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. Last Updated: 07/27/2016

Stores to Bid for Right to Sell Candy

On the eve of its 150th anniversary next year, the beloved Krasny Oktyabr candy factory will hold a chocolate auction to determine which retailers will carry its high-end product line, the company said Friday.

Krasny Oktyabr has invited major retailers to participate in an auction Wednesday for six lots of deluxe chocolates, the smallest of which has a starting price of 54,000 rubles ($1,930). The winners will be designated "VIP buyers" and have the right to keep their stores stocked with the 38 chocolates in the deluxe line throughout the next year.

"People will know they can always buy their favorite chocolate at these stores," said Anatoly Fyodorov, deputy chairman of the company's board.

The deluxe line includes elaborately packaged boxes of assorted chocolates, with names like "Inspiration" and "The Romanov House" and boxes of 4-centimeter-long versions of favorite candybars, such as "Alyonka" and "Pushkin's Fairy Tales."

Yevgeny Kapyshta, deputy head of sales, said the auction would allow them to study market demand for this group of products, which are particularly expensive to produce and have a short shelf life.

Fyodorov said the total production for the deluxe line next year would be about 200 tons, or 1,000 times the smallest lot in Wednesday's auction. That's just a tiny part of the total volume of all Krasny Oktyabr products, which he said was about 200 tons a day. However, in the long-run he estimated it could account for up to 30 percent of the company's profits.

Olga Martynova, head of marketing, said the deluxe products were previously available to retailers, but after the auction they will only be sold to the winners. Krasny Oktyabr's own stores will continue to be stocked with them.

However, Martynova said the winners will not be guaranteed exclusive rights. Another auction, planned for the run-up to Women's Day on March 8, will widen the circle of VIP clients.

Fyodorov said one reason the company was singling out VIP clients to carry the deluxe line was to combat counterfeiting.

"We get a lot of letters every day. They send us, for example, a package with the name 'Alyona,' instead of 'Alyonka.' And the accompanying letter says, 'You should be ashamed to produce such chocolate. In Soviet times, Alyonka was delicious and now it's impossible to eat,' " he said.

In the VIP stores, customers will be able to know for certain they are getting the real thing, he said.

While Krasny Oktyabr produces many old favorites, it has faced tough competition from imports, as well as recent upstarts like Korkunov.

Krasny Oktyabr's response has been to try to hook consumers early.

"Before you came, there were schoolchildren sitting here," Fyodorov told journalists, explaining that every day one class from a Moscow school gets a tour of the factory.

"This way we cultivate a taste for our candy in our Moscow kids," he said.

Fyodorov seemed unremorseful about the risk of cavities, instead suggesting Krasny Oktyabr's products were a "healthy" alternative to Snickers and Mars because they contain no preservatives.

"Even though our buyers are always asking us to increase the shelf life — even as high as two years — we don't agree to that," he said.