Rising Tide in Russia
Brian Courtney
11/01/2006

While most visitors to Moscow last spring marveled at the onion-topped towers of St. Basil’s Basilica or gawked at wonders long hidden inside the Kremlin, there was another group of people, some visitors and others locals, piling into the city’s Expocentr for the 12th annual Moscow International Boat Show. Make no mistake; this show couldn’t be confused with the annual mega-monster-dollar events in Monaco or Fort Lauderdale, but it is growing—significantly. It expanded by 50 percent from 2004 to 2005 and another 21 percent this year, with up to 205 companies representing 15 countries.

Yet it’s interesting that most Russians in attendance call almost any boat over 15 feet a yacht. For some, it may be a translation issue, but more likely the perception problem occurs because recent generations of Russians essentially have no yachting background—in fact, no history of recreational boating at all—to use as a frame of reference. The show is, however, a good indicator of the current state of yachting in Russia and its neighboring Eastern European republics: growing like crazy and learning the ropes as they go.

Photograph by Brian Courtney. (Click image to enlarge)

"Most Russians get into yachting first through chartering, introduced by friends," says Valeria Alekhina, a charter broker in Fraser Yachts’ Monaco office. Born and raised in Moscow, Alekhina understands the market—and the mindset—more than most, and she specializes in placing Eastern European clients. "Most new clients don’t understand pedigree. They don’t care if it’s a [custom yacht], a production boat or a notable yacht that has been refit. They only look to see how old it is."

Russians love classic tenders. Photograph by Brian Courtney. (Click image to enlarge)

Designer Fulvio De Simoni, recently quoted in a Design Showcase article (SBI Oct. 2006), furthers the point. "In Europe, we tend to have a consolidated culture; clients from countries that have come late to our global village look without the burden of historical memory. They live in and for the moment. They look at what is represented as fashionable in Italian or American magazines, and they want it. They want to have a boat that looks like the latest, the most glamorous and the most well known."

This fits with Russia’s larger appetite for all things Western, a trend confirmed with a visit to any one of the new shopping malls in Moscow. It’s hard to find anything that’s not French haute couture, Italian designer labels or American brand icons, such as Levi’s and Nike.

The Russian owner of Benetti’s Midlandia has tastefully appointed her. (Click images to enlarge)

"During the last ten years or so, I’ve found that Russian clients, particularly the newest ones, want Italian-style go-fast boats," says Alekhina. "Russians, even young ones, remember what it is like to be raised and live in a world without choices—there was only one brand of clothes, of shoes, of car. But now, particularly in Moscow, that’s all changed. But the effects of this upbringing remain, and it impacts how these people, now adults, view themselves, and how they want to be viewed by others."

Several brokers confirm that clients from the former Soviet republics usually prefer Anglo crew—Americans or Brits—over Europeans or others. And for many of these clients, the charter itinerary does not include any traveling at all. Some might make short hops to the next port over for lunch, but mostly their vacation is about being seen in the "right" port—Monaco or Saint-Tropez or other high-profile locations. It is all about the image and how they are perceived, especially by others from their homeland.This preference for the latest and greatest has put great strain on the charter market, particularly during high season in the Mediterranean, where there aren’t enough big, sleek new boats to meet demand. And Russia’s short history with luxury boating means that few natives are interested in sailing yachts, which tend to appeal to people with a taste for sailing traditions and classic sailing-yacht styles, thus further reducing the inventory.

The squeeze is particularly notable in light of recent history. The Mediterranean’s charter business dropped severely after Sept. 11, as many Americans opted against overseas travel. But new money in Eastern markets meant new clients, and those neophyte boaters literally helped keep the Med’s charter industry afloat during the last five years. With Americans again traveling, demand is up and so are prices. And while chartering is often the means of entry into yachting, the charter-market shortfall is actually pushing many Russians to buy before they try.

Moscow classics: Right photo: An ancient cathedral. Far Right Top photo: A salty trawler-style vessel at the boat show. Far Right Bottom photo: Lenin's tomb. Photographs by Brian Courtney. (Click images to enlarge) 

 


"The entrepreneurs who have become successful in the new economies of the former Soviet states have a certain fearlessness," says Fabio Ermetto, the Viareggio-based sales manager for Benetti. "They have the resources and the desire, so many are just going directly to ownership."

The company, working in conjunction with Edmiston & Company in Monaco, recently signed contracts with Russian nationals for the construction of four 59-meter yachts. It also signed Eastern European clients for an Andrew Winch–designed 57-meter vessel and a 59-meter yacht with an interior by Redman Whiteley Dixon.

Feadship’s Ecstasea is also Russian-owned. (Click images to enlarge)

The fact that Benetti’s signings are in pairs (and pairs of pairs) is no coincidence. According to Ermetto, most of his Russian clients come with friends. Sometimes it is an "experienced" sailor introducing someone new to yachting; other times both are beginners looking for mutual support in a new endeavor. "Most buyers from this region are quite worldly. Yet, it seems very important to most that their entrée into yachting be shared with someone with whom they are personally close."

Fraser sales broker Dennis Frederiksen, agrees. "Their networks are very important to them. But at the same time, there is a great deal of one-upmanship among them. The first-time buyer will want a bigger, better boat than his friend who brought him into yachting in the first place."

The National History Museum guards the entrance to Red Square and the Kremlin. Photograph by Brian Courtney. (Click image to enlarge)

As fast as the Russians picked up on the free-market economy, they also are beginning to understand yachting, says Frederiksen. "Three years ago I wouldn’t even consider showing a used boat to a Russian client. Right now I’m working with one who is ready to buy a ten-year-old refit Feadship. He understands Feadship’s lineage. This is evolution at work."Benetti is also seeing the change. It is working on two 30-meter yachts in its Tradition line for now-experienced Ukrainian clients who are moving up from smaller Azimut models.

The entrance to the Kremlin’s gardens. Photograph by Brian Courtney. (Click image to enlarge)

And as much as Russian clients are changing, so is the country’s boatbuilding. The former Moscow Shipyard is now the majority operative in an alliance called Timmerman Yachts. Under the leadership of Roman Trotsenko, the yard is collaborating with Holland’s Vripack Yachting International, Guido de Groot Design and Ginton Naval Architects, and British design houses Jon Bannenberg Ltd. and Francis Design Ltd. to produce displacement yachts from 25 to 50 meters. The yard’s order book is heavy, and its client list is not limited to locals.

Like Moscow Shipyard, Hotchya was a Soviet-era builder producing commercial and military vessels before following the money into luxury-yacht construction. The company’s 115-foot steel-and-aluminum motor yacht Gaja has been doing the boat-show circuit. Newcruise Yacht Projects and Dolker & Voges Metrica handled Gaja’s exterior styling and interior, respectively, but the yard does have its own very respectable design team.

Russian-owned Pelorus. (Click images to enlarge)

Laky Verf of St. Petersburg officially opened in April 2005, producing turnkey motor yachts in the 20- to 37-meter range. Its first build, a 23-meter boat designed by Guido de Groot for a Russian owner, launched in the summer of 2006.

While Roman Abramovich is still the single biggest Russian player in the world of yachting, make no mistake; the tide is turning. The Russian Federation and the former Soviet republics of Eastern Europe will forevermore be a significant factor in luxury yachting.