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A Russian Businessman’s Road From Siberia to Success A Russian Businessman’s Road From Siberia to Success
(about 20 hours later)
MOSCOW — He was rejected by the K.G.B. He couldn’t sell vodka to Russians. He went broke.MOSCOW — He was rejected by the K.G.B. He couldn’t sell vodka to Russians. He went broke.
Then Andrei V. Trubnikov bet on a dish-soap factory and started making shampoo. He is one of Russia’s most successful businessmen, at the helm of a global cosmetics brand.Then Andrei V. Trubnikov bet on a dish-soap factory and started making shampoo. He is one of Russia’s most successful businessmen, at the helm of a global cosmetics brand.
A strapping man who adorns himself in ethnic jewelry and indigenous talismans and decorates his office with wooden masks and fish tanks, Mr. Trubnikov serves herbal tea to guests, speaks in a gravely, reverent voice about traditional Siberian shamanism and eschews any hint of business attire.A strapping man who adorns himself in ethnic jewelry and indigenous talismans and decorates his office with wooden masks and fish tanks, Mr. Trubnikov serves herbal tea to guests, speaks in a gravely, reverent voice about traditional Siberian shamanism and eschews any hint of business attire.
In short, he stands out, a distinctive look he has sought to extend to his company, Natura Siberica. The brand’s colorfully named products, like Wild Thistle and Siberian Juniper shampoo and Strength of the Bear shaving cream, are sold in dozens of countries, from Argentina to Australia, at supermarkets like the Monoprix chain in France, as well as upmarket department stores like Harrods in London.In short, he stands out, a distinctive look he has sought to extend to his company, Natura Siberica. The brand’s colorfully named products, like Wild Thistle and Siberian Juniper shampoo and Strength of the Bear shaving cream, are sold in dozens of countries, from Argentina to Australia, at supermarkets like the Monoprix chain in France, as well as upmarket department stores like Harrods in London.
The company is a rare bright spot for a Russian economy that has been languishing in recent years.The company is a rare bright spot for a Russian economy that has been languishing in recent years.
Though the country emerged from recession late last year, growth has been anemic, weighed down by low oil prices and sanctions stemming from expensive foreign adventures in Ukraine and Syria. Outside of the energy and military industries, which Russian leaders view as of strategic importance, few companies have seen sustained profits. Though the country emerged from recession late last year, growth has been anemic, weighed down by low oil prices and sanctions stemming from expensive foreign adventures in Ukraine and Syria. An influential United States Senate committee has warned that further sanctions were coming. Outside of the energy and military industries, which Russian leaders view as of strategic importance, few companies have seen sustained profits.
“It’s very hard,” Mr. Trubnikov, 58, said of succeeding in business in Russia.“It’s very hard,” Mr. Trubnikov, 58, said of succeeding in business in Russia.
As a college student, Mr. Trubnikov aspired to join the K.G.B., studying Spanish and Serbo-Croatian to help his chances. He was abruptly turned away and, like other spurned applicants, was never told why.As a college student, Mr. Trubnikov aspired to join the K.G.B., studying Spanish and Serbo-Croatian to help his chances. He was abruptly turned away and, like other spurned applicants, was never told why.
Dejected and in search of work, he opened a vodka distillery in the late 1990s, but his timing was terrible. Russia was hit by a financial crisis in 1998, and the country defaulted on its debt, sending the economy into a tailspin. The price of vodka nose-dived. Mr. Trubnikov couldn’t cover his debts and the distillery soon went under.Dejected and in search of work, he opened a vodka distillery in the late 1990s, but his timing was terrible. Russia was hit by a financial crisis in 1998, and the country defaulted on its debt, sending the economy into a tailspin. The price of vodka nose-dived. Mr. Trubnikov couldn’t cover his debts and the distillery soon went under.
The next year, in desperation, he sold his car, a Soviet-era Volga sedan, for about $5,000, and used the proceeds to buy a defunct dish-soap factory outside Moscow, setting out to make shampoo.The next year, in desperation, he sold his car, a Soviet-era Volga sedan, for about $5,000, and used the proceeds to buy a defunct dish-soap factory outside Moscow, setting out to make shampoo.
“I wanted to make something that shows the value of Russia,” Mr. Trubnikov said.“I wanted to make something that shows the value of Russia,” Mr. Trubnikov said.
He initially sold products under the brand the Recipes of Grandmother Agafia, named after a Siberian healer, Agafia Lykova. Sales of the products — based on herbs found in Siberia — remain brisk inside Russia. But abroad, Mr. Trubnikov said, they were hampered by a lack of recognition by consumers who also found the name a mouthful.He initially sold products under the brand the Recipes of Grandmother Agafia, named after a Siberian healer, Agafia Lykova. Sales of the products — based on herbs found in Siberia — remain brisk inside Russia. But abroad, Mr. Trubnikov said, they were hampered by a lack of recognition by consumers who also found the name a mouthful.
Still, he wanted to infuse the company with the good characteristics of Siberia. Despite being from Moscow, he was convinced consumers would associate the remote region with snow, isolation and cleanliness, and not the dark clouds hanging over political leaders in the Russian capital.Still, he wanted to infuse the company with the good characteristics of Siberia. Despite being from Moscow, he was convinced consumers would associate the remote region with snow, isolation and cleanliness, and not the dark clouds hanging over political leaders in the Russian capital.
He eventually settled on the brand name, Natura Siberica, in 2008.He eventually settled on the brand name, Natura Siberica, in 2008.
The company has now moved from its original dish-soap factory to a larger facility outside Moscow and runs six organically certified herb farms as well as a herd of yak in Siberia. It also has a factory in Estonia and presses to extract herbal essences in Scotland and Romania.The company has now moved from its original dish-soap factory to a larger facility outside Moscow and runs six organically certified herb farms as well as a herd of yak in Siberia. It also has a factory in Estonia and presses to extract herbal essences in Scotland and Romania.
Mr. Trubnikov’s sprawling executive suite on the third floor of the building is a veritable temple to cosmetics and beauty products. Sunlight filters through and around thousands of bottles of shampoo, soap, gel, lotion and conditioner made by companies around the world, all stacked on floor-to-ceiling shelves.Mr. Trubnikov’s sprawling executive suite on the third floor of the building is a veritable temple to cosmetics and beauty products. Sunlight filters through and around thousands of bottles of shampoo, soap, gel, lotion and conditioner made by companies around the world, all stacked on floor-to-ceiling shelves.
He largely ignores the contents of the products, and instead studies the bottles and labels for marketing ideas, all with the eventual goal of entering the American market. If Natura Siberica were successful, it would become one of the first major Russian consumer brands to do so.He largely ignores the contents of the products, and instead studies the bottles and labels for marketing ideas, all with the eventual goal of entering the American market. If Natura Siberica were successful, it would become one of the first major Russian consumer brands to do so.
“I like this idea because it is difficult,” Mr. Trubnikov said, “and I like difficult projects.”“I like this idea because it is difficult,” Mr. Trubnikov said, “and I like difficult projects.”
In its early years, the company concentrated on its domestic market.In its early years, the company concentrated on its domestic market.
The logic was simple. Women in Russia spend about 30 percent of their income on beauty products, according to the Perfumery and Cosmetics Association of Russia, far more than in higher-income countries.The logic was simple. Women in Russia spend about 30 percent of their income on beauty products, according to the Perfumery and Cosmetics Association of Russia, far more than in higher-income countries.
“In Europe, if you overdo it, you could get a condescending look,” said Anna Dycheva-Smirnova, the association’s deputy chairwoman, referring to the amount of makeup used. “In Russia, if you are not made up, you could get a condescending look.”“In Europe, if you overdo it, you could get a condescending look,” said Anna Dycheva-Smirnova, the association’s deputy chairwoman, referring to the amount of makeup used. “In Russia, if you are not made up, you could get a condescending look.”
“No matter how snowy it is and how slippery,” she added “women will wear heels and a fur coat.”“No matter how snowy it is and how slippery,” she added “women will wear heels and a fur coat.”
Though overshadowed by Russia’s wars, sanctions and political intrigue, fast-footed consumer companies have popped up to cater to the country’s middle class.Though overshadowed by Russia’s wars, sanctions and political intrigue, fast-footed consumer companies have popped up to cater to the country’s middle class.
This year, investors oversubscribed Russia’s first public offering since the onset of the Ukraine conflict in 2014, raising $355 million for Detsky Mir, which operates a collection of toy stores.This year, investors oversubscribed Russia’s first public offering since the onset of the Ukraine conflict in 2014, raising $355 million for Detsky Mir, which operates a collection of toy stores.
Over all, about 260 domestic companies have sprung up to make and market soaps, lotions and shampoos in Russia, according to the cosmetics association. The sector now accounts for about 40 percent of the country’s $16 billion in annual cosmetics sales.Over all, about 260 domestic companies have sprung up to make and market soaps, lotions and shampoos in Russia, according to the cosmetics association. The sector now accounts for about 40 percent of the country’s $16 billion in annual cosmetics sales.
For Russia’s creaking economy, aggravated by a prolonged slump in oil prices from their highs, there is hope that such nonpetroleum enterprises could help kick-start a broader revival. The country relies on oil and gas sales for 60 percent of all exports, and revenue from crude sales in particular was down 17 percent in 2016.For Russia’s creaking economy, aggravated by a prolonged slump in oil prices from their highs, there is hope that such nonpetroleum enterprises could help kick-start a broader revival. The country relies on oil and gas sales for 60 percent of all exports, and revenue from crude sales in particular was down 17 percent in 2016.
The future, economists say, lies in unleashing Russia’s entrepreneurs.The future, economists say, lies in unleashing Russia’s entrepreneurs.
Natura Siberica has largely stood out by putting a different spin on cosmetics, helping the company distinguish itself from the pack both at home and abroad. Its focus on Siberia and Siberian shamanic practices, as well as peculiar ingredients like pine nuts, cloudberries and yak butter, are aimed at evoking visions of stark and unspoiled natural terrain.Natura Siberica has largely stood out by putting a different spin on cosmetics, helping the company distinguish itself from the pack both at home and abroad. Its focus on Siberia and Siberian shamanic practices, as well as peculiar ingredients like pine nuts, cloudberries and yak butter, are aimed at evoking visions of stark and unspoiled natural terrain.
“At first, I was skeptical, because we think Italian or French cosmetics are best,” said Viktoria Y. Vedenskaya, a real estate agent picking up a bottle of Sakhalin Island Thistle body lotion in a Moscow store. “But these berries and flowers are unique.”“At first, I was skeptical, because we think Italian or French cosmetics are best,” said Viktoria Y. Vedenskaya, a real estate agent picking up a bottle of Sakhalin Island Thistle body lotion in a Moscow store. “But these berries and flowers are unique.”
“It’s virgin nature out there,” she added. “You can travel for a week, and see nobody.”“It’s virgin nature out there,” she added. “You can travel for a week, and see nobody.”
Natura Siberica’s big break internationally came at a 2008 cosmetics exhibition in Japan, when a Japanese retailer signed a deal to carry the brand.Natura Siberica’s big break internationally came at a 2008 cosmetics exhibition in Japan, when a Japanese retailer signed a deal to carry the brand.
Since then, the company has been expanding, both within Russia and overseas. It now operates 70 of its own brand stores in Russia and six other countries, while its products sell in more than 40 nations.Since then, the company has been expanding, both within Russia and overseas. It now operates 70 of its own brand stores in Russia and six other countries, while its products sell in more than 40 nations.
In Europe, it is going for a high-end consumer, with shampoo selling for about 8 euros, or about $8.70. Some branded stores offer luxurious touches, like presses that make fresh pine nut oil for customers while they wait. Over all, sales in 2016 were about 14 billion rubles, or $248 million.In Europe, it is going for a high-end consumer, with shampoo selling for about 8 euros, or about $8.70. Some branded stores offer luxurious touches, like presses that make fresh pine nut oil for customers while they wait. Over all, sales in 2016 were about 14 billion rubles, or $248 million.
“A Russian woman can have a lot of problems. She might have to work in a factory,” Mr. Trubnikov said. “But in our stores, she should feel like a queen, feel desired, and feel like a woman.”“A Russian woman can have a lot of problems. She might have to work in a factory,” Mr. Trubnikov said. “But in our stores, she should feel like a queen, feel desired, and feel like a woman.”