Russian firm improves sauce quality

Company food technicians have based the five new lines of sauces - tartar, curry, mushroom, garlic and thousand isles - on mayonnaise with small pieces of vegetables, plants and mushrooms.

The technicians claim to have given these popular sauces a new shade of taste. For example, the curry sauce contains real apples and curry spices, the sharpness of the garlic sauce has been intensified by mustard, and pieces of green and red Bulgarian pepper, onion and tomato paste were used to make up a new thousand isles variety.

Baltimor, already claiming a 52 per cent share of the Russian ketchup market, has spent $800,000 on developing production at its factory near Moscow, which should give the firm a projected capacity there of 20,000 tons per year. It aims to be making 1000 tons of sauces per month by the end of 2005.

The move shows how Baltimor is attempting to gain ground on major foreign competitors, such as Unilever's Calve brand, by improving quality and focusing on innovation.

The firm said it would spend $1.6 million advertising its new sauces and was aiming to them to become number two in the market, before going on capture first place. The company already controls 60 per cent of mayo distribution in St. Petersburg.

Baltimor has also followed similar strategies across its other businesses. About three years ago the company began manufacturing canned vegetables in Russia when previously these had mostly been imported, and it plans to launch two new varieties - peas and corn - in 2005.

Another leading Russian company, Saga, recently added weight to this trend by announcing it would start producing top quality canned vegetables domestically to compete directly with foreign imports, after years of importing products from its business in Spain.

In the dairy sector, Russian firm Wimm-Bill-Dann has risked profits to modernise production facilities in Russia and the Ukraine.

Of course, price remains important and both of these firms have lower-end products on the market.

Russians spend around 60 per cent of their disposable income on food, yet although wages are increasing, the average for the Russian Federation remains low at €19 per month; worse than all of the new EU member states and even below Bulgaria which has not yet joined the supra-national body.

Consumer pricing is therefore a delicate issue in Russia and this means companies have to watch their cost margins closely; something which could inhibit higher quality production due to the greater expense involved.

Mark Wastijn, marketing director at Cerestar Food and Pharma Specialities Europe, said the company had a tougher time selling its premium soy ingredients portfolio in Eastern Europe because "they're much more price conscious"​.

However, Wastijn said there were signs the market was shifting. "There's a change in the region. They are starting to understand Western European products,"​ he said.Companies like Baltimor and Wimm-Bill-Dann now want to show that a need for higher quality products does not necessarily mean a phone-call to a western company. And the move will inevitably improve prospects for foreign investment across the whole CEE region.

Baltimor increased sales by 25 per cent in 2003 to $91 million.