Ukrainian players see relocation and international sales as safeguard against war

Two months after the start of the Russian invasion of Ukraine, local players are considering how they will face the near future and continue the production and sale of their products for pets.  

“We need to plan, even in these kinds of circumstances,” highlights Kormotech CEO Rostyslav Vovk.

The impact of the war on the local market is real. Before the start of the war, the pet industry market in Ukraine was on the rise with increases of between 20% and 25% per year.  

“We understand that the Ukrainian market will decrease by a minimum of 30% in 2022 and we need to sell our products somewhere else,” warns Vovk in an interview with GlobalPETS.

The turnover of the Lviv-based manufacturer reached $110 million (€102.5M) in 2021 and they expected to grow more than 40% this year. But due to the current circumstances, they have lowered their expectations and now they are aiming to reach the same numbers as 2021.

When asked if this is achievable, Vovk is crystal clear: “We can do even better than last year, except if rockets impact on our installations.”

The turnover of manufacturer COLLAR dropped by 60-70% in April and the company expects a 50% decline in the local market this year, despite a recent surge in the purchase of dog and cat food.  

CEO Yuriy Sinitsa believes Ukrainian consumers are buying more now “in the wake of the desire to make stock and the expectation of a shortage.”  

Ukrainian pet supplies chain Master-Zoo opened on April 2 new stores and signed 6 more contracts for new stores in the western part of Ukraine, where the population is heavily increasing because of migration from fighting areas.

The turnover of the chain is still equal to last year, but this tendency differs by regions. In Kharkiv and Kiev the revenue to date accounts for 30%-50% of the 2021 turnover, while in Western parts it has almost doubled.  

Production in war times

Suziria group, the owner of Master-Zoo, has moved all its distribution centers to the western part of the country. But the trouble with the transport only allowed the company to move 20% of all their existing pet product stock.  

The company, headquartered in Kharkiv, recently started to import products from abroad as the Ukrainian government considers pet food and cat litter as a “critical import”

Relocation to third countries is also considered by players, although some of them highlight that this is the most challenging part of all business “We keep going searching for new premises and continue producing in Kharkiv at the same time,” said Polina Kosharna, Head of the Board at Suziria company group.

COLLAR is also planning to relocate 2/3 of the manufacturing process from the current location in Chernihiv to the safest parts of the country. “The transfer of the entire production in a short period is both organizationally and financially an overwhelming task,” reminds Yuriy Sinitsa.

On the other hand, Kormotech is implementing a strategic plan that includes cooperation with foreign partners in case the situation worsens in Ukraine.

“We are preparing the recipes, the designs…. If something bad happens, we will switch to our partners and they will produce for us and do the sales and marketing of our products,” says CEO Rostyslav Vovk.  

Although a possible relocation of the company is always a possibility, Kormotech is not planning to do so. “This is our own home market, we know how to produce here, where to buy the raw materials and because producing here is cheaper than producing anywhere else.”

Market expansion  

Ukrainian manufacturers are also looking for the most suitable ways to sell their products in other markets in order to compensate for the lack of business In the country.

At Kormotech they established a team that is looking to expand its footprint in other countries, especially in Europe. According to Vovk, they already achieved some winnings and their EU partners are now buying more than before.  

The sales to Poland, Lithuania, Romania, Latvia, Estonia, Bulgaria, Turkey, Sweden and France increased in recent times and the company expects to add United Kingdom as a new market from May.

Suziria has recently signed contracts with new warehouses in the western part of the country in order to ease the distribution of their products to European countries.  

COLLAR’s CEO Yury Sinitsa’s forecasts that international sales will grow this year. The company plans to reach pre-war volumes by the beginning of 2023.