Although the general opinion is that Estonian, Latvian and Lithuanian consumer markets are similar, surveys conducted by Emor show that each country has its own characteristics.
People prefer local food production. The Baltic states are no exception.
"Estonians neither prefer Latvian nor Lithuanian products. The same goes for Lithuanians and Latvians - they do not prefer the product of the other two Baltic States. They would rather favour a Western product instead," said Aivar Voog, senior project manager at Emor.
Emor is the biggest research company in the Baltics, which provides surveys of the Baltic states, Russia and the Ukraine through its partners in these regions.
"Lithuanians are the most conservative of the three, while Estonians are the most open to something new. In Latvia, the share of Russian people is biggest and therefore, due to national differences, the consumers are quite open," said Voog.
The preference for local products has increased among people of all age groups. However, the older generation pays more attention to the country of origin than younger generation.
In Latvia, the local confectionery Laima can claim the position of the most popular brand, followed by local brewery Aldaris. Three locals - confectionery Karuna, milk processor Birzu Pienas and breweries Kalnapilis and Utenos - command the Lithuanian market. In Estonia, local companies share top billing with many Western brands. Atop the Estonian list is local confectionery Kalev, Coca-Cola, local meat processor Rakvere Lihakombinaat and Philips.
In all of these countries, food brands that have been established for a long time are the best known. Some Western products (washing powders, chewing gums) that have been advertised a lot are also well known.
It is very hard for new brands to enter the market, as big and traditional producers have already conquered it. The new brand would have to spend much more on advertising in a blocked market.
Strategies for market entry
"Estonian products are marketable on the big Russian market thanks to the long trading traditions, but producers do not have any considerable position there," said Ivar Risthein, marketing manager at Emor.
"Kalev did an excellent job. The management invested in the local market and opened a factory in Russia. The Russian crisis did not affect them as much as it affected the dairy Uhinenud Meiereid for example," said Risthein.
Voog says it's just as important for companies to know their markets and what products their consumers really want.
"It is important to be aware of what kind of a product you want to sell. If it is primary food, then wherever you start operating, you should not start by declaring that you are from Estonia. You should have a local image. For example, we like to think about Saku as our local brewery. However, it actually belongs to foreign investors, which have also acquired breweries in neighboring countries. Saku does not [mention] continuously who its owners are," said Voog.
The same logic is applied to some other product categories of fast moving consumer goods, Voog said. For example, most local consumers do not know the most popular juice in Estonia - Gutta - is a Latvian brand.
On the other hand, Estonians know that Laima confectionery is made in Latvia, and therefore the relations with that product are not positive, said Voog.
Emor has also surveyed the Russian market through its partners in Moscow and St. Petersburg. Consumers' tastes in these two cities vary noticeably. The people of St.Petersburg are more open to foreign, especially Scandinavian products, while Muscovites are loyal to Russian products. While at the beginning of the 1990s, Masterfoods was the number one confectionery, the situation has changed significantly. Only local producers enjoy this fame today.
In terms of manufactured goods, the production of luxury goods is the most risky business.
"It is not wise to produce goods that belong to the luxuries category for the local market. Luxury goods show the social status of a person, thus the brand has to be widely known and its image should be global," said Ulle Parnoja, project manager for Emor. "The cost of creating a global image for the product is so high that it is very risky to count on the local market only. If produced locally, the manufacturer has to co-operate with a world-known partner to support the brand's global image."
Another important issue to keep in mind when creating a new brand is the protection of the brand name. A trademark does not protect brands that include a geographical name or a general name (eg department store). Such brands definitely have lower brand value because any company can cut profit from using the same words in their brand name. Coca-Cola, on the other hand, is an example of a well-promoted brand name, the cost of which may exceed the total value of the company's assets.