West Nautical18A Osborne RoadJesmondNewcastle upon TyneNE2 2ADUnited Kingdom
How and when did yachting first come into Russia?
The yachting industry in Russia was advanced by two main trends. In the 1990s people started actively traveling to Côte d'Azur and Italy, where they became acquainted with the beauty of yachting and luxury lifestyle. After having such distinctive experience once, naturally many of them who could afford it considered buying a yacht for themselves. That was just the time when the yachting market fell into two major niches as some buyers chose to buy a yacht to summer in the Mediterranean. 50 years back from now a yacht of 25-28 meters in length was regarded almost like a ‘superyacht’. As far as I recall, the largest yacht in those days was 96 meters-long Indian Empress. Nowadays there are more than 50 yachts of 100+ meters – a huge leap in size. The others preferred to cruise locally along Volga river, Neva river and Klyazma reservoir. Those people were pioneers of the industry who formed the basis for its future development as we see it now. Supply is driven by demand; in 1996, Bayliner, the American distributor of dayboats, brought its dealership to Russia. No matter how you treat this brand, Bayliner attracted a significant number of enthusiasts to yachting worldwide, and from Russia particularly. From what I know, Bayliner once had a record high of building a total of 20,000 boats per a year.
How did you discover the yachting business yourself?
Every business I have ever had has always started from the “toy” I bought. In 1991 I got my first mobile phone and launched a mobile communications business. Afterwards, a German car led to a car dealership. Later, in 1998 I ordered a dayboat from our local Bayliner dealer that was based in Saint-Petersburg. One year passed and I took the plunge and went to the Czech Republic to a friend of mine, who represented Regal, and I got 10 boats. After completing import formalities, in 2000 the boats were exhibited at the Moscow Boat Show.
Was it the first boat show for Moscow?
At first it was a yacht-dedicated corner within Sport and Recreation Expo, by 2001 the boat show has evolved into an independent event. However, at the very beginning we displayed our boats side by side with fishing rods, rain boots and SIBs. There were Bayliner, Maxum, Regal on display, and several other brands. Our dayboats had a huge success and we sold the entire batch in three days with no PR involved. It was worth it, as the demand was simply overwhelming!
A yacht in the Mediterranean VS a dayboat on the river, why did you decide to supply boats to Russia?
Back then we didn’t fully realize that we could sell boats to Russian clients worldwide. Moscow seemed the center of the universe, and the decision to introduce boats to local clients was natural. There was a market here, and once you added the slogan "this is cool" to any advertised product – everything was sold out instantly. Undoubtedly, selling all 10 boats in three days has been a solid record-breaking result. And at that time, I was incredibly proud of it.
Is it possible to achieve the same success now?
It was reminiscent of the "Name That Tune" TV-show. After the success, we ordered 25 hulls more. Why? It was like a sixth sense. When we analyzed the situation, we just knew that 25 hulls would work. Next year – we bought 50 hulls. In 2008 as a part of Burevestnik Group we sold 350 dayboats of the leading brands, such as SeaRay (285 hulls), MasterCraft, Malibu, Cigarette. Earlier we had become sub-dealers of Sealine, then we won the dealership of Fairline Yachts (that we exclusively represent in Russia). The logic was straightforward: a client, that had bought a 20-feet dayboat, was likely to buy a 25-feet boat next year. Contracts were executed with the thought what we to offer to the client next time.
Is the market different now?
The paradigm has dramatically changed, at least, in our group of companies. If the market used to be emotionally intuitive before, currently we have become more cognizant as we analyze and broadcast. We are not conventional brokers who want just to import and sell out, as we devote ourselves to building or searching for the perfect yacht for a client within agreed budget and timescales. Our goal is to deliver a yacht to the chosen location in stringent observance of all international regulations, employ experienced crew, inspect the yacht to ensure that the client can make the most out of owning of his/her yacht hassle-free.
Was it hard to become a dealer of the world-renowned brand initially? Unexplored market, and new to the industry people…
Well, it has always been difficult to get distribution rights. We were not the only one to see the perspectives of the market. Even that time the competition was high: certain banks were willing to lend funds to potential dealers to buy 100 boats at once. Along with our application to obtain distribution rights for Fairline Yachts, there were two other contenders pursuing it. At some point, we also represented two car brands and our application for Aston Martin was 16th. Bidding war for Sunseeker Yachts was even more heated. We were competing with three international dealers: English, Finnish and German, to appoint its agent and sell yachts in Russia. Winning a distributor contract requires a lot of effort: tons of correspondence, meetings, business-plans, feasibility, justification, argumentation, financing, service base and clientele…
When you founded West Nautical did you already know the way you want it to be?
I am dedicated to developing an extraordinary yachting firm, where clients can come with any yacht-related issue and they are sure to receive exceptional service and professional support. By 2013, when West Nautical was established, I was in the yachting business myself for 14 years. While I have gained a lot of expertise and knowledge, at certain stage I realized that Burevestnik Group, I owned together with Andrey Boyko (2000-2013 equal business partnership – ed. MBY), needed to be seriously upgraded to stay afloat and competitive in the new environment. Prior to 2008 you could relatively easily run a large company, and all that you needed was just to get off the couch and turn your umbrella upside down under money rain. The heavier the rain, the more you can get, that’s why it was reasonable to acquire as many brands as you can. After 2008 business in Russia and worldwide has undergone major changes. I determined the best effective strategies to build the company and identified errors to avoid. Three years later I understood that in order to create a successful company you need to not fix errors over and over again but reconsider the entire concept instead.
How did you reinvent your business?
Russian businesses often look like so: owner is regarded as a Tsar and the Lord of a company, surrounded by many assistants, while he is free to do practically whatever he wants. This scheme obviously works well for nobody. I believe that if you wish your company to succeed, you need to build a committed work team with mutual respect and real spirit when you treat every client like a friend, not like a money bag. In my opinion, when all you care about is money, you are unlikely to have many clients, and over time you will end up with next to nothing. Currently, we have several directors, each being responsible for their division, who we fully trust. Our management is comprised of highly-qualified professionals with exceptional experience. We embrace a complete freedom so that our employees can apply their expertise and contribute to the rapid growth of the business. We devote time to employee training and discuss every case in detail. This rewarding work that ensures that our business is beneficial to all parties.
Do you provide other services besides the sale of brand-new yachts?
We provide a wide range of services from the selling of brand-new and pre-owned yachts to yacht charter and yacht owner services. For those who are making their first steps in yachting we offer perfect charter superyachts. If you are looking for a turn-key solution, we will find your ideal pre-owned yacht based on your lifestyle requirements. In order to secure your future purchase, we perform a survey, validate documentation, complete thorough background checks and as a result we execute a report outlining whether you should buy it or not. I remember a while ago after performing a hull X-ray diagnostic testing, we found a big area of board decaying. Once our client had found a rather cheap yacht for himself, every other broker would likely execute the transaction, but already the first page of a 54-page survey unequivocally stated that the transaction must be prohibited as the yacht could not float and would just drown at a 2m swell.
Do you work with European surveyors?
Our main asset is our own national specialists, who we taught for two years. We employ surveyors from the UK, who get paid monthly, as well as marine engineer A1 (more than 3000GT), who is well qualified to inspect the yachts of any size and prepare in-depth reports that evaluate the yacht condition in accordance with the applicable regulations. Not to mention, we have two Captains of the Royal Navy in our fleet, who are entitled to navigate even an aircraft carrier without weapons.
When you launched your business in early 2000s, have you expected such growth of the yachting market and your company?
At that time, I didn’t. However, by third year I have seen the increase as we had a pretty diversified portfolio of as many as five leading brands: Regal, SeaRay, Fairline, Sealine, and MasterCraft, from what I recall. Later on, we added Cigarette, Baja, Boston Whaler… For the first time we executed a distributor contract with Sunseeker in 2005, and we have been fruitful partners all the time ever since (with the exception of a couple of years). Last year we were ranked the third among all dealers worldwide with the highest amount of revenue.
Are you going to expand your brand portfolio?
Not for now, as I am personally aware what it is like to operate with 20 brands at a time without required level of concentration. Our strategy depends on how fast we will be able to bring up a proven brand-leader within our team. Currently, we have separate directors for Sunseeker, Fairline and Sanlorenzo. Recently, we have executed a contract with Bluegame, an Italian shipyard affiliated with Sanlorenzo, likewise Mini and BMW, it definitely requires its own approach and brand-leader.
You have enriched your portfolio with smaller models from Bluegame. Do you intend to promote this brand mainly for the local waters of Russia?
Bluegame has two major concepts in it; first of all, it is a walkaround-style boat that is ideal for regular day cruises. It features a high-performance hull of a RIB and is quite roomy for a boat of its size. Earlier on, boats of a similar size used to sport minimal rear-cockpit and a sun lounger. Therefore, guests had to fit in this 4 sq.m space that obviously was not big enough. Bluegame boats are proud of wide lateral walkways inside the bulwarks, so you can walk up and down the entire hull length of 13 meters. Well-protected helm station, private lounge area in the bow, al fresco dining area in the aft, option to install swimming platform and gyroscope all that makes Bluegame boats completely sea-worthy. We delivered first Bluegame hull last year, the owner intended to use it as a tender for his superyacht in the Mediterranean. This is completely new perspective of Bluegame boats. That being said, he has ultimately transported the boat to local waters and uses it for daily cruising as a solo boat.
Do you think of our local waters in terms of yachting?
There is a growing trend to buy yachts for cruising in the internal waters of Russia. This year we have delivered new Targa 43 Open, three Sunseeker Manhattan 52s and Sunseeker 76 Yacht with bespoke interior.
If a Russian client wants to buy a yacht for the Mediterranean, what makes it better to work with you instead of local dealers?
Those who are buying a high value asset such as a private jet, a villa or a yacht, primarily seek a trusted partner who is willing to get things up and running. For example, Spanish dealers are notorious for their mañana attitude, so that clients keep waiting for quite a time after they are promised to be sent a specification tomorrow. When you are at home and realize that you need to immediately discuss amendments to your future yacht design, our specialist will arrive in 2-3 hours, for the foreign dealer it will take at least 5 days to get a Russian visa. We speak the same language as you do. Many international firms tend to think in generalities and offer little to no made-to-measure approach to understand the client’s requirements. We have 35 engineers-mechanics in-house, who are ready to arrive at any place of the world at any time. We also have multiple proven contractors across Europe, and with us you can be sure to be understood and receive efficient service in time.
You mean that you are able to provide the service abroad that can compete on quality with local services?
First of all, in case of a complex malfunction local specialists usually replace the whole unit, even if the problem is easy to fix by replacing just a single malfunctioning element, consequently the whole repair in that case turns out costly. Secondly, the most time-consuming part of the process is the delivery of the repair parts from a shipyard. Therefore, the sooner our service engineer detects the problem, the faster we will be able to order the component if necessary.
What about legal advisory related to yacht sale/purchase? How do you deal with complicated cases, and are you able to provide competent advice on the international level?
Local dealers are mainly focused on the European clients, and it is harder for them to assist Russian clients due to specific requirements that our nationals usually have. For example, if a French national buys a 20m yacht, it is usually intended for personal use. The standard scheme is as follows: he pays VAT, enters into lease, registers his vessel with the French flag etc. That is why local firms have made it a routine and follow standard steps. Although Russian clients prefer to register their yacht with English flags, which implies another procedure and more surveys, inspections etc. As a rule, they do not pay French VAT, but, alternatively, go for registering their vessel under Jersey flag, and claim Temporary Admission to enjoy continuous 18-month cruising, thus saving on VAT.
There are some certain challenging cases related to second citizenship of an owner. Under such circumstances the owner needs to get a commercial registration for his vessel and construct it accordingly. Each situation is dealt on case-by-case basis and requires exceptional expertise, and our firm is proven to find efficient solutions as we are among few companies that understand all nuances. West Nautical is the first yachting firm that has ever provided turn-key services to register a yacht in the recently established Russian International Ship Registry, that helps to significantly reduce tax liability if a yacht is imported to Russia. Of course, some limitations apply, and the first time it took us two months, but now we are able to complete the registration in a shorter amount of time.
Being in this business for such a considerable period, does it still feel romantic to you? Do you devote your free time to yachting?
Sure. I would not say it is romantic. However, I see yachting as the best leisure you can dream about.
What boat do you choose for yourself?
My ideal yacht is 25-30 meters in length, built on the leading European shipyard. Personally, I believe that American brands have very specific interiors that only Americans can comprehend, and hulls that suit for very specific purposes, let alone the prices.
Does speed really matter?
The speed of approximately 20 knots proves to be the most comfortable for cruising. However, 13-15 knots are also popular as it's well enough for the long-haul. 35 knots are now a bit out of fashion.
You used to represent Cigarette brand…
Yes, Cigarette go-fast boats we were capable of exhilarating 96 knots. Wearing a helmet was a must, because even a small bumble-bee turned into a bullet. You needed to stay concentrated, so you could not talk, and look around. Nowadays people are not in a hurry anymore, they are truly relaxing. 15 years ago, my client raced his boat around, so the entire fuel tank was completely empty in a couple of days. Today the situation is different. In 2002 two Frenchmen aboard of two Mangusta 108s competed to get to Porto Cervo first, while there were only two people aboard of each yacht, and they would easily stay on one yacht instead of two. As a result, fuel consumption for each yacht was 60t. Keeping in mind the fuel price of 1,5lt, such sea trip turned out to cost 180k euro, that is quite pricey for a night-out in Porto Cervo.
Does it mean that we are back to the original yachting traditions?
People are more into relaxed cruising right now. Experienced crew will ensure all needs are catered for, while guests are mesmerized by 360-degree spectacular views under the tropical sun. It’s ultimate luxury vacation experience when the crew takes care of any desires and questions, salon and staterooms are comfortably air-conditioned, chef impresses the guests with delicious dishes with all food preferences duly noted, and you eat the freshest lobster that is caught right from the sea you are cruising at the moment, but not the one frozen half a year ago… That’s the best ever holiday money can buy.