
2
2
Food
Donetska oblast, Ukraine
21.01.2020
2043
Idea
Project idea
Production of gingerbread with a print/picture made on food printer as well as zephyr, shortbread biscuits, chocolate, long term storage pastries
Market analysis
Confectionery market in Ukraine has been predetermined by two factors during recent years. First is, that Ukrainians enjoy sweets, thus, there is a number of confectionery producers constantly competing with each other for the customers. However, pastry is not considered to be among prime importance goods: the consumption of those is usually reduced during periods of economic tremors
Thus, the crisis of 2014 led to purchasing power decrease, having caused a reduce of demand for confectionery products. In addition, it brought a necessity to search new export channels instead of lost ones. The setback at confectionery market didn’t last long. In 2016 the production volumes started to grow again, up to 2017. Though 2018 was characterized by the slight decrease of market capacity caused by some reduce of inner consumption, the export as well as import continued to grow. Cutbacks actually covered flour confectionery products while other groups went on growing. The situation was predetermined by the prices growth for the main types of raw goods for confectionery products, namely wheat flour
One more unfavorable factor was a 9% decrease of margarine volumes production in 2018. 55,3% of all confectionery production in Ukraine are flour confectionery products while chocolate and cacao products make up 23,6% all together
Confectionery production structure in Ukraine in 2018 in physical terms,%
Figure | 2016 | 2017 | 2018 |
Production, thous. ton | 866,39 | 907,26 | 884,08 |
Export, thous. ton | 219,50 | 240,90 | 254,57 |
Import, thous. ton | 34,20 | 46,71 | 58,36 |
Market capacity, thous. ton | 681,09 | 713,07 | 687,86 |
Growth rate, % | 4,70 | -3,54 |
In terms of money the situation is a bit different. The major profit comes from chocolate bars – 26,6 %, biscuits – 19,5%, chocolate candies – 17,3%. Chocolate is also characterized by rapid growth (29,8% in 2018) in comparison to other confectionery products and is in top-3 of food commodities which develop everyday market at the most
Domestic products are considered to be the most popular among Ukrainians regarding to be the best in correlation of price and quality. Alongside due to the growth of citizens’ income after the crisis period the import of confectionary also increases. Last year, Super Kontik was the top brand among biscuits leaving a bit behind Oreo, Slivki-Lenivki, Do kavy and Barni
So far, Ukrainian producers are represented in the world rating Candy Industry by two brands: Roshen – 27 place with the turnover of 800 mln $ and Konti – 44 place and 473 mln $. AVK company left the list of top-100 confectioners of the world though last year it held place 64 with the turnover of 275 mln $
According to the results analysis of confectionery market of Ukraine the further growth of its volume and production can be prognosed due to the increase of consumer purchasing power, export quantity and geographic growth. Stability of domestic confectionary companies in the inner and international market can be reached by introduction of modern production technologies and assortment expansion
Competition advantages
- Food printer will provide cookies production with high quality print, any sophisticated logo or picture
- There is no mass production of cookies with prints in Ukraine
- There is a representative in Germany (a member of Kyiv Chamber of Commerce and Industry) whose duties include partners search, concluding agreements and sales management
Business model
Consumers
Middle and upper class citizens, physical persons-entrepreneurs, LLCs, shop owners, shop networks in Donetsk region, Ukraine and Europe
Value offer
We produce confection for joy and satisfaction. For all the population groups, available on offer and order, individual design, natural ingredients, minimum sugar so that it is even safe for babies
Sales channels
Marketing department will be formed with the assistance of Kyiv and Donetsk Chamber of Commerce and Industry, with the representative in Germany, via website, social nets, Prom.ua, Prom.ua, Zakupka.com, Rozetka.com.ua, YouTube channel; the cars covering daily 4 500 squ. km
Relations with clients
Constant clients search, bonuses, loyalty program.
Income sources
Grant, credit
Key resources
Own premises, human resource, own lorry transport for ready goods distribution around the region
Types of activity
Production of long term stored flour confectionery
Main partners
Donetsk Chamber of Commerce and Industry in Kramatorsk, Kyiv Chamber of Commerce and Industry
Cost Structure
- Equipment for food production 1 500 000 UAH
- Repair works at the premises 750 000 UAH
- Personnel training 100 000 UAH
- Raw materials purchasing 300 000 UAH
- Wages and taxes 300 000 UAH
Figures
Amount of investments 2 950 000 ₴
Min investment 25 000 ₴
Income for the year 6 000 000 ₴
Payback 2 years
Profitability
36%
Implementation of investments
- 1-3 months – repair works at premises and personnel training
- Starting from 4th month – production
Investments return
2 years
Team
Not formed, planned staff: 4 pastry chefs, 3 sales managers, 1 administrator
Investment offer
Two variants available: becoming LLC co-owner and obtaining share from the income; or monthly interest return and capital sum in the end of the term