Vuktar Stsiapanau in Minsk -
Oil may be the most high-profile trade between Minsk and Moscow, though for one Belarus-based company there is no better business than selling salted herring to Russia, where it is known as one of the most popular foods to go with one of the most popular drinks. But as Sergey Nedbailov, manager of Santa Bremor, explains, it takes millions of dollars worth of state-of-the-art fish processing equipment from the leading producers in the Netherlands, Iceland and Germany, all the sophistication of the modern know-how, and subtle knowledge of the Russian tastes to master this task.
Santa Bremor is a subsidiary of Santa Impex Brest, a Belarusian-German joint venture, which has been operating since the spring of 1993. The major activities of Santa Impex Brest include retail and wholesale trade in fish and fish products, as well as their transportation. Strange as it may seem, this sea fish processing business is situated in landlocked Belarus. It has been operating in the free economic zone of Brest since 1998. Some $126m has been invested into the enterprise, which involves more than 3,700 workers at the company's seven plants pickling, smoking and packing herring fillets into plastic moulds. Delicate "Matias" herring fillets and "Ikra No.1" branded capelin caviar have made the company renowned and commercially successful.
According to Nedbailov, two-thirds of the entire company's output is exported to Russia - in the first half of 2010, fishermen harvested 1.798bn tonnes of fish. Santa Bremor products are now represented in all regions of the Russian Federation, including the most developed Central Federal Region, North West and South, Urals, Siberia and Far East. The company's products are also exported to the US, Canada, Israel, Armenia, Cyprus and Lebanon, while since 2008 it has been fully certified to supply foodstuffs to EU, and exports to Germany, Lithuania, Estonia, Latvia, the Czech Republic and Bulgaria.
The area where Santa gets its raw materials stretches from the Far East to Norway, while the main herring and salmon supplying partner countries are Iceland and Norway. The company buys fish directly from producers and this in combination with the advantages of operating in an economic zone (including the exemption from duties on imported equipment and tax incentives for the purchase of raw materials) allows it to keep prices competitive.
Santa Bremor's location in Brest near the Belarusian-Polish border is another of the company's greatest advantages. "Brest is situated close to European suppliers, while it is only 350 kilometres to Minsk, 600 km to Kiev, and 1,000 km to Moscow. It appears that the three cities through which we carry out all our logistics are not too far from us," says Santa Impex Brest CEO Alexander Moshenskiy.
First among equals
People in the food industry are fully aware that tastes differ, but the founders of Santa Bremor didn't realize these differences could extend to the herring preservation method and that the dividing line coincided so exactly with the border of the late Soviet Union. "From the very start, we considered differences in tastes home and at the European market, and tried to find the most optimal flavour combinations. It refers to products of herring fillets in the first place. In northern Europe, herring is traditionally marinated with a bright taste of vinegar; in the [Commonwealth of Independent States] they like herring light salted and spiced," says Sergey Nedbailov.
According to the Russian Federal Statistics Service, per-capita consumption of fishery products in Russia in 2008 was 19.7 kilograms. The growth trend was interrupted by the global economic crisis, which caused Russian consumers to buy cheaper, domestically produced foodstuffs since the devaluation of the ruble had put most imported products out of reach of the average Russian. A year and a half later, the Russians are spending more on fish again. In January-April 2010, the total imports of fish and seafood increased by 37.2% in value and 9.0% in volume compared with the same period of 2009. Trade sources estimate that consumption of fish and seafood has increased by 30%. The increase is attributed to stabilizing incomes of the middle class, greater choices for staple fish species and improved distribution channels.
The outlook for 2011 suggests higher demand for fish and increasing per-capita consumption not only in lower-priced segments such as herring, hake and perch, but also in more expensive fish and processed products, including fillet and chilled fish. Experts believe that the higher imports and increased consumer demand signal a strengthening national currency and economic recovery.
The recovery of the Russian market holds new opportunities for Santa Bremor and gives rise to new expansion efforts. The construction of a large logistic centre has been completed in Kyiv and another one started in Moscow. Both are financed from equity funds and partly from bank loans. A fourth plant for fish-processing with a total area of 24,000 square metres is already close to completion in the territory of Brest free economic zone.
Sergey Nedbailov believes that "a company that doesn't develop, modify and adapt to market conditions sooner or later ceases to be a leader." In line with this thinking, the company is now giving more attention to the European market and is planning to expand its presence in the West. Sales volumes are small for the moment, but look likely to increase in the longer run.
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