The Valio Company in the Russian Market: Will Processed Cheese Viola Hold a Winning Position?

Abstract

The case is based on the analysis of a range of problems associated with the Viola brand long-term strategy development in the Russian processed cheese market by the Finnish company Valio. The Valio company was one of the first companies which started branding in the Russian processed cheese market. By using the “first step” advantage, Valio won a steady position in that market. However, in the recent time, the competition in the Russian market sharpened, the appearance of strong players fostered Valio to lose its leading position. The attack of competitors made the company take new effective decisions in marketing and branding to fasten its position.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Exhibit 1. Types of Cheese

Hard cheese is generally boiled and not boiled pressed cheese. This type of cheese is covered with either wax or natural crust. There are practically no molded cheeses among hard cheeses, since the technology of hard cheese manufacturing allows mold cultures develop well inside the cheese.

Soft cheese is generally covered with a soft cream or cottage cheese texture, made without additional processing such as smoking or melting. When processing lactic cheese milk is fermented with the help of lactic acid. The fermented cheese curd has high content acidity, so virtually only lactic acid is involved in the cheese ripening process.

Processed cheese is a relatively young product. In 1911 the scientist Walter Herbert and Fritz Slotter (Switzerland) succeeded in preparing processed cheese by using sodium citrate.

Processed cheeses could be considered full-flavored, since they have extraneous fats of vegetable origin. In texture they are close to soft cheese but differ in the method of preparation (additional melting after the ripening) and taste. Being the product of additional treatment packed in foil or hermetic containers processed cheese has a longer expiry date and less sensitive to temperature fluctuations, and that increases its sales season, as well as distribution area.

Exhibit 2. Types of Processed Cheese

Sliced. Processed from rennet cheese (50–70%) by adding other dairy products. The taste of such cheeses is strongly marked. The texture is plate-shaped, slightly stiff. The cheese is easily cut into slices. The cheese is packed in 30, 62.5 and 100 gram bricks.

Sausage-shaped. Processed on the basis of low-fat cheeses by adding rennet cheeses and dairy products (cottage cheese, butter, powdered milk, whey concentrated and powdered, etc.) The cheese flavor is conditioned by smoking it and adding fillings (cumin, pepper). The texture is rather thick, slightly stiff. The cheese is easily cut into slices. Processed sausage-shaped cheeses are packed in links 6–8 centimeters in diameter, up to 3 kilos each.

Paste-like. Cheeses of this group are characterized by high fat content and pronounced cheese or filler taste. The majority of cheeses are packed in polystyrene boxes and cups with net weight 100–200 grams. Some types could be packed in foil bricks.

Sweet. When processed this cheese is filled with beet root sugar and such fillers, as honey, nuts, cocoa, fruit and berries flavoring essences, chicory, syrups, juices, etc. They make cheese taste and aroma special. Sweet cheeses texture varies from sliced to paste-like. Sweet cheeses are packed mainly in foil, some types in polystyrene boxes and cups.

Exhibit 3. Indices of consumption level, brand loyalty and spontaneous brand awareness of three leading players in the processed cheese market (countrywide in Russia, Moscow and St. Petersburg) (as of 2010)

Viola

Hochland

President

Countrywide in Russia (% of respondents)

Consumption

29.7

31.3

19.9

Brand loyalty

19.1

19.0

10.0

Brand awareness

53.3

58.2

49.7

In Moscow (% of respondents)

Consumption

53.9

36.9

29.5

Brand loyalty

42.7

22.2

16.0

Brand awareness

71.

62.2

56.7

In St. Petersburg (% of respondents)

Consumption

63.2

36.1

19.5

Brand loyalty

44.8

17.6

7.0

Brand awareness

73.9

59.6

43.7

Source: TGI, wave, 2010

Exhibit 4. Sociodemographic profile of Viola and Hochland brand consumers, age

Figure

Source: TGI, 3rd wave 2010

Figure

Source: TGI, 3rd wave 2010

Figure

Source: TGI, 3rd wave 2010

Exhibit 5. Sociodemographic profile of Viola and Hochland brand consumers, personal income

Figure

Source: TGI, 3rd wave 2010

Figure

Source: TGI, 3rd wave 2010

Figure

Exhibit 6.

Figure

Exhibit 7. General chart of processed cheese, Moscow (December 2008)*

Figure

*Main indices:

• 69% of all Viola cheese consumers are loyal to this brand (k of Appeal)

• 21% of those Viola cheese non-buyers who know this brand are accessible (i.e. ready to start buying this brand) (k Appeal)

**Size of the circle stands for the group of the processed cheese brand consumers during a month

Source: data provided by the Valio Company

Exhibit 8. General chart of processed cheese St. Petersburg, 5 Volna (December 2008)*

Figure

*Main indices:

• 85% of all Viola cheese consumers are loyal to this brand (k of Loyalty)

• 18% out of Viola non-buyers, who know the brand are accessible (i.e. ready to buy this brand) (k of Appeal)

**The circle size means the group size of consumers who buy processed cheese of this brand in a month’s time

Source: data provided by the Valio Company

Exhibit 9. Processed cheese brands image, Moscow, 2008

Figure

The diagram shows the significance of attributes for the image of various brands. The significance of attributes is calculated as the difference between expected and received indices of a given attribute of a given brand. The result shows the upward or downward bias from the expected significance in standard deviations. If the significance is more than +2, and less than −2, they are statistically significant.

Exhibit 10. Product line of Viola processed cheese

Figure

Exhibit 11. Product line of Viola cottage cheeses

Figure

Exhibit 12. Competition “Write a Poem to Viola”*

Figure

*Captures in the picture: “For each wish there is Viola! Spring promo action. Pick your prize!”

Source: data provided by the Valio Company

Exhibit 13. Advertisement campaigns “Picnic” and “Fishing party” (2008)*

Figure

Figure

* Captures in the pictures: “Fish soup is far from being ready, but Viola is at hand!” “Barbeque is far from being ready, but Viola is at hand!”

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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