Horror! Fine Caviar Now Could Become Cheap as Fish Eggs

As Soviet Control of Market Falls Off, So Do Prices; 'We Need to Keep It Elite'

By Jane Mayer, Staff Reporter of The Wall Street Journal

MOSCOW-The mood in the Soviet caviar business is as black as beluga-not because this most luxurious of bourgeois treats is so rare, but because it is in danger of becoming too plentiful.

At a time when sugar is scarce and bread sells out faster than a Western rock concert, the handful of Soviet and Western experts who oversee the rarefied and lucrative caviar trade worry that the delicacy is on the verge of becoming, of all horrors, common.

"This is a very sad thing," says Igor Kuklinov, whose Moscow-based commercial consulting firm, Liga, has allowed him to play a pivotal role between East and West in the formerly state-run caviar trade. Smoothing his beautifully pressed Western Jeans and sinking a hand into the pocket of his tastefully muted wool sports jacket, he says lie's worried. "The market is growing steadily," he frets. "It used to be a product just for the few, like fine perfume, not something that you could ever find at such places as a supermarket. Caviar is a product that must be treated as a present from heaven, but instead already it is becoming like something between potatoes and bread."

Catching himself, the former Communist adds guiltily, "Maybe from a social pint of view this is not so good what I am saying. Perhaps it would be better if everyone in the Soviet Union were able to have a gram of caviar." But sadly, as Mr. Kuklinov, one of this country's new breed of capitalist converts, has recently learned, good caviar and good social policy very rarely mix.

Snack of Czars

This crash course in luxury market economics began in earnest about two weeks ago as the traditional autumn caviar harvest came to a close in the Volga River Delta, along the Caspian Sea. The temperature of the water there and its degree of salinity apparently make it the perfect spawning ground for sturgeon, the long-snouted prehistoric fish whose eggs were for centuries the czars' favorite snack.

In their day, legend has it, fresh caviar was sped to Moscow and St. Petersburg by a kind of Pony Express, new ice packs being applied at every stop. Clearly, from the description of one royal banquet served in the 1890s, it arrived in abundance, since dinner began with "fine black sterlet caviar piled high in silver buckets," then moved on to "dark sevruga caviar and large beluga roe," and finally: ended with "huge blocks of the rare pressed caviar which towered over everything else at the table."

Since the Bolshevik revolution, the Soviet state has taken the place of the Romanovs as caviar's greatest consumer. A state-dominated cartel has virtually controlled the secretive business from top to bottom, beginning with the harvest, moving on to the processing (which involves adding just a slight sprinkle of salt) and then to the packaging and export of the delicacy. While the Soviet Ministry of Fisheries has officially supervised much of the business, most of the commercial aspects have been handled by a tiny group of Western partners. By far the largest of these has been Paris-based Petrossian S.A., a company whose family name has become almost as inseparable from the little black eggs as sweet butter from brown bread.

This cozy arrangement between one of Paris's most elite purveyors of fine foods and Communist fish bureaucrats worked well for about 60 years. The Western exporters provided the Soviet state a steady stream of hard currency, splitting the profits. In return, the Soviet officials conveniently controlled the market, guaranteeing the product's scarcity in the West and thus its amazingly high price.

Typically, the Soviet sturgeon would produce an annual catch of some 2,000 tons of caviar, of which only 150 tons would be allowed out of the country. The current price shows how well this control has worked: While a state-supplied kilogram of top-grade black caviar costs about 250 rubles in Moscow, or $2.50 to S5 on the black market, the same amount would fetch easily 100 times as much in New York, says. Jeffrey Zeiger, manager of a Soviet-American joint venture restaurant called Tren-Mos, which sells caviar on silver dollar-pancakes in Moscow for $12 a plate.

A Battle of Republics

But the Soviet Union's dissolution may prove the bane of beluga, say those who profit from its high price now. Competition is already beginning to break the state's monopoly, which m turn could bring the world a nightmarishly unchic new product: cheap caviar.

The autonomy movement among, the former Soviet Union's separate states is wreaking havoc on the old system. The two largest Soviet fisheries now fall under the jurisdiction of different autonomous republics, each of which wants to own and operate its own lucrative caviar production business. Russia claims the fishery in Astrakhan, while Kazakhstan claims the one in the town of Gur'yev. Moreover, Individual Caspian fishermen from these republics and others are staking their own private claims, and in some cases trying to set up their own expert channels, which officials view as "black market piracy."

The cumulative effect of all of these new sources of caviar, according to the Soviet news agency Interfax, is a 20% drop in the official caviar export price from last year. "We don't need this kind of competition," laments Sergei Dolya, who works for Sovrybflot, which used to hold the monopoly over caviar exports. "All of these small rivals mean that the price will fall and the market will be ripped apart. This is a delicacy we need to keep it that way."

Caviar in the Baby Bottle

In a basement office below the impeccably polished floor of' the Petrossian restaurant in Manhattan, where the very best beluga can be purchased for $1,956 per 1,000 grams (2.2-pounds), the tall, elegant company president, Armen Petrossian, looks almost as droopy as his long, black mustache when asked how the business is changing in the former U.S.S.R.

His own father and uncle really "made" the caviar market, as he puts it. Of Armenian ancestry, they were born in Iran but educated in Russia until the revolution when they fled along with much of the Russian nobility to France. There they struck a deal with the loathed Bolshevik State to bring caviar to exiled princes as well as the uninitiated West. By the 1920s, it was a sensation. "It was in my baby bottle says Mr. Petrossian, who says that these days he often eats a different type of caviar at every meal. "I have a very agreeable job," he says with a smile.

But everything is changing. "I don't know what's in it" for his potential Soviet competitors, he says. "We're already shlashing the profit. If they go into export themselves, they'd just have more expense: Moreover, he says, they don't understand the secrets of luxury marketing, such as beautiful packaging, quality controls, attention to image-and high prices.

But on a dark and damp wintry afternoon just a few steps from where a red star still glows over the Kremlin, the new Soviet market appears undeterred. Out of the shadows, a man whips open a rumpled overcoat and from a deep pocket produces a greasy little jar. It's not elegant. It's not all that expensive. But as the bent little man says, "Pssssst: it's caviar!"