Lithuanian crab stick manufacturer Vici is preparing to part with Russian business

The Lithuanian Viciunai Group, which produces Vici crab sticks, is preparing to part with the Russian business: the company has received consent from the Russian authorities to sell a plant with a capacity of more than 120 thousand tons per year. The buyer, according to Kommersant, may act in the interests of the large importer of fish and seafood, Unifrost. Crab sticks in Russia are in steady demand and provide good profitability, experts say.

The Government Commission for the Control of Foreign Investments in February 2024 approved a transaction entailing 100% ownership of Viciunai-Rus LLC, a division of the Lithuanian fish and seafood processor Viciunai Group (Vici brand). This is stated in the Vichyunai-Rus reports for 2023. It says that it is planned to assign rights of claims under loan and debt agreements totaling $29.4 million and €1.86 million (RUB 2.89 billion at the Central Bank exchange rate as of Friday) in favor of the Ocean Group Management Company.

Managing Director of Peregrine Capital Dmitry Gabyshev says that the buyer of debt and shares in the company should almost certainly be the same structure. “Few people will buy a share without controlling accounts payable,” he notes. Viciunai-Rus, Viciunai Group and the Ocean Group Management Company did not respond to Kommersant. The Vichyunay-Rus report says that a change of owner is planned “in the near future.” The Ministry of Finance, which oversees the work of the legal commission, does not disclose the terms of the transactions.

“Vichyunay-Rus” produces crab sticks, imitation crab meat, shrimp, semi-finished products, etc. in Sovetsk, Kaliningrad region. The production capacity exceeds 120 thousand tons per year, the regional government reported. In 2023, revenue from product sales increased by 11.2%, to 18.2 billion rubles, net profit was 1.26 billion rubles. The beneficiaries in the Viciunai-Rus report are the mayor of Kaunas Visvaldas Matijosaitis and Liudas Skerus.

Viciunai Group announced plans to sell its business in Russia in the spring of 2022, but the process dragged on. As Kommersant’s market interlocutors say, the group’s owners did not want to part with the Russian asset, but were forced to “make a deal for political reasons.” Kommersant’s sources did not specify which brands could be included in the deal.

Management Company “Ocean Group” was established in St. Petersburg in June 2023, the owners are not disclosed in the Unified State Register of Legal Entities. A Kommersant source familiar with the deal says that the company may act in the interests of Unifrost, a large importer and distributor of fish and seafood with its head office in St. Petersburg. In 2021, Unifrost shipped 55 thousand tons of products, according to the company’s website. Anna Romanova is named as the founder of Unifrost LLC in the Unified State Register of Legal Entities. Unifrost told Kommersant that they do not comment on transactions of third parties.

Executive Director of the Association of Production and Trade Enterprises of the Fish Market Alexander Fomin says that the purchase of production will allow the distributor to strengthen vertical integration and expand sales channels. Managing partner of Agro & Food Communications Ilya Bereznyuk says that Vichyunai-Rus has modern facilities, a wide range and developed distribution. If the rights to the Vici brand are not included in the deal, the new owner will likely need to invest in marketing, he adds.

As Ilya Bereznyuk notes, surimi products, including crab sticks, are in steady demand and have good profitability. There is also potential to expand the range and develop exports, he points out. In the 12 months to February 2024, sales of surimi products grew by 11.8% in volume terms and 15.3% in value terms year-on-year, according to NielsenIQ.

Alexander Fomin adds that Vichyunai-Rus should not have any difficulties with raw materials. Shrimp, the expert notes, are supplied mainly from Asia, and pollock producers will continue to increase the supply of products, including surimi, to the domestic market, also due to the difficult situation on the world market. In the EU, starting from 2024, Russian pollock fillets, including those released by third countries, are subject to a duty of 13.7%, which puts pressure on the competitiveness of the product, noted the Association of Pollock Harvesters.

Anatoly Kostyrev