The Vladimir Dovgan Story

Below is a story about a man who became well known throughout Russia after Perstroika in 1991.  The story was written by Carol Matlack many years ago after Mr. Dovgan's business failed.  For miniature bottle collectors, Dovgan produced some of the most beautiful bottles our hobby as ever seen. 

The Vladimir Dovgan Story

Written in 1996

Vladimir Dovgan still radiates the self-confidence that made him Russia's first marketing superstar. The 33-year-old former factory worker built a $400 million-a-year business selling products of struggling Russian factories--and putting his beaming face on every one of them. But Dovgan's empire has now imploded. With credit cut off and unpaid suppliers suing, Dovgan has jettisoned two-thirds of his 600-person staff, dropped most product lines, and left his offices near Moscow's prestigious

Pushkin Square

for a distant suburb.

Dovgan now says he underestimated the difficulty of getting manufacturers moving again. "Are there Russian producers who can compete?" he asks. "I don't think so." But there's more to it than that. Russian consumers are maturing--and no longer impressed by Dovgan's "buy Russian" sales pitches. He also came up short in everything from quality control to pricing. Although gifted at promotion, he lacked solid financing and is now heavily in debt. Indeed, Dovgan is a B-school study in what can happen when entrepreneurial drive outruns the thin experience of Russia's first business executives.

Dovgan promises to revive his brand. In contrast to the 250-plus products he used to put his name and smile on, he will now stick to alcoholic beverages and soft drinks. But the challenges are many. Multinationals are making huge inroads. Some domestic producers are becoming tough competitors, too. Building a brand requires long-term financing and planning. And Dovgan doesn't have much of a head start: Millions of Russians know his name, but few became loyal customers.

After arriving in Moscow in 1995 from Togliatti in central Russia, Dovgan decided to jump-start the consumer-goods sector. Distribution systems had collapsed, and while shoppers wanted Russian goods, they worried that they might be tainted or stale. With a $1 million loan from a banker friend, Dovgan cut deals with several distillers to label and market their vodka for commissions of 2% to 3%.

Sales took off, even though Dovgan vodka cost more than most domestic brands. Dovgan soon had his name on everything from shampoo to chocolate and frozen dumplings. To lure customers, he started a TV show with a lottery. And he drew attention for his every move--from his daily swim in ice water to his sponsorship of a business school.

Yet trouble was brewing. Shoppers balked at Dovgan's prices, which sometimes matched those of multinationals manufacturing in Russia, such as Nestle and Mars Inc. As sales fell late last year, Perekriostok, a Moscow supermarket chain, dropped Dovgan products. "The prices were simply unreasonable," explains Igor Balelin, Perekriostok's sales manager. Dovgan beer, Balelin says, cost almost twice as much as imported Czech brew. By then, Dovgan had made a muddle of his market by putting the same label on everything, regardless of quality and price. "He needs to manage his brand portfolio," says Leonid Shutov, who runs Propaganda, a local advertising agency. "It doesn't send a clear message."

STILL DREAMING. The market sent one, though. As sales slowed, credit dried up and unpaid suppliers started screaming. Dovgan owes them more than $8 million, and 17 have sued. Dovgan's former partner, German Lillevyali, says that while sales last year were $400 million, the company cleared only $300,000 a month because of huge promotional expenses. It was after a bitter falling out with Lillevyali this year that Dovgan relaunched his enterprise.

Dovgan admits that he lost control and that product quality suffered because he couldn't keep tabs on hundreds of factories, distributors, and retailers. He expects multinationals to dominate the market and Russians to carve niches. Nonetheless, Dovgan still dreams of creating Russia's strongest brand name.

And he could succeed. The new focus on beverages, while it puts him head-to-head with Pepsi, Coke, Kristall vodka, and others, is a step in that direction. Dovgan also is talking to MFK Renaissance, Russia's top investment bank, about restructuring his debt. His face will be absent from his future labels. But if Dovgan gets his brand in order, he still may find reason to smile.

By Carol Matlack in Moscow

The Russian Vodka Story

There are many definitions of Russian vodka, but the most strict and classical one was made by the great Russian scientist, Dimitry Mendeleyev, who devoted his thesis for his doctorate degree to the improvement of vodka production in Russia.  In 1894, the Russian government patented his definition.  According to Mendeleyev's definition, "Only the spirit that contains, as its main ingredient, rye bread spirit prepared on the basis of Russian kinds of rye given triple distillation, dilluted according to the weight with soft spring water exactly to 40% by volume and additionally purified by a special filtration process, with insignificant (2-3%) additions of spirits made of other grains, can be considered "Moskovskaya Special Vodka."
A number of researchers looking into the history of vodka, hold that the main industrial features of its production and the word "vodka" itself, a diminutive of the Russian word "voda"(water) were born in Moscow, in the very heart of the capital in the Chudov monastery.  The Chudov monastery is located in the Kremlin grounds and was founded by Dimitry Donsky under the direction of the Metropolitan Alexius.  The date of the creation of vodka is conseidered to be in the 1450's.  However, the documents found by archeologists, enable researchers to assert today that priority in the production of vodka belongs not to Moscow, but to the earliest Russian city of Novgorod the Great, where the word "vodka" also came into being.  It was in Novgorod that the earliest dated evidence confirming this fact, Birch-Bark Document #65 datable to the 13th century, was found.

The most famous brand names in an immense variety of contemporary strong drinks are Moskovskaya Special Vodka and Stolichnaya Russian Vodka.  The time tested Moskovskaya Special Vodka, the production of which was started in the Soviet period as a realization of Mendeleyev's dream about classical vodka made of rye and specially treated spring water, has won more than a dozen gold medals at prestigious international and All-Union competitions.

The development of more dynamic sand and quartz filtration processes, enabled the industry to create in 1953, a new variety of vodka called Stolichnaya Russian Vodka. This is one of the best Russian high quality vodkas, remarkable for a special softness of drinking due to additions of small quantities of sugar.
Pshenichnaya(Wheat) Vodka is an original vodka which is wholly based on ethyl alcohol received from high quality grain, mainly wheat,  and improved drinking water.  It has a soft taste and low price.  For a long time it was considered to be the most popular brand of vodka in Russia.
The Golden Ring is a high quality vodka ranking as a specialty.  It is made according to classical technology with an addition of edible soda and acetic acid giving this vodka a soft taste and distinctive flavor.
Posolskaya(Ambassador) Vodka is an elite brand as regards its organoleptic properties and ecological purity and is closest to the classical Mendeleyev model - Moskovskaya Special Vodka.  Its technological distinction is that in the process of its production, it is subjected to an additional purification by degreased milk that provides it with a soft taste and pure flavor.

Drinking vodka in a cultural way, presumes a close acquaintance with one's companions.  They may be friends, good acquaintances or a group of people whose conduct is regimented by the situation(reception, festive occasion, etc).  Since vodka is not supposed to be drunk in a hurry, it is better to consume it at home, on a visit or in a restaurant at a well served table.  As vodka is a product ready for use, it should not be diluted with water. It is not recommended to drop ice cubes into a glass for serving vodka cold.  It is much better to freeze the glass first.  Vodka is best served at a temperature of 8-10C(46-50F)

The basic raw material used for Russian vodka is rye.  As indispensable additions to Russian rye vodka, some other cereals such as oats, wheat, barley and buckwheat are also used.  Russian rye vodka does not cause aggressive moods or heavy hangovers, which are characteristic of potato or especially beetroot sugar vodka, commonly found in home brew vodka.  The second most important raw component of Russian vodka is soft water.  Before the 1920's, water in the upper reaches of the Moskva River, Kliazma and Neva was suitable for these purposes.  Water is additionally purified in various ways before using, but is should never be boiled.  This is one of the traditional differences and advantages of Russian vodka.

It is not recommended to use cheese, boiled fish or mutton as refreshements with vodka.  Drinking water after vodka is bad form.  This refers particularily to carbonated beverages because the carbonic acid gas and other chemical components harmful to one's health that they contain and artificially speed up the absorption of alcohol in the blood.  The century old traditions in Russia formed a set of exquisite dishes and zakuskas that most harmoniously combine with vodka.  These are ham, veal, meat jelly, caviar, cured fillet of sturgeon, salmon, blinis, pelmeni, Russian soups, sour cabbage and salted mushrooms.  But the traditional simple dish of boiled potatoes with a salted cucumber still remains an ideal zakuska for Russian vodka to this day.

A mixture of organic substances, which are by-products of spirit fermentation, is called "fusel oil".  It is the toxic action of fusel oil that results in the heavy consequences of intoxication.  Even thoroughly refined home made vodka of double sublimation is more toxic than the ethyul spirit because home conditions do not allow strict maintenance of constant temperature(78.4C or 170F of ethanol boiling) and other technological subtleties as at the distillery.
This is probably more information than many of you wanted to know, but if you are a vodka drinker, this is the story of vodka from the Russian view and after all, they invented it:)

See you next time.

New Helmet Rye

I just won a great new addition to my collection of Pre Pro Whiskey jugs.  This one is a tan colored Helmet Rye by Max Fruhauf & Co. from Cincinnati, Ohio.  I believe this one to be really unique as I have never seen one like it before.  The most common one is the dark brown version.  Another unusual thing about this new beige version is that it has the name Max Fruhauf  Cincinnati Ohio engraved into the ceramic on the rear of the jug.  The dark brown version does not have that name engraving.  Both jugs have the name Helmet Rye engraved on to the visor of the helmet.  These are two of my favorite jugs.

See you next time.

I'm In Montana This Week

This is one beautiful state.  I have been working this week with my sales guy who handles Montana and Northern Idaho.  I flew into Spokane on Monday and we drove to Kooskia, Idaho to visit one of our dealers.  Then we headed over to Missoula Montana.  What a beautiful drive that was.  From Missoula we headed to Helena, and then Great Falls and then finally ended up in Bozeman.  If any of you ever have a chance to visit Montana, make sure you visit Western Montana.  A great trip would be to start in Kalispell at the top of Western Montana and then drive South and end up in Yellowstone.  You will never see anything more majestic than that trip.

Liquor in Montana is controlled by the state, as it is in most of the states in the Northwest.  They only have state controlled stores to buy hard liquor.  You  can buy beer and wine in the grocery stores.  But even with state controlled stores, the variety of miniatures you can find, varies from store to store and city to city.  You have to visit as many as you can to find different brands, even though all purchases are made through one state office in Helena and then shipped to warehouses where each store places their orders.  I visited four stores on my trip and finally at the last one, I found the Yazi Ginger glass bottle.  I had not seen it in any other store.  I bought 6 of them as they are hard to find in glass.  I also found out that there are two vodkas that are distilled and bottled in Montana, Flathead vodka and Vigilante vodka.  Unfortunately, neither one is currently being made in a miniature.  Micro distilleries are popping up all over the place just like micro breweries.  I try to visit as many of them as I can on my travels.  It is always interesting to me to hear from the owners how they got into the micro distilling business and what is special about their vodka.  Many of them say that they were vodka drinkers and could never find a vodka that suited them so they decided to make their own.  Then they tell me how their process is different from any other because of something that they do.  Sometimes it is the water.  Sometimes it is the grain or other product they use to distill their spirits.  For instance, Flathead vodka is made from sugar beets.  That is the first time I have heard about sugar beets being used to distill the spirit.  I know that Ciroc says that they make their vodka from sugar but they don;t say sugar beets.

The distillers that don;t make miniatures tell me it is because it is too expensive and time consuming.  They have to tear down their line to make it over to miniature bottling and then back again for their big bottles.  Others say they can;t find a supply of miniature bottles.  I think they just don;t want to be bothered.  Many of the ones who do make mini's understand the value of mini's in promoting their product.  Then tend to come from a background that exposed them to sales and or marketing.  Most of the ones who do not make mini's seem to come from a more disciplined background like science or engineering.

Some of the more interesting brands of micro distillers that do make mini vodka bottles are Goathead and Zebra out of Colorado, Dry Fly out of Washington, Cold River out of Maine and Cascade out of Oregon.  They all make unique glass bottle miniature vodkas that would look good in any collection.

Well, I'm headed home today and am looking forward to any packages of mini's I might have received this week while I was gone.

See you next time.

Three Beautiful New Additions To The Collection

Yes, these really are bottles.  They are called Figural bottles by collectors.  Figural bottles come is all kinds of shapes from animals to humans to comical figures to objects.  These three actually contain French Armagnac, which is similar to Cognac, except the spirit is not made from grapes in the Cognac region of France nor distilled there.  Only Cognac produced in the Cognac Region and made with grapes from the Cognac region is allowed to be called cognac.                                                                 

These Armagnac bottles are also made from Limoges China, which add to their beauty.  Each one of the bottles is named after a historic Monarch of France.  The Red one if for Henri IV, the Blue one if for Louis XIV and the Green one is for Napoleon.  Each bottle also has the coat of arms of the family.  Napoleon was not from a Royal family so his coat of arms is just an "N" for his family name.  So, not only are they beautiful pieces, they are represent a piece of history as well.  Just one of the interesting aspects of collecting mini bottles.  By the way, these are 2cl bottles.  That is almost 2 ounces.  So it is a true miniature bottle.

This is my first attempt at adding pictures to my blog so I am still trying to get a handle on it.   It isn;t perfect but a few attempts on my next blogs should make me pretty good.  I hope you enjoyed this article and the pictures. 

Til next time, stay healthy.

The Biggest Collection I Ever Bought

This collection was one of the greatest collections in the history of mini bottle collecting.  It started in 1978 when I received a letter from a woman telling me about her collection.  Her letter was in response to a magazine article she saw that contained an article about my collection.  She stated that she was getting older and was thinking about selling her collection.  I had never heard of her as a mini bottle collector so I asked her for the names of some of her favorite bottles.  When she replied with names like Old Camel and Buccaneer I got excited.  I asked her how many bottles she had and she replied about 8,000 or 9,000.  I told her I would like to come and visit her and she said that would be fine.  She lived in Rockport, IL and I lived in Los Angeles.  My Dad lived in Milwaukee.  So shortly after that conversation, I flew back to Milwaukee and picked up my Dad and off we went to Rockport.  When we got there, she took me upstairs to her bottle room and the first thing I saw were whiskies I never heard of.  Then I saw rums I never heard of, and gins and beers and figurals I had never seen.  I was so excited I couldn't stand it.  When we finally went back downstairs, she served us coffee and cookies and we began discussing her collection.  When I finally told her that I wanted to buy it, she said "Oh, I don;t think I want to sell it.  I would really miss my little babies."  I was shocked.  That was the whole reason I made the trip.  I was really disappointed when we left her home.

Four months later, she called me and told me she was ready to sell her collection and she was asking $25,000.  I countered with an offer of $20,000 and she declined.  Four months later she called and said she was willing to accept the $20,000 offer.  I declined her offer and came back with a $15,000 counter offer.  She declined.  About a year later I received a phone call from an attorney who handling her estate and had been advised that before her death, the woman had told the attorney that she had received a $20,000 offer on her collection from me.  The attorney was calling to tell me that the estate was willing to accept the $20,000 offer.  I explained to the attorney that the original $20,000 offer had been declined by her and that the most recent offer was $15,000.  The attorney blustered on about the value of the collection and the $15,000 offer was ridiculous.  When I asked him if he knew anything about minibottle collecting he replied that "no" he did not but that he knew about the value of things.  I then proceeded to start to explain to him that the boxes of bottles that were now in the basement of the old building where the law offices were located were probably starting to mildew and that the silverfish were probably starting to eat the glue on the back of labels and that once labels were destroyed the bottles would be worth nothing.  I could tell that he was a little concerned when I told him those things.  He then began to negotiate.  He said $19,000 and I said $16,000.  He then said $18,000 and I said $17,000.  He then said "Deal" and we had a deal.  I would come to his offices in Rockport and bring a cashiers check for $17,000 and take possesion of the collection.

That is when the fun started.  Where in the heck was I going to come up with $17,000?  I was a young guy with a wife and 5 children and a mortgage.  I went home and called my bank and asked them what kind of second mortgage I could get on my home and they gave me a number larger than what I needed.  Then came the hard part.  I had to discuss it with my wife before I could make a decision like that.  My wife had never been interested in my mini bottle collecting.  But like to good sport and bookkeeper that she is, after I explained that I thought this a once in a million opportunity and that I thought I could make a profit if I sold most of the collection, she agreed.

At about the same time, I heard about a new bottle club that was putting on a mini bottle show in Illinois.  The timing was perfect.  I flew back to Rockport the week of the bottle show in Hinsdale, Ill. and picked up the bottles.  I brought my good friend Linus Earl and his son Cliff because Linus asked if he could have first crack at the whiskies.  I said yes and off we went.  It took us two days to unpack the almost 100 boxes that the bottles were packed in.   Just to give you an idea of how good this collection was, Linus Earl was one of the top mini whiskey collectors in the world at that time.  He found 500 bottles of whiskey that he needed for his collection and half of those were bottles that he never heard of nor knew existed.  He was ecstatic.  He paid me $5 each and all of a sudden, I had $2500 of my investment back.  It actually turned out that she had 11,000 bottles in her collection and 8,000 or 9,000 as she thought.  I picked out 1,000 bottles for my self.  We had rented a U Haul truck and loaded up all the boxes and drove to Hinsdale.

When we got to the Ramada Inn, I decided to set up in my room rather than get a table in the show room because I was scared to death that someone might steal some of the bottles overnight and I would lose money, which I could not afford to do.  My good friend David Spaid was a big help to me by bringing in the top collectors of each type of spirit or figural type, one at a time, to see what they wanted to buy.  That led to a lot sales on Friday night and Saturday.  By the end of Saturday, I had sold $12,000 worth of bottles all together and still have one day to go.  I only needed to sell $5,000 more of the bottles and I would at least break even.  By 1:00PM on Sunday, I had not sold many of the remaining bottles and many of the collectors had already left for home.  I was getting nervous.  Then my old friend from New York approached me and asked me what I would take for the rest of the bottles.  I said $10,000 and he countered with $8,000.  He and two of his friends from New York were interested in the collection because they all collected different spirits and there were plenty of what each of them wanted.  I countered with an offer of $8,000 and they take possesion of the bottles right there at the show or $9,000 and I would cover the shipping to New York.  They chose the $8,000 and it was the wrong decision.  They each gave me a check for one third of the $8,000 but before I consumated the deal, I called my good friend Tony Natellin in New York to ask him if he knew the other two guys and if their checks were good.  Tony gave them the "thumbs up" and I consumated the deal.

Then the trouble began.  The fellows loaded up the bottles in our U-Haul and we took them to the airport and they had sky caps unload the bottles at the airline they were flying.  There were about 70 boxes left.  I am guessing that they bought about 8,000 bottles that day.  We then went to return the U-Haul truck and took a taxi back to the airport  It took us about two hours to do all of this.  By the time we got back to the airport. Lo and Behold, there were the guys still trying to find an airline that would take the boxes of bottles as freight.  As it turned, none of them would.  One of the guys owned a business in New York that had a truck and he ended up sending his truck and one of his employees on a round trip from New York to Chicago and back to bring the bottles home.  It cost them more than $1,000 to do this.

The final result......
$17,000 loan paid back in 10 days.  No interest paid.
$3,000 profit
1,100 great bottles added to my collection.
Many other collectors found bottles for their collections that were extremely hard to  find.

All in all, a real success story.

I am not encouraging anyone else to do something this crazy but sometimes you just get lucky.  And have a great wife!

See you next time.

I Need Your Help

Hello out there.  If you are reading my blogs and enjoy them, I would appreciate it if you would leave a comment.  It is important for me to know if this is an interesting endeavor to collectors out there or if I am just writing for myself.   It is fun for me to write my thoughts and memories about the hobby, but it is a lot of work if I am just doing it for myself.

Thanks.

John
http://www.minivodkaguy.com/