OLGA BUILDS BEAUTY WITH A RUSSIAN ACCENT
Byline: LISA GLAZER
MOSCOW — One winter afternoon in 1990, Olga Romashko was sitting at work with her colleague, sipping tea and wondering whether or not they would ever receive more than 500 rubles a month — about $23 at that time — for their scientific work at the state-run Institute for Biophysics.
“Suddenly I thought to myself that nobody should be waiting on somebody else to increase their pay,” recalled Romashko. So she quit her prestigious job as a senior researcher at the institute, invested her own money — and created a cosmetics firm.
All she had in the beginning was an idea: That she could use her scientific expertise researching skin cells to improve a recipe she’d inherited from her grandmother for face cream. The idea turned out to be a winner and today Romashko and her staff of seven produce 15,000 containers of face cream a month and distribute them to 25 Moscow stores.
Their experience is noteworthy because doing business here is arduous and extremely risky, even for well-established international companies. In addition, there are very few Russian women entrepreneurs in the cosmetics industry — or any other industry, for that matter.
The early days were touch-and-go. Production started in Romashko’s kitchen, and one of the major pieces of equipment was a standard cake mixer. Persuading stores with a Soviet mentality to sell her product wasn’t easy, so she brought along her husband, a film producer, for assistance with her first pitch to Moscow’s Sokol department store.
“In those times, people had a very bad attitude toward the private sector,” she recalled. “The managers said,’Who are you? where do you come from?’
“There were a lot of bad feelings, and in fact, one time there was nearly a fight with my husband until I kicked him out of the office,”she said of a meeting with a store manager.
On her own, she finally talked the manager into giving her product a chance. “I said, ‘Would you take products from Christian Dior?’
“They said,’Of course!’
“So I responded. ‘Well, that’s the private sector, why not take my products?’
“Every place we go now there is the same story: At first we are met with suspicion, but eventually there are friendly relations.”
The company started off with one product, an ivory-colored face cream for dry and normal skin in a melon-green, 22-ml. plastic container with a black and gold label.
The cream, which is called Olga, is patented and made mostly with natural ingredients including lipids, amino acids and vitamin salts, and it sells for just 800 rubles, which due to extraordinary inflation, is approximately 40 cents at current exchange rates.
This winter they started selling a second product, a moisturizer that costs 1,000 rubles, which is roughly 50 cents. While these prices may seem very low to Westerners, they are still a consideration for Russians, who usually earn less than $100 a month.
An elegant and dynamic 50-year-old woman, Romashko arrived for a recent interview wearing a lavender suit and a single strand of freshwater pearls, and in a follow-up interview in her home, she was dressed more casually in a black skirt and sweater. Whatever she wears, her clear, healthy skin is an advertisement for her face cream.
Indeed, sales have been brisk despite an almost complete lack of advertising. “We sell our products by word of mouth,” Romashko said, adding that in the early days advertising was hardly necessary because there were so few products on Russian shelves.
But now that the markets have opened up and Western products are available — although at much higher prices — she wants to advertise. Romashko has already produced a small counter-top display with information about her face creams.
“People see that Western companies spend money on advertising and promotion, they say the products look better, they have better-designed labels,” she continued. “But as a businesswoman, you always have to convince people that your product is the best.”
This convincing seems to be working, partly because of the price and partly because of the quality of the product, with a little pride in buying something Russian mixed in.
“Olga is very popular; usually people who buy it come back for more,” said Nadezhda Saveliyeva, the sales manager at the Siren department store on the Novy Arbat shopping street. “I use it myself at night and it helps keep my skin soft.”
The sales manager at the Moskvitchka department store, who also uses the cream, added, “The product is sold right away. It is a soft and tender cream of nice quality, and when you put it on your skin you feel like it belongs there. It penetrates the skin perfectly.”
As the firm has grown, new equipment was purchased. For a while, there was production space in an unused chemical factory. However, they encountered problems.
“This is the paradox of Russia,” said Romashko. “It was a non-working factory, but we had to give money to everyone from the director to the gatekeeper. It was just too expensive, so we went back to our kitchens.”
Even while she’s trying to find a new production site, Romashko is looking forward. She’s in the process of expanding the firm’s output and plans to produce new creams for women’s legs, hands and eyelids as well as a baby cream and medical cosmetic products.
She’s also made contact with Women’s World Banking, a Dutch-based organization, for assistance in setting up a bank for would-be Russian businesswomen. The nonprofit organization, which has offices in New York, has fostered the establishment of women’s financial institutions in more than 50 countries.
But these ambitious goals don’t mean that building your own business in Russia offers immediate rewards. To keep up with inflation, Romashko has to raise the price of her face creams every six months and even then she isn’t making huge profits.
A year ago she and her husband gave their apartment to their daughter and son-in-law, planning to buy a new place. But their plans have been put on hold, and for the moment, they’re living with Romashko’s mother, a retired medical school professor.
Still, when Romashko compares her lot with former colleagues she knows she’s doing well. “The company bought me a fur coat for my birthday and if I am invited overseas I know I can pay for a ticket,” she said. “The people who work here don’t need to cut their spending for food and clothes, like those in a scientific institution.
“Somehow we’ve managed to deal with the financial problems,” she continued. “We get our money after the products are sold and still we manage to survive.”
She thought some more about her work and added, “There’s a lot of advantage to being a businesswoman: You get a special feeling that you can be independent and enjoy living. But it’s a terrible time to be doing business in Russia.”