CNN's Jill Dougherty has the story of one entrepreneur in Russia who has embraced capitalism to keep her perfume business alive (August 15)
Economic changes not merely cosmetic
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By Jill Dougherty
CNN Moscow
MOSCOW (CNN) -- In the 10 years since the Soviet Union collapsed, Russians have lived in an uncertain world. Banks can fail. Factories can close and jobs can disappear. There are no guarantees. But after years of suffering the harsh realities of an economy in transition, some women are making up for lost time by tapping new opportunities in the beauty business.
Ten years ago, Irina Lebedeva was a chemist working in a government research institute and money was running out.
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"Of course, back then," she recalled, "perestroika was a very important event for our country, but for individual Russians it was tough. The government couldn't support the research anymore. I didn't know what to do."
Lebedeva returned to school, but after receiving a graduate degree in economics she found that it did not further her goal of putting bread on the table.
Then she met a woman who was selling Mary Kay cosmetics, the U.S.-based direct marketing company.
"I thought, 'What a lucky woman! She gives classes, works with cosmetics and they pay her money for it!' So I decided to do it, too," Lebedeva said.
Within four months she racked up $30,000 in sales. The chemist had become a beauty consultant running her own business. This year she received Mary Kay's traditional reward for its top saleswomen -- a car. The only difference is that Russians receive a BMW instead of the trademark pink Cadillac awarded to U.S. employees.
A new dawn for Russian perfume industry
Antonina Vitkovskaya is another Russian who has made a successful transition from communism to capitalism through cosmetics.
For three decades, she has worked for New Dawn, the Soviet Union's largest perfume company. The government-run business produced its scents the same way it produced steel -- according to a centralized plan.
"It horrified me!" Vitkovskaya said, shuddering at the memory. "You'd go to a concert and all the women smelled the same. They would import lipsticks -- a million of them, all in the same color. Whether a woman liked it or not, she had to wear it."
When the Soviet Union fell apart, consumers could finally buy imported fragrances and New Dawn was forced to compete with Dior and Yves St. Laurent.
Russia's financial crisis of 1998 was a further blow to New Dawn and Vitkovskaya was asked to work on a plan to salvage the business.
Today she proudly shows off New Dawn's flagship Euro-style store, where an endless variety of gleaming perfume bottles are displayed and the perfectly made up saleswomen are dressed in chic black.
"My aim is to have my clients come and try out perfumes," Vitkovskaya said, "touch them, smell them, put some on, go home and see how they like it."
As customers made their way to the check-out counter with purchases in hand, she summed up her strategy: Target Russia's working and middle class, keeping quality high and prices low.
New Dawn's production has tripled since the financial crisis of 1998, although it is still only one third of what it was during Soviet times. The emphasis now is on coming up with new products, such as sachet for the home and perfumes for teen-agers.
But Vitkovskaya has not broken all ties to the past, choosing to update two of the Soviet Union's best sellers: "Red Moscow" perfume for women and "Triple" cologne for men -- reputed to be Stalin's favorite.