Legendary Latvian brand Dzintars: can it be saved?

Take note – story published 3 years ago

Legendary Latvian cosmetics firm Dzintars, which went bankrupt in 2019, was recently purchased by Estonian Skinest Group. On September 29, LSM.lv spoke to industry experts about the potential future of Dzintars.

Dzintars (Amber in Latvian) is a historic cosmetics brand dating back to 1849, which peaked during Soviet times. The brand had a glorious past in Russia and other CIS countries, but it gradually faded and did not turn into a bright future. Since 2008, the company worked with losses and declared insolvency in 2019.

On September 14, the brand was purchased by Estonian Skinest Group headed by owner Oleg Ossinovski.

The new investor has not been in the cosmetics business before. Corporative finance expert Salvis Lapiņš said the lack of experience can lead to problems. "I don't know much about Ossinovski's business interests but I don't get the impression that cosmetics is his strong suit. (..) Of course, everything can be learned but in Dzintars situation this can be expensive."

If Dzintars' assets had been bought by the renowned industry player Madara Cosmetics, the outcome would possibly be better, said Lapiņš, despite the run-down factory. "Whether Madara would successfully deal with Dzintars - I don't know. But from the list, they would be the best. Madara is the most successful cosmetics company in Latvia, and its sales are mostly in Western European countries."

Madara Cosmetics was created at the beginning of this century and its business has grown year after year, with biggest markets in Western and Northern Europe. Madara Cosmetics board member Uldis Iltners said he had considered purchasing Dzintars a year ago, but after examining the factory, he had concluded there was no point. 

"Everything is very, very old. (..) Altogether, the production equipment, in our opinion, was in a super-sad state. I have no idea how they even worked there and managed it."

Iltners said that the salvation of Dzintars would mean having to work from scratch: although the brand is somewhat of a legend in Latvia and was renowned in the Soviet Union, the Western market has no idea of it. A completely new image would have to be created.

He added that industry experts in Russia, despite the brand's popularity in the Soviet times, don't seem to recognize it either. "Younger people, aged 30-40, in Russia, they don't know this Dzintars at all. The name doesn't ring a bell. They say, send me a brochure, I'll ask my mom," said Iltners.

Regarding the new owner Ossinovski and what he is faced with, Iltners said - it would be difficult. "It will demand a lot of investment in the capital and in human resources. There is no logical continuation possible there. Most has to be created anew. It's not just packaging update or something. 

Regardless of who does it - an experienced cosmetics business or someone from a different field - it will need a lot of work and a lot of investment. If someone is ready to do it, it might work."

Skinest Group owner Oleg Ossinovski said earlier that "Our only goal is to save the legendary trademark, resume production and turn Dzintars into a success story (..) again." Specifics were not revealed but he noted that it is planned to resume production at the beginning of November.

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