SOHO CHIC WOMEN-LED COMPANY: FROM A DREAM TO THE CANADIAN MARKET

Iuliia Khorishko and Iuliia Hurova, founders of SOHO Chic, a Dnipro-based company, know each other from childhood. In 2011, the young women decided to try their hands at business. It all started with a small shoe shop, where they sold foreign-made footwear imported from the USA, Turkey, and China. Simultaneously, they started adding clothing items to the shop’s offerings, which subsequently became their specialty.

“We always loved to sew interesting and stylish clothes for ourselves for events and special occasions. At some point, we decided to showcase some of these models in the shop. And the customers liked them! It was perfect timing, as the attitude toward “Made in Ukraine” products was changing. More and more people were appreciating the individual style and bright designs created by Ukrainian manufacturers,” says Ms. Khorishko.

Initially, SOHO Chic had no manufacturing facilities of its own; all clothing was sewn at partner companies’ facilities. Products were promoted through social networks, mostly Instagram, as well as through an online store. Word-of-mouth marketing also worked well.

The business grew steadily, as well as the sales volumes. Another store opened in Dnipro, and a growing number of orders were placed by other clothing stores from across Ukraine, including from Kiyv.

Reaching a new level

The year 2015 marked a new phase in their business as the two women began thinking seriously about strategic development.

“The number of online requests, including from abroad, was growing steadily, but it was getting harder and harder to process them promptly, as we were limited in resources. We did not have any stockpiles of fabric in the warehouse, and it was almost impossible to obtain trade credit from the supplier. This complicated our development greatly, as customers were not ready to wait for their orders to be processed for two weeks until we bought fabrics and finished sewing their chosen model,” says Ms. Hurova.

The women entrepreneurs decided to launch their own project on the Indiegogo crowdfunding platform, the second most popular platform in the USA after Kickstarter. “Although we did not manage to raise the desired amount, we realized that there was an interest for our products abroad. A lot of people from the USA and the United Arab Emirates supported us. This gave us an additional impetus to consider developing our export activities,” recalls Ms. Khorishko.

Participation in the U CAN Export program

In 2017, the SOHO Chic co-owners learned about the CUTIS project and its U CAN Export support program for small and medium businesses. “We found the information on Facebook and decided to apply, although, frankly speaking, we did not believe we would succeed,” says Ms. Hurova, smiling.

The production facilities in Dnipro were visited by the CUTIS project team and Canadian apparel consultant Rodolfo Moseres, who highly appreciated the quality and the range of SOHO Chic’s models.

SOHO Chic, along with other applicants, had the opportunity to join the training component of the program, which offered a detailed introduction to the Canadian market for Ukrainian businesses. The acquired knowledge helped entrepreneurs analyze opportunities to develop export activities within their existing business model. The first English version of the company’s website was launched.

In January 2018, SOHO Chic was chosen to participate in the Apparel Textile Sourcing Canada (ATSC) trade show to be held in Toronto in August 2018.

The most challenging part in preparing for the exhibition was product selection, because the company wanted to showcase many of its samples. Yet the two women knew they had to be mindful of Canadians’ sensitivity to high clothing prices. Not all of SOHO Chic’s products would be price competitive in Canada.

Project experts also stressed the differences in consumer habits between Ukrainian and Canadian customers. Casual styles in Canada and Ukraine are very different.

It was at the Toronto exhibition that the women entrepreneurs from Dnipro met a Ukrainian diaspora woman, a boutique owner, who ordered a trial consignment of 500 units. Previously, she worked exclusively with China, but decided to expand her offerings by adding Ukrainian products.

“Canadian and other businesspeople who visited our booth praised our products in terms of range and quality. We were delighted to receive our first order and be able to begin exporting to Canada. Our Canadian partner was constantly providing feedback, informing us which models sell better and which ones go unsold. We hope to continue our cooperation after the end of our partner’s maternity leave,” says Ms. Khorishko.

SOHO Chic delivered the order in 2.5 months. “Thanks to this Canadian order, we were able to finance the opening of our own manufacturing facilities and hire additional staff. On the one hand, we became independent of the partners who previously sewed our products for us. On the other hand, we became more attractive to big customers,” says Ms. Khorishko.

Meeting Canadian buyers

SOHO Chic’s participation in the CUTIS apparel mission in August 2019 was the next step of its collaboration with the project. Together with six other Ukrainian manufacturers, the woman entrepreneurs visited Toronto and Montreal, where they met leading suppliers of European clothing to the Canadian market as well as well-known Canadian retailers.

“Meeting these buyers gave me the chance to get an idea of how negotiations with major Canadian distributors were being conducted and what their key requirements and preferences are. The negotiating style in Canada differs significantly from that in Ukraine. Canadians usually spend more time and effort on building relationships with potential suppliers. Currently, we are still negotiating with three companies, and I hope that we will be able to agree on the price and the minimum quantity of units for our first consignment,” says Ms. Khorishko.

In addition, SOHO Chic products were exhibited for the second time at the ATSC in late August 2019. Models selected by the organizers were demonstrated at the fashion show held as a part of the exhibition. It is telling that SOHO Chic products participated in two major Canadian trade shows, which speaks to the quality of Ukrainian clothing and the originality of its product range.

In December 2019, with the assistance of the CUTIS project, the president of the Canadian apparel company Fashion Priests visited manufacturing facilities in Dnipro.

Transforming the business model

Participation in two trade shows and contacts with Canadian fashion industry operators helped the women-entrepreneurs analyze the requirements and specifics of the Canadian market from a more professional perspective, appreciate the need for further adaptation of their product range toward smart casual style, and identify their company’s shortcomings and competitive advantages.

A relatively high price remained the major barrier to further development of exports to the North American market. The main issue was: how could it be reduced?

Following the advice of CUTIS experts, the co-owners of SOHO Chic recalculated the cost structure in detail while paying particular attention to the non-essential production-related expenses. CUTIS environmental experts suggested that one of the ways to reduce costs was to review the technological process of manufacturing and upgrade their production equipment.

Therefore, the entrepreneurs decided to initiate a partial technical upgrade, which would contribute to waste reduction and optimization of the enterprise’s energy consumption. The CUTIS project supported their detailed business plan and provided co-funding for the purchase of new equipment.

“The results speak for themselves. We managed to reduce fabric waste by almost 50%, while electricity costs decreased by 30%. Thanks to the new hemming machine, the use of threads was reduced by a third. Now, in one day, we can cut out as many sewing patterns as we previously did in five days,” says Ms. Khorishko.

Due to the technical upgrade, the production costs have been reduced, enabling the company to offer more attractive prices to potential customers.

This greater efficiency was particularly helpful during the COVID-19 pandemic. “The company launched a non-profit social project to sew reusable protective masks for Dnipro city. Due to the equipment co-funded by the CUTIS project, we have increased the number of masks we can cut out per shift from 1-1,200 to 8-10,000, which has significantly improved our performance,” says Ms. Khorishko.

She added: “I am very pleased that we started working with CUTIS back then. Working with Canadian experts, participating in trainings, trade shows, and buyers’ missions – all of this has taken our company to the next level. We began to look at the development of our business more consistently and stopped treating it as a hobby. I, personally, became more self-confident.”

“The hobby of sewing clothes developed into a serious, constantly growing business. And we are planning to move forward and continue our cooperation with the Canadian market,” summarized Ms. Khorishko.

THROUGH PARIS TO THE STARS: UKRAINIAN KNITWEAR BRAND JENADIN – READY TO CONQUER INTERNATIONAL MARKETS

The story of Ukrainian knitwear trademark Jenadin began in 2012 and became a continuation of the family’s love to knitting, as the mother of the company’s founder, Nadia Kozyarivska, worked at the knitwear factory in Kyiv for more than 20 years.

Jenadin was one of the first companies in Ukraine to establish the production of high-quality seamless merino wool knitwear. Nadia gained experience abroad. “I went to Latvia for three weeks to practice at a modern knitting company. Upon return to Ukraine, I already had a much better understanding of the details of the future production process, so I began to negotiate with yarn and equipment suppliers. At the same time, we were renovating the premises. In August 2013, we started the machines and made the first product,” she remembers.

Product launch to market was fraught with obstacles because it was unfamiliar to consumers. Also, quality clothes made of 100% Italian merino yarn could not be cheap.

The first sold batches were small – only 5-10 units. Jenadin also began cooperating with designers – based on their requests, complex seamless models were developed. This was a kind of a “know-how” for the Ukrainian fashion industry.

“You can knit almost everything on our equipment: from tracksuits to stylish evening dresses, from children’s clothes to sofa covers. It all depends on the creativity of the customer”, – Nadia says.

Currently, the company employs 21 people and is able to knit about 2 thousand units per month. More than half of products (50-60% of orders) are sold through designers, while the other products – under the Jenadin brand (women’s and men’s clothing, home textiles). The company sold own trademark through clothing stores, multi-brand boutiques and e-commerce platforms.

New markets

Since the establishment of the business, Nadia wanted to try her hand at foreign markets, as she understood that her products were not a mass segment and focusing on the Ukrainian market only would be narrow-minded.

“The first foreign clients were ethnic Ukrainians who got acquainted with our products in Ukraine and wanted to sell them abroad. Thanks to this model, our clothes are sold in Lithuania, Denmark and Canada”, – says the founder of the Jenadin brand.

The company began to take systematic steps toward export development in 2018. “We made an analysis and realized that we were not ready for full-fledged export – we had no English-language website, no English product description, and no understanding of how and where to find partners. We began to look for additional opportunities to enter new markets and applied for various programs. It was at this time that we learned about the support program for small businesses offered by the CUTIS project”, – Nadia remembers.

Nadia Kozyarivska and Canadian expert Maria Guzman

 

The company applied for inclusion in the U CAN Export program reserve and was selected by project experts as a possible participant in the buyer mission to Canada. To join the pool of potential exporters, Jenadin had to do some homework and Nadia’s team completed it perfectly.

According to Olha Shtepa, CUTIS project coordinator, the company managed to prepare all the necessary information materials in English, calculate export prices, and adapt the website in a relatively short time.

With the help of Canadian expert Maria Guzman, the optimal range of products was selected for a demonstration to Canadian distributors and retailers. “There was no time to create something completely new. So, we selected models that best fit the requirements of the Canadian market. We also took samples demonstrating the technical capabilities of our production,” – Ms. Kozyarivska says.

Lessons learnt

Meeting with Canadian buyers in the summer of 2019 helped the company to identify “bottlenecks” in its business model, which made it difficult to develop exports.

“It seemed to me that trading with Canada would be easy because we already had sent some small supplies to this market. People liked our products. But I hadn’t considered a few things, first of all, our price and limited production”, – Nadia says.

According to her, the trip to Canada showed that there was a potential for Jenadin products in this market, but it was necessary to focus on small boutiques, whose customers were willing to pay for quality and unique design rather than large chains, for which the price was too high.

“We also felt the regional differences among Canadian consumers. Our products will be more interesting to the French-speaking part of Canada, Montreal in particular, where fashion trends are similar to ones of continental Europe.” – Nadia continues.

Ms. Nadia notes that thanks to the CUTIS mission to Canada she gained a unique experience in negotiating with big buyers face to face and learned important skills.

“It turned out that I was simply not ready to immediately answer questions about the price of delivery, search for alternative raw materials and the minimum number of units in the production batch in case of selling under a private label”, – Ms. Kozyarivska shares.

After returning to Ukraine, the necessary calculations were made. “Now I know that to reach the “acceptable” price of delivery to Canada, we need to form a batch of at least 300 units. You should also look for options to combine orders from multiple boutiques”, – she notes.

In December 2019, with CUTIS assistance, the President of the Canadian company called Fashion Priests visited Jenadin. The visit of the Canadian buyer became a catalyst for the creation of a separate enterprise-based showroom for large customers. “We had many interesting products for retail buyers in our showroom, but a wholesale required a different approach. For each exhibited unit, the price for different formats of cooperation should be calculated. A quick response to a wholesale customer’s request is required”, – Nadia tells.

Fashion Priests President visited Jenadin production

The next step was the creation of a separate catalog for wholesale customers. “The catalog has more than a thousand models that the company can knit under a customer’s trademark. I used to be against such cooperation, but later I realized that the company had developed a huge number of models, so we could share our design ideas without compromising the Jenadin brand. Customers like this approach”, – says Ms. Kozyarivska.

The Jenadin team plans to create an online catalog for wholesale customers. This will significantly simplify the negotiation process with foreign partners and demonstrate the company’s production capabilities more clearly.

Paris fashion show

With the support of the CUTIS project in February 2020, the company took part in a fashion show in Paris, which took place as part of the leading exhibition Apparel Textile Sourcing.

“It was an incredible experience, thanks to CUTIS. We represented not only Jenadin, we represented Ukraine. We have many great manufacturers, but not all of them have a chance to establish themselves internationally”, – Nadia says.

According to Olha Shtepa, visitors of the show and participants of the exhibition were very positive about the Jenadin collection. “At the end of the show, the audience rose in applause. It was so nice”, – mentions the CUTIS project coordinator.

Ukrainian companies at the Apparel Textile Sourcing in Paris

 

“I am sure that participation in the Paris exhibition will promote our exports because a show of such a high level is a sign of quality”, – Nadia Kozyarivska says.

According to her, thanks to the cooperation with the CUTIS project she gained a systematic view of business development in general and exports in particular, and her misconceptions have disappeared.

“It became clear what to do and where to go. Who our customers are and how we can meet their needs in the best possible way. Before working with the project experts, everything was somehow blurred, we wanted to work with everyone, and that was not the best strategy”, – she emphasizes.

“Currently, the share of exports in the company is 15%. I am sure that we will be able to increase this share to 50%. Including due to new knowledge gained from the CUTIS experts. The goal is ambitious, but those who don’t set ambitious goals, do not achieve ambitious results”, – the entrepreneur Nadia Kozyarivska says with a smile on her face.

Author – Tetiana Riasna

SHEFORSHE MENTORSHIP PROGRAM: A BUSINESS GROWTH STORY OF AN ENTREPRENEUR FROM CHERNIHIV

For more than ten years, the Timi-Tex company from Chernihiv has been producing good-quality children’s clothes. In 2013, despite all the political and economic challenges, Olesya Tymoshyk, with her husband Anatoliy, assumed the risks and bought the other parts of the business from their partners, starting, in fact, a family company.

Timi-Tex specializes in making clothes for babies up to one year old. Besides, there is a line for primary school pupils. «Before, we also produced children’s bed linen, for which fabric was bought from a Donetsk company. After the occupation, linen production was suspended”, Olesya says.

The company’s products are mainly sold through stores throughout Ukraine.

Since 2017, Timi-Tex started to increase its production. Last year, 2019, was quite successful for the company, as it managed to double its staff – from 8 to 16 sewists, and sales grew by more than 25% compared to 2018.

SheforShe Mentorship Program

In the fall of 2019, with the assistance of the Chernihiv Chamber of Commerce and Industry, a partner of the CUTIS Project, Olesya Tymoshyk learned about the SheforShe Mentorship Program for women entrepreneurs.

“The business was gradually developing, but I had the feeling that we were bogged down. Changes were needed, but which ones? There was no understanding of what steps to take, where to go. I wanted to reach a new level. That is why I have agreed to the invitation to join the CUTIS mentorship program,” Ms. Tymoshyk recalls.

Also, the great reputation and professionalism of Mentor Maria Terekhova, Managing Partner of Trade House New Fashion Zone, who already had a successful experience in promoting Ukrainian light industry products, played an important role. “I already knew Maria, not very well, but I understood her being a high-level specialist. Therefore, I simply could not miss this opportunity,” continues the Timi-Tex co-owner.

During the first meeting, Maria visited the enterprise in Chernihiv, where she discussed in detail the specifics of its work and the goals that Olesya set for herself in the mentorship program.

“In a few days, Maria offered us her vision of further business development with a focus on export development and identified some points that would need improvement, in particular, to increase our share of online sales. I was also very impressed with her approach to work: after each discussion, Maria sent a “protocol” with questions that were raised and the next steps to be taken. Everything is straight and clear”, Olesya says.

Introduction of changes 

The first thing we decided to work on was the renewal of the baby product range. “After communicating with Maria, I studied the sites of European manufacturers and realized what we need to modernize in our collection. Changes have brought to life our the summer collection”, Olesya says.

Another critical point is the expansion of online sales channels. With Maria’s assistance, cooperation with Garna mama’s online clothing store has resumed. Negotiations have also begun with other online platforms (including well-known Ukrainian e-commerce platforms Rozetka and Lamoda).

During the mentorship program, Olesya also managed to launch the company’s website with an English version, prepare a new catalogue and company profile containing essential information for potential buyers (about the company, capacities, product mix, etc.), and calculate an updated pricelist.

The next stage of collaboration was the preparation for participation in the international exhibition Apparel Textile Sourcing in Paris.

New experience 

For several years, Olesya and her team have been thinking about exporting to foreign markets, but no special steps were taken in that direction.

The decision of the CUTIS project to support the SheforShe program participants’ visit to the exhibition in Paris has become a particular catalyst for accelerating the implementation of changes in the Timi-Tex company. “For the exhibition, we promptly sewed some products by new patterns, completed a new catalogue, price list and profile,” Olesya recalls.

“The exhibition was not as large as before because many participants (especially Chinese companies) could not get to Paris due to the Coronavirus.

For me, however, that was a unique opportunity to at least feel the needs of the market and the requirements for manufacturers, and at the most – to communicate with potential foreign customers. There were even African companies that liked our product range,” says Ms. Tymoshyk.

One of the conclusions after attending the exhibition – it is difficult for Ukrainian clothing manufacturers, including children’s clothes, to enter foreign markets under their own brand. “We were approached by European buyers and retail chain owners, discussed the possibilities to start production under private labels. It would be a new and interesting experience for us. I hope that cooperation will nevertheless be established after the end of the Coronavirus epidemic”, Olesya continues.

Onward to new achievements

The mentorship program helped Olesya approach the issue of further business development more systematically.

First, she realized that there was no way to enter a foreign market with the existing capacities because sales in the domestic market would be affected in that case. “We even looked for the premises nearby to enlarge the production facility, planned to increase the number of employees to 26 in 2020 and started to implement the Grazia CAD system to automate the design of clothing.

Due to the Coronavirus, however, all our plans are still on pause”, the entrepreneur says.

Second, Olesya found a Ukrainian fabric manufacturer. “If we want to export clothing, for example, to Canada under CUFTA without paying tariffs, then our products must be “of Ukrainian origin.” Usually, we buy Turkish fabrics, so we had to find a Ukrainian good-quality manufacturer. Thanks to Maria, we have agreed to cooperate with the GOLDI company”, Ms. Tymoshyk continues.

Third, she understood the need and benefits for international certification of the production. “At the exhibition in Paris, potential partners asked me about the OEKO-TEX certification. It is issued for a certain period of time and it costs a lot for a small business. We need it, however, for export development. Therefore, we will revisit this issue after the full resumption of our operations after the quarantine is over”, explained the Timi-Tex co-owner.

Olesya notes: “Participation in the mentorship program also contributed to my personal growth as a manager and allowed me to establish new exciting contacts. Thanks to CUTIS, I met other program members. In particular, at the moment, we cooperate with Yevhenia Lukash from Kherson by making protective masks. I do not think such cooperation would have been possible without the project.

We could potentially buy fabrics together and have other options for cooperation. The main thing is that we trust each other. We no longer consider each other as competitors, but as partners. And that’s a huge advantage”.

Author – Tetiana Riasna 

A HEALTHY ALTERNATIVE: LVIV COOKIES TAKE ON THE NORTH AMERICAN MARKET

Ruslana Rymarska, owner of the family-run bakery Budmo Zdorovi (Smakuli cookies), decided to start her own business in 2009. Having defended her dissertation on international economics, Ruslana decided to put her knowledge into practice. “At that moment, it seemed to me that I knew so much. But as it turned out, I was a total dummy in business”, the entrepreneur says with a smile.

First attempt  

Ruslana’s business story began with natural yeast-free sourdough bread. “I wanted to make products that would be good for children. Later, while studying at a business school, I realized that the product had the narrowest place in the company, because the sourdough bread segment in 2010 did not yet have sufficient growth potential in this country. Ukrainians were not ready to pay an adequate price for it. While in Europe good natural bread costs 8-9 euro, we could not sell a loaf even for 1 euro. Shelf life and logistics were another issue. The production facility was out of town, and transportation costs eroded almost all profits, because the product’s shelf life is limited to 72 hours”, says the entrepreneur.

Ruslana was up to her neck in loans and had to sell real estate to pay off her financial obligations to creditors. Owning the equipment and premises, she decided to take the risk and not to close her business completely but re-profile it and quickly find a new product.

“Just before I started searching for an alternative, my nephew became allergic to wheat protein and cow’s milk, and my daughter had a temporary lactose problem. That’s how the idea of making gluten-free cookies came about as no one baked them in Ukraine, there were only imports”, Ms Rymarska says.

Participation in the Charie Blair Foundation’s Mentoring Women in Business program supported by the EBRD helped in building a new business. “During the first year of the program, I set the project goal to launch a new product. My mentor was a British manager from Accenture consulting company who helped me a lot with the “birth” of my product. The second mentor was an Australian entrepreneur with whom we worked on a marketing strategy and implemented corporate social responsibility”, Ruslana explains.

New products

The implementation of plan B began in November 2015. European experience was actively studied, German and Ukrainian technologists were involved, and in December 2016, Ruslana presented a new product.

Initially, buyers were offered the national gluten-free Smakuli cookies through numerous B2C exhibitions (Made in Ukraine, Free from food).

“I understood that cookies had a limited consumer base in Ukraine but a great potential for growth, unlike bread. It was obvious that an efficient business strategy should focus on exports because it is simply impossible to grow faster than the market itself in Ukraine. In order to survive, one needs to keep developing a culture of healthy confectionery in Ukraine while earning money abroad, where the purchasing power is higher”, the Lviv entrepreneur says.

Ruslana understood: if you dream to enter foreign markets and cooperate with foreign trade chains, you need to do your homework and get on the shelf of Ukrainian retail. In 2017, Smakuli started cooperating with Eco Lavka, then Megamarket and NOVUS.

According to Ms Rymarska, the company managed to sign contracts with retailers quite quickly, within a month or two, although the process would usually take six months to a year. “What helped us a lot was the development of a healthy nutrition trend in Ukraine. As a rule, representatives of retail networks tasted products at exhibitions and fairs. Supermarkets started to make special shelves with organic and natural products and were ready to give a chance to our products”, Ruslana recollects.

Retail chains currently account for about 90% of sales and another 10% is individual small stores. Smakuli cookies are sold in Kyiv, Lviv, Dnipro, Kharkiv, Odessa and Mariupol.

The company employs 15 people in total: six in production, three in management, all others are outsourced. Production runs twice a week producing up to 200 kg of cookies per shift. “This is mostly manual work. We have machines that knead dough and ovens. Everything else is done by hands including the formation of cookies. When we have more orders, we will work more days”, says the owner.

Focus on export

The first steps in capturing the international markets were made by Ruslana’s family bakery in 2017 by acquiring international certification according to the ISO 22000 standard. “I learned about the Export Promotion Office (EPO) and started tracking interesting programs to prepare the product for export”, Ms Rymarska says.

The bakery team made a short list of countries with a developed gluten-free culture. Ruslana realized that there was no point in entering markets where the culture of lactose-free and gluten-free products was low. In addition, priority was given to the countries that allowed export of products under international certification ISO 22000.

SIAL Canada

 

The first international exhibition to present the Smakuli cookies was SIAL Middle East and the Sheikh Zayed Festival in the United Arab Emirates. “It was a certain maturity test to see whether customers like our products and whether potential partners would become interested”, Ruslana says. – Our cookies have aced the test. An UAE company ordered a small batch (one pallet of cookies). I was overjoyed”.

Further, in cooperation with the EPO, the bakery participated in trade missions to the UAE, Austria, the United Kingdom, Germany, Israel and Georgia.

In 2019, the Budmo Zdorovi bakery products were exhibited in Japan (FOODEX), the UAE (YUMMEX), and in Canada (SIAL). “Entering new markets requires adapting products to the needs of each of those particular markets. This is not cheap, especially for small businesses. After a series of trading missions, I realized that I needed to focus on one market, work it out and then move on. It was the exhibition in Canada that gave me such a chance”, says the entrepreneur.

The way to the North American market

Ruslana started thinking about entering the Canadian market back in 2017 when she first learned about the U CAN Export support program by the CUTIS project. “We applied to be considered, but were unable to get shortlisted for objective reasons. Our business was only a few months old, and it was a period of the company’s formation”, Rymarska says. However, like all applicants, Ruslana had an opportunity to join the program’s educational component and attend trainings of Canadian experts who visited Ukraine at the project’s invitation.

SIAL Canada

 

Early in 2018, Ms Rymarska attended the Gluten Free Expo in Vancouver, Canada. “This is the largest industry event for gluten-free food manufacturers in North America that sets the world trends. For me as a manufacturer, it was important to understand where the industry is moving towards, what market leaders are focusing on. I was convinced that the path chosen by my company was the right one”, says Ruslana.

Upon her return to Ukraine, Ruslana filled a questionnaire to include her company in the U CAN Export reserve list and was selected by the project to attend the SIAL in Toronto, Canada, in May 2019. CUTIS supported her company’s participation in the event.

During the trip, a series of B2B meetings were held with Canadian buyers that were organized with the assistance of Bertrand Walle, CUTIS Canadian confectionery expert. Ukrainian producers also received helpful sales advice during the information sessions and visited local supermarkets during the study tour organized by CUTIS.

Ruslana Rymarska and Bertrand Walle, SIAL Canada

 

“At SIAL, our products were very well received. There were always people at the booth, which proves interest in the products. This is not just sweet dough, this is a healthy product, plus its manual production made Canadians even more interested, Ms Rymarska says.

The SIAL show also organized a number of meetings for participants. “We had three meetings with US companies, of which one was interested in our products and we started negotiations on cooperation”, Ruslana says.

Negotiations on the delivery of Smakuli cookies to a US retail chain are currently being finalized, and samples have already been sent to the US. The family bakery is in the process of obtaining a US FDA (Food and Drug Authority) registration and approval of a label for that market.

SIAL Canada

 

The next step after entering the US market will be Canada. Even given the complex logistics, Ukrainian products in the US and Canada are more than competitive pricewise, the company owner noted.

“On Amazon, similar products costs USD 7-9, on the shelves of Canadian stores – CAD 5-7. We expect that Smakuli cookies will cost USD 5-6 in the US retail. In Canada even less because, thanks to the CUFTA, Ukrainian products are exempt from import duties”, Ruslana explains.

According to her, the bakery can export up to three containers per month with its existing facilities and is potentially considering expanding production.

More than business

In addition to business, Ruslana Rymarska spends a lot of time for public activities, in particular, supporting women’s entrepreneurship in Ukraine.

“I always wanted to do something meaningful. Previously, it seemed that this could only be done through politics. But at some point, I realized that I was already doing something important because my products are useful and delightful to those who have food restrictions. I am driven by this awareness, and I want to share this drive, as well as the accumulated knowledge, with other women entrepreneurs”, Rymarska says.

Ruslana, as a mentor, is involved in the SHEforSHE business women’s support program of the CUTIS project, which aims to support Ukrainian business women and help them promote their products in foreign markets.

“As Madeleine Albright once said, there is a separate place in hell for women who do not help other women. That’s why I’m trying to help”, the Lviv businesswoman sums up.

UKRAINIAN ORGANIC PRODUCTS ATTRACT CANADIAN CONSUMERS: EXPERIENCE OF THE ARNIKA AGROINDUSTRIAL GROUP

Companies that are part of the Arnika Agroindustrial Group really break the mould. State-of-the-art equipment, GPS-navigation of all rolling stock, sales of organic products around the world… You must admit, this is not quite what you expect to see in the rural areas of the Poltava region. The Group is actively developing, entering new markets and reaching out to such demanding consumers as Canadians.

In 2019, the CUTIS Project co-financed Canadian organic standards certification for the Group’s three businesses.

Viktoria Vasylchenko, Head of Arnika Group’s foreign trade division, shares the secrets of production and commercial success in the Canadian and other markets.

Viktoria, we are very pleased that Poltava region is represented on the Canadian market. Tell us more about the businesses.

Arnika Agroindustrial Group brings together seven manufacturing companies and a trading company employing more than 600 workers in total.

The companies in the Group were organized on the basis of former collective farms in the early 2000s and specialize in growing organic wheat, corn, soybeans, high-oleic sunflower and chickpeas.

On a by-order basis, we can “experiment” with organic millet, flax and hemp. The companies’ land under organic farming is up to 15 thousand hectares.

Why did you specifically start working with organics?

That was a strategic decision of Andriy Pylypchenko, the company’s founder. When the organic trend was just starting to pick up momentum in Ukraine, we began implementing organic production principles in separate areas, even without official certification. We were wondering if it would work out. Granit Agro was the first enterprise where we tried organic technology. Its specificity lies in the denial of agrochemicals and a greater emphasis on soil tillage. This requires higher capital and operating production costs.

The successful results of Granit Agro motivated other companies to switch to organics. Of course, this meant additional investment, but we could not do without that. The transition to organic business involves changing technological processes, logistics and operations. For example, up to 5-6 passes of machinery on the field may be required in soil preparation for planting organics. In contrast, a high production is achieved by pesticide spraying in the traditional agricultural production, which is much cheaper.

Investment in the modernization of machinery amounted to about US $ 10 million. In some cases, those were individual orders based on recommendations from our mechanics.

Control is another fundamental aspect of organic farming. This is where we are champions. The Group’s enterprises have a GPS navigation system, which allows monitoring dozens of vehicles online simultaneously. With this system, one can easily track all the processes on the farms over the last 3 years.

What are the main sales channels?

We focus on exports. We cooperate with many foreign clients, so our production is certified according to different foreign standards. For example, the Group’s three enterprises Agro-Sula, Granit Agro and Novomoskovsk Agro hold most of the certificates. These include BioSwiss (Switzerland), Naturland (Germany), JAS (Japan), COR (Canada), NOP (USA).

Another challenge is storage and logistics. We have to handle different batches of different crops produced according to several standards. God forbid to mix or confuse something! For managers of grain elevators, seasonal work is very complex.

Why was the Group interested in the Canadian market?

Currently, the demand from European customers does not cover all our production capacities. That is why we are constantly looking for new buyers. Priority is given to large grain processors. In Canada, we currently have several active contacts.

For the first time, Canadian partners were introduced to us by our European partners – a trading company with its headquarters in Canada. For some time, our products were resold. Subsequently, there was an opportunity to establish direct contacts with Canadian processors.

In the spring of 2019, some of our representatives traveled to Canada to discuss the details of further cooperation. We are currently working on the implementation of trial export contracts for those clients. Corn is the most in demand.

What are the features of the Canadian market?

Canadians do not really hurry. They carefully study their business partners and agree on small trial batches – up to 200 tons.

The fact that our owner has lived in Canada for some time and is aware of the specifics of the North American market and business culture was an advantage for us. We were prepared and understood the deliberateness of our Canadian customers.

It is important that you do not always have to go to Canada to meet Canadian buyers. For example, we have met them several times at European trade shows. However, it should be borne in mind that exhibitions are not for initial contacts, but for further specific negotiations and contracts.

Participation in exhibitions gives you a certain snapshot of recent market trends and tendencies. If you want to be successful, have a finger on the pulse.

What is next?

Based on our positive experience, we plan to continue working in the Canadian market. Our advantage is the reputation of a reliable partner, openness and sustainability of our business.

What are the company’s competitive advantages in the Canadian market?

Canada’s climate in some regions is very similar to the Ukrainian climate. This allows growing organic grains of the same quality. Currently, the demand for organics in Canada exceeds available local supplies. Therefore, local processors are willing to buy organic grains abroad.

Our pricing is competitive compared with other suppliers as we are a direct manufacturer and can provide uninterrupted deliveries of consistent quality.

How did the cooperation with CUTIS help you enter the Canadian market?

A good tool summarizing information on the Canadian organic market has been the Manual published by the Project in 2018. Our representatives have also repeatedly attended public events on organic exports. For beginners, the information provided by the Project is really essential. Even experienced exporters can find many useful features, for example, potential buyer search tools.

Everything is simple and difficult at the same time here. For example, we tried to work with the Canadian Importer Database. We learned about this site from one of CUTIS’ presentations. We were patient and have done mass emailing to targeted Canadian companies. The result was not great. But it was at least something and it costed the company nothing.

In 2019, the CUTIS Project co-financed certification under Canadian organic standards for three of our businesses (Agro-Sula, Granit Agro, and Novomoskovsk Agro). This has definitely helped us to move forward.

For the products declared as organic, certification under the Canadian Organic Standards (COR) is mandatory in the Maple Leaf Country. Therefore, it helped us to some extent to overcome the regulatory barriers and provided the prospects of expanding sustainable agricultural practices in Ukraine.

Author – Zoia Pavlenko, CUTIS environmental expert

UKRAINIAN SOFAS IN CANADA: SUCCESS STORY OF BLEST FURNITURE COMPANY

Blest’s history began over 20 years ago. It is currently one of the largest Ukrainian manufacturers of upholstered furniture that is popular not only in Ukraine but also abroad – in Slovakia and recently in Canada. High quality, a solid reputation and ambitious plans for the future – this is all that Blest is about.

“The very beginning of furniture production was back in the 90’s when it was a modest production in a small garage. The first sofas were sold at the open marketplace; there are even photos of our sofas standing in the snow. The company has not been operating under the same brand over the entire 20 years. We had a few names, the name Blest appeared in 2005”, – says Serhiy Savchenko, owner and director of the company.

Serhiy Savchenko, owner and director, Blest

 

In the early 2000s, the Ukrainian furniture market wasn’t highly competitive, but the business was steadily developing. Production began and continues at a factory in Cherkasy (Central Ukraine). Production volumes have doubled over the last 12 years.

New trends

The company is currently working in several areas, the main being the production of upholstered furniture in the mid-price segment. The premium segment called Individual by Blest is also under development. At the experimental production site near Kyiv, more expensive sofas and beds are made, the design of which is developed individually at the client’s request. Children’s furniture is manufactured under the Blest Kids trademark.

 

“Trends in the furniture market are changing in Ukraine. Some 5 or 6 years ago, the mid-price segment was core at the market, whereas now more and more manufacturers move towards low-cost lines. Why so? We are moving towards Europe where consumers are not used to spending too much on furniture. The Soviet approach to buying expensive furniture that would serve for 30 years is getting obsolete. Consumers, especially young people, are ready to buy inexpensive practical furniture, which they will replace in 2-3 years with something new and trendy”, Mr Savchenko says.

The company is also actively developing a network of its own showrooms where customers can see the products, choose a convenient model, size, fabric, colors and more.

The company buys almost all materials except for the fabrics in Ukraine. From 2010 the company started to collaborate with the Italian studio Lauriero Design. Besides, Blest company has created a design and innovation service headed by the Italian designer Domenico Lorato.

Export horizons

The next step for the company’s development was entering foreign markets. Like most Ukrainian companies, Blest decided to try its hand at CIS markets – Russia, Kazakhstan and Moldova. The company tried to build a dealer network in Russia and Kazakhstan, but after 2013 decided to abandon development in those regions. Both economic (devaluation of national currencies) and political factors contributed to that.

After 2013, the company decided to refocus on Western markets, although there was no clear understanding what specific market to target.

Through collaboration with a project by the European Bank for Reconstruction and Development (EBRD), a consultant was involved to help Blest identify ten priority export markets including Germany, the United States and Canada.

Way to Canada

In 2017, the company learned about the U CAN Export, CUTIS project export support program for SMEs, and decided to join it and fill a booth at the Canadian Furniture Show.

The participation was preceded by a careful selection by Ukrainian and Canadian experts, which resulted in the selection of 10 Ukrainian furniture companies that represented Ukrainian furniture industry at the largest Canadian exhibition in May 2018.

The assistance of Jacques Nadeau, a Canadian expert of TFO Canada, was specifically valuable to the company.

“Jacques provided us with detailed information about the specifics of the Canadian furniture market and helped us to choose the models that would be worth exhibiting. Otherwise, the company would need to conduct its own research. The CUTIS project did it for us and we are grateful for that”, Viktoria Semenets, Blest Exports Manager says.

Thanks to Jacques’ advice, Viktoria says, the company presented small convertible sofas at the exhibition that could be used both as a sofa and as a bed.

“We did not know the needs of the market and, thanks to Jacques, chose the best option. Furniture trends in Canada are changing. More and more Canadians, especially young people, live in small apartments in condominiums. That is why our convertible sofas fit them ideally”, Viktoria continues.

During the exhibition, Blest products received many positive reviews regarding quality and design. “People lined up at the booth to see us turn a small convertible sofa into a normal double bed”, Viktoria recalls.

The high class of Ukrainian products was appreciated not only by the visitors at the exhibition, but also by the organizers. The Ukrainian furniture booth designed by Sergey Makhno Architects was awarded with the Best New Exhibitor award at Canadian Furniture Show in 2018.

As Ms. Semenets states, thanks to the CUTIS project, not only was the company able to present its products at the largest Canadian furniture exhibition, but it also contacted local Canadian retailers and learned about their product mix.

The main conclusion was that Ukrainian products in the Canadian market are competitive pricewise and attractive due to their quality.

“Chinese companies are among the main competitors for Ukrainian products in the Canadian market. The store owners said that they were not always satisfied with the cooperation with Chinese manufacturers because the quality of products was not very high. Also, not all suppliers were reliable partners”, Viktoria shares her observations.

That is why Ukrainian manufacturers have every chance to occupy a niche of good-quality furniture of the mid-price segment.

“We continue to study and adapt to the needs of the Canadian market. For example, the standard size of mattresses in Canada is one and a half times larger than in Ukraine. It is important to take this into account if you want to develop your presence in the market”, Serhiy Savchenko points out.

What is next?

Through collaboration with the CUTIS project, Blest has found a dealer in Toronto, IVI Furniture, with whom it has successfully partnered for over a year. IVI Furniture has its own showroom in Toronto where products from several Ukrainian furniture manufacturers are presented.

In October 2018, representatives of the Mega Group that brings together about 400 furniture retailers across Canada visited Ukraine and met with Blest representatives. Canadians highly appreciated the range and quality of Ukrainian furniture.

According to Viktoria, the partner company IVI Furniture recently signed a contract with the Canadian online furniture store wayfair.ca. “We are starting our cooperation with this platform, which will be an important milestone for the company to enter the Canadian market”, she said.

Currently, the company ships to Canada a container of furniture per month on average and does not intend to stop there.

Blest team

 

“Demand for Ukrainian furniture in the Canadian market has increased by 25% over the first 8 months of 2019. Ukrainian companies are very flexible, they are ready to satisfy demanding consumers and adapt their products at the request of Canadian partners. For many Canadian suppliers, price remains a key factor in choosing a partner. Due to the Free Trade Agreement between Ukraine and Canada, Ukrainian furniture is competitive pricewise, so I see great prospects for Ukrainian manufacturers in this market”, Iryna Kobets, CEO, IVI Furniture concludes.

Author – Tetiana Riasna

UKRAINIAN COATS OLTEKS ON THE WAY TO CANADA

Do you know what the stylish uniform of the renewed Ukrainian police and a trendy colorful women’s coat have in common? Both of them are sewn by OLTEKS, a leading Ukrainian apparel manufacturer that has more than 20 years of successful experience both on Ukrainian and foreign markets.

OLTEKS specializes in the production of outerwear. Such as coats, jackets, raincoats and more. Production of the so-called costume group – pants, blazers, skirts, and dresses is also actively developing.

The company consists of two garment factories – one in Skvyra, Kyiv Region, and in Pryluky, Chernihiv Region. The company’s production capacity allows to sew up to 15 thousand coats or 10 thousand jackets per month.

Like in most Ukrainian light industry companies, the team’s core (over 90%) are women. The company is headed by a woman, Anna Oharenko, who has managed to assemble a unique team of specialists with years of experience in the industry.

Export development

The company does not have its own brand known to Ukrainian consumers. It used to have a chain of retail stores, but in 2008 it decided to abandon this direction due to the crisis in the country and non-profitability of this line of business, and focus instead on the production of clothing by the customers’ orders.

For the last several years, OLTEKS has been actively engaged in export development. The company’s products are being sold in France, Germany, Poland, Sweden, the Netherlands and more.

The company cooperates with foreign clients both under the give-and-take scheme and sews clothes under private label.

According to her, the volume of private label orders to the European market is still small, but there is a positive trend. “We have reliable partners that we have been working with for several years”, Ms. Ter-Minasyan continues.

Canada. First contact

OLTEKS products are not currently available in North America, but the company is very interested in this region. That is why the company has decided to join the U CAN Export program implemented by the CUTIS project to support exports to Canada.

The company enters the Canadian market with outerwear, primarily, coats, because, as it was mentioned, its factories have been specializing in this group of garments for many years.

“We believe that our products have every chance of attracting potential partners from Canada. Many years of experience, good quality plus reasonable prices due to the absence of import duties on Ukrainian products are our strengths in the Canadian market”, says Ms. Larysa Ter-Minasyan.

On August 1 – 7, 2019, OLTEKS, along with six other Ukrainian clothing manufacturers, visited Canada as part of the Apparel Mission organized by the CUTIS project. The mission took place in two cities – Toronto and Montreal.

All members of the mission were selected by Canadian Apparel TFO expert, Maria Guzman. First of all, preference was given to women-owned businesses that are working to implement environmental certification. All selected companies have undergone training and coaching to understand the intricacies of exports of Ukrainian-made garments to Canada.

Larysa Ter-Minasyan and Canadian expert Maria Guzman

 

“The program in Canada was very intensive. Already on the first day, we had meetings with two buyers and explored the market. In total, we met with representatives of seven Canadian companies throughout the mission. For us, this is was the first experience of this kind, and it was a pleasure to feel the full support of the CUTIS project”, says Larysa.

Participants of the mission had a different number of meetings depending on the specifics of their products. The companies not only presented samples but also discussed specifics of the business, production facilities, team, certification, etc.

Myths busters

In addition to business meetings, an important part of the trade mission was to become more familiar with the specifics of the Canadian clothing and textile market.

“In Canada, we immediately felt the difference not only with Ukrainian but also with European markets. It was important to walk through the malls and see what products are being sold in the stores, what clothes Canadians wear, what they prefer. All this new knowledge helps to negotiate with buyers because you can understand much better what samples should be presented in the first place and what may be more preferable”, Larysa reflects.

The main conclusion is that Ukrainian companies need to adapt their products to the demands of Canadian consumers. Moreover, success in Europe does not mean that your clothes will be bought in Canada “like hot cakes”.

What should be the focus?

First, it is the model range and color scheme. In Ukraine, for example, women prefer brighter and more individual models, plus natural materials. In Canada, softer colors are chosen, and the issue of natural fabric is not that important. Convenience, lightness, and practicality of the product are on the first place. Heavy natural coats and outerwear are not much preferred by Canadians.

Larysa Ter-Minasyan and Anna Oharenko

 

The second “destroyed myth” is a focus on warmer clothes. “We thought that because of the climate in Canada, warmer insulated coats should have an increased demand. But they do not. When it is cold Canadians prefer down jackets, while a coat is more of a warm autumn cape”, says Larysa.

And of course, the importance of the regional factor. Consumer preferences in Toronto and Montreal, that is, in anglophone and francophone parts of Canada, are significantly different.

“We felt that the requirements of Montreal buyers are different from those of Toronto companies. They are much closer to those of our French partners. Given the successful experience of working with France, this is a definite advantage for us. Buyers from Montreal opted for more elegant models and brighter colors”, Larysa continues.

What next?

OLTEKS is pleased with the results of its trade mission to Canada. “We want to develop a private label business, so we are interested in new partners from different countries including Canada. We see great potential in this market. At this stage, it’s important for us to do an excellent “homework” by adapting our products to the specific needs of Canadian customers”, says Larysa.

Communication with Canadian buyers goes on. “We continue our dialogue with potential Canadian partners. For some, we are now calculating the price and shipping cost for the models they are interested in, while for others, we are sewing test samples. We understand that Canada is not an easy market and many contracts cannot be concluded at once”, continues Ms. Ter-Minasyan.

According to her, the company is extremely interested in concluding its first contract, successfully executing it and positioning itself well on the Canadian market. Even if the volume of this contract is not that large.

“We are not set up for a one-time contract, we want to find a client, or even better a few ones, with whom we can work long and fruitfully”, she sums up.

UKRAINIAN ORGANICS FOR EXPORT: EXPERIENCE OF THE SKVYRA GRAIN PROCESSING FACTORY

The Skvyra Grain Processing Factory in Kyiv Oblast is one of the most famous cereal producers in Ukraine. Buckwheat, oats, corn, rye, barley, wheat, and millet here become cereals, flakes, flour and raw materials for baby food.

The company traces its history from 1931 to a small grain purveyance point – Zahotzerno. The combination of market demand, efficient management, and constant modernization has transformed it into an international player. At the moment, the Skvyra Grain Processing Factory boasts four-grain processing lines (three specialized ones and one multiline). With significant grain elevator capacity, the company also provides grain storage services to other businesses.

Until recently, the factory focused mainly on the production of non-branded products only. Currently, preference is given to the promotion of Skvyryanka – its own trademark, retail production and cooperation with retail networks.

The company is actively developing its export destinations – up to 40% of products are shipped abroad.

Previously, the company sold large volumes to Russia. Since 2014, the factory has diversified its sales markets. Therefore, products under the Skvira brand are currently sold in Europe, Asia, and Africa. Among the customers of the plant, there are such well-known food manufacturers as Nutricia, Nestle, and Bebi.

“Quality at an affordable price is the formula of specificity of our products in the global markets”, – comments Ihor Kotsel, the company’s commercial director.

Since 2012, the Skvyra Grain Processing Factory has been working with organic raw materials.

From the very beginning, foreign demand has become the driver of expanding the range of organic products. The main suppliers of organic raw materials for the enterprise are agricultural enterprises from Lviv, Rivne, Chernihiv and Zhytomyr regions.

Skvyra Grain Processing Factory LLC successfully cooperates with Canadian companies that buy Ukrainian products and sell them in many markets, especially in Asia. It was the Canadian partners’ interest in good-quality organic products that prompted the company to get certified in accordance with Canada’s organic standards – COR.

In 2019, the CUTIS project co-financed the company’s receipt of a Canadian organic certification. In this way, the project supports Ukrainian small and medium-sized enterprises in conducting sustainable business practices.

Moreover, Canada’s organic market analytics provided by the CUTIS project forced the company to look more closely at this country. At the moment, Skvyra Grain Processing Factory LLC is establishing direct deliveries to the “maple leaf country”.

The example of the Skvyra Factory once again proves the prospects of deliveries of Ukrainian organic products to Canada.

You can find more about the company’s experience and the history of its entry into the Canadian market in the video.

UKRAINIAN ORGANICS WIN INTERNATIONAL MARKETS: SUCCESS STORY OF AGROECOLOGY COMPANY

Agroecology, an agricultural company based in Poltava region, is one of the largest organic producers in Ukraine. Agroecology is a vivid example of how millions can be earned on organic production and environmental protection. Moreover, not somewhere abroad but in our country, in the Ukrainian countryside!

The company represents a complete cycle of agricultural production: from the cultivation of grain crops and oilseeds to the sales of dairy and meat products.

The company’s food products can be enjoyed both in Ukraine and abroad. Agroecology is actively developing its exports via fruitful cooperation with Canadian companies, among others.

Quality mark for decades

The company has more than 40 years of experience in the organic sector. Hardly any other Ukrainian company could boast of this.

Everything began in 1975 when Semen Antonets, a Ukrainian agrarian, innovator and scholar, became chairman of the Ordzhonikidze Collective Farm. At the farm, Mr. Antonets traced the connection between intensive use of plant protection products, poor health of people and harmful environmental impacts. Observing those negative trends, the manager initiated an experiment to refuse from the use of agrochemicals. As a result, the Ordzhonikidze Collective Farm completely switched to organic production in 1988. That was in the times when this sector of agrarian activity, as well as the organic market itself, were only emerging in Europe.

After Ukraine gained independence, the Ordzhonikidze Collective Farm was reorganized into a closed joint-stock company and then into a private enterprise in 2000. The change of the ownership form caused qualitative changes. Semen’s business was continued by his daughter, and later – by his grandson, Hlib Lukyanenko, who now heads the company. The “ideologist and founder” himself today is a consultant and strategic manager of the organic farming enterprise.

Access to international markets

For more than 15 years, Agroecology’s products have been presented in foreign markets. Exports include raw materials – about 80% of the harvested grain is shipped abroad. These are mainly cereals.

The geography of exports is very wide and is constantly expanding. This includes Switzerland, Germany, the Netherlands, Slovakia, etc.

Since 2015, the company has been selling grain to the Canadian market through the trader company – Field Farms Marketing Ltd.

In 2019, the CUTIS project co-funded the certification according to the Canadian organic standard COR.

You can find out more about this experience and the conclusions on how to work in the Canadian organic market in the video.

More than profit

Organic production technology positively affects not only the condition of the environment and business indicators but also the enterprise’s relationships with its own employees. There are no problems with vacancies – there are always a lot of people willing to work for the company. Refusal from agrochemicals in the technological process makes the work conditions safer compared to traditional enterprises.

In addition, Agroecology promotes the development of rural areas. The company annually holds the Field Days in late June where it publicly demonstrates its achievements in practice. Based on the company’s training center, training is continuously conducted both for Ukrainian and foreign farmers. In particular, the company’s research center was visited by representatives of Bulgaria and Japan in the fall of 2018.

As part of cooperation with the Poltava State Agrarian Academy (PSAA), students get practical training in such areas as zootechnics, veterinary and agronomy. The company has even built its own hostels for the youth.

Ambitious plans

The company is not going to rest on its laurels. “There are plans to visit Canada, to arrange meetings with processors, large flour mills and large bakeries. We hope to find a common language with them and deliver processed products to Canada directly”, – concludes Pavlo Zakharchenko, the company’s commercial director.

A DECISIVE STEP TOWARDS THE CANADIAN MARKET: THE STORY OF KADAR, A SHOE MANUFACTURER FROM LUTSK

The history of KaDar, the largest footwear manufacturer in Western Ukraine, began more than 20 years ago. In 1999, four partners decided to launch their own footwear business starting from a shoe factory in Lutsk. After an unsuccessful attempt to work on a give-and-take basis, the production was idle for some time.

“I had no experience in the production of footwear, although I had experience in trading. At first, it helped a lot. Six months later, our fourth partner decided to quit the business and I bought out his part”, – Viktor Shulgach, CEO and co-owner of the company, recalls.

Viktor Shulgach, CEO and co-owner of KaDar

 

Design is the main thing

The business quickly grew and, five years later, the company was producing 150-200 pairs of shoes a day. Currently, the production capacity is 500 pairs a day.

From the very beginning, KaDar was focused on men’s leather shoes. The women’s line appeared in the company’s product mix in 2012, first, in a limited quantity. Presently, the share of women’s shoes is about 30% and continues to grow.

For its production, the company uses Ukrainian, Chinese and Italian materials, with an increasing share of Ukrainian raw materials. Leather is bought both in Ukraine and abroad. “The manufacturer has to choose the suppliers that will bring competitive advantages. The cheapest solution is not always the best”, – Mr. Shulgach is sure. In the footwear business, it is the design rather than the price that is the key, and KaDar does the design in its own studio.

Export as a new stage of development

Ukraine remains the main sales market: the domestic market accounts for 2/3 of the company’s total sales.

The first deliveries of KaDar’s products abroad took place in 2012. “The main purpose of export development is to diversify the risks of working in a single market. If problems occur with a market or a client covering more than 50% of sales, these become your problems. That’s why it is optimal, in my opinion, to increase the company’s share of exports from the current 30% to 50%”, – Viktor notes.

First, the company decided to try the Russian and then the Kazakhstan market. However, the co-operation failed for both political and economic reasons.

There was a successful entry in the Belarusian market and then the markets of the Baltic States. The company also made its first steps entering the markets in Poland, Slovakia and Hungary.

According to Viktor, there are no universal rules for successful entry into a new market. One must adapt to each country and adapt the products based on local consumers’ tastes. “It is important to establish contacts with market operators. Moreover, these companies should have grounds to trust you. They must be sure that your company is a reliable partner”, – Shulgach is certain.

 

Access to the Canadian market

Canada is interesting for KaDar as a great opportunity to diversify exports and reach the wider North American market. That is why the company decided to apply to the U CAN Export Program supported by the CUTIS project.

In January 2018, it was announced that KaDar and seven more Ukrainian footwear manufacturers entered the program, the first stage of which was to participate in the international exhibition – Toronto Shoe Show in August 2018. The CUTIS project has taken on the costs associated with the exhibition and the organization of booths.

“We started to prepare six months in advance. My partner visited the previous exhibition, so we knew what to be prepared for, and we created the action plan. We tried to maximize contacts with companies that could be interested in our products “, – Viktor says.

The product mix is a separate issue. Potential clients should see what they may be interested in. The U CAN Export participants were supported by Phil Zwibel, Canadian expert provided by CUTIS, who helped with the selection of the most relevant samples. During the exhibition, a number of B2B meetings were organized.

The company is satisfied with the results of the trip. “We got the first contract – about 500 pairs of shoes. In terms of the company’s total exports, the order is small, but extremely important as this is the first step in promoting our products in the Canadian market. Thanks to the participation in the exhibition, we got a better understanding of the demands of Canadian consumers and started a negotiation process with operators in the Canadian market”, – KaDar CEO says.

Could this have been achieved without a trip to Canada and the cooperation with the CUTIS project? Viktor Shulgach does not think so. “Unlike Ukraine, where the share of small distributors is quite large, the lion’s share of the footwear market in Canada is occupied by chains. It is almost impossible to target them without a previous participation in one or preferably a few exhibitions”, – he says.

Onwards and upwards

After returning to Ukraine, KaDar representatives began vigorously developing a new collection of winter shoes adapted specifically for the Canadian market. The company notes that the new collection was developed not so much at the request of a specific Canadian customer, but in view of the future development of exports to Canada. Therefore, they tried to consider extensively all the wishes and suggestions expressed by potential partners and importers during the first exhibition in Toronto.

For example, the new collection is resistant to the severe Canadian climate being made of waterproof materials. “For Canadians, this is extremely important. About 90% of the visitors of the booth were interested in the materials’ resistance to moisture. At Ukrainian exhibitions, this issue has never occurred”, – recalls Halyna Panas, KaDar’s Export Development Manager. According to her, shoes for Canadian consumers should be as comfortable as possible, sporty or casual.

The company had a chance to see to what extent the new collection met the expectations of Canadian consumers at the end of February 2019 at the second Toronto Shoe Show, which became the next stage in the implementation of the U CAN Export Program.

Ukraine was represented at the trade show by six leading shoe manufacturers. KaDar’s products were placed in a double booth.

Halyna Panas, KaDar’s Export Development Manager

 

According to Halyna Panas, the company sees good prospects for the development of footwear exports to Canada after receiving a lot of positive feedback about their products.

“The first order was successfully completed – as we speak, our products are being shipped to Montreal. The second contract is in the final discussion stage. We do everything possible to ensure that Canadian distributors appreciate the high quality of Ukrainian shoes and we believe our cooperation with them will be successful. The most important reward for us will be the customer’s appreciation and the recognition of KaDar as a trusted business partner. Building successful business relationships with Canadian companies takes more than one day”, – Viktor concludes.

Author – Tetiana Riasna

Photos – Vitaliy Kyrychuk