Pakola Franchise Model: Product distribution and Manufacturing in Almaty Kazakhstan

Almaty

We have chosen Almaty the southern capital/province of Kazakhstan to launch the franchise of Pakola due to the rising preferences of the Kazakhs people. The success of the soft drinks industry in this city is directly attributed to its population. It is their cultural demand and needs of the Kazakhs people where soft drinks industries have gained tremendous growth in late 2019 and early 2020. Following is the brief cultural description of the Almaty city of Kazakhstan.

More about Almaty

Almaty is being considered the largest city in Kazakhstan with a total estimated population of around 2, 000, 000 people that is almost 11% of the total population of the country. The city is comprised of more than 2.7 million buildup areas including Boraldai, Talgar, Otegen Batyr, and many other suburbs. There is a majority of Kazakhs ethnics and Russian people in that city. The city has also served as the capital of Kazakhstan but later after its independence during 1929-1997, the new Astana (Nur-Sultan in 2019) has been announced as the new capital in the north. Hence, Almaty is now officially known as the province/southern capital of Kazakhstan and still considered the major cultural and commercial hub of the country. It is also the most populous and cosmopolitan city in the region due to its locomotive mountainous area of southern Kazakhstan near the border with Kyrgyzstan.

Most importantly, Almaty is not only the largest city but also it is most ethnically and culturally developed and diversified in Kazakhstan. During World War II, the relocation of the workers and industries from European areas has been made by the Soviet Union to Almaty. Thus, the city is having a larger proportion of ethnic Ukrainians and Russians. Here, we can undermine the geographical importance of this city in the whole of Kazakhstan. The climate of the city is relatively mild-warm with dry summer and quite cold winters thus a good sign for franchise success in this city. The annual air temperature of the city is calculated as 10 °C (50 °F) where January remained the coldest month with -4.7 °C (24 °F) while July is the warmest month with an average temperature of 23.8 °C (75 °F) (on average). On average, frost started in mid-October and ended in mid-April with extreme cold sustained from mid-December to mid-February, an average period of almost 70 days. It means that soft drink businesses are more demanding and successful for about 7 months starting from April to October. While having average sales volumes in other months.

Though it is the most developed but also has an endemic risk of earthquakes due to its tectonically active area. This is why it has suffered from some of these destructive earthquakes but without any significant damage.

Almaty Culture

Almaty is famous as the heart and soul of the most classical and popular culture of Kazakhstan because of having a distinct pace and vibe as compared to other cities and regions in the country. It mostly has an influence on European culture as its cafes and restaurants mostly have outdoor sitting in a public green space. Historically, it is a place of intellectualism for Kazakhs and Russian people due to its wonderful location alongside the ancient Silk Road. The city is often enriched with the community and local artists due to the presence of Kasteyev State Museum of Arts founded in 1935. It is the largest museum having the largest collection of artworks, archaeological, cultural, historical, and political artifacts by the contemporary and classic artists of Kazakh.

Geographically, Almaty is located in south-eastern Kazakhstan having almost a 1000 km distance from the Nur-Sultan (Capital). Moreover, the capital of Kyrgyzstan (Bishkek) is only 190 km to the west while from the east; it is bordered by Ürümqi (City of China) that has a total distance of 1000 km.

Demographics are to be considered very important while opening a franchise in the international market. You must know about the population density with different preferences and tastes of our target marketing living in that country. It is to be very essential if we are going to launch our manufacturing unit alongside product selling and distribution. Detailed market research is also required to know the needs, wants, and demands of the people living in the same place from a different ethnic background. As already know that Almaty is known as the most cosmopolitan city therefore it is comprised of almost 62% of Kazakh, 24% Russian, 6% Uyghur, 2% Korean, 1% Tatar, and 5% of others.

Another important factor that has to be undertaken while going for an international business is the economic strength of that city or market of the targeted country. Therefore, economic strength is calculated from the current GDP of that city where you will come to know the real economic contribution of the existing businesses to the overall country’s economy.  Based on it, Almaty is currently generating almost 30% of Kazakhstan’s GDP that is $45 billion. It further accounts for above 22% of government revenues while 62% of bank credits. The whole of the nation is economically very powerful in central Asia where Almaty is the main financial center. It has been also declared as a Beta Global City by the GaWC study conducted in 2012. Finance is one of the largest industries in Almaty where financial exports have a large contribution to the overall balance of payment in the whole country of Kazakhstan. Halyk Bank (the largest bank in Central Asia) is also located in this city along with other major banks including Kaposi Bank. On the other hand, Kazakhstan Stock Exchange is also located in this city. Further, the city is also developing as a regional financial and business center (RFCA) in central Asia.

Festivals

Kazakh people love to celebrate their national festivals, holiday, and special occasions. They often dress in their traditional clothes during these times. They frequently visit their friends and family, exchanging gifts, flowers, participate in traditional horse races, and enjoy other festivities.  They represent their diverse culture during these festivals and holidays. These festivals are the celebrations of diversity, ethnicity, and unity among their fellow communities. These events happened once a year and a good experience for travelers.

Kazakhstan is known as the most dynamic nation in central Asia about festivities and celebrations. Almaty, Astana, and Karaganda are one of the most dynamic urban communities where most of the festivals are celebrated in Kazakhstan. Following are the large number of national, traditional, and other popular festivals that are celebrated throughout the year in Kazakhstan:

National Festivals:

The national festivals in the country mostly consist of the followings:

1.      Victory Day

2.      Constitution Day

3.      Capital City Day

4.      Independence Day

5.      Republic Day

6.      Day of the First President

7.      Kazakhstan Nations Unity Holiday/ Labour Day

8.      St. Valentine’s Day

9.      Nauruz

• Victory Day
• This day is celebrated on 9^th May that is known as the most respectable holiday in Kazakhstan and one of the main festivals. Military motorcades are sorted out to memorize the struggles of the Soviet Union's triumph over Germany in the Second World War.

• Constitution Day
• It is celebrated on 30^th August in Kazakhstan and a national holiday. It memorizes the constitution of Kazakhstan Republic that happened in 1995. Marches, road celebrations, and firecrackers are enlightened on this day.

• Capital City Day
• It is celebrated on 6^th July as the birthday of President Nazarbayev with great pomp and show.

• Independence Day
• Kazakh people often celebrate their independence day on 16^th December when they got freedom from Soviet rule. It is also one of the grand events throughout the country.

• Republic Day
• Republic day is celebrated on 25^th October to honor the country.
• Day Of The First President
• It is celebrated on 1^st December when elections were held first time in the country.
• Kazakhstan Nations Unity Holiday/Labour Day
• Kazakhstan also celebrates 1^st May as “Labour Day” with the whole world.
• St. Valentine’s Day
• Kazakhs people also celebrate 14^th February as “Valentine's Day” like other countries around the world.
• Nauruz
• Nauruz is also one of the most popular festivals celebrated in the country for two days i-e 21^st and 22^nd March in springtime.

Traditional Festivals

Kazakhstan also celebrates its religious festivals the same as every country does to carry out the traditions of their from history. Islamic festivals are celebrated due to the dominance of Muslims in this region. Some of the commonly celebrated festivals are listed as below:

1. Kurban
2. Ramadan
3. Russian Orthodox Easter

• Kurban
• It is one of the most important festivals celebrated in Kazakhstan and everyone can attend this event. On this day, many animals that is allowed in Islam are slaughtered by the Muslims.

• Ramadan
• It is also one of the most popular festivals known as the pure month when Muslims are ought to take fasting throughout the whole month with merriment and joy. Muslims all around the world take fasting in the daytime this month. This month is known as the festival of feasting and fasting.

• Russian Orthodox Easter
• It is also one of the most famous traditional festivals in Kazakhstan celebrated in the whole country. People are seen in unique bread “Kulich” if you found to visit the country in the second week of April is also known as the festival of the revival of Jesus.

Other Popular Festivals:

The impression of nations’ one of a kind ethnic and religious synthesis can be found in a large portion of the celebrations in Kazakhstan.

1. Food Festivals In Kazakhstan
2. Biker Celebration ‘Protect Balkhash’
3. Four E
4. Kazakhstan Golf Open
5. Khan Tengri Mountain Festival

• Food Festivals In Kazakhstan
• It is celebrated in September as an Almaty apple in a way that various kinds of apples are displayed by conducting a festival. The music festival is also held in Astana where you can view a tribute to Kazakh music. Entertainers from all Uzbekistan, Poland, and Germany often attend this occasion to listen to the Kazakh singing tunes in their local dialects.

• Biker Celebration ‘Protect Balkhash’
• It is celebrated in July through bike rallies to protect the biological issues encompassing one of the largest lakes in Asia; the Lake Balkhash which is also one of the most beautiful tourists spots in Kazakhstan.

• Four E
• This is a 3 day New Age celebration that is celebrated in August in Almaty. On that day yoga and dance music workshops are being held with a lot of funny activities.
• Khan Tengri Mountain Festival
• The Khan Tengri Mountain festival is held each year in August. There are more than 500 members from all over the world who take part to achieve the peak of this mountain in more than 20 days. It is known as a trial of physical quality and perseverance.

• Kazakhstan Golf Open
• It is held each year in September in Almaty.

Soft Drinks Intakes:

The steady growth of soft drink intakes in Almaty Kazakhstan is primarily associated with the overall growth of the population, the stable economic condition, and the emergence of new product development that satisfies the demands of local consumers. The major focus of the existing manufacturer and product distributors is to produce healthy products with new flavors. The following soft drink brands are operating their international businesses in Almaty where Coca-Cola is one of the leading brands:

·         Coca-Cola Co

·         Danone, Groupe

·         Eckes-Granini Group GmbH

·         Aje Group

·         Monster Beverage Corp

·         Cott Corp

·         Dr Pepper Snapple Group

The Almaty Kazakh are more focused on health and wellness due to their higher standards of living thus it demands to produce soft drinks that are safe, natural, and healthy. This has resulted in a growing number of brands with logos like GMO-free, sugar-free, colorants, and beneficial for health.

Currently, the soft drinks market in Kazakhstan is widely captured by both domestic and international companies. Due to the rise in competition, domestic manufacturers have increased their production capacity by investing more in high tech equipment for better and improved results.  The urban Kazakhstanis are found in searching those soft drink products that provide them additional energy to cope with their hectic and busy routine lives. Therefore, most of the manufacturers continue their brand positioning through natural claims and providing health products.

The growth of soft drinks is expected to rise with the better economic and stable political situation in the country where living standards and purchasing power of Kazakh consumer is directly associated. Urban consumers are deeming to experience new brands and flavors.

Further growth of soft drinks is expected over the forecast period with the positive economic and political situation in the country, and the rising standard of living and purchasing power of Kazakh consumers. Ongoing new product development and innovation are anticipated as consumers are set to demand new experiences and flavors. The leading brands of soft drinks are directly influencing the local market by offering a wide range of products like bottled water, concentrates, juice, RTD tea, Asian specialty drinks, carbonates, energy drinks, RTD coffee, and sports drinks.

Pakola needs to undertake all of the above-mentioned market demands and current situation while opening its manufacturing unit and product distribution in Almaty Kazakhstan. It is to be certain that they will have to face tough competition with the local and international brands but still having an edge of a Muslim country manufacturer. They should have to consider enough cost of manufacturing unit and production of the most demanded products according to the living standards of the urban Kazakh.

Kazakh Clothing

Kazakh people prefer to wear those clothes that are made of such material suitable to regional climate condition and their nomadic lifestyle. Their clothes are most commonly decorated with ornaments that are made from animal hooves, horns, feet, and bird breaks. Most of the. Kazakhs prefer Western dress while the Turkic people wear traditional clothes on special occasions and holidays.

Women Clothing

Kazakh women mostly wear koylek (a shirt like garment) especially unmarried girls. It is made from expensive, soft, and light fabric that accentuates the waist. This type of clothing is best described as trousers that are made of homespun cloth, heavy cotton, and sheepskin fabrics. They may be a long (dalbar) or short (shalbar). They also wear kupe (coat) that is made of goatskin or fox fur. It is also lined with sheep and camel wool and stitched with otter fur on the sleeves for warmth. The women’s kupe is differentiated from men through the embroidered collar.

Chapan (shapan) is another clothing style that is worn by both genders (men and women). It is made from different fabrics and readily available in many colors where most commonly monochrome or dark are preferred. Woll or cotton is often lined with its layers. Other embroidery designs like brushing, applique, and gold are also decorated. This type of clothing is usually worn by wealthy Kazakhs.

Men’s Clothing

Kazakh men wear different clothing in the summer and winter seasons. It traditionally includes a double undervest; lower pants made up of light fabric and upper skin shirt made of thick cotton and sheepskin. These pants and undershirt are usually worn alone in the summer season. In winter, they wear long sleeves coat (beshemt) that are wide at the bottom while narrow at the top. In the 18^th century, trousers were sewn from camel hair fabric and skin.

The jackets they wear are sewn from monochrome dark fabrics in multicolor. The zhargak shapa is commonly popular among young Kazakh men that are decorated with traditional patterns. They wore it on important occasions. They often wear coats (ton) that are made from the skin of raccoons and sheepskin or silver foxes. The wealthy Kazakhs wear a coat that is made from the wool of lambs of four to five-month old.

Note: Headgears are worn by both genders.

Religion and Languages

It is a fact that overall Kazakhstan has well-articulated cultural values and norms due to the nomadic pastoral economy of the inhabitants. Religious rituals and practices are the most dominant part of the culture. Currently, Islam is the largest religion in that country. It has been introduced during the 7th to 12th centuries. Russian Orthodox Christianity is the second-largest religion in the country. There are mostly Sunni Muslims and Russian orthodox. About 70% of the total population is Muslims while less than 25% are Russian Orthodox and 5% belong to other religions. Among Muslims, the majority of Sunni Muslims belong to the Hanafi school of thought including ethnic Kazakhs, Uzbeks, Tatars, and Uighurs. Other religious groups (5%) are Baháʼí Faith, Judaism, Buddhism, Hare Krishnas, and the Church of Jesus Christ of Latter-day Saints.

As you see in the above diagram that Islam is the largest religion in that country and then the Russian Orthodox Christianity. And then there is a little number of other minorities.

Kazakh people usually like to eat lamb (sheep) with many other traditional foods having symbolic value across their culture. It has a larger influence on the Turkic and Scythians nomadic lifestyle. As animal husbandry has remained the center of Kazakh’s traditional lifestyle thus their nomadic practices and customs are mostly related to livestock. This is why they have well manners to ask about the health of each other’s livestock than inquiring about the life aspects of humans.

Kazakh is the official language of Kazakhstan which is a Turkic language that further correlated with Karakalpak and Nogai. Due to the existence of Russians, the Russian language is also spoken widely. Therefore, trilingualism is considered the most important factor for the future development of the country regarding the recent language policy by the government of Kazakhstan.

The above figure represents the ratio of multiple nationals who are currently residing in Kazakhstan. You can see that Kazakh are larger in number therefore Kazakh language is only the most spoken language. Then there are Russian people in the majority and they often speak the Russian language as the second largest language in that country. Then you see there are Uzbek, Ukrainians, Ughur, Tatar, German and others living in that country.

References:

1.      Retrieved from: https://en.wikipedia.org/wiki/Almaty

2.      Retrieved from: https://www.euromonitor.com/soft-drinks-in-kazakhstan/report

3.      Retrieved from: https://traveltriangle.com/blog/festivals-in-kazakhstan/

4.      Kissikov, B. (2011). Franchising in Kazakhstan. Almaty: Igilic, 85-89.

5.      Retrieved from: https://en.wikipedia.org/wiki/Culture_of_Kazakhstan.

6.  Kaziyeva R (2014).  Franchise expectations: case of Kazakhstan. CBU International Conference Proceedings-ojs.journals.cz