Top local players share with GlobalPETS how business is going and their expectations for the coming times.
The Ukrainian pet industry is trying to keep business as usual despite the adverse effects of the ongoing war. The invasion has had many implications, forcing companies to relocate, halt operations and rethink their business strategies to adapt to the new reality.
Ukrainian pet companies have shown a high level of resilience and adaptability to the circumstances.
Polina Kosharna, co-owner of the pet supply group Suziria, believes in the motto of “Two different lives. Two different strategies. Two different speeds” when it comes to before and after the start of the war.
Before Russia’s invasion, Suziria created a brand development framework and started implementing different investment programs. But as soon as the conflict began, the company’s priorities switched to safety and retaining its customer base.
Pet food manufacturer Kormotech changed its organization structure slightly last year into 3 smaller groups to ensure flexibility in a volatile environment. “We managed to come out of it stronger, with a 12% revenue increase compared to 2021,” says CEO Rostyslav Vovk.
Kormotech’s head office, production facility and warehouses are based in Lviv, a city in western Ukraine that borders Poland. But the company decided to relocate part of its production to locations they labeled “safe havens.”
The manufacturer has a facility in Lithuania, which has played a critical role during some of the most dramatic moments of the conflict.
In August 2022, the manufacturer also opened a new warehouse in Poland, which according to the company, has been a great resource when they could not rely on stock from within Ukraine. “We have created a stable ecosystem there,” says Vovk.
…or staying in Ukraine
Suziria’s warehouse, home to 60% of its stock, was located in Kharkiv, a city in the northeast of the country, just 60 km from Russia. “From almost day one, it was no longer accessible, as active hostilities were taking place near it,” remembers Kosharna.
Despite the war, the supplier decided not to move its production abroad and chose to evacuate stocks from its main warehouse. The company then built warehouses in other regions of the country, especially in the west (Ivano-Frankivsk and Lviv) and the central part (Dnipro). A new facility in Kyiv will open later this year in August.
“This new infrastructure will strengthen stability and increase speed in the supply of products from foreign partners and the delivery of orders throughout the territory of Suziria’s distribution coverage,” points out Kosharna.
Supply chain disruptions
Due to restrictions, such as monetary transactions, blocked and mined ports and queues at state borders, Kormotech reduced their stock-keeping units (SKUs) from 650 to 100 in February 2022.
They have now reached their pre-war range, mainly thanks to the fact that they have almost tripled their ability to outsource products as part of their business risk management and resilience efforts.
From the start of the invasion, various challenges and limitations arose concerning payments made in foreign currencies, which could’ve disrupted the importation of raw materials required to produce pet food ingredients. However, Kormotech explains to GlobalPETS that they have managed to avoid recipe changes in their pet food as they persuaded the authorities to extend the list of critical imports allowed.
“As an industry leader, we defended the classification of pet food and raw materials for production as critical imports in our dealings with the authorities,” they say.
Shifting the focus
Despite keeping a strong position nationally, Ukrainian pet firms are also looking to expand their footprints abroad and compensate for the loss in national market share.
Shortly after the war began, Suziria created a brand-new international marketing department responsible for exports. The company admits this helped develop its international presence and list of new distribution partners.
Co-owner Polina Kosharna explains that the company plans to add at least 8 international customers, mainly based in Western Europe, this year. “The company has already managed to firmly enter the Dutch market and has two large contracts with Poland and Spain.”
Since the beginning of the year, Kormotech has expanded its product portfolio to 39 countries, up from the list of 19 countries 5 years ago. “Exports are expected to grow from 22% of total sales in 2022 to 30% this year and between 60% and 70% by 2028,” adds Rostyslav Vovk.
“This year, we will focus on the USA, Latvia, Lithuania, Romania and Moldova, and we intend to go deeper into these markets to gain a higher market share.”
The manufacturer also wants to increase the production capacity of wet food by 25% in its Lithuanian production facility. This has resulted in the investment of €5.4 million ($5.94M) to equip the plant with new technology to produce wet food in the premium and super-premium segments.
The company posted an annual revenue of $124 million (€112.7M) in 2022, and they aim to hit $150 million (€136.3M) this year.
Suziria has set 2 outlooks for the rest of the year: an optimistic forecast—meaning a market growth of 3.8%–4% compared to 2022—and a pessimistic one, foreseeing a decrease of 4%. “At the moment, we see that the market is following the optimistic scenario,” concludes Kosharna.
The latest articles
More than 20% of Nestlé’s sales last year were pet products
The conglomerate’s pet category is the largest contributor to organic growth, while global sales decreased by 1.5%.
Better Choice to develop weight loss supplement for pets
The Florida-based pet health and wellness firm recently acquired all issued and outstanding shares in Canadian Aimia Pet Healthco for an undisclosed amount.
European pet food manufacturers establish new group
SANYpet, Natural Line and Codico have created a new production and distribution group to capture the international market.
Weekly newsletter to stay up-to-date
Discover what’s happening in the pet industry. Get the must-read stories and insights in your inbox.