United Confectioners has plans to grow its business beyond its stronghold in Russia, where it holds the number one position in the confectionery market. Michelle Russell caught up with export director Timothy Odenwald at the ISM confectionery exhibition in Cologne to find out more about the firm’s plans for Europe and beyond.
United Confectioners is the largest confectionery holding in Eastern Europe, the company proclaims, and the leader in the Russian market with a 32% market share. The company has a 200 year history and holds the 14th spot in the ranking of the top 100 confectionery companies in the world, it says. It also operates 16 facilities and eight logistics centres in Russia.
Surprisingly, however, its export revenues only account for 5-6% of group sales volumes. This is something the company is hoping to change as it looks to make its mark on the international stage.
The first move, export director Timothy Odenwald tells just-food, has been to adapt its company name and its product packaging.
“Last year, as part of a decision by shareholders and management, we decided to change our exclusive Russian packaging to include other languages. In order to take the next step in Europe, North America and Asia, we needed to communicate with languages people understood.”
Odenwald said this also meant changing the company name to Uniconf, which he says is “easier on the tongue and easier to translate”.
The next step, he tells just-food, was to choose its top selling SKUs in Russia. Of its 3,000 products, the company chose just 60 of its best selling brands that it would aim to export overseas.
“This has all happened in the last 12 months and it all forms part of our effort to further our European expansion,” Odenwald said. “We are in discussions with all the major retail chains in the Baltic states, and Poland we are in the process of developing.”
Odenwald explains that the company’s attempts to expand overseas have not been without its problems, including that of securing trademarks overseas.
He adds: “Expanding in Europe is trial by error. If we try to launch a brand internationally, we can run into cultural problems. We have had varied reactions to our products. Where you can make a number of mistakes is in the taste and the packaging. Maybe not so much in China but in the Middle East you have to think about things like Halal certification and having no alcohol in your products, and not all of our products are alcohol free.
“What you have is a company that is 200 years old and clearly the single largest player in Russia. In Germany one out of every two packages of chocolate in Germany is exported. So it is only possible [to succeed] when a lot of research goes into it.”
Of the company’s target markets, Odenwald outlines the firm’s ambitions for the former soviet countries in eastern Europe.
“Prior to joining the company, I saw some very overly-ambitious export plans for the next five to ten years. If you are looking at developing in the former soviet states, our brands are well known there and we currently ship around 12,500 tonnes to former soviet republics. It is reasonable to grow this by 2,000 tonnes in the coming three years with the majority from Kazakstan.”
The Ukraine, however, is a different market due to the dominance of three major players. “We are treading carefully in these markets,” he says.
Aside from these markets, Odenwald said the company had its eye on other markets where it felt there was potential to grow. “For me, the biggest blank spots are the Middle East and North Africa. Russia has strong trade ties with that part of the world (North Africa) and it is something we need to work on in the months to come.”
Of Asia, Odenwald said it has become “a more appealing market” for any company producing FMCG products. He adds: “The Chinese chocolate market is just starting to grow. Major brands have clearly marked out their territory and are there for the long run so can tolerate negative profit lines for a few years.”
In western Europe, Odenwald believes its products need “more fine tuning” if it is to grow its product there. “We have to show the history of the brands. To sell to the west you have to accentuate the history. We need to put our best foot forward.”