Sunday, 01 March 2015 00:00

The unceasing search for new markets

Avektra is a 15-year-old Estonian company specialised in processing Norwegian salmon and trout, which is frozen, smoked and marinated for sale on markets in Western Europe.

Avektra started in 2000 as a trader of fish products, mainly whitefish such as hake and other species, as well as salmon. After researching different possibilities for expansion the company decided to establish a processing unit.

Gennadi Smelov, Commercial Director, Avektra
New machinery in the processing facility was equipped with support from EU funds. This year Avektra plan on investing in another filleting line for salmon.

Salmon gradually replaces other fish in assortment

In 2006, the company built a factory in Tallinn in the Technopark for the production of processed fish. Today the company has expanded the facility to accommodate an increase in production. Our numbers have improved each year, says Gennadi Smelov, the Commercial Director, whether you look at profits, turnover, or production. One of the reasons behind this development was the increasing role salmon played in the company’s product assortment. Salmon was increasingly interesting for us, explains Mr Smelov, not only because of its popularity on the domestic market, but also because it was highly sought after in the countries of the Commonwealth of Independent States (CIS), Russia, Ukraine, and Belarus.

The new processing facility was equipped with the help of EU funds, which the company used to buy brand new machinery from well-known names on the market. This year (2015) too the company will use European funds to invest in an additional filleting line for salmon as well as a smokehouse to process salmon, sea trout, and possibly also mackerel. EU funds, to which the company has already applied twice, and now plans to apply for a third time, have been extremely useful, says Mr Smelov. However, as the products increased in sophistication it became more difficult to sell them on its former markets in the CIS countries. Our main products, salmon portions and fillets, are difficult to sell on the Russian market, but demand is high there for salmon by-products, including belly flaps, trimmings, and back bones, says Mr Smelov. Demand was so strong that the company not only supplied the by-products from its own salmon production, but also bought from other companies.

 

Asia replaces Russian market for by-products

Today, with the imposition of sanctions and counter sanctions, the situation has changed again and it is currently impossible to sell any of the company’s products to Russia. This poses another challenge, says Mr Smelov, but it also has pushed the company into looking for other markets. We have discovered that parts of Asia, for example, China and Vietnam, are markets for these by-products. By-products, however, only constitute some 10% of Avektra’s business. The bulk of the production is of frozen salmon portions and fillets, and marinated products. Part is sold locally, but most, about 90%, is being exported, primarily to Sweden, but also Denmark, Finland, Germany, Spain, and Portugal. All the raw material is purchased fresh from Norway, as this is what the customers specify. Deliveries from Norway to Tallinn take two to three days and the processing itself takes another two days so that the final product is made from a very fresh fish.

Salmon prices have climbed steeply in the last few months. Mr Smelov mentions that in December 2014 they reached almost EUR6 per kilo for size 4-6 kg. That prices go up over this period is not unusual in itself as Christmas is approaching, but the extent of the increase last year was a surprise. While he would prefer to fix the price with a long term contract both with suppliers and buyers, since that would give a degree of stability, it is not always possible. In that case one just has to be flexible, he says, as our primary focus is to meet our customers’ requirements. Today about half his customers buy on the spot market, while the other half has longer contracts. Customers that buy only one or two times per month prefer to buy on the spot market, which is understandable, but there are others who buy weekly or even more frequently, yet who still prefer to use the spot market. For the local market Avektra produces salted and marinated salmon. The salted product is not popular on western European markets, where smoked and marinated products are more common.

 

Ruslan Grabovoi, Production and Quality Department Director, Avektra
A selection of Avektra’s vacuum packed portions marinated in different BBQ sauces.

Products sold through intermediaries

Most of the company’s products go ultimately to the supermarket chains. However, the company sells not directly to the chains, but to importers. In Germany, for example, Mr Smelov says, it seems “just impossible” to sell directly as the retailers have special companies who buy and supply them and who have the contracts with the producers like Avektra. The structure is similar in Sweden. All Avektra’s exports to Sweden are sold through supermarkets there, but the contracts are signed with importers. In general, the company sells its products under private label. Detailed specifications of the product are discussed at the outset with the customer so that the company knows precisely what and how to process and package the product. During these discussions the company will contribute with its own ideas and experiences to the final specifications. In a year about 1,600 tonnes of fish are processed of which 80% is salmon and the rest sea trout. The company usually only processes sea trout when the price is right, as typically it is more expensive than salmon, says Gennadi Smelov, but there are periods when the price falls to an acceptable level and then we buy it. Ruslan Grabovoi, Director of Production and Quality, adds that the company may start buying more sea trout as the Japanese market has shown a lot of interest in this species smoked and sliced. The fish is redder than salmon, which appeals to the Japanese, and a potential customer from Japan will soon be visiting the new processing plant. The smoked items have generated interest among potential customers in Germany, Denmark, Sweden and France already and the company is hopeful of converting this interest into actual contracts. In Estonia too the company supplies its frozen and smoked products to the local supermarket either directly or through intermediaries, both its own brand and items made under private label.

Avektra

Punane 72A 
EE 13619 Tallinn 
Estonia

Tel.: +372 602 47 77 
This email address is being protected from spambots. You need JavaScript enabled to view it. 
www.avektra.ee 

Commercial director: Gennadi Smelov
Production and quality department director: Ruslan Grabovoi

Products: Frozen fillets, portions, loins; smoked, marinated, salted fish
Fish: Salmon (80%), sea trout
Packaging: Vacuum packaged, MAP
Certification: IFS
Volumes: 1,600 tonnes (raw materials) per year
Markets: Sweden, Denmark, Finland, Germany, Spain, and Portugal
Processing facility: 2,500 sq. m
Fleet: Two big trucks, three smaller vehicles
Employees: 45

 

Smoked products are also frozen

The shelf life of smoked products is on average 24 days, more if the product has a higher salt content or if it has been treated with preserving agents. Some customers, usually, but not only, those who are located some distance from Estonia, prefer the product smoked and frozen, to be quite sure that the shelf life is sufficient for their requirements.

Avektra like all salmon processors needs to work constantly on developing new markets and finding new clients. Competition is very stiff in this business, Mr Smelov point out, particularly from Poland, and if we do not move forward we risk becoming irrelevant. The expansion of the processing facility and the launch of new product lines should ensure that this will not be the company’s fate any time in the near future.