Russia’s retail revolutionary
The rags-to-riches story of Roustam Tariko
He grew up in a Communist household and his first job was sweeping the streets. Today he has homes in three countries, owns a private jet and drives a Maybach. Meet Roustam Tariko, entrepreneur extraordinaire
Words: John Arlidge
“THIS IS WHERE it all began,” says Roustam Tariko, as he steps out of his £300,000 Maybach limousine onto the littered pavement in downtown Moscow, his bespoke Italian shoes sinking into the spring slush. “This is where I got my first job.”
With its grey buildings, grey skies and grey streets, Sretenka Street may not look like much but it is where Tariko took the first steps that have made him the most successful multi-billionaire entrepreneur in Russia. The son of a Communist Party teacher, who grew up proudly wearing the party’s Young Pioneer uniform, began his working life as a sweeper on Sretenka Street.
Today, 20 years later, he dominates Russia’s fast-growing consumer market. He is creating the first Russian consumer brands in sectors as diverse as alcohol and banking. His Russian Standard and Imperia vodkas have a 67% share of the local premium vodka market and sell for up to £20 a bottle in Europe and America.
His bank, Russian Standard, issues 80% of personal credit cards in the country and has a 40% share of the consumer loans market. It also dominates consumer credit insurance and is pioneering Russian life insurance.
To put Tariko’s business in perspective, it is the British equivalent of owning Barclays and Lloyds TSB banks, issuing every personal Visa and MasterCard in the country, and owning Johnnie Walker Black Label and Glenfiddich premium Scotch whiskies. Small wonder his Russian Standard group – which he owns outright – is valued at an estimated £3bn.
Tariko, 44, enjoys his fortune and has homes in Moscow, New York and Sardinia. He has the only £800,000 Bugatti Veyron sports car in Russia, owns a Boeing 737 business jet and sails a £750,000 Wally Power ‘70 yacht. The father of three-year-old twin girls – he and the twins’ mother, Tatiana Osipova, are separated but on good terms – also parties hard. A good night out “starts at £100,000”, he insists, “with the finest beluga, blinis and borscht”.
Tariko is little-known outside Russia but that is about to change. He is raising his profile to become the figurehead for Russian Standard. By living the brand, he hopes to achieve his dream of creating a raft of global Russian consumer brands.
“The only Russian brand the world has heard of is Kalashnikov, which is not good,” he says. “I want Russian people to have their own best vodka, their own best bank, their own best credit card.”
How did Tariko become a consumer king in the world’s most anti-consumer society? His is a tale of outsize ambition, guile, luck and great timing. He arrived in the Russian capital aged 17, impatient to escape his home in the Volga River region of Tatarstan. “The conditions were pretty terrible,” he recalls. “My mother threw my father out when I was one because she said he was useless. Our apartment was so cold we had to leave the iron on to keep warm.”
He got a part-time job sweeping the streets in between his studies at Moscow University’s Institute of Transport Engineers. “I had to get up at 4.30am and clear the snow even if it was minus 20ºC.”
But even on those cold, dark mornings he had an eye for a rouble. He formed a small cleaning company with two friends and struck a deal with a nearby bank to clear the snow from around the building at a higher rate than the city authorities were paying him. Through a friend, he soon got a job in a restaurant and began to make so much money in tips from the business class that was emerging as the then-Soviet Union began to collapse that he moved into buying and selling consumer electronics – foreign luxuries that were just beginning to trickle into the newly-liberalised market.
His big break established the formula for his future success. In 1986 he set up a concierge service for foreigners visiting Moscow. At that time, hotel rooms for foreigners were hard to come by and one Italian travel agent offered him a 20% commission for every bed he could secure. With perestroika and glasnost loosening the state’s grip on business and society, Tariko took a gamble and bypassed the official Party committee, which usually decided where foreigners could stay, and approached the biggest hotel in Moscow, the Rossiya Hotel, near Red Square. He persuaded the manager to deal directly with him.
Soon Tariko was securing so many rooms he was earning hundreds of much-prized dollars a day, at a time when the average wage was £3 a month. “I led a small consumer revolution in hotels,” he recalls. “It’s the way I do things. If something does not work, I explode it then put it back together so that it does work.”
Tariko moved on from hotels to luxury goods. He knew Russians loved western consumer brands – “in university, if you had Nike trainers you were a king” – and were prepared to pay vastly over the odds for them. So he decided to use his Italian connections “to really spoil” his countrymen: he got a licence to distribute Ferrero Rocher chocolates.
Consignment after consignment of the sweet golden balls sold out and word of his success reached Italian liquor company Martini & Rossi, which hired Tariko’s Roust Trading as the Russian distributor for its vermouth. Triple-digit percentage price rises, along with import and export regulations that changed daily, made it tough to make a profit. There were also visits from the mafia to contend with. But Tariko leveraged his connections (he had the local police chief’s private telephone number) to stay one step ahead of the bureaucrats and the heavies.
The appetite for luxury in 1990s Russia was so great that Tariko soon became the largest supplier of Martini in the world, selling 1.5m nine-litre cases a year. He moved on to produce his own Russian Standard Original and Imperia vodka.
The money he made from alcohol – around £100m in a decade – paved the way for his biggest gamble: banking. In the Nineties, getting a loan in Russia could take weeks and consumers did not have credit cards. Tariko set up Russian Standard Bank, cobbled together a rudimentary credit scoring system and persuaded the authorities to let him set up sales desks near the cashiers in big stores, offering cards that could be approved in 15 minutes.
Interest rates were – and still are – high, at an average 40%, but he guessed, correctly, that ordinary Russians would seize their first chance to become Western-style, debt-addicted consumers, splurging cash on dishwashers, fridges and cars. Although Tariko’s sales plummeted during the 1998 financial crisis, the group survived.
Sales at Roust Trading, his luxury goods import company, have increased by more than 20% annually every year for the past seven years to reach £125m. Russian Standard Bank has issued 13 million credit cards and holds over £4bn in credit card and other loans, making it the nation’s biggest consumer lender. The bank, which has 19 million customers, more than doubled its net profit last year to £300m.
As he expands at home, buffs his global image and turns down weekly offers from Western institutions to buy him out, what analysts are asking is: can anything halt his progress?
Tariko finances Russian Standard Bank with junk-rated bonds from western financial institutions, notably Dresdner Bank and Deutsche Bank. There is more than £3bn outstanding, at an average rate of 8.6%. Repaying the debt will require lots of new customers at a time when competition – Citigroup, Société Générale and the Austrian Raiffeisen Bank are moving into the Russian market – is increasing.
And the Russian economy is still something of a gamble. A sharp downturn, political turmoil or a credit crunch could spell disaster for both the bank and the trading company. But, for now, Tariko is on a roll. He and his products skilfully tap in to modern Russian consumers’ love of the new and their nostalgia for their nation’s former imperial greatness.
“I believe in emotional branding,” he says. “I am a pro-active patriot. My products have Russian names, like Russian Standard, but they look like and perform like a Western-type product. They appeal to both sides of the Russian-psyche: love of Russia and appetite for western lifestyle.” Spoken like a true retail revolutionary.
