THE WORLD ROVERS From Russia with love · THE WORLD ROVERS | Russia From Russia with love With Moscow Duty Free firmly established, the Irish influence across Russia and the CIS began

THE WORLD ROVERS | Russia

From Russiawith love

With Moscow Duty Free firmlyestablished, the Irish influenceacross Russia and the CIS beganto spread. Michael Cashin, one ofthe most experienced WorldRovers, was one man central tothat expansion.

48 The Moodie Report

Vyborg

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Many of the Rovers who left Irelandto travel the duty free world havefound themselves falling in lovewith their new homes. Ask ColmMcLoughlin or John Sutcliffe about

their relationship with the Gulf, and it soon becomesclear that they have a deep passion for the place and itspeople. Ask Michael Cashin about Russia, and he’ll tellyou it’s his spiritual home.

Cashin – one of the original Aer Rianta project team thatset up Dubai Duty Free in 1983 – is one of the most expe-rienced of Ireland’s duty free pioneers. His Aer Riantacareer takes in finance roles in Ireland, General Manag-er at ARI Pakistan, airport management consultancy inBulgaria and Saudi Arabia, and his current role as Pro-ject Manager of Aer Rianta International–Middle East’sconsultancy to Egyptair Duty Free Shops.

Yet it was Russia where his career blossomed, and it isRussia that captured his heart from the time he first vis-ited in 1988.

“I suppose I have a natural curiosity for new places, andI like to learn about the country I work in,” says Cashinfrom his Cairo office. “I’m always interested in what dealsare out there compared to back home. Here in Egypt thevalue is in items like carpets. In Russia we always had aneye out for a deal; we were constantly looking throughthe Russian catalogues and we would buy and sell every-thing going.

“In Soviet times everything had a fixed price and youcouldn’t go above that price. So for example, a helicop-ter cost the equivalent of the price of ten computers. Iremember we brought over the Artane Boys Band [afamous marching band from Dublin –Ed] for the SaintPatrick’s Day Parade in Moscow. We told them to bringsome dollars for new kit. Most of them ended up buyingthe very best new instruments for just a few hundreddollars between them.”

During the Soviet era cameras, motorbikes and evenboats were great value. “My colleague Kevin Farrow(another well-travelled ARI executive) developed a pas-sion for old cameras,” says Cashin. “He knew more aboutthem than the guys selling them in the shops. And hewould go back and sell them in the UK, using his hobbyto make a few quid.

“In the same way I got into motorbikes. I bought a Jawa

350cc bike for US$100, brand new. I couldn’t let it passme by. So I enjoyed using it and also got the sheer pleas-ure you get from a bargain.”

Cashin also took a keen interest in boats, though thatventure didn’t end quite so profitably. He even helped setup a boat club during his time in St Petersburg, where hewas General Manager of Lenrianta from 1989 to 1990and again from 1992 to 1997.

“I bought a 45ft boat and used to sail down the Neva river

Russia | THE WORLD ROVERS

Boom on the border: Liam Skelly (second right) opens theFrontier Duty Free shop between Russia and Finland, abusiness that had sales of US$36 million by 1997

The Moodie Report 49




to the coast. It was really about enjoying what the countryhad to offer rather than spending seven nights in the pub.

“We hired the captain for US$100 a month and everyonewho visited was subjected to the same experience, up anddown the Neva. Unfortunately it was burnt by someorphans, and I even saw them doing it. But I loved thattime, and still love that part of Russia.”

He loves it so much he owns a second home in St Peters-burg, close to the Peter and Paul Fortress in the city.“Apart from being a beautiful city I enjoy how peoplesocialise there. The Russians, once they know you, arethe most hospitable people.”

Cashin’s natural curiosity and interest in new environ-ments made him a good fit in those early days of tradingin the Soviet era with Moscow Duty Free, but at times itwasn’t easy. The pariah status of the Soviet Union withmany Western countries made trading doubly difficult.

Cashin says: “Part of my role – as deputy to Project Man-ager David Hope in the set-up of Moscow Duty Free – wasto oversee the new computer systems, including cash reg-isters, stock control systems and accounting software. Weorganised a tender for the supply of systems, which waswon by the US company Wang. But because US-madegoods were subject to stringent rules on use in the SovietUnion, Wang had to get permission to process our order.

“That was in December 1997, and the shop was set to

open in May 1988, so we became concerned at theamount of time it was taking. Eventually we got PeterHegarty, who was the computer manager at ShannonAirport, to buy some simple, basic software that wouldmeet our initial needs, and he switched the US softwarewe had available for this generic software, which workedperfectly. By the time Wang came back to say they werehappy to go ahead, we were already up and trading.”

Following the success of Moscow Duty Free other partyofficials elsewhere in the Soviet Union wanted Irishexpertise to develop their own duty free shops. In 1989,on signing a joint venture agreement with Pulkovo Avi-ation to set up airport and inflight duty free shops in StPetersburg, Cashin was appointed Project Manager.After organising the initial set-up he became GeneralManager.

“We had a team of round 65 in Moscow Duty Free, andabout the same again when the [downtown shop] ArbatIrish House was set up in Moscow; but in Leningrad(later re-named St Petersburg) we had only about 14 peo-ple. When we first went there we lived in a little towncalled Pushkin not far from the airport.

“It was called the ‘Tsar’s village’ and nearby you had Kather-ine the Great’s palace and the other royal palaces of old.”

The accommodation that greeted the Irish visitors was-n’t quite so palatial. “We first stayed in what was calledan Apartment Hotel, but it was a little different to how

Having worked with brands in Russiafor 11 years before joining ARI, JohnMoriarty came to the company assomething of an outsider. But he wasno stranger to the company. The ARIname and its Irish connection waswell established, especially amongthe ex-pat community.

“Moscow Duty Free’s Irish connec-tions were always apparent to otherex-pats in Moscow,” he says. “Andthere are many people who haveworked for the company for so longout here that it’s a company with agreat tradition. And many of the peo-ple who built it are still here.”

Moriarty is now one of the guardiansof those traditions, in his capacity asRegional General Manager –Russia/CIS. So how does he see the

shape of the market today?

“There are two major macro-issuesaffecting Russia’s position as a world-leading economy,” says Moriarty, “itsaccession to the World TradeOrganization and the succession toPresident Putin. The stage for joiningWTO was set during 2006, but howthe country moves forward after Putinis still unclear, although there are rea-sons for optimism.

“He has brought a lot of stability tothe market, and the conditions fortrading as a business have improveddramatically in recent years. There is agrowing middle class and peoplehave more money to spend. Whenthey get the opportunity to shop, theytake it. Before, many Russians wouldventure overseas on holiday once a

Securing the future of Ireland’s Russian stronghold




year; now it is two, three, four times ayear. And our business has seen a biguplift in sales as a result.”

And Russian consumers are now asdemanding, sophisticated and brand-conscious as those in the West.“You’re seeing good fit-out, better lev-els of service at all levels of shop-ping,” says Moriarty. “When MoscowDuty Free opened it set the standardfor the domestic market too. But nowthat domestic market is very dynamic,the boutiques match anything in Parisor London, and the standard hasbeen raised. And that keeps us on ourtoes, too.”

Growth in the Russian economy, andthe need to invest in transport infra-structure, will present opportunities fortravel retailers in the years ahead.

“There is now talk of a fourth terminalat Sheremetyevo, before the third oneis even complete,” says Moriarty, “butthat is symptomatic of improved for-ward planning. Moscow Domodedovowill continue to expand, with newinternational and domestic terminalsin the pipeline as it plans for 40–45million passengers a year in future.And Moscow’s third airport, Vnukovo,is expanding to hit 20 million incapacity.”

Beyond that, regional governments areeyeing expansion of their airports too.“Of the dozen or so cities of a millionor more inhabitants, at least eighthave begun modernising their air-ports. And we think that ARI can con-tribute to that growth, both throughour knowledge of the airport marketand our expertise as a retailer.”

Throughout that hoped-for expansion,the Irishness of the ARI network inRussia and the CIS will remain firmlyintact.

Moriarty says: “For me there’s a com-fort factor in working for an Irish com-pany overseas, and we’re also work-ing with some great quality Irishbrands that command recognitionamong the Russians. Baileys andJameson are up there and doinggreat things to build their reputationsin the market, but Bushmills and theeven higher-priced Midleton Very Rareare well appreciated here.”

For many Russians, the Irish are syn-onymous with one occasion everyyear: St Patrick’s Day. “I think theother embassies look at us with someenvy – that the Irish, such a small

you might imagine that concept today,” says Cashin. “Itwas really a transit hotel and you could only rent beds,not rooms. If there were three beds in a room, and yourented one, you’d often find the door opening in the mid-dle of the night and some other guest would walk in tooccupy another bed. It wasn’t something many people got

used to, so in the end we would do deals for all the bedsin a room, often for one person.”

The taxi ‘system’ – well known even today to visitors toRussia – was another quirk. In brief, you can flag down anyprivate car willing to take you and negotiate a fare for your

February 1988: Signs an agreement with Aeroflot to createjoint venture company called Aerofirst to operate stores andinflight sales

May 1988: Opens two duty free shops in the Departuresarea of Moscow Sheremetyevo Airport Terminal 2, trading asMoscow Duty Free

August 1988: Begins duty free sales onboard Aeroflot flightsout of Moscow

October 1988: Moscow Duty Free named Frontier AirportRetailer of the Year

November 1988: Signs second joint venture agreement, thistime with Aeroflot – St Petersburg, to open duty free stores atPulkovo Airport, St Petersburg

March 1989: Two Arrivals duty free shops opened atMoscow Sheremetyevo Airport

April 1989: Signs third joint venture – this time with VyborgRegional Consumer Society for Russian-Finnish border shopat Torfionovka

June 1989: First duty free shops at Pulkovo opened, plusbars and inflight sales

August 1989: A joint venture signed with Intourservices andthe Pribaltiskaya Hotel in St Petersburg to establish duty freeshops there and in other hotels

December 1989: Pribaltiskaya Hotel shop opens

January 1990: ARI signs an agreement with Aeroflot –Tashkent for construction and operation of duty free shops atthat airport

February 1990: A similar agreement is struck with Aeroflot –Kiev

April 1990: A new joint venture with Aeroflot and otherMoscow business partners is struck to cover various com-mercial ventures in Moscow

May 1990: A new fragrances and cosmetics store is openedat Moscow Sheremetyevo

May 1990: A second downtown shop opens in the MoskvaHotel in St Petersburg; Torfionovka border store starts up

September 1990: Moscow Departures stores are significant-ly expanded

December 1990: A third shop opens in downtown StPetersburg in the Astoria Hotel

January 1991: An agreement is signed with Moscow CitySoviet and the Novoarbatsky supermarket to develop andmanage hard currency and rouble supermarkets in downtownMoscow. The shops open in August.

Update: Today Aer Rianta International has Russian stores inMoscow Sheremetyevo, Domodedovo and Vnukovo as wellas St Petersburg Pulkovo. It also operates inflight salesonboard Aeroflot. In the 1990s the company phased out itsdowntown and border store operations.

ARI’s pioneering chronology in East Europe 1988–1991

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trip. “We did that a lot, and it was a better scheme thanusing the regular taxis,” says Cashin.

“In St Petersburg I had one of the best cars on the road, aVolvo 240 Estate, which was a step up from the Trabantsor Ladas, so I had a lot of people hailing me for a ride. Iwould pick people up and met some very interesting char-acters doing it.”

Cashin’s nose for adventure made him a sound candidateto kick-start the next phase of Irish expansion in Russia,with the opening of a border shop within the Customszone at Torfianofka, a border post with Finland, in1990. He later spent five years as Director General of thejoint-venture company SITOP from 1992.

“The governor of the region was keen on a duty free shop,and we were allocated the Cooperative Society as a part-ner,” says Cashin. “They weren’t what you’d call hardenedbusiness people, more like a rural cooperative scheme.

“But they were good partners, and the company ended upas the biggest tax-payer in the entire widerLeningrad region, a region that’s about the size ofIreland.

The story of the start-up of the SITOP joint venturecarries a fascinating aside. A young Vladimir Putin, nowPresident of Russia, signed off the legal documents thatallowed the joint venture to proceed. “It tells you a lotabout the power structures in Russia, and the fact that thesame characters are on the scene as they were back then,”says Cashin.

“Putin was a legal administrative officer in St Petersburgat the time, and when we had to register all our documen-tation he was involved in the sign-off. His signature is onthe original legal document that ushered the business intobeing.”

Although it operated in very small shopping outlets thecompany increased its sales from US$4 million to US$36million in five years. (The business later closed when theCustoms fence between the two countries was moved andthe shop ended up outside the zone.)

Cashin says: “At first we thought we would have to closefor four months of the year, because of the weather. Butwe should have realised that when you’re selling duty freeliquor to the Finns you never close your doors.”

The business was built around weekend trips byFinns over the border to buy liquorand cigarettes. “TheFinns had





an interesting relationship with the business. They nick-named the drive down ‘the Vyborg Rally’ because theyused to get in their cars on a Friday and race down to theborder at Vyborg. But because of its popularity wedeveloped a reputation in the Finnish press.

“Alcohol sales were strongly controlled by the statemonopoly in Finland, so they took a moral stand abouthow shameful it was to see liquor being sold cheaply. Infact, that reputation did us no harm at all.”

In those days video recorders and small electronics werepopular too, but with Russians visiting Finland. “For atime we made a fortune selling to Russians on bus toursto Finland for whom we were much cheaper than thelocal market. But that all died off under Yeltsin. Heallowed the import of duty free electronics and the mar-ket was flooded.”

Among the most vivid memories Cashin carries with himare of the three bank collapses he experienced during histime in Russia, and how the company was forced to cope.The most acute problems came when the main Sovietstate bank collapsed in 1990.

“Under the old rules you had to deposit your takings inthe bank within 24 hours,” says Cashin, “and that ruleapplied even if the bank was going bust. There was noway we were going to do that, so all our operations kepttheir cash so we could deposit it all together in a bank thatwas solvent.

“In Vyborg we stuffed all the filing cabinets full of cash,

and the same thing was happening at Lenrianta and atMoscow Duty Free. We knew we could get the moneydeposited in Leningrad, and moved to another bank; butthe question was: how were we going to move all that cash?

“So I chartered a plane to fly from Moscow to Vyborg toLeningrad, collecting around US$1 million in cashalong the way. But it had to be secure, because you couldget murdered for very little money, never mind a milliondollars. So we had to keep the focus away from the moneyand on to something else, so not even the crew wouldknow what they were transporting.

“One scheme we had was to dress a tailor’s dummy, say-ing this was the big boss from Ireland over to see theoperation. We’d make a big fuss over the dummy in theairport lounge, taking photos of each other with it, butkeeping it far enough away from close inspection.

“Then, when everyone was distracted, we’d get photoswith the crew in front of the plane, and make a big fussof them as well. And it was then that we’d slip the cashinto the aircraft. It sounds crazy, but it worked.”

Desperate times, desperate measures, yet the serious workwas always mingled with an acute sense of fun. Cashin’sinnate curiosity and spirit of adventure have brought himrich rewards in his time with ARI. But in nearly 20 yearson the move, doesn’t he ever hear the call of home?

His answer is simple. “I left home on a ten-month con-tract in 1988,” he says, “and I’ve been making my wayhome ever since.” �

nation, can close one of themain streets in Moscow in Marcheach year to have a parade. It’ssomething we take real pride in, and asign of the mark the Irish have made.And it’s an occasion that Aerofirst hastraditionally had a big input into help-ing succeed.”

ARI in Russia is now ensuring that thegreat traditions of overseas Irish retail-ers are kept up. “We have a history ofretaining key Irish people in seniorpositions wherever we set up,” says

Moriarty. “Now we’re looking at devel-oping the next generation of seniormanagers. We have two students whograduated from the University ofUlster who are coming to spend timein this region in 2007, who we hopewill go on to become senior managersof the future.

“We think it’s important to nurture ourown, and to retain that Irish element insenior management.”

They are values that have brought thecompany much success since thosemodest beginnings in Moscow almost20 years ago. And they are valuesthat the retailer will lean on to sustainthat success in the next 20 years.

The ‘greening’ of Russia: The Irishcommunity’s St Patrick’s Day parade isnow established as one of the fixtures on Moscow’s social calendar

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THE WORLD ROVERS From Russia with love · THE WORLD ROVERS | Russia From Russia with love With Moscow Duty Free firmly established, the Irish influence across Russia and the CIS began