Soviet brands too sweet for EEU common market

By bne IntelliNews July 16, 2015

Jacopo Dettoni in Almaty -


Businesses across the Eurasian Economic Union (EEU) hope that a common market stretching from Belarus all the way to the Chinese border will create wide ranging opportunities. However, the producers of some popular brands tracing back to Soviet times, which still retain a wide consumer base throughout the CIS space, have little chance of marketing their production across the EEU because of conflicts in trademark regulation.

“Our company became subject to limitations in the use of registered trademarks, the so-called ‘Soviet’ brands,” Zauresh Toleubayeva, a representative of Kazakhstan’s largest chocolate producer Rakhat, pointed out during a session of the Astana Economic Forum held in May. “We cannot sell them in Russia and Kyrgyzstan, although it is the flagship of our sales.”

The reply by Timur Suleimenov, the EEU’s Minister for Economy and Financial Policies, was not encouraging. “Frankly, I advise you not to hope that the government or the commission will resolve it for you,” he said.

During the Soviet era, each region of the USSR had its own large confectionery factory that made products using the same brand names, which were based on the recipes approved in Moscow. After the break-up of the Soviet Union, local manufacturers kept producing and selling in their respective markets popular Soviet chocolate and sweets within the trademark framework approved by each country independently.

After almost a quarter of a century and despite the competition of foreign products, the appeal of historical Soviet brands such as Alyonka, the iconic chocolate bar depicting the round face of a kid wrapped in a colorful kerchief that was first launched in 1966, remains almost untouched, making it a perfect fit for producers seeking regional growth. However, the lack of specific trademark regulation on an EEU level is keeping these producers out of the common market.

“A special regulation regarding the old Soviet brands is absent,” Nikolai Kartoshov, head of the unfair competition section of Russia’s Federal Antimonopoly Service, tells bne Intellinews.

“At the moment, the established situation dictates that, when the same brands are registered on the territory of one of the countries of the Eurasian Union and when the brands can be only be traded on the territory of the aforementioned country, it is not permitted to trade the trademarked good in another EEU country with a similarly trademarked good.”

“Currently, the problem is getting repeatedly mentioned at the meetings of lawyers and representatives of the authorities of the EEU, but serious negotiations involving the development and adoption of a specific solution are not being conducted,” Kartoshov added.

As they wait for some sort of coordinated solution at an EEU level between Russia, Kazakhstan, Kyrgyzstan and Armenia, some manufacturers are adjusting by exporting to other EEU countries Soviet brands with tweaked names so as not breach local trademark regulations.

“In order to avoid copyright infringement, we tweak the names of the brands, making them represent familiar themes, but practically giving them different brand names, thus we technically export them under different brands,” Timur Sadykov, marketing head of Kazakh confectionery producer Bayan Sulu, where Soviet brands makes up around 50% of the product portfolio, tells bne IntelliNews. The company is exporting Mishka na Severe (“Bear in the North”) sweets under the brand of “Zapolyarie” (a reference to Russia’s Arctic region), which still features the iconic white bear on the packaging.

No solution

However, it is clear that a more comprehensive solution is needed. Smaller manufacturers are pushing for the introduction of some sort of collective ownership of the Soviet brands, granting different producers across the EEU the right to manufacture and market the same product under the same brand.  

“The owner of the trademark included in the unified list should be given the right to unrestricted use of the trademark on the EEU market space, irrespective of the presence on the market of identical or confusingly similar trademarks registered in other EEU countries,” Larisa Konstantinidi, head of the legal department of Konfety Karagandy, another Kazakh confectioner, tells bne IntelliNews.

“A document confirming the validity of the trademark’s registration for the unified list must be issued by a relevant authorized EEU body,” she says. Soviet brands make up 35% of the Konfety Karagandy’s product portfolio.

On the other hand, larger Russian producers such as United Confectioners, the region’s largest chocolate producer and owner of most of the old Soviet brands in the confectionary sector, will find it difficult to agree to such terms as it would challenge its leadership in the Russian market, by far the largest market in the EEU. It could even jeopardise the reputation of Soviet brands as a whole as it would be difficult to check that all the producers meet the same standards.

A final agreement remains in the hands of the same producers and their national associations, given the current sense of powerlessness of EEU authorities on this specific issue.

"We were closely involved in this issue for a long time and realised that we are unable to provide regulatory and administrative solutions in these situations,” EEU’s minister Suleimenov said at the Astana Economic Forum.

“Therefore, the solution to this problem lies in the realm of the rights holders, who registered the same exact trademarks in their respective countries."





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