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Cases 10:22 13 Apr 2021

Borscht for export: how to sell Ukrainian eco-friendly products in EU

What does it take for a Ukrainian entrepreneur to enter European markets? The key thing is consistency and originality.

Organic food is a new trend in nutrition, which, apparently, is to stay with us for a long time. The trend which began in the West in the United States and the European Union has spread around the world, giving people not only a chance to pay more attention to their diet and the origin of the food they eat but also opportunities for new businesses.

In Pervomaisk, Mykolayiv region, a farm grows and preserves organic vegetables and fruits. And one can see these useful products not only on the shelves of our stores but also abroad, in particular, in EU countries.

Yan Ostrovskyi, a well-known Ukrainian volunteer and now the owner of the Stodola brand told us how it all started and how the Ukrainian company managed to enter the international market.

Ян Островський

Yan Ostrovskyi

Europeans should be surprised

The story of Yan Ostrovskyi's business dates back to the time of volunteering for the anti-terrorist operation. Even then, everything revolved around the main Ukrainian dish–borscht:

"After graduating from university, I worked in international trade, promoting Ukrainian commodities abroad, and later organized a family business, a restaurant. Since the beginning of the anti-terrorist operation, I've been volunteering, setting up the production of canned rations in my restaurant's kitchen, which we handed over to the anti-terrorist operation zone–borscht, anti-cold mixtures with garlic. Also, our jars were raffled off at charity auctions in Ukraine and abroad among the Ukrainian diasporas, the proceeds of which we used to purchase what was needed for the soldiers. Of course, no one thought at that time it would become a business. But when the logistics in the army were established and the need for rations disappeared, I continued to receive requests from the Ukrainian diaspora for these products, and so we decided to continue this business, and started growing our own vegetables to can."

Yan Ostrovskyi's first contribution to the development of the new business was $5,000. They bought seeds and set up an irrigation system. At that time, the team of young farmers consisted of Yan himself, his parents, and employees of the family restaurant. These people still work together, but the team itself has doubled or even tripled. Now it's a full-fledged production. The company's range includes not only borscht and a delicious spread of lard and garlic. Now it's both traditional pickled vegetables, and more refined mixes, dip sauces, sun-dried tomatoes, organic grilled vegetables.

борщ

Naturally, the organic path is much more complicated than the usual business, but, according to Stodola, the complete safety of products for children and adults is part of the company's philosophy. Besides, for successful competition with foreign counterparts, there was a need for certificates that would confirm compliance with international standards, including the EU ones: "Because of the taste, we won the shelves, but we understood that our environmental friendliness must be confirmed by some documents. The organic market in Ukraine is still quite narrow. We polish the recipes, get feedback from Ukrainian consumers, but from the very beginning, we realized we needed to move on and export."

For three years, Stodola has done a great deal of work to enter export markets. During this time, they took part in trade missions to Germany and Scandinavia, in the international exhibitions Gulfood (UAE), Anuga, and Biofach in Germany. Having received many potential partners, the company is working in this direction and now, negotiating and making the first test deliveries to the EU, USA, Singapore, UAE.

Ян Островський

"Actually, we're not very much awaited abroad," Yan laughs. "If they have ten types of cucumbers, then why do they need an eleventh one, Ukrainian? We have to not only convince with the quality of our products and serious attitude to the long-term cooperation but also to surprise them."

For example, at one of the exhibitions, along with sauces and marinades, Yan brought home-grown exotics: hot peppers and physalis of unusual purple color, colorful corn, spiked melon, and Mexican cucumber, which looks like small watermelons.

Ян Островський

How to defeat mistrust?

Yan Ostrovskyi calls the lack of potential partners' experience of working with Ukrainian companies, a certain distrust, the occupied markets with similar products from other countries, the lack of a culture of consumption of traditional Ukrainian products as the main problems of entering the EU markets. Therefore, first, vegetable growers from the Mykolayiv region provide samples of their products to all interested companies, explain the nuances of consumption, make a test shipment, and then, if the puzzle is completed, prepare contract orders for next season.

Comprehensive work on all fronts also includes cooperation with many international organizations that promote imports into the EU and exports from Ukraine, such as the German Import Promotion Desk (IPD), whose services are targeted at small and medium-sized companies from emerging markets, and who have little or no contact with Europe.

"All this helps a lot both in terms of reputation and recognition," the founder of Stodola says. "When customers come to your stand, they already know you well, they have heard a lot about you, your reliability is guaranteed by partners with whom you've passed a comprehensive check. For example, representatives of IPD, which finds potential partners for the EU, come to the ground, study the production conditions, test the products; potential consumers fully trust their conclusions.

Every year the company undergoes an audit of European-accredited inspectors, who check and confirm compliance with European standards of all production stages, from growing seedlings to packaging finished products. Products for all markets (including Ukrainian) are absolutely identical, the only difference is in the packaging and labeling, so it's very important to maintain common standards and requirements in each batch of products.

Ян Островський

European trends and quarantine

Currently, tens of thousands of jars of delicious and original conserved food are made in Pervomaisk per season. This year's novelty is a line of organic sauces. The plans include fruit and berry smoothies, to which you can add flax seeds and amaranth flour; jams, and marmalades from a variety of berries, useful cereal snacks. They also plan to make energy shots, small 50-gram bottles with organic energy, which includes fruit, turmeric, ginger. This trend is very popular in Scandinavia. They've been developing new biodegradable packaging. There are even ideas for cane cocktail straws.

Quarantine affected Stodola's international activities, closing the exhibitions and moving them online. But in terms of sales in the national market, they've increased because of the specifics of the product sales; due to quarantine restrictions, consumers are less likely to visit stores and choose products with a long shelf life. Test shipments (Germany, the UK, France, Scandinavian countries) are still going to Europe. The product is provided to dealers to work with their customers and partners, as well as to study demand and feedback.

Ян Островський

"There are several ways to enter export markets," says Yan Ostrovskyi. "This is either a large bulk with low margins on high-demand products or, as in our case, a unique trade offer, niche products with an organic certificate. Therefore, we don't chase and won't chase bulks, our goal is to sell niche high-quality products with high added value. The borscht we started with is a product with excellent prospects. It's universal in taste and liked by many who taste it for the first time, including in Europe. In fact, borscht from Baltic and Polish producers is already sold in the EU, but it's not exactly what we're used to. We not only made Ukrainian Borscht, but we also certified it as organic according to European standards. This is a very complex process that took years, because we needed to certify absolutely all the ingredients, from home-grown vegetables to spices, sugar, water, and processing equipment.

Foreign partners have little interest in your bank accounts. They need your understanding of European standards, direction, knowledge of European business principles, and quality standards. Different markets require different products, for instance, marinades in different countries: somewhere, they like more spicy taste, and somewhere, as our usual taste, they like very sweet flavor. You need to understand consumer habits."

Yan Ostrovskyi also shared the opinion: it's through cultural festivals that there's a great opportunity to convey the culture of consumption of our dishes. Yes, the producer's Ukrainian borscht became a bestseller on the stand of our diaspora at the festival of cultures in Luxembourg.

According to him, selling outside Ukraine requires almost the same steps as local sales. You need to conduct a detailed SWOT analysis, understand your strengths and weaknesses, form your unique trade offer and look for markets and partners who'll be interested in your product.

However, you should also be prepared for surprises:

"Earlier, everyone thought it was difficult to plan only in Ukraine; the legislation is constantly changing and other conditions for doing business. But the last year has shown that the lack of stability is now inherent in the entire world, so an important quality has become the ability to treat any obstacles philosophically and enthusiastically. Personally, I believe all the problems always mean new opportunities, you just have to look hard at them.

Well, and the key thing is to be into the business, believe in it, and go forward to successful sales. In my case, my business is like my child, to whom I give the maximum of my time and energy and who's dynamically growing in front of me and actively developing.

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