Founded in 2014 after the merger of some of the oldest and most important Russian gunmaking companies, the "Kalashnikov Group", or "Kalashnikov Consortium" ("Concern Kalashnikov" in Russian) is one of the world's biggest and most important manufacturer of hunting, sporting, defensive, and military firearms.
Despite doubling its production numbers earlier in 2014, during the course of the same year the Company had to sustain several crippling blows: not only its line of military products is witnessing a decrease in international sales − most former Warsaw Pact Countries are now aligned with the West and conformed to NATO military standards, while other Countries that used to procure their military weaponry from Russia now are starting to feel that the AK/AKM platform and other products of the Russian military industry is getting long in the tooth! − but even the Group's "newest and latest", the AK-12 assault rifle, seems to be loosing its race against the A545/6P67 design (an upgraded Kovrov AEK-971 variant proposed by the ZID plant) within the "Ratnik" Program, launched by the Russian military to design and adopt a new service rifle.
Furthermore, halfway through 2014, the "Kalashnikov Group" saw itself cut out of its most profitable civilian markets (Europe, United States and Canada) as the West imposed sanctions and embargoed the Russian arms industry due to the Kremlin's role in the ongoing Ukrainian crisis.
Sources suggest that the combined civilian sales embargo by the West and the lack of military customers may be causing considerable income losses to the "Kalashnikov Group".
Indeed, in the past months, the Company had already outlined possible future strategies including a total privatization of its stocks and massive investments in modernization of its production lines. Foreign analists stated that said strategies − most notably the sale of the company's vast majority of stocks to Russian billionaire Andrey Bokarev − would be nothing else but attempts to bypass the international sanctions.
Local and international press sources − including BBC, the Moscow Times, Russia Today and others − were thus surprised by the event that the "Kalashnikov Group" held Tuesday, December 2nd, during which its PR representants and the executives of the Company announced a new global marketing strategy and an image rebranding.
The event saw Tina Kandelaki −the TV presenter who heads the PR firm that developed the new brand for the "Kalashnikov Group" − introduce a new corporate logo and a renewed company website; a couple of new civilian products, mainly conceived for the Russian market, were also introduced (the 9x19mm caliber SAIGA-9 semi-automatic carbine and the 12-gauge MR-155K magazine-fed semi-automatic shotgun, so to speak). Some words were furthermore spent concerning brand diversification for the group: the "Kalashnikov" brand will be used for military products, the "Izhmash" brand will be used for sporting firearms and the "Baikal" brand will be used for hunting-related guns and products.
When asked by Moscow Times reporter Matthew Bodner, Sergei Chemezov − CEO of the ROSTEC State Enterprise, the current owner of the majority stake of the "Kalashnikov Group" − admitted that the Company is "having a hard time", as "[We] have lost the American market, and most of our hunting products were sold to the U.S.".
As a matter of fact, The Moscow Times has been told by an anonymous source that the loss due to the annullment of the deal with the U.S.-based civilian arms distribution Russian Weapons Company «...are not calculable, but they are in the millions [of dollars].»
At the same time, though, the Company is now aiming to expand to South America, Africa and the Asia-Pacific region, as well as in the Russian national market, where it already covers 95% of all guns sold to civilians. Plans also include boosting the manufacturing capabilities and volumes up to 300.000 guns a year.
However, Mr. Chemezov also stated he's aware of the fact that a well-recognizable brand is important to compete with the "big guns" of the Western arms industry; that's why the Company plans to launch a line of hunting apparel and accessories in the future.
The rebranding and the new marketing strategy will cost 20 million rubles ($375.000, or €305.225,65), and will be part of a 4,5 billion rubles strategy (that's $85.000.000, or €69.184.475); Alexei Krivoruchko, the CEO for the "Kalashnikov Group" − who reportedly spoke at the press conference in a theatrical way, waxing nostalgically about the glorious triumphs of the Russian people − the Company, whose new motto will be "Promoting Peace", aims to be come the world's biggest firearms manufacturer by 2020.
The opinion of many independent observers of the civilian guns and defense markets, however, is that this may be nothing else but an expensive and useless "make-up refreshing" for the "Kalashnikov Group", and that the company will need much more than that to become competitive on the global markets again.
80% of the overall production of the Company is sold outside of Russia; the plans outlined during the press event of December 2nd may include a major manufacturing volumes boost, up to 300k guns per year, but the current U.S. embargo means that 200.000 civilian guns, originally meant to be sold in the United States and Canada, will remain unsold. At the same time, the Company was capable to produce "merely" 140.000 guns all throughout 2013.
According to the Center for the Analysis of Strategies and Technologies − a Moscow-based think tank specializing in the Russian defense industry − the "Kalashnikov Group" closed the year 2013 with a loss of 1,7 billion rubles (that's $31.000.000, or €25.231.985) and may barely break even this year − if ever, that is.
Plus, the militaries of Asia, South America, Africa and the Pacific area already rely dependent from European and U.S. exports, and many of them indeed have their own defense industries; and their local gun laws are too restrictive to make them appealing for civilian sales. Same goes for the internal Russian market.
All in all: if what Alexei Krivoruchko stated during the press event is real − if really over 90% of the technologies owned and operated by the "Kalashnikov Group" are indeed outdated − a rebranding and a new corporate image are the last thing the company ever needs to put its money into.