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Case Study

Borjomi: Crisis in Russia

16 pages

June 2006

Reference: IMD-5-0706

Borjomi is one of Russia’s oldest, best-known and well-loved mineral waters. After going through a steep decline at the end of the Soviet era, the brand was bought by Georgian Glass & Mineral Water (GGMW) in 1995. Two years later, GGMW hired Frenchman Jacques Fleury—he turned the company around, and in 2001 had restored Borjomi to its former glory. In 2002, GGMW was bought by venture capital firm, Salford. Together with Fleury, Salford partner, Vladimir Ashurov, led a further transformation of the company turning it from a local, almost family-run company into a professional corporate enterprise, and growing annual sales from $25 to $125 million, and from 54 to 366 million liters. This achievement did not go unnoticed, and in 2005 GGMW received two offers from multinationals. But Fleury and Ashurov believed there was still significant room for growth. They made an ambitious plan to grow Borjomi’s Russian revenues threefold in as many years. Just as they prepared to put their plan into action, Borjomi fell victim to the increasingly tense relations between Russia and its former satellites. In April 2006, Russia banned imports of Georgian mineral water, following an earlier ban on Georgian and Moldovan wines. With their growth plan in jeopardy, what options were open to Fleury and his team? Would Borjomi survive this threat to make yet another comeback in this its largest market.

Learning Objective

1) Crisis management & political risk in emerging markets; 2) Study brand development and growth options in an emerging market with strong traditions, by looking at issues such as: a) widely differing regional markets dominated by low-cost competitors; b) limits of brand extension. 3) Learn about the bottled water industry in Russia and the CIS.

Keywords

Water, Bottled Water, Retail, Retail Trade, Marketing, Brand Management, Packaged Water, Mineral Water

Settings

1997-2006

Type

Published Sources

Available Languages

English

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