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. Last Updated: 07/27/2016

Ramstore to Create Own Brand Name

Turkish supermarket giant Ramstore announced Wednesday that it will launch a wide range of products under a yet-to-be-decided brand name for its chain of stores in Moscow.

The move, which Ramstore said will enable it to tap into the growing popularity of local brands, will make the supermarket the first in Russia to join the likes of U.S. chain Safeway and Britain's Sainsbury's in offering its own brand of goods like butter, milk and meat.

"We will create trademarks with traditional names," said Mustafa Saglam, director of Ramstore's parent company Ramenka. "It could be something to the tune of Stolichny, though a particular name has not been chosen yet."

Saglam said Ramstore will use different brands to market various groups of products starting with meat and dairy products, the two best-selling goods at Moscow's four Ramstores.

Supermarket officials said they are negotiating with local food companies about producing goods that will bear the brand name.

Ramstore's decision to develop a brand name for locally produced goods comes on the heels of growing consumption of domestic products. The Comcon market research agency estimates 57 percent of consumers prefer local goods, up from some 35 percent before the 1998 ruble devaluation. The figure stood at 44 percent in 1995.

"Russification of brands is a long-term trend which is likely to continue in the future," said Maria Vakarova, public relations director at Comcon.

However, it affects only food products and has nothing to do with durable consumer goods, she said.

Sales of foodstuffs make up 80 percent to 85 percent of Ramstore's total revenues.

Comcon surveys also found that the number of people who prefer to buy local products and who are ready to pay for high quality products surged to 16.8 percent last year as compared to 10.4 percent in 1998.

"There was a prejudice against the foreign products as people thought they contained preservatives, while the Russian products have always been perceived as more natural," Vakatova said. "By positioning foreign brands as local, foreign companies eliminate this prejudice."

Ramstore's expansion in the local market is in many ways similar to that of other foreign companies which, seeing no fast profits, try to cultivate attachment of local consumers to their brands, analysts said.

Ramstore said Wednesday that the payback period for its projects is seven to eight years, meaning that the first store that opened in 1997 should break even sometime around 2005.

Analysts said Ramstore's strategy is no doubt a result of depressed consumer demand coupled with its desire to grab a larger share of a market where many foreign food producers are taking a wait-and-see approach.

Ramstore officials also said Wednesday that the company spent about $1 million on advertising last year, most of which went to leaflets and radio ads.

This year, the advertising budget could be twice as big with a larger share spent on television ads, officials said.