Estonia
// SPRATS IN LIQUEUR
When we say "Estonia", we think of "sprats". When we say "sprats", we think of Estonia". Although we all know that Estonian sprats are banned from entering Russia. But in this republic they used to make other delicious and wholesome products like candies, liqueurs, cheeses, and, most importantly, real Soviet chewing gum. However, we probably won't get a chance to try them either.
Sprat Front
For Russians, Estonia was always a land of myths. The first myth is that Estonia is chock-full of sprats. War veterans remember them in holiday packages. The second myth is that there are no Estonian sprats, but there are Latvian sprats.
Both myths are true. In 1994, Russia imposed a double customs duty on Estonian goods, and the Russian market was lost to them. Today, Estonian sprats are "personae non gratae" in Russia in revenge for the "improper attitude" of Estonian authorities towards the Russian-speaking population. So sprats and their consumers have become victims of political games.
The third myth is that Estonians speak very slowly, drawing out each word in a funny way, and also think and act slowly. This is not true, jokes about Estonians notwithstanding. Maybe they speak Russian slowly, but they speak Estonian pretty fluently and without an accent. They also think and act very quickly. After a brief post-Soviet crisis, independent Estonia opened its market and went on to economic growth. In 1995, GDP growth was already 4.6%; it reached a peak of 10.4% in 1997, and after a short-lived drop to -0.7% in 1999 caused by the Russian crisis, is now holding at a level of 4.5-6.5% per year. On May 1, 2004, Estonia will enter the European Union.
Economic growth in Estonia occurs mainly through domestic consumption. However, in a country with a population of only 1.4 million people, all hopes for prosperity are basically pinned on entry into the foreign market. In the meantime, most Estonian companies end up doing subcontracting work for companies in neighboring countries, primarily Finland and Sweden.
Nevertheless, when relations between Russia and Estonia became strained over the citizenship law and Russia imposed double customs duties on Estonian goods, certain local politicians began calling for reducing Russian-Estonian trade turnover to zero. According to the figures for 2002, Russia's share in Estonian exports fell to 2.7% (tenth place), and in imports, to 8.1% (fourth place).
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| Old Tallinn liqueur is a must-have for any tourist. It is now produced in four different strengths from 16 to 50% |
The loss of the Russian market cost Estonian companies dearly, especially in the food industry, where one-third of production up to 1998 went to Russia. Some fish processing plants went bankrupt, and the celebrated sprats were abandoned.
Today, the composition of Estonian exports to Russia is quite amusing. The Estonians send us furniture, machinery, equipment, and electric power; but the absolute champion in volume of deliveries (more than a third of all Estonian exports) is-get this-seat belts. Even in Soviet times, AO Norma supplied these belts to AvtoVAZ and GAZ.
As for the sprats, they have found their place in life by redirecting themselves to markets in Central Europe and Ukraine. Today, those Estonian sprats uneaten by Russians go to Ukraine.
This intractable "we know our stuff" position is entirely in keeping with the Estonian spirit. This small nation belongs to the group of Finno-Ugric peoples (along with Finns, Hungarians, Karelians, Udmurts, Maris, Mordvins, Komi, Khanty and Mansi, Saami, Weps, and others). And throughout its entire history, Estonia has rarely enjoyed independence. In the Middle Ages, the Teutonic Order lorded over their lands, then the Danes and Swedes, and then the Russian Empire. Estonian began living independently only in 1920; but then in 1940, a group of Estonian Communists called on visiting comrade Zhdanov to voluntarily admit Estonia to the USSR. Comrade Zhdanov conveyed this request to the Soviet Army, which happily obliged him.
Not surprisingly, Estonians have become used to living apart, even from one another, on farms rather than gathering in villages and are very suspicious of foreigners, whose presence is a potential threat to their independence and culture.
However, for all the Estonians' insularity, Russians have memories of Estonian brand names. In the mid-19th century, Narva began manufacturing cloth that was equal in quality to European fabrics. The Kalev Confectionery Factory of Tallinn, which made elite chocolates, started making the first Soviet "chewing gum" in 1968. And of course, no visitor to Tallinn went home without a bottle of Vana Tallinn (Old Tallinn) liqueur, the city's "calling card".
Tiri-Aga-Tymba
The Kalev Confectionery Factory is one of the oldest in the former Soviet Union. The Babaevskaya factory goes back to 1804, and Kalev, to 1806; but this is all relative, since it refers to the founding dates, not of the currently existing factories but of their predecessors.
The Swiss Lorenz Caviezel, who opened a confectionery on Pikk Street (now the location of the Maiasmokk Cafe) in 1806, is considered to be Kalev's forebear. The confectionery changed owners many times, until it ended up in the hands of Georg Johann Stude in 1846. Stude's products were popular outside Estonia: the company's marzipan figurines and handmade chocolates were purveyed to the court of His Imperial Majesty. Factory employees proudly note that these exclusive products are still being made according to the recipes and methods preserved from Stude's time.
In the early 20th century , there were several other factories laying claim to being Kalev's predecessor. KAWE, Estonia's largest confectionery company, belonged to the brothers Karl and Kolla Wellner. Prior to this, they had owned the Renome Factory in St. Petersburg, but the revolutionaries gave the brothers the boot, and in 1921, they were forced to move their business to 62 Muurivahe Street in Tallinn. Their business grew mightily: by 1939, KAWE had 42% of the Estonian market and exported more than half its production to 20 countries around the world. The Wellners even had a business office in Cape Town.
There were also 19 other factories, including the large Ginovker, Brandmann, and Klausson factories, and the smaller Riola, Endla, Eelis, and Efekt factories. All of them were in for a great surprise in 1940.
Nationalization in the USSR always went hand in hand with consolidation of facilities. Thus, Riola was ordered to merge with Brandmann to form the Karamell factory and then to incorporate Georg Stude's marzipan and chocolate subdivision. Likewise, the Efekt, Eelis, Endla, and Soliid factories and the Ermos Molasses Factory were merged with KAWE.
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| The Kalev Confectionery Factory counts nearly 20 predecessors going back to 1806 |
That was exactly how they consolidated them. The trouble was that Party officials inexperienced in Estonian realities overlooked a real bit of ideological sabotage: for eight whole years, KAWE operated right under their noses using a name formed from the initials of the exploiters-the Wellner brothers. It was only in 1948 that an earnest Estonian comrade reported this to the Minister of the Food Industry. The Minister nearly had a fit. The factory was renamed on April 1 (April Fool's Day) of the same year.
There was also some mischief-making here too. A contest for a new name was announced, which ended in a competition between two serious contenders: the ideologically acceptable "Red Candy" (Punane Kompu) versus Kalev, the hero of an Estonian epic (also a questionable character smacking of bourgeois nationalism). Hard to believe, but Kalev won by one vote! Bookmakers could have done a roaring business on this show.
In 1957, they built a new factory called Uus Kalev (New Kalev) on Parnu Street, and within a year it was united with Karamell. The final merger of the Estonian confectionery industry occurred in 1962, when Kalev was merged with Uus Kalev.
The factory became the 15th -largest in the USSR, and it also accounted for one-fifth of all Soviet candy exports going to 25 countries. This was without counting special orders from the Kremlin and dozens of prizes at international exhibitions.
Otto Kubo, a researcher of Kalev's history and curator of the factory's museum, worked in it for more than 40 years. He gives a straightforward explanation for the high quality of its products: "It's simply that some employees who had worked for the old owners were still alive."
Tradition is tradition, but Kalev was the one that tried to achieve a revolution in the Soviet confectionery industry by developing the first Soviet chewing gum in 1968. It was Soviet in every way: it was made of synthetic rubber and even the brand name- Tiri-aga-tymba, which means something like "Come on now, pull!" -sounded purely Soviet.
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| At Krenholm, they have always cared about high product quality, thanks to tradition and pride in their work |
Chewing gum was banned on the spot. Academician Petrovsky concluded that it was a bad habit and moreover propagandized the capitalist way of life. Fortunately, at the time, Kalev had an extremely energetic director, Edda Vladimirovna Maurer, who was a member of the Soviet Women's Committee. Through Valentina Tereshkova (the first woman cosmonaut), she got to the cosmonauts, who as was well known had problems with oral hygiene: under weightless conditions, toothpaste always flew out of their mouths. In addition, the cosmonauts regularly visited the observatory in the city of Torva, and the factory's managers succeeded in inviting the cosmonauts as guests through the Central Committee of the Communist Party of Estonia.
On signing the guest book, cosmonaut Grechko expressed "special thanks for the gum." After this, samples of Tiri-aga-tymba were sent to the space center laboratory. Doctor of Medicine General V. Kustov noted in his report that gum "helps equalize barometric pressure in the middle ear cavity during takeoff and landing of airplanes," decreases smoking levels by 26.4% and drowsiness," and generally had a positive effect "under special object conditions." The words "special object" in the report are a tribute to the transparent secrecy of Soviet science, since these "special objects" are called airplanes only three lines above.
Gum was still forbidden. However, the demented quality of Soviet reality became apparent when on January 28, 1974, while the ban was still in effect, comrades "Kiik Harri Juliusovich and others indicated in the description" were issued inventor's certificate No. 4 287 36 for "chewing gum". (This was despite the fact that Thomas Adams had obtained a patent for gum back in 1869.)
Estonian gum triumphed in 1979, in the year that Soviet troops invaded Afghanistan and before the Moscow Olympics. Four chewing gum production lines were purchased, one of which went to Rot-Front in Moscow, another to Leningrad, the third to Yerevan, and the fourth to Tallinn. Given that Kalev had already perfected gum production on a toffee line, Estonian gum captured more than half of the Soviet market.
Today, Kalev produces only a small amount of gum, mainly in Ukraine. Things are going much better for gum candies. Kalev products are known in Scandinavia, and some go to Germany. Marzipan figurines in the 19th-century style sell well in the US. Altogether, exports make up 25% of production. Another 25% used to go to Russia up to 1998, but this market has been lost. Production is four times less than it was in Soviet times.
Nevertheless, by 2000, Kalev PLC had overcome the losses resulting from the Russian crisis. The company has been quoted on the Tallinn stock exchange since 1996. It is one of the few Estonian companies owned by local capital. The chief shareholder is the young but prominent businessman Oliver Kruuda. The company's turnover for 2001 was 317.5 million Estonian kroons ($22.7 million) for a profit of 29.9 million kroons ($2.136 million); and despite an abundance of imports, its products occupy 45% of the market.
Terrycloth Capitalism
Terrycloth bathrobes and towels were a small pleasure in the difficult life of Soviet housewives. Estonian products made at the Krenholm Factory in Narva were especially valued. You will hardly ever encounter them in Russia today.
Estonian textile manufacturers are less dependent on the Russian market than the Estonian food industry. After independence, they quickly reoriented themselves to new markets and now local fabrics and domestic textiles (curtains, tablecloths, terrycloth items, and hospital and hotel clothing) go to Scandinavia and Finland (more than 40%), the US (30%), and Germany (20%). Matters with Russia are the same as with sprats.
At the time Krenholm was founded, it was one of Europe's largest textile companies. Now no one except Trekhgorka is comparable to it in size. European factories long ago shifted their facilities to Asia.
Anatoly Ilkevich, Krenholm's marketing director, attributes the high quality of his factory's products to a number of traditional and somewhat abstract factors: "There was a high level of discipline and organization. People were proud of their work. Traditions."
It is worth dwelling on traditions. German industry magnate Baron Ludwig von Knopp founded Krenholm in 1857. It was a unique factory and a unique empire. Unlike other contemporary one-story textiles mills, Krenholm was made up of multistory buildings. There was a cascade of waterfalls on one of the branches of the Narva River, and von Knopp realized that he had found a cheap energy source. Water falling onto a belt drive powered the machinery on all floors simultaneously.
Krenholm, which occupied an area the size of a small neighborhood, soon turned into a whole empire. It had its own stores where employees received goods (they were paid in vouchers), its own police, and even its own jail.
Krenholm kept its brand name both during the first period of independence and in Soviet times, when 12 000 people worked for the planned economy. After the collapse of the USSR, there were problems in the transition period: there were delays in cotton deliveries, and part of the company's money, so to speak, chose Russian citizenship. But there were no stoppages. In 1995, the large Swedish textile concern Boras Wafveri AB privatized the factory. The Swedes invested nearly a billion Estonian kroons and introduced knowledge of markets and understanding of customers' requirements. Today, Krenholm's monthly output of 5 million meters of cloth is fully comparable with Soviet times. In addition, 18 marine containers loaded with diapers for the Gerber company go to the US alone every month. In the area of domestic textiles, Krenholm works with major sales networks like Metro and Auchan, as well as with catalogue sales companies like Otto, Quelle, Anttila, and IKEA. Incidentally, at one time, IKEA made portfolio investments in Krenholm. According to the results of 2001, the Narva textile company had become Estonia's largest exporter (power companies have traditionally been considered the largest exporters here). The company's turnover has reached nearly $100 million.
Today, Krenholm has no competitors in Europe in terms of capacity, but out of habit, the company keeps a close eye on its neighbors, e.g., Trekhgorka in Riga, Alitus in Lithuania, and the Vera Slutskaya Finishing Plant in St. Petersburg. "Russian textile companies aren't vying to get into Europe," remarked Anatoly Ilkevich. "It turns out that European prices are too low for them, and it's more profitable to sell in Russia. That's all very well when you have a self-sufficient economy. On the other hand, there's the danger of not keeping up with current market demands."
Tourist's Dinner
Like any other visitor to Riga, I took a bottle of Rigas Balzams back with me; and like any visitor to Tallinn, I didn't go home without a bottle of Vana Tallinn, although there is no whiff of its competitor. Vana Tallinn is simply a liqueur, not a balsam.
At first glance, AO Liviko, the distillery where they make Vana Tallinn, reminds you of a sauna with its picturesque wooden barrels and exotic odors. A group of friends, notably Jaan Siimo and Bernard Jurmo, invented the Estonian liqueur in 1962. When asked about the recipe for the drink, Liviko's general manager Udo Temas and production manager Aavo Veintal answered evasively, saying only that it contained tropical ingredients and rum flavoring. We managed to get a glimpse of jars of cinnamon, vanilla, and cacao beans; and aromatic spirits were maturing in 100-year-old copper vats.
From the distillery they took us to a room something like a cross between a museum and a bar. Here there were collections of old documents, accounts, and other calculating equipment, a gold-plated ball for measuring beverage strength, a bottle of Moscow Special vodka 1953 (only 50 g had evaporated, or 1 g per year), and even a Buttler engineering system (equipment for bottling vodka in 3-liter bottles). As he passed by one of these bottles, Veintal sighed nostalgically and said, "Yes, there were strong Russian men once…"
The tour ended with a tasting session. Visitors are allowed to pour straight from the line leading to the bottling section. In recent years, Liviko has made four different versions of the liqueur with strengths of 40, 45, 50, and 16%. The 50% liqueur is surprisingly smooth. There was an attempt in the 1970s to make 0.1-liter souvenir bottles, but Brezhnev prohibited it. In those days, the Central Committee of the Communist Party of the Soviet Union concerned itself with these questions.
Estonians drink very little of this liqueur themselves. They make it for tourists. "But you know, the tourists we get now, the ones from Finland, they're after vodka," said Udo Temas. We call it "alcoholic tourism."
This is why liqueur makes up only 5% of total production at Liviko. Their main product is vodka. In Soviet times, the distillery produced 22 million liter per year in a republic with a population of 1.4 million. This year, they plan to produce 7.5 million liters. Officially, one-quarter of production is exported, but no one knows how much "alcoholic tourists" take back with them.
Liviko has slightly more than a 55% share of the liquor market, where it competes with imports like Finlandia Absolut and Smirnoff. Russky Standart also sells well. Counterfeits are the biggest problem on the Estonian alcohol market. This was especially true in 1998, when the excise tax on alcohol increased and counterfeit vodka took over nearly 40% of the market. Today, the figure is about 20%. However, this is not the result of any actions by the authorities, but rather because of a tragedy in Parnu. Some guys got hold of a tank of methanol and flooded the city with it. More than 60 people died. The share of "official" vodka immediately increased 1.5 times. But in the eastern part of the country, Russian vodka has no competition and its share is estimated at about 80%. It's cheaper.
The fact is, there are no excise stamps in Estonia. Liviko protects itself by using corks with a hologram. Copying them is pointless and unprofitable, but pirates are finding other means. "We did a special study at delivery points for glass containers," said Temas. "The salesclerks sort our bottles, and the ones with intact labels go for a higher price."
Vladimir Gendlin and Vasily Shaposhnikov (photos)
All the Article in Russian as of May 19, 2003
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