Major Russian seafood company suspends business amid economic crisis
Petropavlovsk-Kamchatsky Russia-based seafood company Vityaz-Avto has stopped production and sales of semi-finished and finished seafood products, and closed its brand shops, for at least one year amid the pending economic crisis in the country.
Media in the Kamchatka region of Russia reported the company closed its shops across the area. The closure is a continuation of a trend for the company: as of early 2022, there were three shops instead of the seven that the company had at the start of 2020 – prior to the onset of the COVID-19 pandemic.
Vityaz-Avto is a major company in the Russian Far East catching a variety of species, mostly salmon, navaga, and pollock, as well as running processing facilities with a daily output of 120 metric tons (MT).
The company, through its own retail outlets, had been selling two brands: Mirandel and Kamvita. Mirandel is targeted at high-end customers, while Kamvita is more general, targeted to a wider audience. Under the brands, the company manufactured a range of products including humpback salmon roe, slices of salted sockeye salmon, slices of smoked chum salmon, and fillet, fish mince, and frozen fish.
A representative of the company told the press that the decision to close the shops was caused by the consequences of the changes in the country’s economic situation – largely caused by Russia’s invasion of Ukraine and the ensuing economic sanctions levied against the country.
“We had been producing premium seafood that required high prime costs. In the current situation – the high interest rate, the volatility of the national currency, controversial relationships of Russia with other countries – we see a declining demand for our brands and an increase in production costs,” the representative told Kam24.ru. “The trend is caused by increasing costs for energy, among other things. So, it’s difficult for us to compete with cheaper products. We have stopped the production for a period of a year which leads to the closure of the retail outlets”
Russia’s Kamchatka region in the country’s far east is the source of the lion’s share of Russia’s 5 million MT catch. However, the region has a population of just 320,000 residents and is extremely far from Russia’s population center, making it difficult for the country to ship its seafood domestically. For perspective, the distance from Kamchatka to Moscow is slightly further than the distance from Kamchatka to Los Angeles – over 6,500 kilometers.
The region has poor transportation infrastructure, and Russia has mulled transport subsidies to offset the logistical challenge of shipping seafood to the country’s populations centers – and shipping needed equipment back.
Despite the crisis, and the initially challenging conditions, Vityaz-Avto has a good chance to survive the turbulent times that have come following Russia’s invasion of Ukraine. In 2021, Russian group AFK Systema reportedly acquired a stake in the company, aiming to build an asset for a subsequent sale. Business newspaper Vedomosti wrote the net profit of Vityaz-Avto in 2020 was RUB 1 billion (USD 17.2 million, EUR 16.1 million).