fedgazette

Moscow and Whitefish -- united over a cup of cappuccino

Montana State Roundup

Published October 1, 1993  |  October 1993 issue

"If you can do it in Whitefish, you can do it anywhere." That's the motto for Montana Coffee Traders (MCT), which opened a coffee roasting business in Moscow about 18 months ago.

Having already surprised some people with the success of his Whitefish coffee roasting business, MCT owner R.C. Beall was undaunted by the challenge of a similar operation in Moscow. Bemoaning the lack of good coffee in Russia, Whitefish residents Aleksandr and Laulette Malchik, who own an international consulting firm for small business, suggested that Beall might find a lucrative market there.

Thus was born MCT-Vostok (meaning MCT-"east") in March 1992. Beall and the Malchiks formed a partnership and opened their wholesale coffee business in Tagansky, one of the oldest sections of Russia's capital. With the Malchik connections, they took on a Russian partner and hired four others.

Even with Russian staff, there were problems in setting up business. They had difficulty finding adequate space, finally settling on a tiny downtown second floor office needing major cleaning and renovation. They had no telephone service for months, no source for basic office supplies and no way to get the coffee roaster into the country without bribing local officials (with coffee).

The partners also faced a major problem with Russia's highly unstable ruble. They could depend only on hard currency, which limited sales and marketing efforts to wholesale businesses catering to foreigners—hotels, restaurants and specialty grocery stores. "Until the ruble is freely converted, the majority of our business is in hard currency," says Whitefish MCT manager Scott Brandt. "We now do some business in rubles and exchange them to cover salaries, a few supplies and some general expenses."

In spite of the difficulties, Aleksandr Malchik says the business has been "virtually self-sustaining" since its second month, with profits reinvested. "We've seen a lot of Western speculators who want to make quick bucks and get out. But our vision is to set up a business on solid ground that forms a model of Western-style small business for the Russians. Small business provides a lot of energy in the US economy and the Russians need to see more of this over there."

After a year and a half the number of accounts in Moscow continues to grow. Employees now number seven, and current demand for the fresh roasted coffee beans keeps their roaster at capacity each day—150 to 200 pounds. They also sell related items such as grinders, plunge-style pots and espresso machines. "We take our accessories out on sales calls since we don't have a retail shop," Brandt says.

Brandt and the Malchiks talk of opening stores in other Russian cities such as Kiev, Penza, St. Petersburg and Novgorod. They've also discussed a joint venture with a Ben and Jerry's Ice Cream store in Karelia, a scenic vacation area in northern Russia near the Finnish border.

The bottom line is that the shop is making money and there is a lot of growth potential. Now the company's motto is: "If you can do it in Russia, you can do it anywhere."

Christine Power

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