The World Biggest Caviar Exporters

There is no separate black caviar production statistics in the world. Nevertheless it is possible to estimate the black caviar production volumes using the statistics of CITES organization. CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora) is international agreement between the governments. Its aim is to ensure that international trade in specimens of wild animals and plants does not threaten the survival of the species in the wild.

However, in the following charts we can see the biggest players on the market:

18 http://www.fish.gov.ru/

24

Chart 1: the world’s largest caviar exporters

The above chart contains the largest caviar exporters in the world. Iran, Russia, Kazakhstan and Azerbaijhan. They produce caviar from the wild sturgeons, which were grown in their natural inhabitant area – Kaspy Sea. Iran doesn’t sell caviar to the local market because this type of fish and it’s roe considered as a dirty food, according to Islamic rules. It’s positively effects on it’s export size. However, from the year of 2007 to 20011 there was a ban on fishing osetra sturgeons in Kaspiy Sea in order to save the world’s population of wild sturgeon. However, yearly Iran exports around 438 tons of black caviar worldwide.

The ban of the fishing sturgeon in Kaspian sea boost the production of black caviar in aqua – farms. Kibbutz Dan which is located in northern Israel has become a somewhat unlikely source for one the world's most exclusive marine delicacies – caviar. In 2007 95% of the caviar in the world came from the Caspian Sea and 5% from fish farms, and in 2012 the proportions are reversed: 90% already came from farms and 10% from nature . Right now Israel exports around 200 tonnes of caviar a year.¹⁹

Russia has been always either a monopolist on the back market, or took the leading positions.

However, after sturgeon stocks in the Caspian Sea were nearly wiped out by overfishing and poaching, the fish – and its coveted eggs – are back in legal circulation.²⁰ Right now Russia

19 Source: CITES trade data for the years 1998 to 2012

20 http://rt.com/news/russia-sturgeon-caviar-export/

25

exports about 138²¹ tonnes of caviar to Europe and other countries worldwide. The participation of Kazakhstan and Azerbajan is highly expected in this chart because these two countries have a natural resource of the wild sturgeon.

Recently, China gained its possitions on caviar export maket, due to the raising ammount of sturgeon aqua-farms. According to analitics,the amount of caviar production in China is going to grow tremendeously have ambition to become world’s number one producer by the year 2021²². 4.5. The World Largest Caviar Importers

According to trade statistics reported by countries to CITES,the European Union (EU), the USA and Switzerland are the largest importers of caviar,importing 81% of all caviar reported in legal international trade between 2000 and 2011. During that period, the volumes of caviar reported in international trade per year plummeted from a peak at 263 tonnes (t) in 2001 to 44 t in 20010.

Among the 27 EU Member States, France and Germany are the largest importers. Besides their role as consumers, the EU and Switzerland are also important 'transit' points for caviar, which re-export to other countries over 50% of the caviar they import. Besides the caviar reported in international trade, considerable volumes of caviar are also consumed domestically in the countries of origin, for example in the Russian Federation and the USA.The majority of the caviar imported by the EU and Switzerland comes from Iran and the Russian Federation,the two

‘giants’ among the world’s caviar producers.

Chart 2: The world’s Largest Cabiar Importers

21 Ibit 8.

22 http://en.amurcaviar.cn/about.html

26

4.6. Illegal trade of caviar

It is difficult to quantify the levels of illegal caviar trade, as this is by nature a hidden activity.

What is known is often anecdotal and based on reported seizures and convictions. However, large seizures of illegal caviar in Europe indicate that there is a thriving black market in the luxury roe, which is threatening the survival of sturgeon species. They also demonstrate that caviar smugglers are well-organized and use sophisticated methods and the illegal caviar trade is considered to have strong links with organized crime groups.

EU-TWIX,an online database,accessed exclusively by officials from the 27 EU Member States, helps law enforcers in the EU to fight wildlife trade crime. According to data reported to EU-TWIX to date, over 7 t of illegal caviar were seized by European authorities from 2000 to 2007 (see text box on left).However,the real size of the illegal trade is likely to be considerably higher, given that much of it is undetected and information is incomplete for some importing countries.

The illicit caviar trade is particularly difficult to control in the EU single market, where caviar that has been imported by one Member State can be moved freely between the 27 countries.

Cooperation and information exchange is therefore of particular importance, not only between EU Member States, but also with neighboring and exporting countries.

27

CHAPTER V:

RUSSIAN CAVIAR HOUSE ENTERS TAIWANESE MARKET

Case study

The aim of this chapter is to provide an overview of the new entrant and also propose strategies for entering Taiwanese Market.

5.1. Why Group of Companies “Russian Caviar House”?

In Chapter 4 we discussed the issues of caviar production in Russia. It was said that there are 10 certified aqua farms which breed sturgeon and produce black caviar. GC Russian Caviar House is considered the biggest producer of black caviar in Russia nowadays. It is also the only company which was approved by CITES²³ certifications to export caviar worldwide.

5.2. Company Profile

“Russian Caviar House” Group of Companies represents the world famous exclusive product called "caviar". Being undisputed leader among the caviar industry companies of the former Soviet Union countries, "Russian Caviar House" Group of Companies actively promotes Russian Federation restoration the fame of the Caviar queen of the world.

"Russian caviar house" - a group of companies engaged in the cultivation of sturgeon and caviar sales. The group includes sturgeon aquaculture and enterprises engaged in fish farming in order to obtain their eggs and meat and sturgeon stocking material:

 LLC "RTF" Diana

 Vologda OOO Sturgeon company

 JSC "Sashno"

 Caviar House Boutique (Moscow, St. Petersbourg)

23 CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora) is an international agreement between governments. Its aim is to ensure that international trade in specimens of wild animals and plants does not threaten their survival

28

Alexander Novikov, the owner of the company, started his business in 1978 with an opening an experimental plot "Vologdarybprom" breeding and cultivation of fish. The company has a royal and repair (used to replenish the mother) herds of sturgeon, which allows it to not depend on the supply of fertilized eggs for further cultivation of marketable fish fry and other third-party companies. Caviar production company is 10 tons per year by 2014 is planned to increase to 12.5 tons.Today, Russian Caviar House sells its products not only in Russia but also abroad. For direct sales group companies opened branches in Kiev, Dubai and New York, Hong Kong and Singapore.

During the activity the group of companies "Russian Caviar House" won several gold medals and diplomas at the international professional competition of food and beverages "Product of the Year" as part of WorldFood in category "Manufacturer", honorary diplomas and medals "For contributions to the development of food industry "within the framework of the international exhibition" Prodexpo "and diploma of the winner of the international competition" Best Product - 2012 "within the framework of the 19th International exhibition" Prodexpo-2012 "in the category" Best Innovative Product and the Grand Prix winner of the international competition

"Best Product - 2013" within the framework of the 20th international exhibition "Prodexpo 2013" in the category "Fish seafood”.

5.2. 1 Black Caviar by Russian Caviar House

Russian Caviar considered as a benchmark in the world until the collapse of the USSR. The reason for it is that the raw material for caviar during its production passed the most rigorous selection process with various parameters, thereby providing the highest quality caviar. In this case for the export we use of all that was selected the best caviar of the best - you can say outstanding. Black Caviar, produced by GC “Russian Caviar House” - caviar of the highest quality, prepared in accordance with the old Soviet State Standard (GOST), and meeting the most demanding requirements previously applicable to caviar which was produced for export.

There are several reasons, why caviar of this brand is unique. First of all, they do not use the chemical preservatives, while packaging the product. It is all just fish roes and salt. We have already mentioned this technique in the previous chapters. Secondly, Russian Caviar House interacts with Russian and foreign scientific - research centers and uses in its work the most advanced technologies, that allow them to control caviar production process on all stages, until it

29

will be delivered to their customers. This fact makes customer sure that there are buying the product of the highest quality and it is completely safe to eat. Finally, environmental conditions make northern river Suda on which we placed our aquacultural facilities, the perfect place to grow osetra sturgeon.

5.2.2 Russian Caviar House Brand

Alexander Novikov, the owner of group of the companies Russian Caviar House said in his interview that his main goal “to renovate the glory of Russian caviar worldwide”. Indeed, black caviar is iconic Russian delicacy, even though nowadays it is produced in different parts of the world. As for the group of the companies Russian Caviar House there are two main goals:

1. To develop a line of original products in delicacy category which would meet international quality requirements;

2. To create a brand which would claim the return to traditional caviar production standards and improve the image of Russia both at home and abroad.

The company owner wants Russian Caviar House to demonstrate that the new Russia is again capable of producing superior quality product . In the process, it may improve the “Made in Russia” label will associate with the brightest and the most luxurious part of Russian culture.

Russian Caviar House has a strong will to be an ambassador and personification of Russia in the same way as Mercedes with Germany, Channel with France and Versace with Italy.

5.2.3 Brand Identity

The personal owner’s affinity for luxury goods and ambitions to create the first truly premium Russian brand determined much to the extend the identity of Russian Caviar House Brand.

“If you want to sell products to Russians, you have to look at their past. You need to understand who they are and what they will buy. Russian Caviar House brand makes sense because most of the Russians of our target auditory (aged 35-55) remember the glory of Russian black caviar

30

The name for the brand was very natural and easy name to create. It directly leads the costumer to the product, it’s country of origin and there are no further explanation needed. It’s also very easy to understand and remember for the foreigners. To say shortly, the brand embraces the past and inspires the progress.

5.2.4 The Brand Positioning on Russian Market

We have already mentioned that group of companies “Russian Caviar House” is the leading producer of caviar on Russian market. The company market share is around sixty percent. There are ten legal aqua farms, producing caviar in Russia. The following chart shows the biggest players on the market in Russia:

Chart 3: the Biggest caviar producers in Russia

According to Infolio Research Group, in 2011 the legal production on Black caviar market was represented by ten main aqua farms. The biggest four are represented on the chart above.

Russian Caviar House produced about 10,5 tones of caviar, Beluga company produced about 2 tones; Raskat fishery - 1,2 т; Bashkir fishery — 900 kgs.

5.2.5

The price of the black caviar usually depends on the type of the fish, the size of the roe and the amount. However, it usually stays in the same segment worldwide and can not be cheap. In the following chart we are going to show the position of the black caviar by Russian caviar house the market according to it’s price and quality:

31

Figure 1: GC “Russian Caviar House” compatitors on the mother market

On the chart above we can see the range of key caviar producers in Russia according to it’s price and quality. Even though the products of Russian Caviar House groups are the most expensive, comparing to it’s competitors, it is also reaches the top o the quality in the segment. This factors make the product’s of Russian Caviar House the most valuable and trustworthy on the market.\

Let’s closely analyze the line of the products of GC Russian Caviar House, presented on the market:

5.2.6 Product Line Description

Russian Caviar House sells black caviar in metal and glass canes size of 20 gramms (0,7 oz) 1 servings; 50gramms (1,75 oz) 1-3 servings, 100gramms (3,5 oz) 2-5 servings, 125gramms (4,4 oz) 2-7 servings, 250gramms (8,8 oz) 8-10 servings, 500gramms (17,6 oz) 15-20 servings 1000gramms (35,3 oz). There is also special back caviar packaging of special space addition. It is surved for austronauts in space, and this line is called ‘Kosmos. It is packed in the vacuum plastic package, size of 125 gramms (4,4 oz) and is good for 6-10 servings.²⁵

25 https://russiancaviaruae.com/

32

Product Description

Premier Caviar Light-gray clear eyes Premier Caviar

occurs in nature significantly rare. Medium-sized glossy grains with buttery flavor come to us from farm-raised in pure water of forest river Russian sturgeon. In homeland, Russia, Premier Caviar is an attribute of the holiday and a symbol of wealth in the family.

Price Range: 20 grams 47,08USD; 1000 grams -1959,51USD.

Moskva Caviar.

A favorite delicacy of the Russian nobility, Moskva Caviar is prepared according to the unique recipe of the 18th century. Moskva Caviar grains range in color from a light grey to a warm, rich black. Limited production.

Price Range: 20 grams - 148.35USD -500 grams - 1419 USD

Diamond Caviar

Bright attribute of leadership and excessive wealth, the perfect gift among business elite, only original Russian Diamond A concentrate of majesty and unprecedented success in every grain. Extremely rich in taste and flavour, Diamond Caviar is the pinnacle of charm. It inspires. Limited quantities. Price Range: 50 grams – 270USD; 250 grams - 1249,75

Imperial Caviar.

Nearly beyond the reach, Imperial Caviar - is the rarest Sturgeon caviar in the world. Big-sized richly colored caviar pearls evoke the feeling of unsurpassed taste. Each year it is possible to select only a few pounds of this delicacy. This exclusive – golden caviar obtained from the Russian Royal Sturgeon. Very limited quantities.

Price : 150 gram 1212.21USD

33 5.2.7 Russian Caviar House Sales Geography

Map 1: Russian Caviar House

On the map above we can see the presents of GC “Russian Caviar House” in different countries.

Currently the branch offices are settled in Kiev, Ukraine, New York, the USA, Dubai, UAE, Hong Kong and Singapore. GC “Russian Caviar House’ also distributes their caviar to China, Japan, Korea and S. Africa.

We can see that company is right now oriented on Asian market, because of it’s success in Singapore and Hong Kong. Right now we can see the production of Russian Сaviar House on the shelves of Singaporean upscale supermarkets and restaurants, restaurants and gourmet shops in Hong Kong.

5.3 GC “Russian Caviar House” entering Taiwanese Market

5.3.1. Partners on the market and Location

From the literature review we have known that the entry mode is crucially important for the new entrant on the market. On this section I am going to briefly discuss the advantages and disadvantages of the options that the company can apply.

34

Since we know that GC “Russian Caviar House” successfully opened their branch offices in Hong Kong and Singapore and distribute their product without any help from intermediary parties to the whole sellers, restaurants and, gourmet specialty shops. We believe that GC

“Russian Caviar House” can apply this option to the Taiwanese market. Here we can see the advantages of this model:

Distribution through the whole sellers have some vivid advantages and disadvantages:

Advantages:

Wholesaler provides accessibility to the market in order to boost brand presence, and provides the retailer with accessibility to the products. There is a number of upscale supermarkets and specialty shops in Taiwan that have a big choice of European Products²⁶. The presents of the caviar on the shelves may boost the awareness about the product

Disadvantages: for the luxury goods sector in general, collaborating with a wholesaler might represent high risks for the brand image. Indeed, even though clauses in contracts can protect the brand and settle distribution conditions, there are always risks for the brand image. Since it cannot directly control its distribution, the distributors may distort the brand identity through irrelevant brand communication strategy. In the case of distribution through the wholesaler we have to make sure that salespeople are highly acquainted with the product.

However, GC Russian Caviar House can also think about distribute their product in the retail sector. Above, we are going to talk about the options:

Presentce through Franchise. It might be an option to choose franchising to expand the number of units.

Advantages: The retail company then licenses its business to a franchisee or independent business person. While there are certain advantages to franchising stores, such as increased exposure in the marketplace, there are also disadvantages of having stores operated by licensees rather than directly by the company.

26 Cleo Fu, Mark Ford, “Taiwan; Food Service Hotel-Restaurant Institutional” 12?06/2013

35

Disadvantages:Even though it is an money – saving option and might be very attractive for the new comer to the market, it might occur the same as for the wholesaler partnership, the brand image may be weakened if the franchisee does not respect the brand guidance management. A close follow-up from the brand is essential. There is also a threat that the franchise branch may become the competitor in the matter of time.

Directly Operated Business. In our case directly operated business will be represented through Russian Caviar House Boutique. Directly operated stores (DOS) help to increase margins in times of rapid growth and high demand and increase the market presence of the brands. However, in times of slower sales, the fixed cost of stores can drag down financial performance., the operation of the store will be the most expensive option, but the most successful one in terms of the right brand presentation and product distribution. Moreover, through directly operated shop it will be easier to represent the caviar eating culture and product itself.

Location

According to Veda International Corp., marketing communication service company. the best locations in Taipei for a new upscale product to enter the market are: 101, Sogo and Breeze Center. In our case, the most suitable location will be Taipei 101. There are several reasons for that:

 First of all, 101 mall is Taiwan’s premier international shopping destination, featuring

 First of all, 101 mall is Taiwan’s premier international shopping destination, featuring