America's caviar king won his crown by coming in second.It's a story that reveals a lot about the politics of caviar, which in turn reflects international politics.
William Zee represents gastronomic royalty. He and a French associate, Georges Fixon, control all caviar (sturgeon roe) from Iran and Russia sold in this country. By all appearances, the 75-year-old "Mr. Zee" (who has abbreviated his last name, Zarotschenzeff) is a happy monarch. A tiny man with a sunny smile who wears well-tailored three-piece suits, he could pass for a gnome of Zurich. But his throne is somewhat shaky, and he admits it.
"I have my fingers crossed," he said last week. "The political situation in Iran is our No. 1 problem, and politics with Russia, too. Next is the inflation and oil and what it has done to foreign exchange. With our poor dollars we are at a tremendous disadvantage. The sturgeon supply? That is third.
"There were all kinds of uncertainties and shortages at the end of last year. This year we have received our supply from the [Iranian] spring catch and we have reasonable quantities, particularly sevruga. Prices will not go up. Maybe down."
The average consumer isn't likely to notice. Early this spring fresh beluga caviar (the largest eggs) cost from $200 to $300 for a 14-ounce tin in New York City. Fresh sevruga (small eggs from a smaller sturgeon) was $110 to $140. At a promotional reception here the wholesale price list offered 14 ounces of beluga at $235 and the same amount sevruga for $108.
That means the wholesale cost of beluga is more than $8 a tablespoon; sevruga costs a modest $4 for the same amount.
Of course, it's come a long way - in distance as well as cost.
The sturgeon are caught in the Caspian Sea. It is the world's only source of caviar on a truly commercial scale, with a yearly yield of about 600 tons on the Russian side and 140 or so tons to Iran. In recent years, overfishing, pollution and ecological changes - the sea has shrunk - have decreased the harvest dramatically.
The roe is separated and salted by hand. That destined for export goes from Russia and Iran by refrigerated trucks to Rotterdam, then is flown to Puerto Rico (a free-tade zone where Fixon's Panama-based PanaCaviar company has its processing plant and warehouse). Some will be sent on to Japan or to Canada. Caviar destined for U.S. mainland cities goes to Los Angeles, then is reshipped. (Mr. Zee maintains that bureaucratic red tape makes it impractical to ship caviar directly from San Juan to Washington.)
Pasteurized caviar is quite resilient. Fresh caviar, however, must be kept in a temperature range of 28 to 32 degrees throughout its voyage.
All this costs a lot of money, which helps explain the high price of "real" caviar. (Roe of other fish may be called, for example, "lumpfish caviar," but sturgeon roe alone can be labeled simply "caviar.") There's duty to pay - 30 percent for Russian fish eggs; 15 percent for Iranian. Also, Mr. Zee and his associates paid a great deal to play international hopscotch: They won a five-year contract from the Iranian government in December 1976 with a bid of $16 million. Russian contract is offered yearly, apparently without bidding.
The money is paid in fixed increments for delivery of the spring and fall harvests. No adjustment is made for a shortfall in supply; thus Mr. Zee's crossed fingers.
As he tells it, his fingers were crossed as well on that December day in Tehran when the bids were opened in the presence of government ministers. "The bids had to be sealed," he said, "so we ran around the city to find someone with wax. When it was in the envelope, we used an American quarter to press in" as a hallmark.
PanaCaviar and Mr. Zee's own company, Caviar, Inc., submitted bids, as did Romanoff and an Iranian firm. In an attempt to outflank the competition, PanaCaviar's was higher than that of Caviar, Inc. By the rules of the game, Mr. Zee said, once they learned their bids were first and second high the partners could have gone with the lower Caviar, Inc. bid and paid a penalty. They chose not to, however, for reasons that can be understood only by tax lawyers and accountants.
A "security deposit" of $500,000 in cash was required to activate the contract, Mr. Zee said.
Mr. Zee said his father and Georges Fixon's grandfather crossed paths in Paris in the 1920s where Fixon's family operates the Caviar Caspian restaurant on the Place de la Madeleine. The elder Zarotschenzeff was a meat processor. " who became a pioneer in electrical refrigeration. William, or Vladimir - our Mr. Zee - was sent on to America. He worked in the Chicago stockyards and earned a degree in business administration from the University of Chicago, then rejoined his father to work on "quick freezing" in England and frozen food machinery in this country.
As World War II approached, his father retired to California. When the war ended, Mr. Zee became involved in the frozen seafood business, traveling and working to develop the industry in Canada, Cuba, Japan, Brazil and Pakistan. Caviar he knew from his youth. ("Until today I still recall the taste of the pressed caviar sandwiches my mother quite often would send to school with he," he said with a smile.) But it was only when he himself moved to California that he became active in the caviar business.
"Los Angeles today does not have the tonnage of New York," he said, "but it is not cutthroat competition. One caterer we work with offers caviar with a party, but he doesn't take a markup. We deliver an hour before a party. The caviar is in perfect condition. We measure, weigh and serve it. It makes him look good and he makes plenty on the rest."
Mr. Zee's firm also sells to cruise lines and airlines and has done "terrific business" in the food shops of fancy department stores. But he is not sitting still. Lately he has been "branching out." Caviar Inc. now wells smoked salmon and pate de foie gras as well as caviar and has plans to offer smoked sturgeon and " a few other items."
As for caviar itself, Mr. Zee agrees with other experts that the Caspian beluga may become commercially extinct in the next few years. Therefore he is keenly interested in new sources of caviar, mentioning China as one possibility and talking about fish egg samples from Pakistan, the Great Lakes, various West Coast rivers and even from Kentucky and Tennessee. "Who knows?" he said. "If there is something, we don't want to miss out." However, he doesn't think a plan to "farm" sturgeon on the West Coast is commercially viable and dismisses an ersatz caviar developed in Russia as a "complete fiasco."
Despite their contracts with the producing companies, Mr. Zee and his associates sell to wholesale competitors such as Romanoff, Iron Gate and Purepack to avoid possible antitrust action. Caviar demand is strong, both in this country and worldwide. But despite its reputation for parties, Washington evidently is not a very active market.
"Frankly, I'm disappointed," said Marvin Stirman, the wine merchant who also heads Washington Caviar Company, the local distributor. "We've done business with restaurants such as Le Pavillon and Lion d'Or, the hotels, and the Old World Market is a good customer, but I'm still trying to get the caterers. They seem to be very price-conscious. I guess they are using substitutes."
Mr. Zee winced.
Several restaurateurs confirmed a dropoff in demand for caviar. "With these prices (for fresh caviar)," said one, "I'd have to charge $20 to $25. Who's going to pay that for an appetizer?"
"I'll tell you this," added another. "At our place a man will never buy caviar when he's out with his wife for dinner. It's strictly a romance item." CAPTION: Picture, William Zee, by Vanessa R. Barnes - The Washington Post