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Wagon Wheels, the Great (big) British biscuits, are to roll back into Russia after an earlier attempt crashed during the country’s 1998 sovereign default.

Burton’s Foods, which makes them, will be selling Wagon Wheels the way it did in the 1990s, marketing them on the “British-ness” of their taste, look and packaging. But would the company actually do better to make the flavour a bit more Russian?

The track record is mixed. Some foreign food companies have succeeded in Russia by sticking closely to their original formula, as Burton’s Foods clearly intends to do.

Starbucks, for instance, offers the same vanilla frappuccinos and caramel macchiatos that they do everywhere else, and in tall, venti and grande – a strategy that appears to have served it well. The company entered Russia only in 2007 and then only through a Kuwaiti franchisee but it has gone from having just 2 locations to 28. Seven new coffee shops have opened in the past month alone.

On the other hand, some companies have gone a long way to adapting to local tastes. Take for instance Lay’s, the Pepsico crisp brand, which entered Russia exactly 20 years ago and has experimented with crisps flavoured with everything from caviar to mushrooms and sour cream.

As Yuri Ovchinnikov, operations development and change manager at PepsiCo Russia who was working at Lay’s at the time, tells beyondbrics, the crisp maker’s original task at the start of the 1990s was to distinguish the American crisps from their Soviet cousins, called colloquially “no-name crisps” and known for their “very brown”  colour and “oily and too salty” taste.

Yet in the following years the company ultimately turned to a local relevance campaign, doing taste tests across the local market and coming up with flavours familiar to Russian palates.

To get the best taste for “mushrooms and sour cream”, the company invited Moscow chefs to prepare the best mushroom and fried potato dishes, with the best chef winning a Lay’s contract to develop the crisps’ flavour.

The company went on to launch other favourites like red caviar and pickled cucumber which continue to be sold today. Crab-flavoured crisps were originally launched as a special offer in Siberia and the Far East but after flying off the shelves during the first three months the company decided to roll them out across Russia.  The flavour is now the the third best-selling in Lay’s Russia portfolio and has been exported to Thailand.

So do multinational food groups need to go local? Should they follow Lay’s or Starbucks?

Matt Lasov, director of research at Frontier Strategy Group who has worked with clients on adapting their products for different markets, says the best tactic is usually a hybrid approach: maintaining most aspects of the products that made it successful to begin with but experimenting with local flavours there.

He gives the example of Pizza Hut in Pakistan which has adopted roughly 30 per cent of its products to local tastes and culture. The restaurant chain offers Hara Chicken and Spicy Prawn pizzas and has marketed Pizza Hut as a more upscale chain than it is perceived in America.

Lasov says that striking a balance between assimilation and not changing at all is key. Speaking of the Russian market, he says: “If you go in [as a foreign company] and try to compete with purely Russian products you will fail because local companies, at least at the beginning, will be able to do it better and cheaper.

“But if you go in with your product without any localisation you’ll fail again.”

Related reading:
Wagon Wheels to roll into Russia, FT
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