Feeling 'Ostalgie' for communist-era brands



BERLIN // Plans to relaunch East Germany's Wartburg car brand have highlighted a renaissance of eastern products sparked by mounting nostalgia for the communist era 20 years after the fall of the Berlin Wall. Supermarkets have begun stocking resurrected eastern brands in response to growing demand in the former German Democratic Republic driven by a wave of Ostalgie, fond memories of the days when everyone had a guaranteed job and was looked after by the state, provided they did not disagree with it.

It is a far cry from the early 1990s when easterners ditched local products in favour of western food brands, televisions, washing machines and cars they knew from TV advertisements beamed across the Iron Curtain, and had spent decades yearning for. Anything eastern was tainted by communism and ridiculed as cheap and shoddy. The ubiquitous Trabant car with its temperamental two-stroke engine and plastic body became a legendary butt of jokes such as this one: "How do you double the value of a Trabant? Fill it with petrol. How do you quadruple the value? Put a banana on the back seat." The car now enjoys cult status.

"When the [Berlin] Wall came down there was a surge in demand for Western goods that had been out of people's reach and were seen as exotic," Nils Busch-Petersen, the head of Berlin's retailers' association, said in an interview. "A lot of companies went bust. But that trend has since been reversed. It's not just because of Ostalgie. It's also down to more professional marketing and greater awareness that these home-made products are good."

The Wartburg, known as the "working-class Mercedes", was a cut above the Trabant, and even West Germans acknowledge that it looked like a real car - from afar. Now media reports say Opel, which is being sold by its ailing parent company General Motors, is considering reviving the Wartburg as a budget car. The possible resurrection of the Wartburg is further evidence that eastern brands no longer carry a stigma. Some, such as Rotkäppchen sparkling wine from the eastern state of Saxony-Anhalt and Radeberger beer from Dresden, have even managed to establish themselves in western Germany.

Others are successful locally because they trigger memories. "People are buying eastern grocery brands because they say it comes from here and it tastes like the old days. It's an Ostalgie effect," said Christoph Bauditz, head of accounting for Ostprodukte Versand, a mail-order company that sells eastern brands. "I was just six when the Wall came down so I don't care whether a product comes from the east or west. But my parents' generation does," Mr Bauditz said. "The fact that the big discount chains are starting to stock these products shows that the demand is back. Five or six years ago they wouldn't have bothered."

Firms are opting for trendy, retro-style packaging and have introduced slick advertising campaigns to lure customers by promising a taste of the old days. Vita Cola, the eastern version of Coca-Cola originally launched in 1958, is back on supermarket shelves vying with its rival. "It's a homage that triggers a pleasantly warm recognition, like meeting an old friend again," Vita Cola's maker gushes. One of Germany's biggest retail discount chains, Penny Markt, recently started a marketing campaign called "Eastern is Delicious" and now boasts that 30 per cent of its product lines in its more than 470 eastern stores are local brands.

It may seem surprising that many easterners look back wistfully at a time when they were not free to travel, had an extremely limited choice of goods, did not have a proper right to vote, were systematically spied on and could wreck their career or get locked up for expressing the wrong opinion. But many easterners are disenchanted with the harsh realities of the capitalist system that wrecked their economy in the 1990s. The region's unemployment rate at 13.3 per cent in May is almost twice as high as in the west.

Surveys regularly show easterners feel like second-class citizens, and the Left Party, the successor to East Germany's Communist Party, enjoys 25 per cent support in the region. The problems of everyday life in united Germany have left many yearning at least for a taste of yesteryear - the crunchy chocolate flakes made by Zetti, Spreewald pickled gherkins and Werder tomato ketchup that used to line the thinly stocked shelves in communist times.

"Werder ketchup is a classic and it's one of our best sellers," Mr Bauditz said. "We send loads of it to people who've moved away. There's simply no ketchup that tastes like it." In addition to ketchup, Mr Bauditz's company, which sends out 30,000 parcels a year, also sells T-shirts emblazoned with "Hero of Labour" and vintage East German sandals. Many regard their new-found brand loyalty as a way to support the local economy, which remains fragile despite having received transfers of an estimated ?1.5 trillion (Dh7.8 trillion) in state subsidies and benefit payments from the west since 1990.

A trade fair for eastern goods in Berlin this month attracted 20,000 visitors, most of them over 50, who scoured the stands for such forgotten brands as Pottsuse, a mixture of mincemeat and liver sausage. Mr Busch-Petersen, Berlin's retail association chief, thinks it will take at least another generation before people stop distinguishing between eastern and western brands. "The east-west division will gradually blur and be replaced by the regional identities that are normal in a federal state like Germany," he said. "But it will take time.

"We'll only achieve true unity if we stop pretending that we've already attained it. "There are still major differences between east and west. Our business leaders and top civil servants are still westerners, for example. "Easterners are still firmly in second place." dcrossland@thenational.ae

Medicus AI

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Based: Vienna, Austria; started in Dubai

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Skewed figures

In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458. 

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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The bio

Studied up to grade 12 in Vatanappally, a village in India’s southern Thrissur district

Was a middle distance state athletics champion in school

Enjoys driving to Fujairah and Ras Al Khaimah with family

His dream is to continue working as a social worker and help people

Has seven diaries in which he has jotted down notes about his work and money he earned

Keeps the diaries in his car to remember his journey in the Emirates

Haemoglobin disorders explained

Thalassaemia is part of a family of genetic conditions affecting the blood known as haemoglobin disorders.

Haemoglobin is a substance in the red blood cells that carries oxygen and a lack of it triggers anemia, leaving patients very weak, short of breath and pale.

The most severe type of the condition is typically inherited when both parents are carriers. Those patients often require regular blood transfusions - about 450 of the UAE's 2,000 thalassaemia patients - though frequent transfusions can lead to too much iron in the body and heart and liver problems.

The condition mainly affects people of Mediterranean, South Asian, South-East Asian and Middle Eastern origin. Saudi Arabia recorded 45,892 cases of carriers between 2004 and 2014.

A World Health Organisation study estimated that globally there are at least 950,000 'new carrier couples' every year and annually there are 1.33 million at-risk pregnancies.

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