Russia's new "Wild East". (Market Horizons).

Western investors still swap horror stories about their experiences in Russia in the 1990s. They call it the Wild East. Like the mythical frontier portrayed in Hollywood westerns, the ground is strewn with the sun-bleached bones of failed businessmen.

To many, Russia remains wild to this day. But the meaning of these words changed after foreign investment fled Russia and the devalued ruble made imports an impossible luxury. Many Russian companies responded positively, by taking their first wobbly steps into the free market. The result has been a Silicon Valley--style new economy boom, where the "new economy" in question is Russian capitalism.

One domestic player to have benefited is Wimm-Bill-Dann, a Moscow maker of milk and fruit drinks that blossomed from nothing in late 1992 to annual sales of more than $650 million by 2001.

Initially, there were few signs that Wimm-Bill-Dann--curiously named after the famous Wimbledon tennis tournament in Britain--would move into the Grand Slam of Russia's food processing industry. It owned no equipment and leased a single production line at a Moscow food processing plant. Under the old Soviet Union, juices were sold in truly inconvenient three-liter glass jars that couldn't be recapped once opened.

Meanwhile, plenty of other juice producers were eager to sell to the new Russian market in the early '90s, including Coca-Cola and France's food giant Danone. Wimm-Bill-Dann's single brand was a poor domestic cousin to brightly packaged products from Israel, Turkey, Poland and elsewhere.

What changed the picture was Russia's debt default and financial crisis in August 1998. The ruble fell to one-third of its value. Overnight, imports became prohibitively expensive for the newly poor Russians. One company's disaster is another's chance of a lifetime. And so it was that the domestic also-ran, Wimm-Bill-Dann, proved to be in the right place at the right time--and its sales took off.

Since then, the company has gone on a massive shopping spree, acquiring and building some 14 different packaging and processing plants and dairies. It now has 450 different product lines. Sensing a contender, Danone paid $33 million for 4 percent of Wimm-Bill-Dann at its public offering in February 2002.

Wimm-Bill-Dann hasn't entirely shaken the old Wild East image. Some directors have been linked to Trinity Holdings, an obscure business believed to be a front for organized crime, according to reports in the weekly newspaper The Russia Journal. Wimm-Bill-Dann's largest shareholder has done time in a Soviet jail for committing a violent crime. Undeterred, Danone reportedly wants to get a board seat.

Wimm-Bill-Dann is by no means unique in Russia, not only in its questionable connections, but also in its rapid growth and spectacular success. On the contrary, it is rather typical. Success stories abound, ranging from the local cell phone operator Bee-Line to Aptiki-36.6, a rapidly growing chain of Western-style pharmacies.

With Western economies in a period of lackluster growth, Russia represents an expansion opportunity for Western companies. European and Asian multinationals are waking up to its potential, as the Danone example shows. U.S. companies, however, are lagging behind. American executives remain suspicious of Russia, regarding it primarily as a supplier of natural resources.

Even with prodding from the Bush Administration, few U.S. oil companies are willing to commit to Russia. Despite immense prospects for the future, private U.S. companies are pressing for better investment protection and are expected to remain cautious until Russia passes proper legislation to allow production sharing. They are right, of course: As far as natural resources are concerned, there is still very little transparency, a shaky legal structure and plenty of unsavory characters running the industry.

But there are profits to be made in surprising corners of the vast and growing Russian domestic market. Partnership with successful local enterprises could provide a source of growth for western businesses at a time when such opportunities are lacking in the West.

Stephan Richter ([e-mail]) is publisher of TheGlobalist.com.