Strong focus on quality at Gamma-A helps to expand markets

Inexorable rise in costs causes concern

Gamma-A, a company that was established in 1995, is one of a handful of firms that manufacture what is probably Latvia’s best known traditional fish product, Riga sprats in oil. The product was well known across the former Soviet Union which was for decades the most important market for the product. Today, however, it is exported the world over thanks to efforts by the industry to diversify markets, innovate, and adapt to western clients’ demands for customisation.

The company, Gamma-A, has the advantage of its own fleet of sprat fishing vessels which supply it with the raw material it needs. Complete control of the entire supply chain enables the company to focus heavily on quality starting from the catch. Gamma-A is in fact a group of companies each of which has its own function. The fishing fleet, for example, belongs to one of the group companies, the processing activity to another. In addition, there is a can-manufacturing company that supplies the steel cans, into which the sprats are packaged, as well as the transparent lids with which the cans are sealed. Yet another company in the group is involved in the manufacture of small twin seater aircraft for recreational purposes. The production of canned fish goes back 25 years, says Igor Kushnerchuk, the export sales director of the company, and most of it is at a factory in Kolka on the western tip of the Gulf of Riga, where some 240 people are employed.

Transparent lids and glass jars highlight fish quality

At the factory most of the work is done manually as the products are primarily either glass jars or cans with transparent lids. These lids are a relatively new invention and are widely used by manufacturers of canned sprats. In the tin the sprats are carefully arranged by hand in a specially attractive way that can be seen through the transparent lid. Consumers shop with their eyes first and the Igor Kushnerchuk, Export Sales Director, Gamma-A

appealing look of the fish in the can is a good way of marketing the product. Glass jars demand manual labour for the same reason— the contents must be arranged attractively to catch the shopper’s attention. While the appearance is one critical factor, quality is another. As the company owns the fleet that supplies the factory with fish, it can guarantee the quality of the raw material. This is particularly important considering that the contents are visible. The fish must be of premium quality, or the product is sure to be rejected on sight. When the fish arrive in the factory, it is first graded by size. Following this, individual fish of the same size are placed in a small container and threaded with a long steel pin. The pins with the fish are arranged on a frame which moves slowly through the smoking chamber. In the chamber the high heat and smoke from wood chips made from alder smokes the fish to the desired degree. The frames

The transparent lids on the cans of smoked sprats reveal the attractive way the fish are arranged in the can.

come out from the smoking chamber and are allowed to cool. Finally, the fish is taken from the steel pins, the head is removed, and it is ready to be packaged.

Individual fish are arranged in the containers (glass jars or steel cans) which are dosed with salt and oil before being sealed. Adding salt after the fish has been placed in the containers enables the amount of salt to be measured vey precisely. Normally, when smoking, the fish is salted first and then smoked, but this can lead to uneven levels of salt in the fish, a result Mr Kushnerchuk is keen to avoid. The container, whether can or glass jar, is closed, sealed, and finally sterilised in an autoclave. The final step in the process is to label the product appropriately and package it in cardboard boxes for shipment. Another of the company’s products is also based on sprats but is marketed as bristling sardines. The process they go through is almost the same as with sprats except for the absence of smoke. The fish is subjected to high heat without smoke, allowed to cool, and then packaged in cans which are topped up with olive (or rapeseed) oil and spices. This product caters to people who are not keen on the smoky flavour of the sprats. The sprat-based products are only part of a much wider assortment of items produced from various other species of fish, such as tuna, Atlantic mackerel, Atlantic herring, Baltic herring, and cod liver. While the sprats are produced in the company’s own factory in Kolka, the other items are manufactured on contract. The cod liver for example could be made in factories in Iceland or Norway. The company places an order for its requirement and the goods are produced in accordance with its specifications.

At the premises in Riga, where the holding company is located, most of the activity relates either to the manufacture of empty cans or to the fishing fleet. The canned sprats manufacturing is concentrated at the Kolka factory.

Damaged fish is sent for reduction rather than human consumption

The fishing quotas the company owns are large and about 30 are used in the factory in Kolka. Another third is used for the production of fish meal. This is because firstly there is a limit on how much the company can sell for human consumption, and secondly because the fish needed to make the sprat and bristling sardine products must be of very high quality. If it is slightly damaged it cannot be used for these products and is therefore sold for fishmeal. The last third is sold to other companies that will process the fish into products for human consumption. There are currently five vessels in the fleet down from eight a few years ago. The fleet has been optimised—two smaller vessels were sold and replaced by a large one, among other changes. For Mr Kushnerchuk the vessels are an instrument to fish the 10,000 tonnes of quota the company owns and the most important is to have the fishing capacity to fully exploit this. Whether the vessels are large or small is a secondary concern. A more immediate source of apprehension is the decreasing trend shown by the quota. The limits for Latvian companies have fallen by about 50 over the decade. The company therefore buys fish from other suppliers to feed the factory. This raw material is typically frozen and comprises fish caught during the winter when the quality is best. As a result, the factory can operate all the year round and the company can supply its high quality products 12 months in the year.

A decade ago, when the company was still exporting to Russia, the Riga site housed a factory where canned products were manufactured. At the time it used to import cod liver from Norway to be processed and exported to Russia. However, with the sanctions and counter sanctions imposed by the EU and Russia on each other in 2014 exports to Russia ceased and the factory was mothballed. In the meanwhile the company reoriented itself to markets in the west including the US, Japan, Australia, Poland, and Uzbekistan, which meant offering a wider range of products that cater to the requirements of the different markets. The countries to which Gamma-A began to export also implied a new strategy with regard to where and how the products should be manufactured and production of the most traditional products (the sprats and bristling sardines) moved therefore to the plant at Kolka, while the rest of the assortment (Atlantic fish, tuna, etc) is supplied on demand by a Latvian manufacturer who has a factory dedicated to this kind of production. The marketing and sales of all the products, whether produced at the Kolka plant or under contract, is undertaken by Gamma-A. Altogether the company is selling most of its products in 46 countries around the world. The cod liver, however, is only sold in 15 or 16. Exploring and developing new markets has been greatly supported by European funds which have enabled the company to participate in 12-14 trade shows a year all around the world, where it promotes its products. While some of the consumption in these markets is by communities of eastern European who live there, a significant proportion is also by the native people who like the taste and the quality of the products. In some countries, like Japan for instance, where there are few immigrants from Eastern Europe the products are doing very well because the Japanese have developed taste for them. In Spain, Italy, and Portugal the smoked products are not very popular but the bristling sardines are doing well, possibly because they are similar to the local small pelagic fish such as anchovies or sardines.

Trying to keep up with spiralling costs

The last year has been unusual in that shortages as a result of the