Confectionery shop

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,%

Main figures of confectionery market of 2016-2018 in natural values, thousands tons

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

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