Case of Expansion: Insights from snEco's Round of Consultations
Meet snEco, the snack that stirred up the Ukrainian snack industry with its health-conscious, eco-friendly cheese treats. Founded by the two brothers, Vadym and Philip, this Ukrainian-based company is on the mission to expand from a local favorite to an international contender. Let’s take a look at the practical advice on the strategies and insights for businesses considering expansion to other markets.
While the snack options are often a trade-off between taste and health, Vadym and Philip set out to create a snack that created a new norm. Their brainchild, snEco, was born out of a desire for a snack that was not only delicious but also aligned with the fast-paced, health-conscious lifestyle of modern society. By crafting a certified eco-snack from premium cheese, the brothers struck gold in the hearts of consumers seeking both flavor and nutritional value.
Due to the war, that came from the East, snEco was forced to relocate from Kharkiv, which is located in the far East of Ukraine and was immediately under the occupation as the aggression started. Relocating their families to Mukachevo, the far Western part of Ukraine, brothers set to restart operation. In partnership with the EU4Business international aid program, snEco received vital financial support, bolstering 300 micro and small enterprises. The financial backing came as a lifeline, nurturing competitiveness and internationalization for SMEs—backed by funding from the EU and the German Government, and supported by key ministries and organizations.
Founded by native brothers Philip and Vadym Hryshyn in Kharkiv, "Prime Snack" aimed to create not just any snack, but a healthy, flavorful, and long-lasting cheese-based delight. Their journey led them to NASA's food preservation technology, a concept that dehydrates products to extend shelf life—a technique perfected by the Hryshyn brothers. In 2016, the result of their innovation was unveiled—snEco, the first eco-snack in Ukraine, marked by its unique drying method and absence of additives.
The Hryshyn brothers are not just revitalizing their business; they are nurturing dreams. With aspirations to export their products to Europe, snEco aims to elevate Ukraine's presence on the global stage. The road ahead is illuminated by representative offices in Poland and impending contracts in the Czech Republic, Slovakia, and Switzerland.
However, this leap requires a careful mix of strategy, partnerships, and innovation.
Consultations with KSE Expert Oleg Zubchenok
Vadym, one of the co-founders, applied for consultations with KSE initiative of free consultations for small businesses. Oleg Zubchenok, a seasoned consultant from the Kyiv School of Economics (KSE) took the wheel on this one. Together, they discussed three distinct approaches: franchising, joint ventures (JVs), and investment partnerships, all with the aim of expanding business to the new market and positioning snEco as a global snack brand.
Franchising
Oleg introduced the idea of franchising as a means to scale up without shouldering the entire financial burden. This involved collaborating with local partners who would replicate snEco's successful model in different markets. Oleg stressed the importance of crafting comprehensive franchising agreements that clearly defined roles and responsibilities. For snEco, this can be an opportunity to expand rapidly while tapping into local expertise and insights.
Key Recommendations
First, it is important to establish a well-structured franchising framework that maintains consistent product quality and brand identity across various locations. Transparent communication channels are essential for nurturing strong partnerships and a cohesive brand presence.
A comprehensive franchising agreements are important to set clear expectations and responsibilities from the outset.
The consultations’ insights spanned beyond franchising. They discussed the significance of robust risk management and contingency planning in unpredictable markets, urging businesses to prepare for unexpected disruptions. The strategic outlook extended to business processes, stressing their interconnection with the strategy. The tools like CAWEMO were introduced for visually representing these processes, enabling smoother execution and reducing dependency on individual skills.
Another advice emphasized the importance of adaptability, collaboration, and systematic approaches
Joint Ventures (JVs)
Oleg shed light on joint ventures as a pragmatic route to penetrate markets with unique local dynamics. He advised against a 50/50 partnership, advocating for a balanced approach that mitigates conflicts. JVs offered a way to pool resources, expertise, and risks for mutual benefit.
Recommendations: Seek partners who share snEco's values and vision. Clearly outline each partner's contributions, roles, and decision-making mechanisms. Establish a collaborative environment that leverages the strengths of all parties involved.
Investment Partnerships
Recognizing the need for financial support, Oleg presented investment partnerships as an avenue to secure funding for expansion. External investors could inject capital in exchange for a stake in the company. Oleg underscored the importance of presenting snEco's growth prospects in a compelling manner to attract potential investors.
Recommendations: Craft a persuasive business plan that highlights the potential returns on investment and outlines the path to growth. Evaluate potential investors based on their expertise and alignment with snEco's values.
With these insights, snEco not only gained strategic direction but also imbibed the principles of collaboration, adaptability, and process optimization. These consultations marked a pivotal juncture in snEco's journey, guiding them toward becoming a global snacking sensation and inspiring other businesses to chart their own successful expansion stories.
Other Consulting Recommendations for Prime Snack's International Expansion
Other key recommendations were provided to Prime Snack for successfully scaling their operations and expanding into international markets:
1. Market Research and Selection:
- Conduct thorough research to identify potential target markets for export.
- Consider geopolitical factors, demand, competition, and cultural preferences.
- Assess the impact of the ongoing conflict on the local market and potential opportunities in international markets.
2. Franchising and Alliances:
- Explore franchising as a potential expansion strategy to mitigate risks and access local expertise.
- Consider forming alliances with established players in the target markets to leverage their distribution networks and market knowledge.
3. Business Process Documentation:
- Develop comprehensive business processes that outline each stage of production, distribution, and sales.
- Start by documenting the most critical processes and gradually expand the scope.
- Use visual representations like CAWEMO to improve understanding and communication.
4. ERP Implementation and Optimization:
- Implement or update an ERP system to streamline production planning, inventory management, and purchasing.
- Consider Ukrainian ERP options to avoid unnecessary expenses on custom solutions.
- Optimize production planning around sales and bottleneck operations.
5. SWOT Analysis and Action-Oriented Planning:
- Conduct a detailed SWOT analysis, focusing on actionable strategies and initiatives.
- Address the unique challenges and opportunities of each target market.
- Develop strategies to leverage the company's strengths and mitigate weaknesses.
6. Distribution Partnerships:
- Evaluate potential distribution partners based on shared vision and values.
- Negotiate exclusivity agreements with clear terms and conditions.
- Consider sliding-scale pricing to incentivize sales growth for exclusive partners.
7. Investment and Growth Strategy:
- Evaluate potential investment partnerships based on alignment of interests and expertise.
- Clearly define the motivations of both parties and the terms of investment.
- Use financial models like NPV to estimate future income and valuations.
8. Patent Valuation and Protection:
- Determine the value of patents and intellectual property as a percentage of the business.
- Incorporate the value of patents into investment discussions and agreements.
9. Transparency and Mutual Trust:
- Establish transparent communication and trust with potential partners and investors.
- Align incentives to ensure that both parties are committed to long-term growth.
10. Market Pricing and Perceived Value:
- Determine a fair and motivational investment figure that aligns with the company's growth potential.
- Avoid pricing strategies that make the company appear either too cheap or too expensive.
11. Adapting to Market Dynamics:
- Remain adaptable to changing market dynamics and behavior patterns of investors.
- Focus on maintaining mutual interests and alignment with partners.
12. Sustainable Growth and Continuous Improvement:
- Prioritize sustainable growth strategies that ensure long-term success.
- Continuously improve processes, product offerings, and partnerships based on feedback and data.
By implementing these recommendations, Prime Snack can strategically navigate the challenges of international expansion, establish fruitful partnerships, and successfully position themselves as a global player in the cheese snack industry.
