Livonia's management said the company has been successful because it follows a Western marketing strategy. The dairy focuses on brand development and management instead of concentrating solely on production.
The dairy started by developing ice cream for the summer season, and quickly took 12 percent of the market despite bad weather that slowed the industry's overall sales. The company plans to triple its ice-cream sales next year.
Livonia's success with chocolate-covered cottage cheese bars has been even more spectacular. After its debut in October, the chocolate covered bar Pipo had captured over 45 percent of the market by the end of the year.
"The good result is due to [the bar's] high quality and an attractive wrapper," said Marketing Director Atis Riekstins.
He noted that developing attractive packaging has been one of the keys to the company's success. The Pipo wrapper design is based on combining simple bright colors and a large cartoon figure.
"It has to be attractive to children, who are the main customers, and their parents," said Riekstins.
The company has used the same approach to designing covers for other products. All of Livonia's products feature simple but bright and attractive use of color with a prominent place for the brand name rather than the type of product.
And while not all of the products are sold under the Livonia brand name, the company's name is still featured prominently on the label as a means of promoting the company's other products.
A satisfied ice cream customer is more likely to try its other products, Riekstins said.
Now the company is ready to break out of the Latvian market, to the other Baltic states and beyond.
A Lithuanian-language wrapper for Pipo has already been produced and other products for the Estonian and Lithuanian markets are under development.
"People don't buy a nationality, they buy a product," said Riekstins, who admitted that consumers feel more comfortable seeing labels in their own language.
Livonia is confident about expanding in the Baltics and developing markets beyond, said Riekstins. Most of the company's management has considerable experience working on the Baltic dairy market.
"We see huge potential for the market," said Riekstins, adding that the company's turnover figures have been increasing every month. "We have taken all the necessary steps to ensure success." .
Edgars Skulte, director of Brand Sellers DDB in Riga, believes that marketing will become even more important as competition heats up on the Baltic market.
"I think in 1999 we will see fierce fighting for the Baltic market by local companies," he said. "Until now companies have been focusing on distribution rather than marketing. The Russian crisis will force local companies to concentrate on the Baltic market and marketing will become very important."