Major Ukraine -based importer shifting focus to ready-to - eat fish products segment

February 16, 2009 16:38

Ukraine-based Scandinavia Company, known as one of the largest seafood importers in the Ukraine, has been stepping up its offensive to enter the segment of ready-to-eat seafood products, reports ( ) with reference to local media sources.

More specifically, by the year 2011 the company plans to finish a building of fish processing plant as well as invest USD 10 million for buying a number of existing factories already in operation to produce marinated fish products and other seafood. The first deal will be concluded shortly. According to the Company's director Ms. Elena Yakimenko, they made such a decision to profit from lower prices of the plants in the situation of the world financial crisis.

Consumption of fish preserves in the Ukraine in 2008 amounted to 40 - 50 thousand tonnes, according to the market players. Nearly 20% of this volume was imported. About 90% of the raw materials used for processing preserved seafood products came from importation. The largest producers of marinated preserves have been Pleyady Fish Processing Plant, International Seafood Group, Sam Fish Company and S.O.V. Gavan.

As was mentioned earlier, in its drive to become a seafood processor Scandinavia has invested Euro 30 million to build a plant in Kiev to be completed by 2011. The plans to accelerate the entry into the segment of ready-to-eat products were boosted by a decrease of demand for frozen fish as the margins in this business will not exceed 5%. Until recently the importers were making money thanks to a large turnover with the market volume increasing almost twofold annually. But currently the situation has changed and the importers are afraid that they may lose the discounts for large volumes (they used to get from foreign suppliers).

Ready-to-eat products is a good way to improve the mode of business operation. Processing facilities will allow to import large volumes of fish and make money from selling value added product. Producing preserved fish from its own imported raw materials the Scandinavia Company will increase the profitability of the production by 5% on the average.

In the situation of Hryvnia (Ukrainian currency) devaluation the value of imported raw material has increased on average by 25% since November 2008. Taking into account the value of jars, spices and oil the processors have to increase wholesale prices. More specifically, the company increased the price by 20% and as a result, in November 2008 the sales volume dropped by nearly 25% and in January 2009 by 5%.

According to the Ukrainian market players, in the situation of short working capital about 20% of fish processing plants were closed only in Kiev area, and even more in other provinces of Ukraine.

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