Red October Confectioner Searches for Respect, Investors in Russia : Marketing: The candy maker survived czars and communism. Now it faces competition from giants like Mars and Snickers, and the task of modernizing and getting capital.

Don’t ask folks at the Red October candy factory about the invasion of Mars. And don’t mention Snickers or Bounty either.

These American sweets are so heavily advertised, so omnipresent in today’s Russia that a whole generation of Mars, Snickers and Bounty jokes has appeared.

But no one is laughing at Red October. A scowl darkens the face of Red October director Anatoly Daursky at the mere mention of a Mars bar.

“One hundred and fifty million people wanted to try some foreign chocolate. Well, it’s been two years and everyone has had their taste! And we now say our confectionery is going to survive!” he declared.

Like many big state enterprises, Red October has had a tough time since the Soviet collapse. But this 127-year-old confectioner isn’t about to give up.

On Monday, the red-brick factory in the heart of Moscow will become the first former state company to sell shares to the general public, officials announced this week.

Money raised through the landmark stock offering--part of a pilot program aimed at showing other Russian companies how such a thing is done--will be used to modernize its plant and market its sweets.

Red October has, Daursky says with a certain understatement, “had its ups and downs” since it was founded in 1867 by a German master confectioner.

There was the Bolshevik Revolution, when the factory was nationalized. There was World War II, when hundreds of workers were sent to the front. There was the 20% tax on imported sugar levied this year.

And then there was Mars. And Snickers. And Bounty.

But Red October officials--and their British advisers--insist that the company’s chocolates, toffees and caramels have a solid niche in the Russian market.

To many Muscovites, Red October products like Mishka (Clumsy Bear) chocolates, Little Cow caramels, Romance bonbons and Kis-Kis toffees are tender reminders of childhood treats and family gatherings.

Red October sweets are savored, Daursky insists, not wolfed down on the run like an American candy bar. Red October seems at least equal in quality to American sweets, but buying the imported stuff is the trend.

Red October cultivates its role as a national institution; the company museum is like a quick tour through Russian history.

It is crammed with memorabilia, from brocaded boxes from the days when the factory supplied sweets to the czar’s household to red velvet flags emblazoned with the Communist hammer and sickle.

The $21.8-million stock offering could give Red October a new lease on life. Daursky says half the plant’s equipment is obsolete. Packaging and distribution also need improvement.

Red October will offer 3.5 million shares to Russian and foreign investors at 20,000 rubles, about $6.25, a share for two weeks beginning Monday.

Officials hope that the stock offer will set an example for a nation still somewhat befuddled by the whole concept of investing. Millions of Russians seeking quick riches have been defrauded by fly-by-night funds and thinly disguised pyramid schemes.

Red October, officials say, won’t make anyone rich overnight. But it won’t vanish overnight either. Red October posted a profit of $22.3 million in the first half of 1994.

“This is a very strong company and it is well led,” said Richard Oliver of the Samuel Montagu investment bank in London, an adviser to Red October.

When the Soviet Union started falling apart, Red October faced the collapse of the planned economy. What if there were no more imported nuts? What if the transport system collapsed? Daursky said he braced for every dire eventuality he could imagine.

What he got was an onslaught from Mars.

Red October seems determined to fight back. “We want to compete with Mars,” Daursky said. “We want to compete in the West.”