Last week, Coca-Cola started producing kvass for the Russian market under the label, "Kruzhka and Bochka" (Mug and Barrel.) It is being brewed in two factories, the "Brewing Plant Semko" and "Brau Service." It will be available in 1.5 liter bottles which are scheduled to go on sale this summer.

Kvass is produced by fermenting bread made from rye, wheat or barley. It is similar to beer but at its strongest it contains no more than 1.5 percent alcohol. This is the first time that Coca-Cola has used a fermentation technique to produce a drink. Clyde Tuggle, the President of Coca-Cola in Russia, stated that it will be "a natural product with no preservatives," following a traditional Russian recipe.

In the Baltic countries, Coca-Cola bought kvass companies in order to increase their market share. However, in Russia it spent two years developing its own recipe which underwent testing in Samara last year.

Kvass is a Russian drink that is mentioned in Russian chronicles as far back as the 10th century. Despite a decrease in popularity in the 1990s, it has been resurgent in recent years, with sales growing by 43 percent to $461 million last year. This was a significant increase compared to only an 8 percent growth in the overall size of the drinks market.

As a soft drink kvass is a natural competitor to Coke, but its increasing popularity has encouraged Coca-Cola to enter the market. But competitors have sought to differentiate their kvass from cola, particularly the firm Nikola.

They vehemently attack Coca-Cola on their website, by insisting on no "cola-nisation." Furthermore their advertising campaign seeks to differentiate their product from cokes by using the pun Nikola - Ne kola (Nikola is not a cola.) They assert that kvass is different because it is a natural product rather than a chemical one and that consumers should say no to "chemistry." Coca-Cola's offering of natural kvass will blur the lines between this distinction.

However, other producers have welcomed Coca-Cola's involvement in the market. Nikola Volkov, Marketing Director of Deka, was quoted in The Guardian as saying "If their kvass is sold alongside Coke it will improve its image among young people and raise the whole sector."

Coca-Cola predicts that the target market will be 25-39 year olds. "They are modern Russians who appreciate traditions and aspire to keep up to date," said Tuggle. It is thought that many older people are more opposed to Coca-Cola's image.

Coca-Cola has already come into conflict with Russian traditions in the last twelve months. At the end of last year there were complaints in Nizhny Novgorod over an advert which showed religious and historical symbols.

There has also been speculation that Pepsi are preparing to enter the Kvass market. Last year they were linked with the company Pershin but Pepsi have not made any formal moves yet.

Coca-Cola plan to advertise extensively, using the slogan "Kruzhka and Bochka - Real Kvass." However, the success of this venture will depend significantly on whether they can reconcile their Western image with that of an historic, Russian beverage. 

By Ed Bentley