Krasnoe i Beloe is a chain of Russian “grocery stores.” The name means “Red and White,” which the owner says that is a reference to the Soviet-era tradition to offer guests “white or red?” Red referred to wine, and white to vodka. From this, one might already guess that the store is heavily focused on the sale of alcohol.
While most stores see their highest profits come from alcohol, which usually takes up a smaller portion of the store, Krasnoe i Beloe has turned that model on its head, giving most of the floor space of their generally small stores to alcohol. While they sell just enough other things to still qualify as a grocery store rather than a liquor store, two-thirds of their 1300 items contain alcohol. Krasnoe i Beloe operates all over Russia, but with particular emphasis on the Ural region, where it was founded.
Sergei Studennikov started Krasnoe i Beloe in the city of Chelyabinsk, located on the eastern side of the Ural Mountains. Currently based in Perm, Mr. Studennikov has mused about moving the headquarters to Moscow to better deal with shifting government regulations on alcohol.Studennikov is himself a fascinating individual. A bootlegger in Soviet times, he recently became a billionaire off of the success of his stores.
Krasnoe i Beloe is not yet one of the biggest players in the Russian grocery store industry, but it is getting there. In 2015, it entered the top 10 stores for the first time. It has a good chance of even meeting the ambitious target of being in the top three by 2021. With 6700 stores in 57 Russian regions, as well as $3.76 billion in revenue during 2017, it is only narrowly behind major competitors Lenta and Dixy. The chain employs 100,000 people.
Shifting business decisions and political climates have shaped the company’s expansion. In a recent interview, Mr. Studennikov spoke about diversifying products. This included the addition of children’s toys to “guilt” adults with. He has also said that one of the hardest things to deal with in expanding to new regions is alcohol regulations and the attitudes of government officials. For this reason the firm will not expand to the North Caucasus, for instance, where alcohol is much more heavily regulated. Studennikov has also ruled out the Far East because of the sparse population.
The store has not escaped criticism. While Studennikov says he wants to change Russia’s attitudes about alcohol, to make it more like Italy or France, others say he just wants to take advantage of poor people and make money on Russia’s declining number of alcoholics. Krasnoe i Beloe has also come under fire for making employees pay for unsold inventory, a policy Studennikov says is “motivational.” It was also recently raided by the authorities and saw much of its operations halted for several days for what Studennikov said was a “glitch” in the state’s computerized business registry system.
Despite Russian regulations on alcohol such as minimum prices, high excise taxes, and restricted operating hours, Krasnoe i Beloe has thrived with a booze-centric business model. While it comes in for heavy criticism, its methods also appear to work quite well, and it is expected to continue to expand for years to come.
Promotional video for Krasnoe i Beloe.