Lifestyle


When an Indian student in Moscow started missing spices from back home, a business idea was born. It is now a big money-spinner.


ANISIA BOROZNOVA RIBR


When Jeeva Ponnuchamy came to Moscow from Tamil Nadu to study at People’s Friendship University of Russia (PFUR) in Moscow in the late 1980s, he wanted to become an agriculturalist. He managed to adjust to the Russian winter and the ways of his new habitat, but his In- dian palate had a difficult time liking Russian food. Cooking was just as hard, as there were no familiar cere- als and spices in Moscow shops. Curry, turmeric, hot pepper, clove, cardamom, basmati, dal, mung beans, rice fl our, Indian pickles, co- conut and gingili oil – all these items were missing in Russian shops in the 1990s. Spices from Russia’s Cauca- sus were available, but Indi- ans did not like their quality and composition. “The only popular spices in Moscow were black pepper and bay leaf, and when some of our friends went to India, we always asked them to bring at least 50-100 grams of spices. That was not enough. When we went our- selves, we would bring enough spices to last for a year,” Jeeva recalls. While Russia’s spices market has now been growing 15- 20% over the last few years, the consumption of food ad- ditives in the country re- mained very low for centu- ries. And this was not just because spices were expen- sive: the culture of spice con- sumption in Russia, whether home-grown or imported, didn’t take root. Why? A study of some 5,000 recipes from almost 100 cook books representing 36 countries showed that the hotter the


country’s climate, the spicier the food, the more flavour- ings and spices are used in cooking, since hot sauces and spices have some antibacte- rial properties. In Russia, with its chilly summer and extremely cold winters, there was no such problem. Spices were a matter of personal whim, not a necessity. This was, however, to change at the end of the 20th centu- ry. As a result of globalisa- tion and cultural interpene- tration, not only did spices become cheaper, but also much more popular. The glo- balising culinary industry also played its role in whet- ting Russians’ appetite for spices. Ponnuchamy graduated from PFUR in 1994, but in- stead of returning to India and continuing the family


Jeeva Ponnuchamy, who came to study in 1990s, now owns three Indian Spices shops in Moscow.


business of growing sugar- cane and cotton, he stayed in Moscow. Using their student cash savings, he and his friends leased a small area in the hall of one of PFUR’s buildings, where they set up a kiosk and purchased some food products in the whole- sale market to start their small business venture. Ponnuchamy used his fi rst earnings to go to London to visit his relatives. Walking through an Indian quarter, Ponnuchamy was surprised to see many shops selling au- thentic Indian products, mostly spices. There was nothing like this in Russia. Even the import of the most popular spices, such as gin- ger, coriander, caraway, and cardamom was suspended following the collapse of the Soviet Union.


BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA WEDNESDAY, NOVEMBER 10, 2010 Enterprise Russia's spices market, estimated at 110-120 mn, is expected to grow by 20-25%; brands from India, China, Vietnam dominate the market Indian spices tickle palate, spin money REUTERS/VOSTOCK-PHOTO


Foreign brands proliferate


Jeeva Ponnuchamy


He brought several boxes of spices from his next trip to India, which he began to sell through his kiosk. Little by little, Indian products side- lined everything else and the first shop was opened soon after. “Of course, we used adver- tising. First we distributed leaflets; later we began to hand out our ads on the streets and in the metro. Yet, the most effective advertis- ing was through customers themselves," he recalls. When restaurants began to buy his spices, Ponnuchamy realised that “suitcase” trips could not satisfy the growing de- mand. The first container came from India by sea in 1995. Yet, it could not leave the customs terminal for a long time due to difficulties with product declaration: it was hard to find customs codes for some spices, espe- cially for those that had not been imported to Russia be- fore. Over the next three years, the shop already had a loyal band of customers. Ten years later, not only foreign- ers but also Russians became Indian Spices’ regular pa- trons. This shop still exists, but it has grown in size. An- other three outlets have been opened in Moscow, and there are plans for a shop in St Pe- tersburg too. Ponnuchamy had to adjust his business to Russia’s spe-


Indian spices are the new fla- vour in Moscow. Russians spend $2 mn on spices every month.


Spice market: Vital stats


Russia’s spices market, includ- ing in the food industry, is es- timated at $110-120 million. In 2009, the market value grew 21.8% compared to 2008, MEMRB Retail Tracking Ser- vices calculated. It is expect- ed to grow by 20-25% over the next few years. The struc- ture of Russia’s spices market has changed over the past two years, with universal and sin- gle-ingredient spices chang- ing its market shares: the uni- versal segment grew by 7.4%


cifi c climate: liquid products such as rosewater or coconut oil can't be transported in winter because of low tem- peratures. Containers could get stuck at interchanging ports, products would freeze,


in volume in 2009. Packaged dill, parsley and other single- ingredient herbs saw a 13.1% drop in sales. At the same time, special spices edged up 2% by volume. In terms of val- ue, neither segment declined over the last few years. So, universal seasonings and spe- cial spices accounted for 27.7% and 20.3%, respectively, while single-ingredient herbs grew 1.3%. Interestingly enough, universal seasonings make up 60.4% in terms of volume.


and packaging might burst in extreme cold. Such goods can only be transported in summer for the whole year. In the winter, oils, sauces and other liquid products come from heated storage facili-


ties. “The biggest problem faced by any foreigner plan- ning to open a business in Russia is the language bar- rier. Knowing English is not enough to run a business; you have to understand what the locals say. The second major problem is legislation and its hidden pitfalls. It is important to have a good knowledge of customs regu- lations,” he says. Another problem is Moscow’s high rental, which is so high here that the business does not al- ways pay off. But despite these limitations, Jeeva is optimistic. Russia’s spice market has not slowed down despite the economic crisis. One of the main rea- sons behind the booming growth is high profit mar- gins, verging on 100%. According to the Business and Marketing company, Muscovites purchase spices


worth some $2 million every month. “The culture of spice consumption lost in the early 1990s, is on the rise again, just as people’s inter- est in a healthy diet,” says Ekaterina Petrova from Vre- mya & Co. “More and more people have been choosing a healthy lifestyle recently. With this in mind, we can expect the appearance of specialty shops soon that will be promoting spices and fl avourings not just as food additives, but also as medi- cations.” For Jeeva, the thriving busi- ness in Moscow has spiced up his life. He travels to India twice a year, mostly for busi- ness. and is fond of saying he has "two homes now”. Jeeva has come to love some Rus- sian dishes, including borscht (beetroot soup) and pelmeni (boiled dumplings with small portions of


Russia’s spices market is cur- rently dominated by foreign brands, including from Chi- na, Vietnam, India, Indonesia, Egypt, Nigeria, Brazil, Peru, Mexico and some European countries such as Holland, Po- land and Turkey. According to customs figures, most spices come from Vietnam (25%), followed by China (24%), India (9%), Uzbekistan (8%), Indo- nesia (7%), and Poland (7%). Over the past two years, the following five companies have kept the lead, retain- ing their positions, despite slight changes in their mar- ket shares: Maggi (Nestle SA, Switzerland); Knorr (Unilever holding company); Vegeta (Croatian company Podravka d.d.); Poland’s Cykoria S.A; Gallina Blanca (Spain’s Gallina Blanca S.A).


ground meat and onion), which he orders whenever he goes to Russian restau- rants. The Indian Spices shop has long outgrown its name, sell- ing products not just from India, but also from China, Japan, Thailand, and Mexi- co. The product range had to be extended after requests from PFU students. Chinese students wanted to see more noodles of various kinds, and Latin American students asked for their traditional sauces. Students from Arab and African countries are also frequent visitors here, though there are no special offers for them. The custom- ers are growing by the day: some come for tea, some ask for ayurvedic cosmetics and hair dye, and others were taken by the Indian culture, hoping to understand it bet- ter through food.


Motorsport With Putin cheering on, Sochi to host Formula 1 Grand Prix in 2014-15; India readies for 2011 extravaganza


Grand Prix dream race speeds up


A dream for 28 years, Russia is now set to host F1 Grand Prix, adding another sporting jewel to its crown.


CHARLES ARMSTRONG-WILSON SPECIALLY FOR RIBR


It must be the longest-run- ning soap opera in F1, but after 28 years of twists and turns, Russia will host a Grand Prix. The sport’s sven- gali, Bernie Ecclestone, signed up Prime Minister Vladimir Putin last week. He fi rst met General Secretary Leonid Brezhnev back in 1982 with the idea of staging the Grand Prix of the Soviet Union. But with the venture mired in bureaucracy, Eccle- stone persuaded Hungary to become the fi rst Soviet bloc country to host a race in 1986. Since then, the subject of a race in Russia has cropped up again and again, but has remained just a dream. Now


that the ink is dry on a seven- year contract, we can expect to see the fi rst race in 2014, or perhaps 2015. If there is a slight uncertainty about the precise time, it’s due to the circuit being built next to the new Winter Olympics village at Sochi on the Black Sea coast. They will be sharing some of the same facilities, but if there is a danger of the F1 circuit impeding the Olympic event then, says deputy prime minister Dmit- ry Kozak, the race could be delayed for a year. This new state-of-the-art cathedral to motorsport is rumoured to be costing $204 mn and the Russian organis- ers will be charged $41mn per race thereafter, making the total cost $489 million. The million-dollar question is: Will this investment pay off? It seems to be unlikely. Even at Western ticket pric- es, it would struggle to cover


the cost and the deal spe- cifically excludes both television and most of the promotional rights. But the business model for Grand Prix has long since transcended the


normal commercial type, and is now closer to a World Cup or Olympics. In fact, the glamorous sports event has proved a magnet to emerging economies. This year saw the fi rst Korean Grand Prix and India joins the calendar next season. Like other global sporting events, they are perceived to have great value as a means of show- casing the country and promoting it in a positive light. The governments have been willing to pour big money into it, driving the price of events upto a level that established na- tions struggle to afford. Ecclestone has argued elo-


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Pulling out all stops for sucess: Renault’s young Russian ace Vitaly Petrov in action; below, the man behind the visor


million – global TV audience for each Grand Prix race


million – the value of Fer- nando Alonso’s 2010 Ferrari contract


quently that those events should receive similar state support in return for the benefi ts they bring. But or- ganisers of the British Grand Prix have failed to sell the idea to any British govern- ment. Having a Grand Prix can bring enormous benefi ts to a country’s own motor- sport industry, of which Brit- ain’s is a world leader. Can Russia expect a similar boost from its F1 adventure? Currently, the Russian mo- torsport landscape is rudi- mentary, with mainly sa- loon-based series for amateur drivers. The pre-


mier race series is a saloon car championship, and there are only two permanent race facilities currently in opera- tion (although others are in the pipeline). Last year, the Russian car manufacturer Lada fi elded a team in the World Touring Car Championship. In real- ity, it was Russian tycoon Viktor Shapovalov who largely funded the team. They also operated out of Belgium to cope with the lo- gistics of racing in a largely Western European series. Even fi elding a team of Rus- sian mechanics called for ro- tation of members to man- age their visas. Racing mainly at the back of the grid, they showed a glimmer of promise, but pulled out before it could be realised. The biggest news in Russian motorsport is the country’s fi rst Grand Prix driver, Vita- ly Petrov. He has enjoyed a modestly respectable rookie year with Renault, alongside highly respected Polish driv- er Robert Kubica. Interest- ingly, his car has started car- rying Lada branding, the Russian manufacturer being partly owned by Renault, and the permutations of brands in a marketing drive for the growing Russian market seem limitless.


However, the past experi- ence suggests that Petrov’s F1 drive will do more to spur enthusiasm for motorsport in Russia than the race ever will. It will also do more for the growth of a fl edgling do- mestic industry. Right now, the country has a lot of catch- ing up to do to become a world player. Motorsport is traditionally conducted by wealthy amateurs and large commercial concerns, both of which Russia was short of until two decades ago. With more teams and drivers spending money, there will be more chance for domestic companies to pitch for the business. But it seems un- likely that anyone racing outside Russia will be com- petitive without drawing on non-Russian expertise. Even local icon Petrov, following two seasons of domestic rac- ing, had to build his career in Western Europe in order to be an F1 contender. The Russian GP will, there- fore, be more about promot- ing Russia than Russian mo- torsport, but a successful Petrov will inspire a legion of imitators that may well fund a burgeoning domestic mo- torsport industry. The race is on, and the stakes are going to get bigger in days to come.


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