Outlook for Russian sushi market still bright. Part 1.
In mid-1990s the Japanese cuisine driven by sushi and rolls captured high-class Russian restaurants. With the emergence of Japanese sushi bar chains sushi have grown affordable nearly for all the strata of the population.
The next development was sparked off one and half year ago by producers of ready-to-eat salads, who started to make rolls in abundant volumes. Now they sell sushi sets in common shops next to sausages and ravioli and the market, unlike the restaurant segment, is still far from saturation, according to Kommersant-Dengi.
Success
Svetlana Kim, general director of Moscow-based Ariram Company, as quoted by the magazine, recollects that two years ago her family went to one Japanese restaurant and they had to stand in a long queue to enter the restaurant. She even thought then that her company should pay attention to the Japanese cuisine and to start producing such popular products.
Some three years ago the Japanese cuisine was peaking and specialized restaurants opened in Moscow almost every week. However, retail shops did not offer sushi and rolls at all evidently due to common belief that exotic products should not be offered in the low-end market segment.
There was another problem of storage life as fresh fish was very difficult for storage. Only when producers coped with the problems, the retailers started offering the new range. Producers of ready-to-eat salads started making sushi as they already had processing units and the salad market had been long saturated and no large growth was expected.
As quoted by the report, Maxim Akulovich, general director of Saint-Petersburg-based Atlanta, said that when his business took off the "salad pie" had been divided and the competition was extremely strong. Then they decided to pioneer production of sushi for retail shops. At that time sushi were available only in restaurants.
At first, retail shops agreed to cooperate very reluctantly and Atlanta managed to make contract only with the retail chain Metro Cash & Carry. The reason behind other chains' unwillingness was in the products' unattractive packaging. Sushi sets in plastic containers triggered a kind of revolution on the sushi market in Russia approximately one and a half year ago, Akulovich said.
Ariram has been working on the Moscow market for a long time with its ready-to-eat salads. The company's general director Svetlana Kim said that there was one good cook in the company's salad department, but he left for the Japanese restaurant where he rose to chef's assistant. When the company started to diversify into sushi, Svetlana offered him to return to the firm as the head of the unit producing the Japanese products.
According to victuallers, it is the sushi master who mostly determines the quality of the ready product and success of the whole project.
Market
Maxim Akulovich is sure that even now the capital's market of sushi sets is saturated at one third at the best. Far from every supermarket has sushi in its range, especially in the budget chains of Pyaterochka and Kopeika whose clients cannot afford sushi. However, the producers think that in the near future the situation can change for the better with the rise of people's income.
Maxim Akulovich continued saying that the fashion for the Japanese restaurant cuisine was dying as the middle class seemed to be fed up with sushi. In the meantime, the situation with sushi sales in cheap food stores of the capital is still developing and the growth is expected for another two or three years until every shop will offer sushi to its visitors. In regions the above period will be even longer.
Svetlana Kim added up saying that sushi sets should turn affordable with price decreasing thus to result into a sales boost and growth of the product's popularity. The Russian producers of sushi are not numerous so far with the list including Ariram, Atlanta, Optima-torg, Kanpai, Chingan, etc.
Svetlana Kim said that when they began trading, the company fell into a real sushi-boom without any competitors on the market. By present, the market has grown somewhat stabilized.
Altlanta has developed into the largest producer of sushi for the retail market within just one year of operation. At present, according to expert estimates, the company monthly sells more than 2.5 million products, of which about one third of rolls and sushi are on display in the nation's trade chains. Atlanta's sales success should be attributed mostly to low prices from RUR180.00 per sushi-set. Some people say that the share of 15% on the capital's market belongs to Ariram Company.
The market of ready-to-eat sushi sets is very young and small because no market studies have been made so far, but some estimations as to volumes can be still made.
According to Sevtlana Kim, average wholesale price amounts to ca.RUR1000 per kilo of sushi. Her Ariram company annually produces ca.36 metric tons of sushi and their turnover amounts to ca. RUR3 million per month (the average check per sushi-set in shops is RUR300.00). If the company does own up to 15% of Moscow sushi market, that means than Moscovites annually purchase 240-250 metric tons of sushi at a total price of ca.RUR250 million in retail trade, less restaurants. On the other hand, Maxim Akulovich thinks that the two largest cities of Russia, Moscow and Saint Petersburg, eat sushi nearly worth 60 million USD.
According to Svetlana Kim, Auchan retail chain contributes up to one half of sushi sales in Moscow with other chains contributing the other half all together.
Now the most important thing for producers is to promote the product on the market not as something fit for restaurants and very expensive, but rather as a fairly affordable product.
According to Akulovich, sushi producers should develop very quickly as the competition has been growing, the technology is not very difficult and the market is far from being saturated.
A staff of 60 people are engaged in product promotion in Atlanta, thanks to which the company has managed to boost sales in just a couple of months. More specifically, in the first months sales grew by 300% every month. Now, in Saint Petersburg where the company has won nearly all the market the sushi sales have been growing by 7% per month and the annual growth has reached nearly 100%. In the turn-of-the-year weeks Atlanta have managed to boost its sales of sushi and rolls to RUR3 million.
Challenges
Short shelflife of sushi and rolls is evidently the main challenge for producers of the above range for the retail trade. According to Svetlana Kim, it has taken her company twelve month to draw up the necessary documents, although Ariram has been running well-equipped food units for a long time already.
They have faced problems as the institute of parasitology has first refused to approve addition of raw fish to rolls. The thing is that in Japan the fish is harvested and very soon eaten in the form of sushi and rolls. In the case with Russian producers of the Japanese products the raw fish is transported thousands of kilometers before it is eaten as sushi and rolls and the institute has obviously thought about problems during the raw fish transportation to the producer such as possible break of the cold chain and the long way of about one week (extremely shortening the product's storage life).
The above reasons have hinted the Russian producers about developing the Russian sushi. The European sushi also differs from traditional Japanese product.
Robert Lee, chef of the Japanese culinary department of Ariram Company, explains that the Japanese cuisine means small simple rolls. For instance, California, one of the most popular rolls in Russia, has been invented not in Japan where they practically do not eat mayonnaise. The Russian cuisine has been adapted for the European taste. Akulovich calls their products gurmi-sushi explaining the difference from the traditional Japanese recipe on their site. Gurmi-sushi are made under the traditional Japanese recipes, but instead of raw fish, shellfish and mollusks the producer uses sushi-quality salted fish thus extending the product's shelflife.
Maxim Akulovich says that at present there is practically no true sushi on offer in restaurants as it is practically impossible to keep the fish fresh via lengthy transportation or it will be very expensive. Taking into account the above problem, Atlanta has developed a special product for the Russian market on the basis of the Japanese product.
Chefs say that victuallers' assertion that they use only chilled fish for sushi production is not true to life, but it is very difficult to catch them lying. According to Robert Lee, correct defreezing of the raw fish makes it practically impossible to tell the fresh fish from frozen.
Ariram Company has managed to extend the product's shelf life by means of filling the sushi-set container with special food gas. Thanks to the technology the product's shelf life is extended from 24-36 hours to five days. For the retail sector the product's shelf life is very important as the short life of up to one day is fraught with large product return (now Ariram's return reaches planned 5%). However, gassing machines are not affordable for all producers as the price of the German-made automatic machine amounts to 120,000 Euro and hand-operated machines cost 20,000-30,000 Euro.
Just-made fresh sushi have different taste from sushi which have lain in the fridge for 24 hours at plus 4-6 degrees C (rice becomes hard at low temperatures). In order to make retail sushi tasty and fresh, Svetlana Kim advises to warm sushi up in the microwave.
Japanese-style sushi-sets
Some people think that sushi are a super profitable product as all the costs consist of some ingredients and a rice nubbin. However, Svetlana Kim thinks that the efficiency is not so high with all the overheads and tax disbursements.
Out of dozens of sushi and rolls offered in retail shops by Russian producers four sushi product including salmon, shrimp, smoked eel and California rolls contribute one half of all the sales. Hardly all the sushi products make the same profits. Worst of all, sushi can even yield losses.
Svetlana Kim adds up saying that it is impossible to abandon production of very popular items though unprofitable, because it encourages sales of other more profitable products. Here there is a direct analogy with salads: Korean-style carrots which must be present in the range of all the producers, though the product's profit is the lowest.
Svetlana Kim gives another example of the California rolls. With the wholesale price of RUR1000 per kilo of the product the roll's cost price of the ingredients (rice, avocado, crab meat, cucumber, mayonnaise, flying fish roe) amounted to RUR441 in December 2006. The above figure should be added up with chefs' wages of RUR150.00 per kilo on the average (for comparison, chefs wages for smoked eel rolls are lower at RUR64.00 per kilo.); with the cost of plastic packaging of RUR10.00 each (RUR240.00 per kilo), RUR1.43 for corrugated cartons, RUR45.00 for soybean sauce, etc. As a result, the total cost price of California rolls amounts to RUR1058.00 that means it brings 5% of losses.
The total profit from sales of the Japanese range is made thanks to other rolls with lower cost price. For instance, rolls with eel contributes 33% to Ariram's gross profit (just because eel is cheaper than flying fish roe costing more than RUR900 per kilo). Salmon-based sushi contribute 59% of the company's profit, tuna and rudderfish rolls give 15% and sushi with sweet shrimp give 11%.
That is why sushi sets often include not very popular rolls: it is not only for the sake of the range expansion, but also for raising profitability (otherwise all producers would have made only four most popular types of sushi and rolls). Logistics expenses amount to the largest share of costs of Saint-Petersburg-based Atlanta whose main market concentrates in Moscow. According to Akulovich, sushi are delivered to Moscow by air due to the product's short shelf life of 72 hours (motor transport is not suited for purpose) and the cost price grows by another RUR30.00 per kilo of the product.
According to Maxim Kazmin, director of Restorannyi Kapital Company (supplier of sushi ingredients), restaurant margins for sushi ingredients amount to 250-500% depending on the standard of the house. In retail trade the margins cannot be as high as above, because both competition and consumers are somewhat different.
The daily wages of one sushi master amount to RUR600-900 and, as sushi are hand-made, there must be a lot of such sushi masters. For instance, Ariram has ten masters, each of them makes his own operation, but all of them are interchangeable.
Sushi robot
Specialists say that there are just a few good sushi masters in Moscow.
Robert Lee (chef of the Japanese culinary department of Ariram Company) continues saying that the Japanese have a real sushi cult and the requirements to sushi makers are very strict. When hired a new sushi master first boils rice for a couple of months until he knows how to do it with his eyes closed. After that he spends several months to get experience in rolling up sushi. The last stage which is considered the most difficult is correct fish slicing. Ariram cannot afford training its staff for such a long time. They can train a man from the zero knowledge of sushi production within some three months, though the complete cycle of training will still take one year.
Svetlana Kim is proud to say that one Japanese sushi master once came to her company and appreciated the Russian masters' work.
Efficiency of sushi department mostly depends on the sushi master production rate. Per minute one sushi master makes two rolls on the average, the output of ready-to-eat products per chef amounts to 40 kilos per shift and it is also important to keep the product quality high.
At first sight, the technology seems not very difficult: you should take a rice nubbin, place a piece of fish onto it (for sushi); or take a special bamboo mat (makisu), place onto it green seaweed nori, then rice and then all the ingredients, after that the product is firmly rolled and finally the roll is cut into several rolls. Despite apparent simplicity it takes at least one month to train a person in sushi making.
So far only Atlanta Company from Saint Petersburg has managed to automate production of sushi thanks to sushi robots (30,000-40,000 USD each) capable of producing up to 2 million of rice nubbins per month. Each robot substitutes ten masters and it has already paid back. Many market players are skeptical about sushi robots as the product is meant for hand-making. Robert Lee says that he has seen such robots in a number of Moscow shops and the product quality has left much to be desired.