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Knights of the Vine RUSSIA


Entrepreneurs. The message is the Product
Text by John Bonar
Photos by Liza Azarova
Paul Goncharoff, an American businessman who has been doing business with Russia for over 20 years, and based here full time since 1989, would like to believe fortune cookies were invented in San Francisco in 1907 by a second generation Japanese American. He acknowledges that such message-bearing cookies may, however, have originated in the form of pelmeni unearthed in the Altai Region of Russia. These ancient pelmeni, dating to around 1500 AD, bore messages believed to be communications with the spirits of good fortune by a Shaman (spiritual leader).

Whatever the competing claims from around the world, including China and Japan, Goncharoff picked on Fortune Cookies, or Biseshki, as his latest venture to spread ‘positivity’.

“The cookie doesn’t mean anything, it’s the message that counts”, he says enthusiastically during a breakfast meeting at Starlite Diner, where his Biseshki have been sold since mid August. “I was looking to find something that is purely positive, just because it exists.”

From his surname it is obvious that Goncharoff has Russian roots. His grandfather was a Tsarist cavalry officer in WWI. He was gassed and evacuated to a Crimean sanatorium when the 1917 Revolution raised him from his bed to fight against the Bolsheviks. Eventually the family settled in the New York area where Goncharoff was raised.

His colorful career started in metals trading, and took him to Bermuda, Johannesburg and Tokyo, with frequent visits to Moscow. In 1986 he left his position as President of Platinum Group Metals International,Inc. NY to become a board director and executive vice president of RSI International, a New York based technology-transfer company that brought him to Moscow. In 1991 he founded Goncharoff Inc., a consultancy firm, and became Managing Director of a Dutch medical technology company and a director of a German high technology start-up.

After the ‘crash’ of 1998 Goncharoff got a big boost to his profile and business prestige in Russia by being the man hired by AIG to turn around their Moscow operations. By the time he left in 2002, he had created year-on-year sales increases of 210%, with 72% higher productivity. He had expanded AIG activities from a multi-national corporate client base into the local Russia market. He was at the birth of the first consumer auto-leasing insurance program in Russia and expanded the insurance giant’s operations into St Petersburg, the Urals and eastwards.

For just over a year in 2002 to 2003, he worked in the Menatep Group, as President and deputy chairman of the board of their Progress-Garant insurance company unit. He was charged personally by Platon Lebedev to raise business standards, and clarify and monitor the functions of the Board of Directors, while establishing business transparency to internationally accepted norms. By eliminating corrupt practices, and

“Conventional marketing will deliver conventional results, Biseshki deliver results unconventionally well!”

breaking into the ‘open market’ from a captive ‘Yukos’ market base, he largely succeeded. By 2003 Progress-Garant was a major player in the ‘non-captive’ Russian insurance business, which included health insurance, pensions, leasing and life insurance. After the principal shareholders, Lebedev and Mikhail Khodorkovsky, were arrested in October of 2003, a prescient Goncharoff resigned.

He stayed in the insurance business working with the Allianz AG and Rosno Insurance Company joint venture, Axia, as President. Axia aimed to package and sell ‘holistic’ insurance policies as a diversified wealth management product, crafted to specific client needs. The firm was closed earlier this year as it was determined the Russian market was not ready for holistic wealth management just yet. Goncharoff continues to consult to both Allianz and Rosno.

But his consuming business passion today is Biseshki, which he sees as not only a fun consumer experience but also as a sound marketing tool – in ANY language.

"Conventional marketing will deliver conventional results, Biseshki delivers results unconventionally well!” Goncharoff writes in a piece of promotional literature.

 “At a sales dinner, the delegates were each given a Biseshka, but told not to open it until asked to do so by the Sales Director. The message read, ‘Look around you, the 10 of you who win the next quarter sales competition will be seeing each other again - but next time it will be on the beach in Turkey!’ What a great way of allowing the Sales Director an opportunity to create the maximum impact of such a sales incentive,” Goncharoff enthuses.

From his Atlanta manufacturing plant the entrepreneur is producing a million Biseshki a month for Russia. The virtually fat-free, slightly flavored cookies have a six month shelf life, take around eight weeks from ordering to delivery in Moscow and can be produced in quantities from one to several million. A single cookie could be a marriage proposal, while Goncharoff sees a fast food chain as an ideal customer for serving millions. Goncharoff promises different flavoured cookies in the future. The Biseshki on sale in Starlite can contain any one of 3,000 messages, which are randomly inserted into the cookies on the production line before they are individually wrapped and boxed in quantities of 350. All the messages are positive; stresses Goncharoff. The one this reporter sampled broke open to reveal a message (in Russian) ‘This month concentrate on creativity.’

Among potential users of Biseshki are hotels, offering them at check-in, with a message such as ‘Bring this message to the bar for a pre-dinner drink. Courtesy of the Hotel Management.’

As ever-tighter controls are exerted on liquor advertising and marketing, Goncharoff sees Biseshki offering a more cost effective tool promoting sampling than even scratch-cards.

“Say you are launching a new drink brand, but you have limited funds. You cannot afford to sample everyone. You have many outlets in which to promote. Say a bar expects 350 customers during the promotion period. We deliver a box of 350 Biseshki with 25% or approximately 80 winners with a message ‘Congratulations, you have won a free glass of ……. Please claim at the bar while stocks last.’ The other 75% of the messages read, ‘with our compliments please try a …… at half price – while stocks last.’ Everyone’s a winner,” he laughs. It is also self-policing, as bar staff cannot manipulate who gets the free drinks. “I would expect typical results would be that for only three bottles of a new brand, 25 people would try it free and generate the word that it was good, while a large proportion of the others would try it because it was half price.”

The messages can be in Russian or English, and for corporations wanting the same message in both languages, they can be bi-lingual or prepared in separate batches with English and Russian messages.

Goncharoff has two complete production lines for his Biseshki sitting in storage in Moscow, waiting for Russia’s cumbersome bureaucracy to alleviate the extraordinary expense for small enterprises, such as his, of installing gas for commercial use. Until then his cookies are baked in the USA and shipped to Russia with the extra labor and shipping (and customs) costs passed onto the end user. But even then, his fun cookies that bring a smile to stressed ladies in the beauty parlor and relieve the tension in breakfast meetings at the Starlite Diner, still only cost 30 rubles. “It’s a small price to pay for having some fun in your day,” he says.

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