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Russian dreams of global luxury products service

"The luxury goods market is very rapidly growing, the returns are very high. We're moving quickly."

David Henderson-Stewart, LuxAdvor head

Billionaire Russian Senator Sergei Pugachyov bought Hediard to expand the 153 year-old French gourmet food chain into emerging markets such as China and Kazakhstan as the cost of luxury goods grows.

Pugachyov's "family-owned" LuxAdvor wants to acquire more European brands and build an international luxury goods business, David Henderson-Stewart, head of the Luxembourg-based company said by telephone in Moscow.

Russian business leaders, many with fortunes rooted in oil, metals or banking, are investing some of their billions overseas in resource assets, soccer clubs, vineyards and castles. They, and growing ranks of millionaires worldwide, have helped fuel demand for high-quality, rare and expensive goods.

"The luxury goods market is very rapidly growing, the returns are very high," Henderson-Stewart said by telephone in Moscow yesterday. "We're moving quickly."

Hediard sells delicacies such as Chinese white tea that costs 700 euros (US$990) a kilogram, foie gras and caviar. Its wine cellar boasts rare 1820 Grande Champagne Cognac for 10,305 euros a bottle and 1890 Chateau d'Yquem for 6,772 euros.

Clients from Russia, China, Taiwan and Japan buy the most expensive wines, said Damien Riberou, sommelier at Hediard's original store in Place de la Madeleine, Paris.

"Hediard will still be a French company, managed by French people, developing French products," Hediard president Dominique Richard said by telephone from Colombes, France.

"The main change will be increasing the strategy of developing worldwide," he said.

The French government named Hediard, which sells luxury jams, spices, condiments and beverages in more than 30 countries, a "living heritage company" this year.

Richard will continue to run the company as it expands in the fastest-growing markets of Asia, the Middle East and Russia.

Hediard's biggest store stands on Moscow's Garden Ring.

Michel Pastor, who took control of Hediard in 1995, sold the chain to focus on real estate development in Monaco. He declined to reveal the sale price, saying it was "significantly less" than the 1 billion euros reported by the Kommersant newspaper.

"A billion euros, I would have liked that," Pastor said, laughing, when reached by telephone yesterday.

Hediard's sales will probably rise this year to about 30 million euros from 27 million euros last year, Richard said.

The purveyor will open its first cafe-boutique in Riyadh this month and will enter China next year.

Pugachyov's United Industrial Corp manages US$9 billion of assets, with stakes in banks, warplane maker OAO Sukhoi and two of Russia's largest shipbuilders, and is developing elite housing near Russian President Vladimir Putin's residence outside the capital.

Pugachyov, who represents the Tuva republic, located on the Mongolian border, is Russia's 50th-richest man, with a fortune of about US$1.3 billion, Forbes magazine said.
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