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Beer politik: computer software choice aids American beer distributor in Russia.

On a 1991 Aeroflot flight into Moscow to attend to business interests, Rick Grajirena sat next to a Russian who celebrated the jet's safe landing by reaching into his carry-on bag and popping open a can of Milwaukee's Best.

The man's affinity for American beer--warm beer at that--planted a seed in Grajirena's mind. A year later, that seed sprouted into a company that has since become the first American-style beer distributor in Russia.

"We acquired the rights to market Miller Brewing Co. products in Moscow and other parts of the Soviet Union," says Grajirena, president of Tampa, FL-based First Republic L.C. "It's been an interesting experience, to say the least, but we have quickly learned how to operate more efficiently over there."

According to Grajirena, one of First Republic's first decision's also proved to be one of its best. The company recruited George Fotopulos, who had 20 years of experience at various beer distributorships, to serve as director. His first assignment was to recommend a computer software program to manage First Republic's Russian beer distributorship.

"George quickly narrowed in on the dBEV program from Micro Vane Inc.," Grajirena says. "He told me it was the most comprehensive program he'd run across. That's all I needed to hear."

In 1983, Micro Vane became the first company to provide a microcomputer software solution specifically for the beverage industry. Today, the company has more than 800 customers in 45 states, Canada--and now Russia.

"Thanks largely to the dBEV program, operating a distributorship in Russia has not been nearly as complicated as you would think," Grajirina says, "I'm convinced that we'll soon reach the point where having a Russian distributorship won't be much different than having a branch office in, say, Los Angeles." Establishing an Account List

That's not to say First Republic's Russian venture has been all smooth sailing. The biggest setback occured on the eve of Russia's May Day celebrations last year, when the walls of First Republic's new underground warehouse in Moscow collapsed under a sea of spring mud. Grajirena had to hire Russian military personnel to dig out the beer.

Long before that, there was the problem of finding potential accounts for the beer First Republic had promised to sell for Miller. In most new markets, this wouldn't seem to be an insurmountable problem, but most new markets aren't Moscow.

The primary difficulty was that there were no telephone books or reliable street maps to help First Republic sort out the 12.5 million people in Moscow. The Communists figured no good could possibly come from having such basic reference materials around, so they didn't permit their publication. Contacting a fellow Muscovite isn't so challenging today--an American company publishes a phone book that's updated weekly.

"But we had to start from scratch," Grajirena says. "Unless you already knew the number of someone you wanted to contact, you might as well forget about trying to call them."

First Republic solved the problem by recruiting 50 bilingual journalism students from Moscow State University. The students went street to street and door to door, compiling a list of businesses that might be interested in buying American beer.

"They came back with a number of potential accounts--and their phone numbers," Grajirena says. "To this day, it's probably the only database of its kind in Russia. No one had ever quantified the Russian market to any extent before. Based on this list of accounts, we were able to estimate how many cases of beer we would probably sell."

Previous Experience in Russia

Though Grajirena is new to the beverage industry, he actually has a good deal of experience doing business in Russia. He formerly operated a marine yacht fitting company that counted the Soviet Olympic sailing team among its customers in the 1970s.

In early 1991, Grajirena traveled to Russia to explore other manufacturing-related business opportunities. In the midst of his search, the Russian business broker he was dealing with suddenly asked about the possibility of obtaining to containers of American beer. Remembering also the actions of his Aeroflot flight companion, Grajirena figured the Russian market was overly ripe. Upon his return to the United States, Grajirena spoke with Miller Brewing Co. executives about establishing a Russian distributorship and was given 90 days to present a business plan. He formulated a plan based in part on sales estimates derived from the door-to-door survey in Moscow. It was enough to earn the go-ahead from Miller.

First Republic's first beer shipment arrived in Russia last January. The beer is shipped from ports in the Eastern United States to Rotterdam in the Netherlands. from there, it is shipped to St. Petersburg, russia or Riga, Latvia, and ultimately trucked into Moscow.

The company's first six Russian sales representatives visited a Springfield, MO, Miller distributor for intensive training. today, First Republic employs 24 people in Russia--only four of whom are Americans--and nine at the home office in Tampa.

"We try to look as much like a Russian company as we can, so it's important to have a large base of Russian employees," Grajirena says.

First Republic also would like a large base of Russian customers. russians now only account for about one-third of sales, though that percentage is rapidly increasing. The majority of the company's accounts are on-premise, primarily hotels and restaurants used by foreign business travelers and tourists.

Computer Communication with the U.S.

First Republic's point man in Russia is Mark Mroczkowski, a certified public accountant who serves as the company's chief operating officer. He spends about two-thirds of his time in Russia, usually returning to the United States for three weeks or so every couple of months.

Mroczkowski has been responsible for incorporating the dBEV program as thoroughly as possible into the company's Russian operations. In Tampa, computer duties are handled primarily by controller Raisa Ross. Moscow is exactly eight hours ahead of Tampa, which works out perfectly from a record-keeping point-of-view.

"Communications with Moscow have improved dramatically in the past two years," Ross says. "You couldn't direct dial Moscow or get a fax through when we first started, but those problems are quickly disappearing.

"We've found the eight-hour time difference to be a real convenience," Ross reports. "At the end of every working day, the Moscow office prints the necessary dBEV reports and faxes them to our office in Tampa. All the day's sales and business-management information from Moscow arrives soon after I get to work in the morning. At the end of every month, they fax us their monthly reports and we input the data here. We're working with Micro Vane now on the feasibility of establishing a modern hook-up that would make it even quicker and easier to exchange data."

Software Support Solutions

Since First Republic is Micro Vane's first and only customer in Russia, there was initially some concern as to whether customer support could be handled efficiently. The company's Tampa office, however, has rendered many of these concerns moot. Questions that arise in Moscow are relayed to Tampa and then forwarded to Micro Vanes's customer support specialists.

"As far as software support goes, time differences and geographical distances haven't been a problem," Ross says. "It seems like it might be a cumbersome process, but that hasn't proved to be the case."

Another concern was whether the dBEV program as it's currently written would be able to accomodate rubles, since the Russian currency requires far more digits than do U.S. dollars. As it turns out, this concern was of no practical significance either. First Republic deals in a parallel dollar economy that runs throughout Moscow.

First Republic also has found the dBEV program to be a suitable software solution for a recent U.S. acquisition. Last February, the company purchased a bonded warehouse that supplies beer, wine and cigarettes to cargo and cruise ships which sail into Florida ports.

"The operation had no computer system when we purchased it, but fortunately we found dBEV to be a perfect fit." Grajirena says.

Grajirena sees big potential for American beer in the former Soviet Union. His biggest promotional coup so far occured last January, when First Republic sponsored a Super Bowl party at the Radisson Slavanskaya Hotel. More than 800 people showed up to watch the 2 a.m. kick-off on Russian TV.

"If there's ever been an untapped market, this is it," he says. "We also plan to develop markets in St. Petersburg and Odessa, a Ukrainian tourist city. On the software front, we expect our next step will be to acquire some hand-held radio frequency devices to interface with our computer system. Computer technology has played a big role in the success we've been able to achieve so far in Russia."
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Title Annotation:First Republic L.C.
Author:Pursel, Bob
Publication:Modern Brewery Age
Date:Jan 31, 1994
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