Press about us


The complex ball 23.01.2012

The situation on the domestic fresh market seems paradoxical even for the worldly-wise expert agricultural sector. On the one hand, the annual agricultural enterprises of all ownership forms produce significantly more vegetables and potatoes than is required to meet the needs of the domestic market (in fact, in recent years, despite the economic crisis, the production has steadily increased).

On the other hand, the high yields for some reason does not lead to a dramatic increase in the implementation. For example, in Ukraine, the need for people in commercial potatoes, according to experts, is only 2.7 million tons of vegetables - 2.2 million tons and vegetables in greenhouses - 500-600 thousand tons per year (see "Production ..."). In the per capita consumption of products of vegetable average statistical group in Europe at least 3 times higher than Ukrainian figure.

According to some experts, the reason for the existing state of affairs lies in the fact that the vast majority of producers can not organize the promotion and realization of products grown primarily used as a primary sales channel network of retail food (see "The structure of distribution channels ...").

For example, according to Oksana Varodi, head of the International Finance Corporation (IFC) "The development of the fruit sector in Vinnytsia Region" (from 2005, about 10 people.), the average turnover of 1 square meter of the European supermarket vegetable is EUR 5- 6 thousand a year, and in Ukraine – EUR 1,5-3 thousand. Thus, the potential for increasing fruit and vegetable production through the implementation of the retail network in Ukraine is big enough.

Why?

According to the Minister of Agricultural Policy and Food Mykola Prysyazhnyuk, annually about 50% of the "vegetable" crop and 60-65% of harvested potato rot before reaching the consumer. Alas, last year's record harvest and produce not only failed to provide income to farmers, but in general has led to direct losses - at the beginning of 2012 domestic farmers estimated that the total damage to the industry last year amounted to 3 billion USD.

The situation was not saved but finally the wholesale markets started to work. Meanwhile, even with an excess supply of vegetable vendors and low purchase prices prevailing in the season, not all vegetable chain stores showcase the breadth of assortment and encouraging quality products.

Largely vacant shopping area networks were unused due to unavailability of suppliers to work in a competitive environment. "In lean 2010 the retailers were willing to reduce the requirements for quality and price concessions to go to the suppliers. Many networkers in small batches collected the necessary amount of vegetables in several farms. This year it is exactly the opposite: very low prices and quality requirements are very high. Network preference for households that have proven themselves as reliable partners for many years", - said Tetyana Getman, director of "AIC-Inform: Vegetables and Fruits "(Kiev since 2003, 15 people).

Although vendors have managed to meet the requirements of networks have benefited. According to Bogdan Zvolinsky, executive director of the Ukrainian Association of producers of potatoes (Ulyanovsk Aviation Industrial Complex, Kiev, in 2010, 18 members), "this season has shown that the network - is a serious and profitable alternative to the open market under conditions of overproduction and a significant offer vegetable production".

For whom?

However, according to Ms. Getman, collaboration with networks is not for all categories of farmers. Network regularly tenders among providers, and to lay the costs of pre-training products, and logistics in the selling price means losing the tender. Therefore, all these costs from the manufacturer must pay their own profit.

"It is clear that by working with the retailer directly, bypassing the middlemen in the face of wholesale companies, farmers can expect a higher price. But he takes certain risks. For example, the network may overestimate the amount of defective product and refuse to accept the goods delivered. The problem with the implementation and utilization of a waste, the farmer must decide on his own, "- says Ms. Getman. 

In addition, she said, involves working with retailing and grace - the farmer must be willing to lend to the network for a period of several days to several weeks. In other words, to afford the "luxury" of cooperation with the network can be a major manufacturer of retailing, which has established logistics, working with several categories of customers (retail, processors, export, wholesale markets) and has a certain reserve funds. For most small farmers the most convenient distribution channels are wholesalers who take products from the field and then pay for it, or the wholesale markets of agricultural products.

Requirements for retail

It is necessary to consider that for networking it is not enough to be a major producer. It is necessary to meet specific requirements imposed by the network of fruits and vegetables. For example, according to Valentyna Gilko, manager of procurement of "METRO Cash & Carry Ukraine" (Kiev since 2003, 31 Shop, 7.2 thous.) from the suppliers of fruit and vegetables a network requires firstly all documentary evidence that the proposed product is completely safe.

In addition, said Ms. Gilko, "Fruits and vegetables should be fresh, clean, free of mechanical damage, excessive moisture, odors, the same degree of maturity, calibrated, and the requirements for packaging products are nominated in accordance with the standards of the network and national health standards, some conditions apply to certification of the manufacturer ".

As the Valentine Gilkoy specifies, the "Metro" usually has no problem complying with these requirements when it comes to imported goods. But for local suppliers it is difficult to meet the demands of retailer.

"For example, while only a domestic company - producer of berries could provide a supply of suitably chilled and packaged products", - said Valentine Gilko.

Olga Ruban, Head of the direction of "Fruits and Vegetables" network "Eco-Market" (Kiev, 86 shops, since 2003, about eight thousand people), confirms the observations of colleagues: "Unfortunately, not all manufacturers can sustain the competitive struggle in this market. The situation is especially difficult with the suppliers of domestic production - 80% of producers prefer to work in a "market": to come, to wholesale and to forget. But we have special conditions for the reception of the goods. For example, products at the distribution center should come packed, chilled to a certain temperature, etc.".

However, we note also that showing stringent requirements for suppliers of fruits and vegetables, not all retailers meet the high standards of modern civilized retail and perform basic management errors at times. This often leads to unnecessary damage and loss of suppliers of products (see "Quotes from the supplier").

Features

At the same time, major suppliers, who established a long-term cooperation with the retail network, find the requirements to be quite reasonable. For example, Victor Gordiy, Deputy Director for Economics of Uman Greenhouse Complex (Uman, Cherkasy Region., Production of fruits and vegetables, since 1974, more than 500 people., the total area of greenhouses - 34.6 m), told the “Business”: "No one raises the impossible demands to the suppliers of fruits and vegetables to a network. Indeed, when we started cooperation with the Food Network, it was quite difficult to meet some of their requirements for grading, the degree of cooling of the product quality and packaging. The main "stumbling blocks" we were able to overcome a year or two. In 2009, we have been certified by European standard GLOBALG.A.P (or Good Agricultural Practice - Safety Standard for agricultural activity. - Ed.). And now our products have not only meets the requirements of domestic but the transnational networks".

In this case, Mr. Gordiy emphasizes that the own logistics center (cargo delivered to Ukraine's own transportation) helps to maintain the strict delivery dates of the company.

Asa result, if five or six years ago, about 90% of the products Uman greenhouse complex marketed on the open market, but now the situation is the opposite. "Trading on the open market - is first of all "cash" turnover, which requires an additional control, poorly projected sales volumes, higher logistics costs. For us this is unacceptable, "- says Viktor Gordiy.

Growers generally have adopted the European experience of developing and implementing uniform requirements and standards at the level of industry associations. According to Mr. Zvolinsky, Ulyanovsk Aviation Industrial Complex has recently developed a single standard of quality potatoes for retail chains.

"Taking into account the wishes of retailers the indicators of tuber size and maximum number of damaged potatoes in each lot, its content of land, mineral impurities, etc were established. The most difficult to "sustain" the requirements for the degree of lesion index of potato pests and diseases (current prices for pesticides do not allow to fully protect the harvest). It also points to the problem can be attributed, and mechanical damage occurring during combine harvesting "- explains Mr. Zvolinsky.

At the same time, according to Ms. Varodi, to improve the efficiency of interaction with the network the provider can comply by fairly simple advice. "First, the manufacturer must provide a separate specialist who will deal exclusively with the cooperation of retail network, as this work is connected with a huge document and control the fulfillment of specific requirements retailer. Second, the employee must attentively examine all contracts that are signed with a future implementer. The retailer details all terms and conditions. Often the manufacturer misses a number of requirements, which further leads to undesirable consequences, such as payment of penalties", - an expert warns.

In addition, sais Ms. Varodi, in the harvest season the producers of fruits and berries, as a rule, hire a third-party transportation for delivery of its products in stores network. It is desirable that the unloading of such vehicles on the ramp or in the supermarket distribution center were controlled by an employee of the manufacturer (in order to avoid unnecessary complaints about the quality of networking product).

There is one very important caveat: even if their own products from the supplier end, it makes sense to buy it "on the side" to continue the cooperation with the network. This strategy will allow concluding the contracts with the network on the Rights of the permanent partner.

Quotes supplier

"Most of the networks continue to lose open markets" – sais Maksym Yenchenko (32), the owner of "Mikotek Farm" (Kiev, mushroom production, since 2005, about 20 people.)

- How has changed the approach to the fruit and vegetable range of networks in recent years?

- Without exception, all the top managers of networks have already understood that fruits and vegetables - are the same "anchor", as well as bread. If you do not have potatoes in the store, the customer will go to the store across the street. With fruit the situation is somewhat different.

At the point of sale a full range of vegetables and fruit in this group should be, in my opinion, it is important for buyers of the existence, maybe even one, but very good suggestions. This may be strawberries, peaches, grapes, or something else, but of excellent quality and at an attractive price.

However, we see that the fruit and vegetable display cases look different and bring very different financial results for the owners of different networks. Alas, most of them continue to lose the open market.

- What are the main retailers’ mistakes?

- In my opinion, the range and quality of fruits and vegetables are very dependent on human factors: the making of top management of the network concept of business management, purchasing manager, employee relations distribution center and head of the vegetable department of a commodity, in the end-to-consumer relationship network. Especially popular beach - incorrect rotation and late cancellation of the goods.

When you work with fruits and vegetables the right approach would be more gradual devaluation of the "early" product while adding to the shelves of fresh fruit. This, of course, is rather difficult to organize, but many managers do not try to do it. As a result, the old production is exposed on the shelf, but fresh is in stock and gradually deteriorates. It happens that the stale and fresh vegetables are on the shelf and at the same price (it is clear that the old product no one buys).

Though not often, but sometimes, due to various reasons, the range "misses" an important position, for example, there are potatoes, but no onions or carrots. Manager must ensure the full offer of "Borshch set" at any cost.

If I were the owner of the network, I would commit my managers one day a month to carry out the trading floor, to communicate with customers and find out who bought, what and why, in the range of what is missing. But many of the networks, though not all, do not really study the demand, or simply ignore the needs of customers. And if they decide to take this into consideration, they charge with this a marketing company issuing the "obscure” and very often incorrect results. Here you can add staff and poor communication networks with suppliers - managers usually do not even see the supplied vegetables.

Thus when choosing a supplier, they often decide based only on the selling prices of products. In other words, it seems that the minimum threshold of quality is sufficient for the goods to be taken in stock. Now add to this that many shops storage the goods in warehouse without refrigeration, as well as the irresponsibility of employees of vendors who "hold" the products during hours on the ramp with a 30-degree heat.

Quotes from retailers

"Suppliers do not try to get a profit on the packing of goods," - said Maxim Didenko (38), the manager of the category "Fruits, Vegetables," Department of Commerce Civil Fozzy Group (Kiev, trade in food and consumer goods, production of food, 378 food stores in various formats, since 1997, more than 30 thousand people.)

- Do the suppliers of fruit and vegetables change the promotion strategy in connection with the growing competition?

- Now, many suppliers have already started to adopt the technology used in Western Europe. For example, fruits and vegetables get to the store shelf packaging manufacturer. We are working with the exchange pulling packaging standard format (specialized plastic reusable packaging. - Ed.) and disposable packaging.

This allows us to accelerate the process of receiving the goods at the distribution center and store, and reduce product loss. We don’t accept fruits, vegetables or mushrooms in the so-called "banana boxes" (only the actual bananas), as this complicates the delivery of packages and does not contribute to the preservation of products.

- In your opinion are the manufacturers ready to supply products that meet customer requirements?

- So many consumers still prefer to choose fruit or vegetables from the box on the trading floor. But there are customers who do not want to buy vegetables in bulk and prefer the product to be packed, and every fruit and vegetables in this package should be fresh and of high quality.

For example, our partner, Uman greenhouse complex, offers several varieties of tomatoes and cucumbers in individual packaging. For supermarket it is enough to put such products on the shelf, just like any other commodity in individual containers. When choosing a product the buyer saves time, as also ensure that the vegetables will not be damaged until he brings them home.

Or, for example, Kremenchug greenhouse plant started manufacturing greens in pots under our own brand "Green Krajina". But it is important to note that the producers of fruits and vegetables can be more successful if they are not trying to earn a profit on the packaging itself. In other words, if to pack 1 kg of carrots worth UAH 1. into the net 4 cop., the buyer should pay maximum 1.1 UAH instead of 4-5 UAH.

 

 

Diplomas and awards


Gold medal of the winner of the contest "Best products, technology and scientific invention" (2009)

Press about us


Antonina Gordiy: “GREENHOUSE BUSINESS IT IS A BUSINESS AT YOUR FINGERTIPS”. 01-05-2013 Antonina Gordiy: “GREENHOUSE BUSINESS IT IS A BUSINESS AT YOUR...