Since 1991, class segregation has been increasing in the Baltic state. Like other countries, it is said that there are two Lithuanias—the city and the country (only 16 percent of the population lives in the capital city of Vilnius). Within the two Lithuanias are the “new Lithuanians”—the nouveau riche who made money legally or illegally through the privatization of state property, along with the beginnings of a middle class.

Edmundas Brazenas, marketing director of TNS Gallup says of the New Lithuanians, “You can’t treat them as middle class as they can’t afford to purchase much. Only ten percent of the population earns more than 800 litai (GBP 160/US$ 309) per family member per month, and sixty percent of the population earns less than 400 litai (GBP 80/US$ 154) per family member per month.”

As the basic standard of living has yet to improve for these people, price drives most of their purchasing decisions. The elite (those making 5,000 to 10,000 litai a month; GBP 1-2K/US$ 2-4K) do not even total one percent of the population. Tomas Gedminas, executive director of Leo Burnett Vilnius, says that rarity of product is most prized among these consumers. “It’s more important to have a watch no one else has, or a car no one in Eastern Europe has seen before.”

There is no direct translation for the word brand in the Lithuanian language, and it is not part of the common vernacular like it is in the west. Daiva Tonkuniene, client service director of DDB Vilnius explains that, “You must remember we’ve had only a very short exposure to the advertising market, less than 15 years.” Svyturys, Lithuania’s number one beer didn’t even have a marketing department when Carlsberg acquired it in 1999.

However, Lithuanian brands are dominant in traditional, long-existing categories like food and alcohol. The Karuna chocolate brand owned by Kraft Foods has been the number one brand in the country for many years. In categories where Lithuania is not naturally strong, and where higher levels of service are required, foreign brands dominate.

Tomas Bartninkas, managing director of Astos Dizainas McCann-Erickson Vilnius, calls the biggest and strongest brands in Lithuania the “golden five.” These include beer brands like Svyturys, Utena, Kalnapilis, and Horn; food brands like Nestle, Coca-Cola, and Kraft; supermarkets like IKI, Maxima, Saulute, and Rimi; GSM operators like Bite, Omnitel, and Tele2; and banks like Vilniaus Bankas, Hansabankas, Sampo. These brands are among those spending the most on advertising, and according to Brazenas, “strong Lithuanian brands correlate to expenditure of advertising and length of time in the market.”

Many Baltic (Estonia, Latvia, Lithuania) brands are foreign-owned, and it seems likely that foreign investors will continue to take over the best-known Baltic brands. There are very few state-owned Lithuanian brands as it is the foreign investors who have the well-developed sales and supplier networks to ensure the brand’s growth.

Audrunas Listopadskis, media director of VRS explains, “It’s difficult for Lithuanian brands to go global as they don’t have the contacts, the established distribution model or infrastructure. Lithuanian brands invest in producing, while global brands invest in branding.” For many local brands, the biggest part of production is white labeled (private labeled) and exported.

Other than Lithuanian brands changing from being producers to brand owners, Jaunius Jakaitis, managing director of Media House, believes that for Lithuanian brands to compete globally, “They have to stop competing on price, and start competing on values. As the market opens up, there will be an increase in foreign brands offering cheaper prices. Clients need to understand the cost and time involved in building a strong brand, and to not view communications activities as a waste of money. They need to inform their audiences about the qualities of the brand, other than just its price.”

Lithuanian brands can’t compete solely on price, but they are strong on the price/quality ratio, though the country’s size (3.463 million inhabitants) will always be a problem; Lithuania doesn’t have the capacity to produce for 300 million people.

A strength Lithuanian brands could emphasize is the history and provenance of its products, going deeper into what “Made in Lithuania” means. Most of the agencies interviewed for this article, expressed that the best way for Lithuanian brands to compete globally is to integrate the national consciousness of the country into its brands.

For example, Lithuanian linen brands can tell a powerful story of third-generation weavers, exquisite craftsmanship, and detailed hand-stitching that almost borders art. How the products are produced can rival where and what is produced in importance.

However, Lithuania does not yet have any associations around its new status as an EU country. Petrukaitis says, “first we need to build awareness of Lithuania, and only then can we concentrate on its brands. When you say ‘French’ there are associations with that, that mean something, and Lithuania needs to build its own associations.”

The country needs to re-identify with its strongest national characteristics and reconnect with the bedrocks of its culture (behavior patterns, traditions, arts, beliefs, institutions, language) and begin communicating its values. Lithuania needs to inform the world of its distinctiveness so people choose its brands, choose to holiday there and choose to trade with the country. Jakaitis observes, “Lithuanians are now Europeans. We are freer in our mentality, but we need to work out where we want to be, and also how to be.”

By identifying the country’s positive national qualities, Lithuanian brands can begin intertwining the relevant elements of the Lithuanian culture into their brand offer. As Aidas Puklevicius, editor of FHM Lietuva says, “Success in this country used to mean money and status, but now success is about realizing one’s potential.” Lithuania should think the same.

A full version of this article was first published in the October issue of Brand Strategy

Kristina Dryza is a freelance strategist based in London who translates emerging social and consumer trends into commercial propositions for companies.