Mongolian Beverage and Booze Business

I went to Mongolia at the invitation of the APU Company and at the suggestion of James Espey who works with them. The purpose of the visit was to provide marketing training.

APU is the biggest alcohol and beverage company on the Mongolian Stock exchange. In the marketplace, they are the dominant factor in vodka and beer – certainly in volume and, in my view, in terms of product quality as well. (The vodkas are the best I’ve ever tasted and the beers were equally outstanding.)

APU Vodkas.

The company was established in 1924 as a state monopoly (with Soviet influence), became a joint stock company partly owned by the state and partly private in 1992 and today is totally privately owned and a top player. You’d think that such a market leader would rest on its laurels. No way.

Golden Gobi Beer.

In some respects it reminded me of Seagram before the show businesses crazies and greed set in. The people in marketing and sales are arguably the best in the Mongolian business and still continue to strive for excellence without arrogance. The production operation is top notch – I have never seen a plant and manufacturing facility so state-of-the-art. While I was there they had just received their ISO Certificate of Quality for soft drink and beer production. So, add world class to the mix.

Other similarities included concerns about social responsibility, customer service, debates about brand spending as a cost or investment, marketing and sales issues, and many other things the Seagram alumni will readily recall.

I found it interesting that governmental concern (and hypocrisy) about alcohol consumption is universal. In the US, prohibition failed because the government needed the tax and tariff revenue on alcohol. In Mongolia, the government gives APU an enormous award for being among the top five tax revenue producers (see photo below) yet, lobbies the public to drink soft drinks on New Year’s Eve.

I was so impressed with the management and team that I initially worried about whether I could meet their expectations and add value. Based on their knowledge of marketing and sales, what was supposed to be a training session, turned into discussions of beverage and alcohol marketing issues and case studies.

All in all, the people I encountered, except for the language difference, could be sales and marketing executives from any leading company in the world. I would have hired any one of them.

After the factory tour, wearing a required clothing cover. Note the huge award on top of the showcase.
My fellow marketers.

It was an experience of a lifetime.

My only complaint — I should have brought more vodka home.

My new favorite vodka.



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Impressions of Mongolia — Part Two

Mongolia map

The flight to Ulaanbaatar (or Ulan Bator or UB) from New York is long and tiring and even business class only partly eases the burden. But, for this experience, it was well worth the effort.

Stepping out of the airport and into Mongolia for the first time, there were a number of prominent impressions. First, it’s cold. It’s November 13th and it’s already below zero. I could care less if it’s Celsius or Fahrenheit it’s cold! Oddly enough, by the end of the week I’m used to it. I also came to realize that people who can endure such weather extremes can also endure whatever life and history throws at them.

Second, the pollution is strong. No worse than major eastern European, South American or Asian cities but somehow different. There is an odor I can’t identify that I later learn is from coal. The city has a very large ger district where the residents use coal for heat. (A ger is a felt-lined tent covered in durable, waterproof, white canvas. While modern and expensive homes are being built in UB, many rural Mongolians have retained their traditional lifestyle, of which the ger is an integral part.) The situation is not helped by UB’s topography – it’s almost completely surrounded by low mountains that trap the air until a strong wind can blow it away. Kind of like Los Angeles.

Gers just outside the city

The third impression that starts as soon as I land is about the people. While waiting for my luggage I look around and realize that I could be anywhere in the world. There are lots of westerners (British, Canadians, Americans, Germans) some coming home and many here on business. But what strikes me the most is the pleasant demeanor of the Mongolians. Despite the time and the anxiety of baggage claim (or is that just me?) all I see are smiling, happy people. To a large extent, the strongest and most favorable impression of the country is the people – warm, friendly, industrious and very smart. So much so that I begin to wonder how I can be effective as a marketing lecturer. But I’ll come back to that another time.

Finally, the city of Ulaanbaatar makes me think of Paris in the reverse. I love Paris but I’m not crazy about the people. In UB, I love the people but the infrastructure needs some work. The roads are always congested and I think of Sao Paolo where a red light is only a suggestion. But, UB is no worse, and certainly much safer.

The problem is clear – the infrastructure has not kept pace with the growing affluence and economic well being. Further, the weather wrecks havoc with the streets and roads and I’ll never complain about NYC potholes again.

The weather also inhibits construction. All around the city there are buildings going up but I didn’t see anyone working on them. It seems that due to the sub-zero weather, construction stops in the fall and resumes in the spring. I suppose it has something to do with the cement and concrete versus the weather.

Leaving that aside, UB is an interesting, bustling metropolis with shops, restaurants and culture reflective of Mongolia’s past and present. I didn’t have time for much shopping or sightseeing but I can attest to the fact that the food was very good. Let me put it to you this way — whether Mongolian, Japanese, German, Korean, or French — I didn’t meet a meal I didn’t like. But then again, it might just have been because of the people I ate with more than the food.

Buuz, a traditional Mongolian dish

Next post My hosts


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Mongolian Awakens – Part One

As mentioned in my last post, I was in Mongolia for a week consulting with the largest beverage company there and this will be the first of a number of blogs on the country and my travels.

How and why I got there will be the subject of a future post. For now, I’d like to provide some first impressions. Particularly since most people have only a vague and hazy image of Mongolia. Myself included, before I went there.

Why bother you, you ask. Because, in my view, despite its size and only a few decades of free market economics, the country will take it’s place among the most important emerging nations in the world. As a colleague who has been there observed, “They should put up a billboard over the country saying, ‘watch this space.’”

I like to think of the Mongolia as a “sleeping beauty.” Put to sleep by an evil empire for 70 years and whose recent awakening foreshadows a strong new beginning.

When one thinks of Mongolia, chances are that the first thing that comes to mind is the Mongol Empire and “Genghis” Khan. (In fact it’s pronounced Chinggis; Arabs could not pronounce the ch sound and that’s how it became a g sound.). By the way, the Mongol Empire had the largest contiguous land empire in history, 22% of the Earth’s total land area.

This small country that once ruled much of the world became the Mongolian People’s Republic in 1924 and was subjected to Soviet rule. Suddenly in 1991, with the collapse of the evil empire, Mongolia was on its own. What followed was roughly a decade of restructuring, embrace of free market economics and unfortunately, a deep recessionary period.

Fast-forward ten years. Despite ups and downs, the country gets on its feet and by 2009 analysts are referring to it as the Mongolian Wolf – “Untapped mineral deposits and a bourgeoning financial system could make Mongolia the next Asian tiger, analysts say.” Further, on his trip to Asia this past summer, Vice President Biden visited China, Japan and – you guessed it – Mongolia. That ought to tell you something.

Consider this – not only is Mongolia land locked, it is the only country I can think of that is surrounded by two super powers (Russia and China) and is dependent on them for trade and access to the world. Yet, the GDP growth is among the fastest in the world.

Roughly half the population lives in the capital of Ulaanbaatar (Ulan Bator), a bustling, sprawling city struggling to keep up with the growth of the economy. As my Texan friends would say, “too many tires and not enough road.” It’s a city in transition with contrasts between vestiges of the Soviet days alongside modern skyscrapers.

The other contrast is the perception versus the reality. I think visitors are surprised to see the burgeoning affluence and the palpable level of optimism and aspiration. The roads are full (perhaps too full) of late model cars, supermarket shelves are stocked with choices more extensive than many places in the States and the modern department stores were already crowded with Holiday shoppers.

At one of my training sessions, we were discussing brand awareness and the importance of top-of-mind recall. I asked for people to call out the names of automobiles that first came to mind. I fully expected to hear Toyota and Hyundai thinking that these everyday brands would top the list. Instead, I got rousing choruses of Mercedes and BMW with a few Bentleys thrown in.

That, my friends, is aspiration.

Next – the people, culture and my hosts.

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