The idea for the business came from Galina Sidarec in 40 years when she worked as a saleswoman at the market. Together with his partner Shavkat by Sayfutdinova she launched her own production salting and pickling vegetables and founded the company “the Echo”, the annual revenues of which now stands at more than $ 23 million, the Brand produces more than 50 tons of sauerkraut, delivers this product in large retail networks of Russia, Australia and is looking towards America. About how to build a business, Galina “Pro business”.
Company “Echo” owns several brands: “CIT”, “Kapustka”, “pan Head” under which we produce pickles, pickling, salads, marinades and semi-finished products of fresh vegetables in a vacuum. We started with the production of sauerkraut, but now our products can cover a whole table. The idea to start my own business came in 2003, when Shavkat by Sayfutdinova worked at the market where I sold vegetables, and he was a major supplier of vegetables, including onions.
At some point we decided that it is possible to increase sales of onions, if you clean it before you sell… the Idea was working, so the onions followed by the peeled potatoes, beets, carrots, etc.
<cite>That was the original idea for a business — to clean vegetables before selling to keep the handle of the hostess is gentle and get rid of excess cooking worries.</cite>
We even the first slogan thought: “Always clean pen products from CIT”. Therefore, even funny that our first wholesale customer was dumplings workshop:)
About how we built the business, in order to tell.
Started to clean the bow for the pelmeni
After graduating from the Institute on a speciality “Economics of trade”, I’m 15 years working in the network of jewelry stores, was head of the section. But when the enterprise has transferred to private hands, many have reduced staff, and I was left without a job. With three children I knew that to sit still is impossible, it was necessary to do something. So there I was in the market — opened the SP and began to sell vegetables in the tent. As I said, my business partner Shavkat was done while the import of vegetables and delivered them to my tent.
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I love to cook and know what it takes women a lot. And I always wanted to make cooking easier, more convenient. One day I thought, “Well, who like to clean the bow?!” And offered Shavkat sell this vegetable already peeled. Buyers liked this idea — the demand has grown and the income too.
<cite>While we washed and cleaned onion with our children, looking towards business development.</cite>
In the end, decided that we needed some way to establish a wholesale supply the peeled onion for any production. And went with his idea to producers of frozen dumplings to make at least just to know — do they need such a product. Pelmeni shops immediately became interested in the product — so we made sure that the business idea is promising.
To organize the production of cleaning Luke — rented the premises in Nizhny Novgorod area of 250 m2, has hired engineer, sales representative, foreman and shop employees — a total of 18 people. Purchased equipment — five Russian machines to clean vegetables with a production of 50-60 kg per hour and the Italian mandolin. Such facilities are allowed to receive up to 500 kg of onions per day.
Just at this stage in running a business we Shavkat put somewhere in $ 5000. To collect all the documents and run sales, took about six months.
A chain reaction in commercial networks
In 2004, we decided to try to sell peeled onions not only on production, but also through the retail network. I addressed this proposal to the Russian network of shops “Crossroads”. There product all loved it, and in the end we signed Federal contract. This means that we can place your product on the shelves of the stores in all the cities and points of presence. The only thing that could represent for us the difficulty then is the money to pay for space on the shelves. But these investments quickly paid off. So we started to look for new customers.
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This search led us to the fact that we agreed to meet with representatives of the supermarket chain Spar in Nizhny Novgorod. Employees responsible for working with suppliers, offered a peeled onion, but it turned out that they were interested in a wider range.
<cite>They were ready to sign a contract with us, if we can put them not only onion, but other peeled vegetables in vacuum packaging.</cite>
And we decided to move in this direction.
Feature of vacuum packing is that there is no air, no bacteria — the product does not deteriorate. The development of this technology for vacuuming vegetables and the corresponding technical documentation for this process, we went to the all-Russian research Institute of canning technology. To implement this technology in production was not a problem — we did it pretty quickly, so a contract with Spar we also received.
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The circumstances played into our hands
And yet we still do not fully understand how large the prospects of our product. When, for example, “Crossroads” made us clean the radish, we wondered, “Well, who would have grated, sealed in the package Uzbek radish?” But fans of radish among buyers network found — and re-ordering the product was nine times larger than the first.
<cite>And then for us was the fact that the network usually monitor each other — started some kind of chain reaction. Every new network that came on the market, seen from a competitor our product and wanted to get it in your range.</cite>
So one after the other in our portfolio were added and other networks: “Auchan”, “Metro”, “Lenta” and “Okay”. Six months later vacuumed our vegetables came in all the regions where these retailers. Of course, for promotion, we used all available means: exhibitions, advertising, participation in events, sponsorships, social media, own website, etc. But none of this toolset could not even begin to compare with how it worked in our favor competition between retail chains.
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Revenue for 2005 reached about $ 100 thousand per month. And just at that time, the national markets began to disappear in General, and trade networks — is rapidly expanding… And we had a new idea.
We decided to start production of a product that is so loved by the Slavic sauerkraut. At this point we are again “played up” circumstances. In the fall of 2005 the markets of Nizhni Novgorod was closed for quarantine. And then it was the only place where you can buy sauerkraut, it was sold in bulk — expanded in plastic bags.
<cite>Markets don’t work — consumers are left without pickles and sauerkraut. Well, don’t order the same!:)</cite>
And I again went to the “Crossroads” with a new business idea — to sell unpasteurized sauerkraut, is Packed in small plastic buckets.
Retailer are interested in re — entered into another Federal contract. Then we began to contact other networks. But this does not mean that we can easily they were different barriers, mainly high fee for attendance on shelves. But we did not require a long time to explain what our product is and why you need it.
Cabbage is not juicy, the yeast, the sugar does not “eat”
From the very beginning we wanted our recipes have been really popular.
<cite>We went to the villages of Nizhny Novgorod and neighboring regions — tried cabbage in different Housewives. And those who it was most delicious, was invited to his production, to the technology team was able to adapt the recipe to a large amount.</cite>
About the reward with all the Housewives, who work in production, negotiated individually: someone paid someone a favor. For example, one woman helped to get a rare medicine, the other rented an apartment for his son-student. These people we are now constantly looking for and invite you to join the range. And, of course, technologies themselves are working to improve the taste and finding new recipes. Most often, something interesting turns out experimentally.
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Today, pickling and pickles account for about 60% of the company’s revenues.
Besides the usual sauerkraut we produce kimchi, Korean carrot, cabbage in Georgian — all based on traditional recipes of the cooks, who came to the production of “Echo” to teach employees their craft. We also produce pickled tomatoes, pickled wild garlic, garlic, mushrooms and ginger. But the cabbage just a few years turned into the flagship product of the company. According to the press service of X5 Retail Group (a network “Crossroads”, “Pyaterochka” and “Carousel”), sauerkraut the range of products of the “Echo” is the most popular.
The quality of the product we make sure every party is compared with reference samples. And the product was exactly the same in taste and quality, the technicians constantly have to adapt to the changing characteristics of varieties of vegetables and other products. Cabbage is not juicy, the yeast, the sugar does not “eat”. Sometimes you have to take the samples to the lab so the researchers explained that changes in the composition and why the process of fermentation isn’t going as before. The results of these studies — change requirements to suppliers, adjustable recipe.
Raw materials we purchase from farmers. The total number of providers now do not call — only potatoes we have over 100 of them. They are constantly changing mostly due to the fact that each farmer in fact has a bad batch, and if something is wrong, then we expand and purchase another. And the next time may be the opposite. Now the geography of supply of raw materials for our production is very wide — from Belarus to the Volga region, there is no problem with the choice. Although, for example, before the introduction of food sanctions we used and Dutch vegetables.
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Scaling problems
When scaled we have faced and are facing shortage of space and equipment. All problems appear or grow since the advent of something new, for example, range or any new technological solutions. The lack of quality raw materials and as a result high costs for the purchase of a high quality. The manufacturing business is always associated with these moments.
For example, our biggest competitor is a manufacturer of pickles and sauerkraut “Ferel’gam” — self grows vegetables on plantations in Dagestan.
<cite>To become independent from suppliers, we also thought their fields to plant… I was looking at this option for some time. But I realized that this is a completely different business and we are not ready for it.</cite>
In addition, we constantly felt the need for new production facilities. In March 2006 we moved — rented dilapidated building. To use was suitable only one wing, but it was a great area is 4000 m2. Now the building is finished completely on all technical standards and with consideration of technological processes. The total area of all premises currently about 17 000 m2. They placed warehouses, storage, manufacturing: shinkovanny machines, mixers, packing lines, cleaning, slicers, etc. the Amount spent on all of this, it is hard to call — we are talking about hundreds of thousands of dollars.
The staff we hired, as necessary, using well-known and public portals. Thus, the number of employees grew from 18 at start of business up to 250 today. Managerial staff at one time, much “shuffled”, there was a turnover. Perhaps in a period of rapid growth, the company employees was really difficult to focus in their tasks and areas of responsibility. But now the backbone is there and everything is stable. Recruitment Department staff: working on the post try to choose the most hardworking, managerial positions, more attention to managerial skills.
The result of our investment in production, equipment and personnel was that the volume of output at the new place began to grow at an incredible pace. If in 2005 they amounted to 500-700 kg per day, today is more than 50 tons daily. The company’s turnover rose to $ 23 million a year.
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Access to the international market
One time we had thought to supply their products to restaurants. From her, we refused for various reasons, although there was a chance to become a supplier of McDonald’s.
In 2010, when in the network menu was not yet cleaned fresh vegetables, I agreed to meet with its representatives in the office in the center of Moscow. I invited them to enter in the menu of carrot balls. But when they announced the volumes that we had to provide, I refused. We did not have such capacity. By the way, soon in McDonald’s restaurants appeared vegetable snacks.
Recently sent a trial shipment to Canada via Moscow intermediary. But feedback for unclear reasons, never received. The only thing that could take into account then is what the website need to translate at least two languages, as his English version. Which turned out to be very much decided in this story…
In 2016 our company was a representative of the importing company with a proposal to establish a delivery overseas. Said is looking for a supplier of natural unpasteurized sauerkraut for Australian retailers. The query in the search engine brought it to our website, which, unlike competitors, has had the English version.
<cite>And when he called our office, I honestly reacted to his proposal with some irony. But he did not abandon the negotiations.</cite>
In the end, the joint discussion of product samples and other parts dragged on for nine months — for the importer was important price, quality and packaging of the product, which by the beginning of deliveries has changed radically.
For example, we decided that the labels for the Australian version of the products are printed in Europe, then will be sent to the manufacturer of plastic containers and vpaivaetsja to the banks in the casting process. And if you look at a Bank now — hardly guess that a product Made in Russia.
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We provided the importer about ten samples of cabbage with a variety of spices, berries and other supplements, but to send to Australia took 3-4. The recipe began to be refined after each change, the samples were sent to Australia by courier service, overseas colleagues tried and asked again to make changes: reduce the amount of sugar, salt, garlic, to increase the amount of pepper, add popular with Australians turmeric — and so until then, until he got what he wanted.
So, after 8 months of work to develop the layout, packaging, boxes, flavors we were able in 2017 to implement the first delivery. It was decided to put the cabbage in three types — acute, with horseradish and carrots and turmeric — in a large network in Australia, Woolworth (with over 900 stores), the network Costco and 1,500 independent shops and cafes. Soon managed to establish a supply in New Zealand. Now the export is about 5-6% of the total turnover. But we will increase sales and export component. Today there monthly leaves the sea on two 40 ft container — 26 tons each.
Bring the cabbage to the sea, the entire journey takes 8-9 weeks, another week is spent on shipping. The main difficulty for the importer is that the product is sensitive to temperature changes, so the way the temperature regime is strictly enforced.
Interestingly, foreign supermarkets sauerkraut is in the vegetarian section and belongs to the category of healthy eating. Before the Australians knew little about this product and certainly did not know that it can be consumed as snacks. And now eat Kale as a separate dish or added to burgers. The fact that our product is in demand on another continent, I don’t see anything surprising. We do not limit your diet of potatoes and carrots, and eat everything we carry and bananas, and papayas, and avocados.
Plans
Recently, we sent about 3 tons of goods in Kazakhstan, we plan to develop this direction. I hope to teach sauerkraut Americans. Going to introduce our cabbage in the food fair in the U.S. in March. It is planned before the end of 2020 to enter the American market.
We see a strong global trend to a healthy lifestyle and healthy eating in particular. And sauerkraut belongs to the group of fermented products, its beneficial properties have long known. This should certainly help in the implementation of plans to capture the global market:)
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