For seven years, black caviar of Ukrainian origin has been produced in Trypillia and Rzhyshchiv near Kyiv. Last year, Bester Caviar House began to export its products to France. Anton Yaremenko, the founder of Bester told MC Today, with the support from UopenEU project of the EU Delegation to Ukraine about the prospects and advantages of the free trade area between Ukraine and the EU, about how a catastrophic decline of sales may prompt a company to enter the European market.
From advertising to caviar business
We started to deal in caviar seven years ago. Back then, my father had a media holding company which managed media addressing military topics. And I had a transport advertising agency. At some point, we lost interest in this business and started to think about agricultural projects.
While on a flight, I read some magazine, I think it was The Wall Street Journal. It had an interesting article, saying that 91% of black caviar sold in the United States is imported, perhaps even from China. We took interest in it, and decided to start breeding sturgeons. We thought that it’s interesting and off the beaten path.
Before we started this business, we knew nothing about sturgeons. We did a market research, and realized that there is absolutely no competition at all in it.
How much a sturgeon farm costs
In the beginning, we overestimated our financial capabilities. It’s a very expensive business. A cage line alone costs several hundred thousand dollars – it’s a floating square structure with a cage hanging inside and fish inside the cage. This way, fish lives in natural conditions. On our farm, for instance, it lives in a Dnieper estuary, and we only limit the area of its habitat.
Keeping a farm is very expensive. In the beginning, we invested about $300-400 thousand. During the first two years, this amount has doubled. Today, we have probably invested over a million. The first investment went on the construction of farm and purchase of feed. The feed for adult species we produce themselves, but for the fish still growing, we buy feed in Europe. It costs about 60 hryvnias per kilo, and we need tons of it.
The most difficult thing was paperwork. If you want to install a cage line in the river, you cannot lease a part of the national body of water. Legally, you can have an allocated square area only at sea, where you can catch fish and where you are required to breed baby fish. So, we had to document the farm in Trypillia as a marine enterprise. The second farm, in Rzhyshchiv, is the one we own, so we had no problems like that.
There is nothing simple in this business. Perhaps the only thing was that, because we were pioneers in this industry, it was easy for me to enter nationwide retail chains.
It was two years ago. When you show up and offer the 101st position of pasta, you’ll find it harder to get into a retail chain than when you offer the first Ukrainian black caviar. Before that, our stores were selling Russian caviar only.
We made the first profit five years after we started this business. I won’t tell you the exact figure, but back then, we sold 200 kg of caviar a year. Today, we sell some 400 kg of caviar per year in Ukraine. We have five employees on the farm, another four in the workshop and three more in the office.
Presently, what we make is enough to maintain the business. To gain profit, we need large sales turnover. We expect to achieve it through exports.
How black caviar is made
Today, several dozens of companies breed sturgeons in Ukraine. Some grow fry only, others simply breed fish and sell it to us.
Besides varieties, caviar is divided into three categories. The first is contraband, brought to Ukraine from Russia. But in fact, the caviar coming to us from Russia has long been of Chinese origin. The truly Russian caviar is scarce, and the entire supply goes to Moscow and Saint Petersburg, not reaching Kyiv.
The second category is aquaculture caviar produced in captivity. It’s the traditional caviar, and that’s the caviar we make. The production process looks as follows. When a fish grows up, we determine its maturity using biopsy or ultrasonography. We see that the roe has matured to a required condition, and in winter, before the spawning period, kill the fish. Then, we salt the roe in the workshop, can it, age for another two weeks to make sure it saturates with salt, and ship to supermarkets.
The third category is ovulated caviar. A fish is administered a hormone, which in three-four days restructures its body into spawning condition. The fish’s reproductive system fully relaxes, and it is then placed on a tray and massaged to squeeze out the roe.
The coat of this roe is very thin, bursting on the slightest touch. In order to salt this kind of roe, mix and can it, the coat must be strengthened. For that purpose, it is treated with tannin, a compound with leather tanning properties not very healthy for humans, to put it mildly. After that, the roe is placed in water 83-84 degrees hot for three-four minutes. What happens is denaturation of protein, i.e. soft-boiled egg: strong coat on the outside and liquid inside.
The fish remains alive, and the next year, spawns the same roe. The profit is fabulous, three or four times higher than we have. But firstly, it’s unhealthy: the chemical tannin strengthening the roe is also used to embalm corpses. And secondly, the philosophy is missing. Caviar is not apples or carrots. Why is black caviar so expensive? Because fish needs 12-13 years to mature. The ideal caviar must melt in your mouth. It should not be lightly salted or oversalted, and it should not have the taste of old fats or smell.
The beginning of export to the EU
The most difficult time in our business was the outbreak of armed conflict in the East. Sales went down three-fourfold. We started to look for other places for sales in Ukraine. We went out to regions, found many small deli stores and began working with them. But that wasn’t enough. That’s how the idea of exporting caviar to Europe was born.
I was looking for partners in Europe for two years, from 2014 to 2016. I know many diplomats, met with people involved in trade between Ukraine and Europe, and, step by step, reached the right people. In the end, I found partners in France.
Back then, we leased a workshop from people who dealt in red caviar, using it on a free shift to salt our own roe. But when visitors from the German certification company TÜV came to our place, they told us: “You will never receive a European certificate for this workshop in your life”. That’s why we built a new workshop according to European standards, forking over $380 thousand on that. It looks very much like an operating room: everyone there wears masks and caps.
In 2017, we began to sell caviar to a distributor in France, who resells it to restaurants, stores and somewhere else. At the moment, we sold 20 kg in a trial consignment. Presently, we are also at the final stage of negotiations with Japan, and have talks with Canada and the United States.
We work with France on the partnership basis: we send them caviar, and they pay for it a month later. With all others, we work on the prepayment basis. For the time being, we sent samples to Japan: small caviar jars.
Specifics of trade with the EU
On the European part, there are no difficulties of any kind for our exports. In the case of caviar, the only applicable regulation is CITES, the Convention on International Trade in Endangered Species of Wild Fauna and Flora. The European regional authority contacts their Ukrainian counterpart, and inquiries about the producer.
The entire difficulty lies in Ukraine. To get a required certificate for 20 kg of caviar, we have to give 2.7 kg for analyses. And a 100-gram jar of Bester caviar costs 2,900 hryvnias.
It took us six months to do the paperwork for an export consignment. There are two problems: corruption and the State Service for Food Safety and Consumer Protection. When its local bureaucrats hear that we need documents to export black caviar, their eyes become round. They don’t know how to do it, so we have to do everything for them.
In Europe, everything works like a clock. If a letter says that the process takes up to seven days, seven days it will be at the most.
When the paperwork is ready, we clear the shipment through customs at Boryspil Airport, receive an international veterinary certificate there, and ship the refrigerated box with caviar by airmail. We sell to Europe for less than in Ukraine. Firstly, it goes wholesale, and secondly, we have to compete with local producers, including price-wise. The price for France is 10-15% lower than in Ukraine. In the future, we want to export the entire caviar output.
After visa-free regime came into effect, traveling to Europe and making deals there has surely become easier. The free trade area with the EU made our life less difficult, too, but mostly, it benefited large exporters selling honey, nuts, chicken, grain. Our turnovers are too small for the moment.
I am sure that export of Ukrainian goods to the EU will grow apace. Today, many young entrepreneurs do something worthy, interesting over there. Therefore, controlling production here and selling the output over there is an excellent option.
The original article was published on MC Today