SME Consulting Case: Export Journey of TikPack
The global market has always been an alluring venture for small to medium-sized businesses. The prospect of reaching a wider audience, gaining higher revenues, and diversifying operations has enticed many SMEs to dive into the complexities of exports. One such enterprise, TikPack from Ukraine, approached the KSE consulting initiative, sponsored by the International Organization for Migration (IOM), in hopes of expanding their reach beyond the Ukrainian borders.
Client: TikPack Taras Boichuk | Company Website
KSE Consulting Experts: Volodymyr Semenikhin | Mykhailo Lutskiy | Oleg Zubchenok
Founded in 2014, TikPack began its journey in Western Ukraine as an agribusiness consultancy. However, in February 2022, they ventured into the packaging sector and started packaging products under their brand, "Polichka Smaku." The transition was influenced by lowered grain prices in Ukraine, prompting them to brand and export their products. Despite their evolution, they were novices in distribution, and the retail and wholesale European grain market seemed uninviting.
A promising lead arose when an interested buyer from the Middle East showed inclination towards their products, further motivating the firm. Fortified with a grant from Diya for a new production line, TikPack was now in a dilemma: should they explore new products or produce more of the existing ones? This was the beginning of their consultation journey.
TikPack's Brand Evolution
In business, evolution is often driven by external pressures. When TikPack decided to transition from an agribusiness consultancy to packaging products under "Polichka Smaku," it wasn't just a strategic move. It was a testament to their ability to pivot, recognizing market signals and adapting. The branding of grains, traditionally considered a commoditized product, was a bold move.
Brand Identity and Its Significance
The essence of "Polichka Smaku" captures traditional Ukrainian values, emphasizing quality and authenticity. The name, which translates to "Shelf of Flavor," represents the promise of genuine, high-quality products. When venturing into international markets, a brand's story can become its strongest selling point.
Cultural and Regional Insights
Understanding the nuances of the European grain market required more than just an analysis of numbers. Each region in Europe, from the Nordic countries to the Mediterranean coast, has its unique culinary preferences and traditions. The success of exporting a product like grain depends not only on price and quality but also on aligning with regional tastes.
For instance, the Middle Eastern preference for buckwheat is not just a matter of taste, but also of culture and dietary habits. Recognizing such nuances becomes crucial when entering new markets.
Three primary directions were identified for consultation:
1. Export
2. Grants
3. Marketing
Consultation Insights
Volodymyr Semenikhin who specializes in FMCG and marketing, shed light on TikPack's transition from a B2B service company to a B2B packing, and eventually to a B2C brand. He identified a lack of a concrete business strategy, emphasizing the need to identify the right segment, enter with a competitive product, and sell strategically, as this is the essence of Fast-Moving Consumer Goods (FMCG).
It was interesting to note that while TikPack's packaging equipment was versatile, enabling them to pack any pourable product from grains to potentially even cookies, Semenikhin advised focus. In business, it's crucial to recognize your core strengths and strategically leverage them for success.
A significant challenge for TikPack was quality assurance and obtaining necessary certifications. Their Middle Eastern client's preference for buckwheat led them to assume similar demands from other countries. This assumption, while logical, is a classic example of how businesses need to be wary of generalizing based on singular instances.
Export Research and Its Complexities
Starting from the export domain, Semenikhin introduced TikPack to a specialized agency that could provide these services. This agency’s process involved a detailed analysis, crafting a tailored export roadmap, product adaptation, branding, design, and even lead generation. They provided an exhaustive overview of the export research process. This included (but not limited to):
- Analyzing 10 markets based on 10 different criteria.
- Recommending 2-3 markets suitable for entry.
- Detailed analysis of the primary market from a marketing perspective.
- Understanding volumes of import, export, and domestic production.
- Thorough competition analysis.
A particularly eye-opening part of the process for potential investors might be understanding the importance of certifications such as HAASP. The platforms listed below (or others similar) are recommended for research to be able to use data in making informed decisions.
International trade data sources
1. International trade:
- https://atlas.cid.harvard.edu
- https://www.wto.org/english/res_e/statis_e/statis_e.htm
3. Organization of Economic Cooperation and Development: http://www.oecd.org
4. World Bank: https://data.worldbank.org
Challenges and Opportunities
A primary obstacle for TikPack was their pricing. They procured grain, and packaged it, thereby elevating the product’s cost. With their production line operating at only 20% capacity, the costs escalated.
However, challenges often lead to innovation. Oleg Zubchenok from KSE highlighted various strategies to overcome the low-margin problem:
- Diversification of Services: TikPack could offer export consulting or provide export packaging for smaller businesses who might not possess the funds for their equipment.
- Collaborative Platforms: Initiating an online store for trading grain and other agro products could be a potential avenue. This platform would only charge a commission and serve as a middleman between producers and buyers.
- Proactive Outreach: Reaching out to agro-producers region by region, offering TikPack's services, could expand their customer base.
- Eco-packaging: Eco-friendly packaging might be costlier but offers a competitive edge in markets prioritizing sustainability.
Moreover, the trend in Ukraine indicated that grain producers were leaning towards adequate grain storage facilities. This meant that they no longer felt compelled to sell their grain at meager prices just to clear stock.
Future Directions
In the realm of exports, finding reliable partners is pivotal. For TikPack, attending trade shows seemed like a lucrative strategy. Another essential strategy highlighted was applying for grants and diversifying towards manufacturing, not just repackaging.
For potential businessmen in Canada and the US considering investing in imports or exports, the TikPack journey is an enlightening example. It underscores the importance of research, strategic diversification, understanding market trends, and the necessity of collaborations.
Diving into the global market is not a mere leap; it's a calculated jump. Preparation, backed by expert consultation, can turn challenges into opportunities and dreams into tangible realities. TikPack's ongoing journey is a testament to this, providing invaluable insights into the intricate world of exports.
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