Established in 1994 as a fishing company, DGM Shipping expanded a decade later by building a processing plant to add value to the catch. The company has significant quotas of cod, Baltic herring and sprat. The fish was frozen and exported in blocks to Russia, Ukraine, Belarus, and other Commonwealth of Independent States (CIS) countries where local companies canned or otherwise processed the fish. Today the facility produces fresh and frozen Baltic sprat and herring as well as preserves and marinated fish most of which is exported to other EU countries, as well as Russia, Ukraine and other parts of the CIS.
Eastern markets interested in Scandinavian-style marinades
Many of the approximately 90 companies in the fish processing sector in Estonia use Baltic sprat and herring as their raw material. The fish is typically frozen and exported in blocks to the CIS countries. DGM Shipping is different in this regard as much of its production is further processed, that is, not just frozen into blocks but made into fillets, preserved or marinated. The product that won the award at Prodexpo was based on a fillet of sprat. The fish is caught by the company’s own vessels, where the fish is very carefully handled to ensure the best quality raw material. Back at the factory the fish is filleted by machine and the fillets are salted and spiced and allowed to mature. While different products can be manufactured from the mature fillets, the prize-winning product was one that had been marinated in a solution of sugar and herbs. The sweet marinade is popular in Scandinavia, but unusual in Eastern Europe, where marinades tend to be savoury. Developing a suitable package for this delicate product was also a challenge. The company elected to place the product in a tray sealed with a foil that can be peeled off. A plastic lid allows the tray to be closed once the foil has been removed. The award at Prodexpo took into account not only the product, but also the sophistication of the packaging.
Ilja Gorohhov, Development Director, says that the traditional savoury taste of marinated products sold in Eastern Europe is still very popular, but the sweeter Scandinavian marinade is making headway there too. The company has a chain of shops in Estonia where it sells its products and these function also as a testing ground for whenever it launches something new. Customers are encouraged to give their opinion about new products and the company uses this feedback to modify and improve its recipes. As it owns each step of the value chain, from the raw material to the final distribution and sales point, it can exercise complete control over the product, ensuring that it is the highest quality. The most recent product that the company has developed is a fish cake. What is unusual about this product is the high proportion of fish (70%) that it contains. The fish in the cake is a mixture of salmon, Baltic herring, and cod, which is combined with carrot and onion in a recipe developed by the company. The salmon, which is imported from Norway, is added in small quantities to the cake to add some colour and some taste.
Sanctions force a revision in strategy
DGM Shipping has been affected by the political problems between Russia and the EU. The sanctions have prevented the export of frozen fish to Russia and have forced the company to look for new markets and consider new strategies as their very survival was at stake. The company has hit upon supplying salted fish to the Ukraine in the form of 10-litre barrels filled with sprat, salt, and spices. The company has quotas for about 3,900 tonnes of fish of which about half is sprat. The herring is used mainly to freeze and sell to processors in Ukraine, Romania, and Moldova as well as Estonia, who smoke and can it.
As a vessel owner DGM Shipping is a member of the Estonian Trawling Association (Eesti Traalpüüigi Ühistu), a Producer Organisation. This enables them to take part in projects which are publicly co-funded as well as to gain access to information and participate in discussions about the business. The company does not supply the PO with fish, but processes its catch at its own facilities. While the company has a small quota for cod, currently Baltic cod is undersized and underweight and therefore not worth very much, so most resources are going into the capture of Baltic herring and sprat before the season closes in April/May. In summer there is no fishery and the company has to fish enough raw material in the season (October/November to April/May) to cover the summer period as well. About 30% of the catch goes into the production of highly value added products like the fish cakes and the company aims to increase this proportion each year, so that finally the entire catch will be used for the production of these items.
Exploring the potential of canned products in Central Asia
Developing and manufacturing the products is of course only part of the challenge, they also have to be sold. Today the company is selling into EU markets such as the Baltic States, and Germany, as well as the United States and Israel. In the latter two countries the company is targeting the large Russian communities, which are familiar with similar products and which could provide a launching pad to distribute the product to other market segments. In the East the company has started looking at Kazakhstan and Uzbekistan, not only for the products that it is already manufacturing, but also to explore the potential for exports of canned products. Not, however, traditional aluminium cans, says Mr Gorohhov, but plastic containers similar to the one that was used for the prize-winning product, that can be sterilised in an autoclave giving a 12-month shelf life just like a traditional metal can.
Briis, the brand under which the company sells its products has been registered internationally. As a result the company does not want to produce under private label. In Estonia the production is sold directly to the retail chains to avoid the costs of using intermediaries, but on other markets such as the US it is not possible as there the company needs partners in distribution and logistics to get the product on to supermarket shelves.
|DGM Shipping AS|
EE 74114 Maardu, Harjumaa
Tel.: +372 6386983
|Development Director: Mr Ilja Gorohhov
Products: Marinated, salted, whole breaded, or block frozen sprats, and herring, fish cakes
Markets: Baltic States, Germany, United States, Israel
Raw material: Quotas for 3,900 tonnes of Baltic sprats and herring
Vessels: Two trawlers
Local distribution: Chain of fish shops
Optimal use of manual labour and automation
In the DGM processing factory sprat is being processed with a combination of manual labour and automated processing. The fish is placed manually in a machine which heads, tails, and guts the fish before filleting it. The fillets are washed and placed manually in a mixture of salt and spices for four days to mature, while the waste goes into the production of fish meal and animal feed. At other tables workers weigh and carefully place the matured fillets into trays, which are then filled with the marinade, sealed and sent into storage. In another part of the factory is a processing line to make the fish cakes. This is also used to produce another product, whole breaded sprats that are cooked and frozen. At the time of eating they need only to be warmed to give a snack that can be consumed with a drink. This unrelenting focus on value addition will stand the company in good stead in both good times and bad.