Ukrainian firms struggle to build strong brand names
Known as the angels of agriculture, honeybees have been helping Ukraine top the list of European and world honey producers. In 2016, Ukraine exported $108.2 million worth of honey.
But customers abroad won’t see many purely Ukrainian brands of honey on sale: What they usually see is merely a “made in Ukraine” mark on the packaging of another country’s brand, since Ukrainian honey producers can rarely enter a foreign market under their own names.
To boost sales of honey and other products under Ukrainian trademarks, producers will have to invest more in good marketing strategies and attractive packaging. The least a company can do is translate its website into English. But only a few companies have started to do even that.
One person who is already a veteran of the business is Vadym Pankovsky, marketing director of honey producer Bartnik, which has been producing honey for export since 1999. That’s when Pankovsky teamed up with Polish citizen Janusz Kasztelewicz, who helped bring Ukrainian honey first to Polish households, and then later to the Canadian and U.S. markets.
It’s worth investing in the export of a finished product: The average export price of raw Ukrainian honey is $2 per kilogram, while packaged honey in Germany costs nearly $12 per kilogram, according to the Ukrainian office of the Baker Tilly, an accountancy and business advisory company. Within the European Union, Germany and Poland are the largest importers of Ukrainian honey.
While Pankovsky admitted that Bartnik still mostly exports raw materials, he says the company is studying ways to target new markets, including those in the Middle East and Africa, to which Bartnik hopes to export under its own trademark.
“It’s hard to compete in Europe as they get lots of cheap honey from China,” Pankovsky explained. Experts say that the quality of Ukrainian honey is far better than that of China, the world’s largest honey exporter, but Ukrainian honey often struggles to “become noticed.”
In the United States, Pankovsky said, it’s better to target places where the Ukrainian expatriate community lives. Pankovsky’s Bartnik exported some 4,000 tons of honey in 2016, or 99 percent of its entire output. At home, honey sales are sluggish.
“There’s no honey-consuming culture in Ukraine,” Pankovsky said. Most people only use honey as treatment during the flu season. The company, therefore, has reoriented itself to foreign markets.
Maryana Kahanyak, who heads the Export Promotion Office in Ukraine, says that exporting is a good test of the maturity of a business.
“The problem is that Ukrainian brands are often little-known, and the companies often lack resources for brand development,” Kahanyak explained. “Another obstacle for many producers is that you need to study the market from within, and one of the best ways for that is to work with a local consultant.”
To prepare Ukrainian businesses to enter new markets, the Export Promotion Office has organized trade missions to help producers hold meetings with local business representatives.
CUTIS, the Canada-Ukraine Trade and Investment Support Project, also educates Ukrainian businesses on how to compete in the vast North American market after a free trade pact with Canada came into force this summer.
Olga Vergeles, project manager at CUTIS, said there is not yet much demand in Canada for Ukrainian products, so companies have to do their homework first.
“When talking to Ukrainian companies, I hear a lot about the challenges, e. g. distance, lack of information, prices, etc., but the most common ‘problem’ is that many Ukrainian companies don’t understand the need to make changes, first inside the company and/or the prod- uct, and accept the way Canadians do business — in terms of the format, process of negotiations, timeline and even business meetings,” Vergeles explained.
Ukrainian products must have a competitive advantage in price, quality or uniqueness, Vergeles said, and only then will it attract the attention of Canadian buyers.
Tailoring a strategy to European markets is time consuming, but can pay off.
That’s the lesson learned by Kormotech, a Ukrainian manufacturer of dog and cat food, which has achieved a breakthrough for its brand on international markets.
The business, founded in 2003, produces six brands of food for dogs and cats in the standard, premium and super premium segments. Kormotech first started selling on the domestic market, and then adapted its products for customers abroad, according to Ihor Blystiv, deputy marketing director at Kormotech.
The company started exporting in 2011 and has since built up a network in 18 countries. To adapt the product for sale abroad, the company rebranded the name of the food into English — as Club 4 Paws — and redesigned its packaging. It also expanded its product range.
According to Blystiv, “the European markets are more developed and more financially reliable.” Today, about 20 percent of the 30,000 tons of food the company produces every year goes abroad.
To enter new foreign markets, Kormotech hires a distributor or launches a sales team in the targeted countries. Visiting international trade fairs also helps.
“When a new player comes, it's already difficult,” Blystiv said. “But when we say that we are from Ukraine, the attitude is… to a certain extent cautious,” he said of Western perceptions of Ukrainian goods. “No one is waiting for us there — the Polish market is aggressive, saturated with other players,” he added.
Blystiv said the company was able to hold its own on the Polish market because of product quality, good branding and competitive pricing. Since its founding, the factory has introduced international standards of production because of the lack of local legislation on pet food production, Blystiv said.
“In fact, we’re a European company, but just located 30 kilometers away from the border,” Blystiv said of his factory, which is in Lviv Oblast, next to Ukraine’s border with EU member Poland.
A man behind bottles and jars of honey at the Kyiv honey fair in August. Ukrainian honey is one of the top products the nation exports to the West, although it rarely is sold under a producer's brand name. (Oleg Petrasiuk)
Ukraine produces and exports the largest amount of honey in Europe every year, but local producers still struggle to establish brand names that will sell well in Western markets. (United Nations)