A kvas and a smile? Coke cashes in on nostalgia

A brewer since the days of Kruschev and Sputnik, Vyacheslav Shamarin laments what capitalism has done to kvas, the Soviet Union's favorite soft drink.

He pours another round of the sudsy brown liquid from a plastic bottle and talks about the old days, in the 1980s, when you could buy a glass of real kvas poured from a shiny vat by a streetside vendor for about a penny.

"Everything that has been made since then is not kvas, it's nothing more than cola," Shamarin grumbled.

Traditionally made from a fermented brew of rye, sugar and yeast that tastes like sweet, dark beer minus the alcohol, the real kvas of the Soviet days would only stay tasty for a couple of days and couldn't be bottled and sold in stores.

Kvas production collapsed in the early 1990s under the weight of the slick marketing and Western chic of companies like Coke and Pepsi and new health laws that banned its sale on the streets.

Coke quickly dominated the soft drink market here and elsewhere in the former Soviet Union, cashing in on a public that desperately wanted its MTV, a Big Mac, a Coke and a smile.

But in 1998 kvas - spelled "kvass" in Latvian and known as "kali" in Estonian and "gira" in Lithuanian - returned when a handful of local juice and condiment producers took a page out of Coke's book by mass producing non-fermented kvas that had a long shelf life and plenty of nostalgia.

Most are made from a syrupy concentrate shipped in from beer breweries in Germany or Austria.

Locals admit that the new kvas isn't as good, but they're buying it at a rate that has triggered a re-markable turnaround in the soft drinks market across the former Soviet Union.

About half the price of Coke, kvas grew from a 4 percent share of Latvia's soft drink market in early 1999 to an estimated 32 percent share in the first half of 2001, according to the polling firm ACNielsen Latvia.

Coke's share dropped from about 40 percent to 23 percent during the same period and Coke posted losses locally of more than $1 million in 1999 and 2000.

"There's a nostalgic trend among people to go back to the older products that people drank at home with their families during Soviet times," said Aki Hirvonen, Coke's marketing director in the Baltics.

Latvian juice maker Gutta, which kick started the kvas revolution three years ago, has learned Coke's playbook by heart.

It now markets vitamin-added kvas aimed at kids and calcium-fortified kvas for women side by side with its original brand, which it has renamed "klassik."

"We are on the same playground as Coke and we have to have the same tools when we go into the stores and try to sell," said Uldis Ronis, general manager of Gutta.

But now Coke is fighting back.

Last fall it began producing its own kvas after purchasing the trademark of the leading kvas producer in neighboring Estonia, Linnuse Kali, and the Latvian kvass brand Pilskalna. Coke has also refitted some of it plants throughout Russia to produce kvas.

It has also begun producing a favorite local drink in Finland and others in Asia.

"It's indicative of a transformation that's taking place all over," said American University professor James Mittelman, best-selling author of "The Globalization Syndrome." "There is no longer a strict separation of the global and the local."All this is a little overwhelming for the brewer Shamarin.

He's in charge of kvas production for Kok and Company, a condiment maker that decided to make use of its factory, a ramshackle 19th century brewery, to get into the kvas market in 1998.

Squeezed into his white scientist's coat stained brown with the day's batch, Shamarin closely guards the recipe of Ilguciems kvas, the closest thing that Latvia has left to the real thing, he says.

It's brewed in large vats using a secret mixture of rye, oats, sugar and yeast.

But unlike the original its pasteurized, which Shamarin says gives it a shelve life of two months and a slightly massed-produced flavor.

It's the best kvas around, he boasts, saying proudly that his own grandson would rather go thirsty than drink the kvas made from concentrate that now dominates the market.

"You can't carbonate wine and call it champagne," he said.

In addition to its original brew, Ilguciems recently started making "healthy" kvas targeted at kids, a choice that Shamarin says Kok and Company's management made to compete with bigger producers.

"The kids love it," he said.

Leaning in, he sheepishly revealed its appeal.

"More sugar," he said.