An Examination Of The Caviar Market Economics Essay

An Examination Of The cavi atomic number 18 commercialise Economics EssayThe new commerce is aiming to produce a reserve caviare point of intersection in Russia and Kazakhstan, with a view to exportationationing it to the UK. It is evaluate that the main targets for this product exit be those in the paltry to eye income bracket who would non for the most part be able to afford satisfying caviar. Consumption of caviar in the UK is non as widespread as in some other regions and this is thought to be primarily ascribable to the high charge that is commanded by caviar in the country.The aim of the calling is to provide an affordable alternative that depart be provided over the cyberspace and by phone, allowing for rapid deli very(prenominal) of products that are well equipment casualtyd. Loyalty offers impart be available and the business aims to target the general consumption grocery rather than the exclusive, opulence segment of the commercialize. Initially , the target will be the UK alone, although at that place is no particular reason that this could not be extended in time as takings increases. Substitute caviar do up of a variety of different ingredients will be available in night club to satisfy the widest range of tastes possible.Overview of interrogation ProcessA sundry(a) explore approach has been taken, out-of-pocket to the event that whilst completing the sign inquiry it became clear that the UK foodstuff may not be the best initial overseas grocery to target, and this burdened in a wider abbreviation than originally anticipated. viewation was given to the global market for both the export and substance of caviar and caviar replaces, with a view to gaining an understanding of the general movement of caviar and also in an attempt to understand where the value lies and where in that respect is probability for growth.Another research approach was to look at commentary special to the UK market and the way in which UK consumers view the caviar products, in order to get an idea as to whether or not in that respect is probable to be a penury for a caviar substitute of the character proposed. This type of research will internally require greater abstrusity and primary research in the diversity of consumer questionnaires interviews would also be preferable to supplement the general media proclaims.Information was also obtained in congener to the proceeds industry in Kazakhstan and Russia, which was also seen as important as this gave an trace as to whether or not these countries had the ability to increase their production and had the incumbent facilities to do so at a reasonable price.Critique of Research ProcessThe research process was somewhat scattergun in nature, aiming to administer a wide range of takingss and this resulted in lack of depth at times. By attempting to detect the potency market in the UK, the general market for caviar and caviar substitutes, the gener al production processes and the way in which caviar substitutes are developed, this research was naturally less expatiate than may be necessary in the next stages of business development. A more focussed approach, for example, flavour specifically at the UK and the various caviar substitutes available, may own been a more productive approach at this stage. reason self-containedA wide variety of evidence, of varying reliabilities, has been gather, as noteworthy below. In terms of the education relating to the UK, in that location was very limited general annoy information available and media interpretations had to be relied upon. This in itself is a potential weakness. However, from this research it is clear that caviar in the UK is very such(prenominal) a luxury product that is able to command a substantial price, but it is not growing in popularity as a result of the increasing price that is stimulated by the shortage in supply.Evidence was also ga thered in terms of the global market as a whole, identifying lacquer as a substantial consumer, as well as the US. This brocaded the query as to whether or not the UK is the best plectrum as a target for this new product. This research also looked at the export side of the market and identified both Russia and Kazakhstan as macrocosm life-or-death players. This is likely to be a positive factor, as it indicates that the supply shackles for this type of product are already present, although it may raise concerns relating to intensity of resources, depending on the exact type of substitute that is being used.Critique of EvidenceSome of the issues down been raised already in relation to the dependableness of this research. It has been observe that there is not a great deal of information available in relation to the UK consumption of caviar and caviar substitute, so media commentary has had to be relied upon. There is a danger that this analysis is slanted and does not present all of the available data and this factor need to be considered when looking at the research below.Furthermore, there is little research that actually distinguishes betwixt the relative desire for caviar and caviar substitute, which is potentially fundamental to the likely success of the proposed business. Much of the information available is produced by the industry itself and so there may be issues of bias. The research does not contain information from the last 12 months and again this may result in a degree of weakness in the figures being produced, as matters may have changed dramatically in late months and particularly during the financial crisis.Recommendations for Future ResearchBased on the above, it is suggested that future research is need to supplement the initial research undertaken. A much more detailed analysis of the consumer demand for caviar and caviar substitutes in the UK is required. This is likely to read primary research, which would include consumer analysis in a bid to d etermine just how likely consumers would be to switch to a cheaper substitute and whether the handiness of a cheaper substitute would encourage more consumers to purchase this product.Research into other potential markets should also be undertaken, as there seems to be a greater appetite for caviar in places, such as japan and Sweden, that should be explored in more depth.Research AnalysisFinancial Implications / Ingredients of Caviar and Caviar Substitute (http//www.caviarist.com/index.php?s=substitutex=0y=0)Although focussing on the caviar market, the musical theme by The Caviarist provides valuable financial information, as well as hardheaded suggestions in relation to the market for caviar substitutes. This report is useful, based on the fact that it draws together several industry opinions and also is able to consider the value of these substitutes, in comparison to pure caviar.The reports produced by The Caviarist noted that there was, in fact, a wide range of potential alt ernatives to the traditional pitch-black caviar, m any(prenominal) of which offer a substantially cheaper plectron, but these do not always meet with consumer approval, in terms of taste. Some of the key substitute options were noted as being snail caviar (De Jaeger) from France, Cajun caviar which is made out of Bowfin Roe and comes from the US, and Keta which is derived from salmon roe. Each of these could, potentially, be competitors for any new caviar substitute coming to the market. A further option is to use aubergine which has resulted in poor mans caviar being produced and again shows the potential for cheaper substitutes to be brought to the market.Imitation caviar in Japan is, potentially, well-favoured business already, with one company, Hokuyu Foods Co Ltd., specialising in the production of imitation caviar, which consists of a gum that is derived from kelp, pectin from apples, sea urchin extracts, scallops, oysters and squid ink. The consumption of this caviar is t hought to be approximately 20% of the consumption of genuine black caviar and indicates the potential market for substitute caviar and the consumer willingness to use a substitute. It is, however noted that this imitation caviar, Cavianne, is not often sold directly to consumers, as it is generally purchased wholesale at a price of approximately 11USD for a 50 gram jar.A more recent substitute which has come to the market is that of Cabial, which is sea urchin roe and originates from Spain. The typical price for this is between 10 12 Euros for a 120 gram jar. This, again, suggests that there will be a drop in quality, although it does produce a real pricing contend for any company looking to drop off the market.Substitution is not always welcome, with some individuals only being prepared to consider the real caviar, due to taste and the perceived lack of quality associated with these cheaper options. For those consumers who are prepared to substitute, there is the issue of price competition, which is likely to be fierce and a bulwark for any new substitute.Current Market Trends UK, Russia, Kazhakstan / Competitors (http//www.fao.org/docrep/006/y5261e/y5261e06.htmbm6.4)Reports have suggested that the market for caviar has declined, in recent years. It was noted in this detailed report that the availableness of wild roe was in decline and there was a revival meeting of farmed sturgeon to satisfy the increasing consumer demands for caviar (or indeed caviar substitutes).Production of sturgeon by the farming industry has increased from 150MT, in 1984, to a total of 158MT, in 2000, showing that this industry is growing, albeit not at a rapid rate. Initiatives in the caviar industry are focused on this new form of farming therefore, even where the production of caviar is still taking place, it is being done so with efficiency of production in top dog and this has cut back the prices of production, devising the caviar substitute market even more competitive, o n an ongoing basis. The main markets for producing farmed caviar are Russia (2,050MT), Italy (550MT) and Poland (250MT).When looking specifically at the position in Kazakhstan, it poop be seen that despite being considered a lower-middle income country, it is a highly influential region when it comes to the production of caviar. There is a total of slightly 16,000 fisheries in Kazhakstan and a production of caviar at approximately 1,153 MT (value of US$2,469,500), showing just how influential the caviar industry is to this region and that the likely competitive nature of the industry will result in a price war.Russia is seen to have a equivalent demographic in that it is also considered to be a lower-middle income country that relies severely on the fisheries industry. The number of fisheries in Russia is considerably greater than in Kazakhstan, with a total of 316,300 fisheries of which 1,300 produce farmed caviar alone. Total production in Russia amounts to 77,132 MT and a val ue of around $204,779,000. Export income stands at approximately $1,386,000, indicating that there remains a substantial market for caviar and that the market will become increasingly competitive, as farming production becomes more in force(p) and the economies of Russia and Kazakhstan strive to protect their position within the global market.This market analysis shows both positive and negative trends for a company looking to enter the market. Whilst it is clear that there is a growing market for caviar (both natural and farmed), it is also an incredibly competitive market. Moreover, as real caviar can be produced more cheaply, this will naturally put a farm animal on the market for caviar substitutes.Demand in the UK (http//news.bbc.co.uk/1/hi/uk/1055748.stm)A report from the business section of the BBC has looked specifically at the issue of caviar in the UK and who actually consumes caviar. Although this review dates back to 2000, it is the most recent of its type and is a key indicator of the consumption trends of caviar, in the UK. It was noted, in this report, that from the UK point of view, the availability of caviar has dropped substantially this is likely to be traceable to the fact that the UK relies entirely on imports and does not have its own production facilities. The availability of top quality caviar, e.g. Beluga caviar, remains relatively low and therefore the pricing of this caviar has risen to reflect this lack of supply. For example, it was noted that 50g or Beluga sells at 210 in top restaurants, in the UK, making it very much a luxury product. It is no surprise, therefore, that the consumption of caviar has dropped, in recent years, mainly due to the escalating prices. What is not clear is how much of this reduction is simply a matter of taste and how much of it is bug out to affordability. This will be a key issue to determine when looking at the viability of a caviar substitute. It is estimated that the amount of consumption in the UK is around four tonnes per year when this is compared with Sweden at six tonnes and bearing in mind that Sweden has just 10% of the population of the UK, it is clear to see that the market for caviar, for some(prenominal) reason, is not large in the UK.The consumption of caviar in the UK is, therefore, seen very much as a luxury specialist product that is consumed by very few individuals. This raises interesting questions in relation to the potential for a cheaper caviar substitute, in the UK market. As the price of caviar has risen, so has the direct of sales and this would suggest that a cheaper substitute (end of sentence?).Despite this, it is not clear whether there really is the appetite for caviar, in the UK, and even if the price were to reduce, substantially, it may be that it simply is not a popular choice with UK consumers and that other markets should be considered, in order to introduce this substitute caviar product.A Global Trade PerspectiveThe 2005 Report conside red the global market for caviar, in terms of where the most production was achieved and where in the world the great demand for caviar was. This is particularly relevant in the context of this business plan, as the market for a caviar substitute is likely to learn the same trends as the market for caviar itself. There is, however, the potentially bigger scope of caviar substitutes, due to the fact that they are cheaper to produce and therefore will be sold at a lesser price, which may, ultimately, string a wider consumer base.This report gives an excellent overview of the global position in relation to caviar and caviar substitutes, indicating that the largest exporter of caviar and caviar substitutes is the US, followed shortly by Iran and thence Russia. By contrast, the largest importer is Japan, followed by France. The UK is the 10th largest importer, indicating that there is a demand for the product however, there may be a bigger demand in other regions which have been overl ooked so far during this study, notably Japan. Nevertheless, this report does consider caviar and caviar substitutes, together, and therefore consideration will have to be given as to whether there is a greater demand for substitute caviar, in accredited regions, possibly those that are generally considered to be less affluent, such as Latvia and Hungary, which currently rank relatively lowly, in terms of import.When it comes to imported caviar and caviar substitutes, in Europe, the main targets are France, Germany and Sweden, with the UK ranking relatively lowly, in 8th position, taking under 4% of the European import market. This suggests that the current approach of targeting the UK may not be the best possible business plan, because there is a considerably larger market in other regions of Europe, for example, France which takes up 26% of the European import market.Based on this report and the general demographic of the import and export of caviar and caviar substitutes, it wou ld seem that there is a much greater demand to be had in regions that may have previously been overlooked. For example, there is a substantial market in Japan and France, neither or which was immediately obvious, in the business plan. This report does not distinguish between caviar and caviar substitutes, which may change the demand structure, due to the fact that the cost associated with caviar substitutes is less, potentially, encouraging better market penetration, in certain less affluent regions.