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bne February 2018 Cover Story I 37
Russians love fish – it’s one of the the domestic development of the salmon need,” says Sosnov, an energetic
organiser who made his career working for some of Russia’s biggest industrial concerns as CEO and CFO, including the oil major Yukos and petrochemical company Sibur, where he ran the tyre business.
Norway is the world leader in salmon production and the country has already almost reached the maximum that it
can produce; there is no spare water
left to open new fish farms. Russia, on the other hand, is only now setting out to build up its aquaculture industry, but Russia Aquaculture faces a uniquely Rus- sian problem: as the only ice free port is on Russia’s western coast, the fjords are also home to the Russian navy.
Murmansk was used in the Second World War to supply Stalin with Allied materiel under the Lend-Lease pro- gramme. It was the scene of brutal fight- ing and subject to constant Nazi subma- rine and bomber attacks. It is even home to a cemetery for the British soldiers who
few distinctly Asian traits of its
otherwise European culture. When the first fast food eateries began to appear in the 1990s following the fall of the Soviet Union, Planet Sushi took the market by storm and can now be found across the country and in the other countries of the Commonwealth of Inde- pendent States (CIS). Some long-term residents of Moscow refer to the 1990s as “the sushi years”.
And salmon, known in Russian simply as “red fish”, is the king of fish. It’s incon- ceivable for a celebration or party not
to have piles of red fish “buterbrot” on the table. At opera houses across the CIS glasses of sweet champagne and the same red fish buterbroti are universally on offer as a default snack in between acts.
Salmon is as Russian as bears. The riv- ers that wind across Siberia, Yakutiya and Karelia are full of the fish that also spawn in the fjords around the north- west port of Murmansk and on the Pacific coast in the east. Since Soviet times the locals have collected huge plas- tic buckets of the “red caviar” that is sold everywhere and is more widely eaten than the harder-to-find black variety.
But Russia is a net importer of salmon. Today it produces less than half the total demand for the fish and the companies that catch it in the wild typically export it for the higher prices it commands overseas.
That has created an opening for Rus- sian Aquaculture, the leading domestic producer of salmon that SPO’ed on the Moscow Exchange in 2017 and plans to double its production by 2025.
The SPO has piqued the interest of inves- tors, which are increasingly looking for mid-cap companies in apolitical sectors with a strong growth story. And Russia Aquaculture is so far very profitable with ebitda of RUB2.6bn ($46.3mn) and a EBITDA margin of 47%.
The margins have been helped a lot by an exemption from profit tax as the Russian government is throwing everything it can at promoting
agricultural business thanks to its tit-for-tat sanctions stand-off with the West over the fate of Ukraine.
“Russians have been eating salmon
for 100 years and there is a lot of wild salmon throughout the north of Rus- sia. It's a fish with a very long tradition indeed. Eating salmon is hardwired into Russian genes,” Ilya Sosnov, CEO of Rus- sian Aquaculture, told bne IntelliNews in an exclusive interview in the company’s headquarters on the edge of Moscow.
Between the sweet and salty water
Getting to see the company’s salmon farms on the northern coast proved to be impossible for this correspondent, as the fjords where Russia Aquaculture raises most of its fish are off limits to foreigners.
Salmon are very particular about where they will spawn. They are an anadro- mous fish, which can live in both fresh and salt water, but spend most of their lives in the sea. That significantly limits
“Eating salmon is hardwired into Russian genes”
the places where salmon can flourish and it turns out that the best place on earth for the fish to live and breed is the Russian coast.
Scandinavia is actually a giant salmon fish farm. The Gulf Stream hits the Scandinavian coast of Norway and flows round the top on to Murmansk before petering out as it flows into the icy waters of the Barents Sea. The fjords that crinkle the entire Scandinavian coast therefore make a perfect location for fish farms.
There are literally hundreds of them along the entire Scandinavian coast producing some 1.3mn tonnes of salmon a year, which accounts for just over a tenth of the entire EU per annum fish consumption.
“The water doesn't freeze in the fjords. It is 5-10C all year – exactly what the
died there defending the port. Today the coast is dotted with naval facilities and many of the fjords are simply off limits as they are home to secret submarine bases and other naval facilities.
“The fjords around Murmansk are occu- pied by the navy as they like the same conditions as the fish,” quips Sosnov, adding that the entire area is closed
to foreigners.
It is an unusual barrier to entry into
the industry as it means that Russian Aquaculture spends a lot of time talking to the Ministry of Defence to get permits that allow the company to set up the 27m deep cages in 21 sites and moor
a feed-ship nearby that it uses to raise salmon. But with only three harvests under its belt, the company is already the largest player in the Russian fish business, with a 22% market share as
of the middle of 2017.
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