The fat-and-oil industry of Ukraine is a stable and advantageous segment for the producers. In order to provide the consumers with the high-quality products, many companies modernize the production capacities and improve the formula. Such approach also gives a possibility to export the products not only to the EU countries, which have the high requirements to the products’ quality.
About the tendencies of the fat-and-oil market of Ukraine You can read in the interview of APK-Inform Agency with the Operation director of the Group of companies Olkom, Nina Leschenko.
Note
The Group of companies Olkom is a laboratory of the formula mixing, technological, marketing innovations in the fat-and-oil industry, and it is one of the leading companies on the Ukrainian market. The Group of companies includes such enterprises as: LLC Kyiv margarine factory, PE Ruta-K, PJSC Kyiv margarine factory, which was founded in 1949 and one of the leading companies among the food production facilities in Kyiv.
Kyiv margarine factory owns the TM Olkom, and produces mayonnaise, mustard, sunflower oil, food fats, table and sandwich margarines.
The Group of companies Olkom is the export-oriented company. The products are certified to be supplied to the market of the EU and the USA. The high standards and the wide range of the products are able to satisfy the requirements of the most demanding foreign partners. The geography of the export deliveries constantly widens, and the products are already presented on the markets of the Middle East countries, Baltic states, the EU, the USA, Canada and Cuba.
— Please, tell us about the range of products manufactured by the Group of companies Olkom, and what is the share of Your company on the domestic market of Ukraine?
In 2018, the Group of companies Olkom became one of the three largest producers of fats and special use margarines (pastry, baking, culinary, milk fat replacer, etc.). We produce the products using not only the traditional formulas and technologies.
Last year we offered to the maker the low-trans fats and margarines and this allowed us to become the sub-exporter. For now, we have more than 20 formulas of such format. Thus, this is another sign for our consumers of the innovativeness of the company and the quality of the produce.
In terms of B2C, we produce several categories of the products. These are the sauces — mayonnaise, mayonnaise sauces, mustard; margarines — table and sandwich; sunflower oil — P mark, cooking oil, the mix of oils.
The range of our products always increases – we study new niches on the market and offer the unique products for our consumer. The products are manufactured under TM Olkom, Olkom STYLE and “Smachno yak zavzhdy” (“Tasty as usual”), and are presented on every distribution channel on the domestic market.
— How severe is the competition fight on the market of margarines?
The market of margarines and special-use fats is specific and has its own peculiarities. And the high competition is one of them.
— According to our analytical data, there is a growth of the consumption of margarine products for two recent years. Please, tell us who is the biggest consumer of the product in Ukraine?
For today, the domestic market of margarine products and special-use fats is characterized by the upward consumption tendency. Mostly, this is due to the main areas of the use. The main consumers of margarine products and special-use fats are the pastry, baking and other sectors of food industry, and also of HoReCa segment.
The development of these sectors stipulates the growth of the consumption of the special fats. Moreover, the market gradually transforms to the substitution of the simple fats by the complex and specializes ones and to the implementation of the new types of fats with the specified technological characteristics for the functional food products.
— We can see also that the export volumes of margarine products from Ukraine in 2018/19 MY declined by more than 20% year-on-year, but increased by 6% compared with 2016/17 MY. What is the reason of such trend?
This situation was caused by several technical force majeur aspects that unfortunately happen from time to time, connected with our native competitors.
These aspects are rather situational and in my opinion are not connected with the general trends on the global market.
Today, in view of the market analysis, we can see that the domestic producers of margarine produce increase the volumes of the international contracts, widen the geography of the possible clients. Also, the Group of companies Olkom takes an active part in this process and negotiates with several representatives of the foreign producers and distributors.
— Despite the increase of the margarine products manufacturing volumes in Ukraine, the import has slightly increased too. How does this trend influence the selling volumes of Your products on the domestic market?
Indeed, the global producers distinguish the market of Ukraine as a perspective for the promotion of their products as our country has the developed pastry and bakery industries, high population, gradually improving economy. But this, apart from being the negative factor, also is the possibility to improve ourselves by means of the improving the formulas and technologies, modernizing the production processes, minimizing of the costs and searching for the more effective models of the commercial and marketing communication with the clients.
All these factors must be used to grow on both the domestic and global markets.
— This year Your company widens the markets of distribution. What is the situation with promotion of the products on the EU market?
The Group of companies Olkom negotiates with the clients from different markets, including EU countries. We already have the successful case of the launch of some products distribution in Baltic countries and now we actively work on the widening of the representativeness of our products.
Here we should note that if the case has not only the margarine products, but also mayonnaise, sauces and sunflower oil, you can widen the range of the perspective clients.
The market of each regions of course differs in standard and quality requirements, and consumers demand. For example, the EU countries have high requirements and standards in terms of the low content level of trans-isomers in the products of the fat-and-oil industry. In this area, our company is absolutely competitive as it has products, that fully coincide with the European standards.
Despite the fact that the requirements to the quality characteristics are different on the different markets, the main task of our factory is the production of the high quality products that meet all the requirements and standards of the national and foreign legislation and are ready to satisfy any customer demand in Ukraine and overseas.
— In Your opinion, how severely have the global margarine market trends changed for 5 recent years? What are the prospects for the near term future?
As I have already said the market gradually transfers to the substitution of the simple fats by complex, specialized fats and implementation of the new types of fats with the set technological characteristics for the functional food products. This also applies to the domestic market and foreign markets. Moreover, the consumption of the products increases around the globe on behalf of the South-Eastern Asia and Africa – respectively we have the perfect perspectives of the export development to the country of these regions.
— Ukraine can cancel the state standards. Such initiative was given in the legislation #1068 “On amendments to separate legal acts of Ukraine connected with adoption of the law “On Standardization”. This means that the adherence to standards will be voluntary. In Your opinion, how much will it affect the quality of the products?
In my opinion, the voluntary adherence to standards will not change the market situation. The honest producers, and company in particular, will continue manufacturing the products of high quality. The standards don’t make us produce high quality product, but give the possibility to make it.
Today, our company has its own standards of the quality of the finished products, which often even more strict. For example, the acid and peroxide number of fats for pastry and dairy industry we keep twice lower than it is required by the DSTU.
Moreover, the market prescribes the high requirements to the finished products and as a consequence we keep the high level of the quality of our products (use new methods and technologies, quality standards, etc.) and it works only on the will of the producer to keep improving.
Of course, the market has other producers, should we call them unfair, that now allow to manufacture less quality products or even counterfeit products. Until there is no strict measure of the state control of such products, producers and consumers, such products will stay in shops.
— Many countries importing fat-and-oil products from Ukraine have regulations that suggest the restriction of the content of trans-isomer fat acids in food products. What about Ukraine? In Your opinion, how many time it is needed to re-orient the market to fats with low content of trans-isomer fat acids?
For now, in Ukraine the content of trans-isomer fat acids is restricted by law in finished products to 8% (DSTU 4445:2005), in spreads and sandwich margarines to 8% (DSTU 4465:2005). For all other products, there is no legislative regulation.
I believe that the industry needs 2-5 years to transfer to low-trans fats. Each enterprise will have its own duration, depending on the equipment, contracts with raw materials suppliers, formulas and technological regimes.
— Despite the fact that Ukraine still does not have the restriction on the use of trans-fat acids, in 2018 Kyiv margarine factory started to produce the products with the minimum content of trans-fat acids (to 2 g per 100 g of the product). How did You manage to decline the number of trans-fats in products?
We do not use artificially hardened hydro-fats for the development of the low-fats products. Instead we work with those oils that are naturally already hard. These can be coconut, palm oils and others. Then we combine, pick the parameters for the finished product taking into account the demand of the consumers and change the tariffing.
Generally, it is rather complicated, interesting and creative process of new product creation, and our company deals with this easily.
Today we can satisfy the highest and the most uncommon desires of the client.
— In conclusion of our conversation, please, tell us what are the short-term plans of the company?
Olkom has always been an innovator and trendsetter on the market of oils and fats of Ukraine. We try to offer the market the unique products, outrunning and forming the demand. In 2019, the Group of companies Olkom plans to increase the production volumes, to widen the distribution channels in order to strengthen our presence on the Ukrainian and foreign markets, in particular, on the markets of the EU, Africa and Asia.
The combination of the classical approach and innovations is the guarantee of the quality and distinctive taste. Saving the best quality traditions, the Group of companies creates tasty Ukrainian history.
Interviewed by Anna Bulatova, APK-Inform Agency
