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 the time, I thought I knew so much, but 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 realised that the product had the smallest place in the company because the sourdough bread segment in 2010 didn’t yet have sufficient growth potential in this country. Ukrainians were not ready to pay that kind of price for bread. While in Europe good natural bread costs 8 to 9 euros, we couldn’t sell a loaf for even 1 euro. Shelf life and logistics were another issue. The production facility was out of town, and transportation costs ate up almost all the profit because the product’s shelf life is just 72 hours», explains the entrepreneur.
Ruslana was up to her neck in loans and had to sell real estate to pay off what she owed to creditors. As she owned the equipment and premises herself, she decided to take the risk and not close her business completely but rethink 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 intolerance. That’s how the idea of making gluten-free cookies came about as no one was making them in Ukraine; they were all imported», observes Ruslana.
Ruslana’s participation in the Cherie Blair Foundation’s Mentoring Women in Business programme, supported by the EBRD, helped her to build a new business. «During the first year of the programme, I set the project goal of launching 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 experiences were 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 business-to-consumer (B2C) exhibitions (Made in Ukraine, Free From Food).
«I understood that cookies had a limited consumer base in Ukraine but great potential for growth, unlike bread. It was obvious that an efficient business strategy should focus on exports because it’s simply impossible to grow faster than the market itself in Ukraine. In order to survive, you need to keep developing a culture of healthy confectionery in Ukraine while earning money abroad, where purchasing power is higher», says the Lviv entrepreneur.
Ruslana realised that if you dream about entering foreign markets and cooperating with foreign trade chains, you need to do your homework and get on Ukrainian retail shelves. In 2017, Smakuli started cooperating with Eco Lavka, then Megamarket and NOVUS.
According to Ruslana, the company managed to sign contracts with retailers quite quickly, within a month or two, when the process would usually take six months to a year. «What helped us a lot was the developing healthy nutrition trend in Ukraine. As a rule, representatives of retail networks tasted products at exhibitions and fairs. Supermarkets started to make special displays with organic and natural products and were ready to give our products a chance», Ruslana recollects.
Retail chains currently account for about 90% of sales, and individual small stores for the remaining 10%. Smakuli cookies are sold in Kyiv, Lviv, Dnipro, Kharkiv, Odessa and Mariupol.
The company employs 15 people in total – six in production and three in management – and all other work is outsourced. Production runs twice a week, with up to 200 kg of cookies made per shift. ‘This is mostly manual work. We have machines that knead dough and ovens. Everything else is done by hand, including the shaping of the cookies. When we have more orders, we will work more days,’ remarks the owner.
Focus on export
The first steps in capturing international markets were taken by Ruslana’s family bakery in 2017, when it acquired international certification according to the ISO 22000 standard. «I learned about the Export Promotion Office (EPO) and started tracking interesting programmes to prepare the product for export», Ruslana says.
The bakery team made a short list of countries with a well-developed gluten-free culture. Ruslana realised that there was no point in entering markets where the culture of lactose-free and gluten-free products was weak. Priority was also given to countries that allowed exports of products under ISO 22000.
The first international exhibition where Smakuli cookies were presented was SIAL Middle East and the Sheikh Zayed Festival in the United Arab Emirates (UAE). «It was a kind of maturity test to see whether customers liked our products and whether potential partners would become interested», observes Ruslana. «Our cookies aced the test. An UAE company ordered a small batch (one pallet of cookies). I was overjoyed».
In cooperation with the EPO, the bakery also participated in trade missions to the UAE, Austria, the United Kingdom, Germany, Israel and Georgia.
In 2019, Budmo Zdorovi bakery products were exhibited in Japan (FOODEX), the UAE (YUMMEX) and Canada (SIAL). «Entering new markets requires you to adapt your products to the needs of each of those particular markets. That’s not cheap, especially for a small business. After a series of trade missions, I realised that I needed to focus on one market, work it out and then move on to the next. It was the exhibition in Canada that gave me just this chance», recalls the entrepreneur.
The way into the North American market
Ruslana started thinking about entering the Canadian market back in 2017 when she first learned about U CAN Export, the CUTIS Project support programme. «We submitted an application but weren’t shortlisted for objective reasons. Our business was only a few months old, and the company was in the start-up phase», explains Ruslana. However, like all the applicants, Ruslana had the opportunity to join the programme’s educational component and attend training events given by Canadian experts who visited Ukraine at the project’s invitation.
Early in 2018, Ruslana attended the Gluten Free Expo in Vancouver, Canada. «This is the largest industry event for gluten-free food manufacturers in North America, and it sets world trends. For me as a manufacturer, it was important to understand in what direction the industry was moving and what market leaders were 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 in a questionnaire to have her company included in the U CAN Export reserve list and was selected by the project to attend SIAL in Toronto, Canada, in May 2019. CUTIS supported her company’s participation in the event.
During the trip, a series of business-to-business (B2B) meetings were held with Canadian buyers, organised with the assistance of Bertrand Walle, a Canadian CUTIS confectionery expert. Ukrainian producers also received helpful sales advice during the information sessions and visited local supermarkets during the study tour organised by CUTIS.
«At SIAL, our products were very well received. There were always people at the booth, which proves the interest there is in the products. This is not just sweet dough; this is a healthy product, and its manual production made Canadians even more interested,’ enthuses Ruslana. The SIAL show also organised a number of meetings for participants. ‘We had three meetings with US companies, one of which was interested in our products, and we started negotiations», recounts Ruslana.
Negotiations on the delivery of Smakuli cookies to a US retail chain are currently being finalised, and samples have already been sent to the US. The family bakery is in the process of obtaining US Food and Drug Administration (FDA) registration and approval of a label for that market.
The next step after entering the US market will be Canada. In spite of the complex logistics, Ukrainian products in the US and Canada are more than competitive pricewise, the company owner notes.
«On Amazon, similar products cost USD 7 to 9, and on the shelves of Canadian stores, they cost CAD 5 to 7. We expect Smakuli cookies to cost USD 5 to 6 in US retail stores. In Canada, it will be even less because, thanks to the Canada–Ukraine Free Trade Agreement (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 considering expanding production.
More than business
In addition to running her business, Ruslana spends a lot of time taking part in 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 realised that I was already doing something important because my products are useful and delightful to people with food restrictions. I am motivated by this awareness and want to share this drive and my accumulated knowledge with other women entrepreneurs», Ruslana says.
Ruslana, as a mentor, is involved in the CUTIS Project SHEforSHE mentorship programme for women’s businesses, 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», sums up the Lviv businesswoman.
Author – Tetiana Riasna, СUTIS