams, is the largest distillery in the country. The Riga factory began producing a variety of high-quality liquor at the beginning of 20th century, and now produces a wide range of Black Balsam packages from 50-gram souvenir bottles to three-liter jugs. In addition to Black Balsam, the company turns out 50 different varieties of vodkas, bitters, liqueurs, aperitifs, gins, and brandies.

While the majority of the company's products are sold in conventional glass bottles using gravure printed paper labels in four or six colors, the Black Balsam is packaged in ceramic bottles of various designs. The unique bottle shape dedicated to this brand has not changed for decades; however, some design variations come with the modern technology and consumer demand.

For example, a side handle seems necessary in some export markets, so Latvijas Balzams has developed a clay jug with the round handle at the top of it while still keeping the original shape proportions. The Balsam jugs are closed with handy traditional cork stoppers, and the external part of the cork stopper is covered with a specific protective cachet. The dark brown, glossy ceramic jug is decorated with a black and gold label which was introduced just before the company's 100 year-anniversary in 2000.

The label design refers to the history of the drink, and the place where it has been created. Before 2000, Latvijas Balzams was using hand decorated embossed impression as a label jug. Latvijas Balzams procured a specialized ceramics manufacturer who mingles old practice and modern technology to produce over two dozen sizes of clay bottles. This proprietary process allows the fabrication of ceramic bottles impassable to liquid.

The packages for Latvia's Dzintars perfume products are designed by the company's art studio using modern technologies for glass, paperboard, and plastic containers.

Dzintars reestablishes category

Latvia is the largest producer of cosmetics in the Baltic region. The manufacture of perfumes and cosmetics in the country is such a significant part of its well-developed chemical and pharmaceutical industry that according to ExIm (Latvian Export & Import Directory), it contributes nearly 6% to the country's industrial output and employs about 6,500 people.

Dzintars, the largest and most successful cosmetics company in the Baltic region, employs 600 in Riga, Latvia's largest city and capital. Dzintars means "amber" in Latvian, and the company began by manufacturing soap and candles and bottling French fragrances. Established in 1849 and state-owned during the Soviet era, the company was again privatized in 1991 and now concentrates its main activity in three areas-fragrances, cosmetics, and makeup.

Dzintars has its own research and development center, is recognized today as a leading producer of natural and ecologically safe products, and utilizes the latest technologies in compliance with international standards such as KOSMETIC-GMP and ISO 9001. The company runs its own package design group and makes quality plastic packaging for cosmetics, including bottles, jars, tubes, and lipstick cases.

Boxes and glass fragrance flacons, on the other hand, are sourced from Western Europe. Part of Dzintars' success is its long-term partnerships with leading packaging supplies from France, Germany, and Austria. With the price range of its 350 products generally from $3 to $10 and attractive packaging design solutions, the company competes successfully in the low- and middle-price sector of the market.

Among Dzintars products are various perfumes and skin care cosmetics with the most recognized package design style dedicated to perfumes. In the economy price range, Latvian perfumes stand out in the Eastern European market when compared with similar price level imports from Asia.

Laima's "ziemassvetki saldumu izlaserton" Christmas box for assorted candy has distinctive red indentations in the domed shape of the upper piece. The champagne color printed bottom part of the box serves as a presentation dish after opening.

Leading candy exporter

The category-leading Laima candy company started in 1870 when the German candy maker Theodore Rigert founded the first sweets factory in Riga. Its brands Laima and Staburadze dominate the domestic market and account for about 80% of all the candy exported. The brand name Laima has for decades been a household synonym for candy, cakes, chocolate, and waffles, and is now known in far corners of the world.

Before World War II, Latvian chocolates and candy were very popular in Northern Europe and the Baltic region. After the country's Soviet takeover in the early 1940s, the residents of adjacent Russian territories were thrilled with being introduced to Latvian candy with its rich taste and bright attractive packaging. Having recovered from tumultuous times and years of dedicating nearly all of its entire candy export to the U.S.S.R., the company is currently exporting in many directions, including Europe, Israel, U.S., Canada, Morocco, South Africa, and India.

Laima is generally using paperboard packaging in the form of rectangular candy boxes with plastic thermoformed inserts, providing good product shipping and presentation properties in compliance with European Union standards. The company outsources carton production to the leading European supplier with the latest state-of-the-art technologies including flexo and gravure printing, foil lamination, and hot stamping. The company offers a full Christmas catalog every year, with ornate packages decorated in bright gold and red.

Latvia was one the poorest countries when it joined the EU, but it has an active free market and it may have the fastest growing economy. The country's economy based on modern and traditional brands and services should continue to thrive, and will hopefully join the eurozone in 2008, adopting the euro as its currency.

Greg Grishchenko is an engineer and freelance packaging consultant in New Jersey, specializing in technical and business topics in the emerging markets of the Eastern Europe. He can be reached at greg_grishchenko@comcast.net.