In Ukraine, there is one clear leader in the production of snacks for domestic consumption and for export. S. Group produces snacks under seven different brand names, as well as a brand of household paper products and a brand of cleaning products. The company has grown and expanded its markets by paying careful attention to quality control and engaging in continuous quality improvement.
Snacking Habits Vary a lot Worldwide
Generally defined as products that are eaten either between meals or as substitutes for meals, the market is made up of cookies, crackers, candy (including chocolate), and chips. Depending on what products are included, the industry sells about $400 billion annually.
Tastes vary a lot from region to region of the globe, and demand depends not only on population, but also consumer tastes and health considerations. As is true in many industries, the big players enjoy advantages of economy of scale and marketing, while smaller players find success in specialty products and knowledge of local markets. As an example, it took Kraft a year to successfully introduce Oreos into the Chinese market, and by the time they did the product was quite different from the one that is the most popular cookie in the United States.
One market segment that is experiencing overall growth is savoury biscuits, driven by consumer demand for new flavors and by a concern for healthy snacks. More than any other category, savoury crackers have been redesigned for local markets by introducing ethnic flavours, reducing sugar and fat, and increasing fibre.
Worldwide, North America and Europe are the largest, mature markets, making up about 70% of sales, while the rest of the world is growing about three times as fast. The market is also highly competitive and quite fragmented, and because of the factors cited above regarding local variations in tastes, it is likely to remain competitive and fragmented for the foreseeable future.
According to a Nielson study, the single largest snacking segments in each region of the world are confections in Europe and the Middle East/Africa, salty snacks in North America (potato chips dominate), refrigerated snacks in Asia/Pacific, and cookies and snack cakes in Latin America.
Snacking is quite universal, with 76% of respondents to the Nielson survey saying they eat snacks often or sometimes to satisfy their hunger between meals or to satisfy a craving, and 45% eating snacks as a meal alternative. Consumers who eat snacks as a meal alternative are more demanding so far as health characteristics such as low sugar and calories are concerned. Savoury crackers and fresh fruit seem to be the biggest beneficiaries of this trend. Nonetheless, consumers eat a wide variety of snacks when asked about their habits in a 30 day period, meaning there is room for producers and distributors of practically any type of snack. Indians are the most likely to replace meals with snacks, while northern Europeans are the least likely.
A Ukrainian company with an International Perspective
A restaurant in Lviv has no prices on the menu. Diners bargain with wait staff over how much to pay.
S. Group brands may now be found in more than 25 countries from Israel to North America, and Europe to UAE. No Ukrainian snack company has a larger global footprint.
The success of S. Group brands did not come by accident. Instead, the company follows deliberate strategies to ensure that quality is maintained and never sacrificed. Through a combination of experience and robust systems, wholesale and retail customers are able to expect a consistent product. As a result, S.Group has received ISO 9001 and ISO 22000 certification, Halal certification, and has been determined to meet strict EU guidelines for export to Europe. Overall, snack products from S. Group have received more than 20 quality certificates.
According to S. Group Corporation CEO Vitaliy Skvortsov. “We have gathered a team of professionals, people who love what they do….” They do what they love from Dnipropetrovsk, where S.Group’s packing facilities are located, along with quality testing and assurance. By implementing a written corporate quality control management system, S. Group is able to obtain a level of consistency hard to establish otherwise.
Production methods are critical to maintaining consistency, and they start with high quality ingredients. Snacks production at S. Group uses only the best suppliers of high quality raw materials, natural spices and flavors. Storage standards are written and strictly adhered to. Packing and processing equipment incorporates cutting edge technology, and all processes are automated. With thorough in house training of company staff, the end result is consistent, high quality products.
Total Quality Management starts with a statement of values, which S. Group publishes on its website:
- REPUTATION: S.Group Corporation is responsible to its employees, partners and customers for the excellent quality of provided services, constantly improving the standards of production.
- TIME: As a company respects the high value of time in a dynamic world, the S.Group Corporation is trying to fullfill the needs of its partners and customers effectively, quickly and fully.
- INNOVATION: Development and innovation are the main priorities at S.Group Corporation. Desire to improve and search for the best are basic for long-term success. Each employee is free to express an idea and have that idea heard.
- HONESTY: S. Group’s corporate reputation is formed by the moral, human and civic qualities of each employee and maintained by the recognition and respect of stakeholders.
Every good company recognizes that its most important asset is its people, and S. Group makes a concerted effort to develop human resources through active learning in order that it may hire from within. According to CEO Skvortsov, “Many of our senior managers started their careers as the lowest-level managers. Their personal and professional contributions together with Corporate development mean high level success for the company.” Promoting from within also gives the company the chance to manage growth to meet the competencies of its personnel while ensuring that institutional knowledge is continuously passed down to subsequent generations of managers. Team loyalty is promoted when all employees know they have a fair chance of promotion.
In addition to foodstuffs, S. Groups affiliate Clean Planet Ltd. is one the top five producers of sanitary hygienic disposables in the Ukraine. Production is also carried out in Dnipropetrovsk, and a quality testing lab is on premises to ensure that products maintain high quality. The same innovative management processes and a commitment to technology are used at Clean Planet Ltd. as are found in the snack production area.
One testament to the quality of S. Group products is sales to other retailers for their private labels. The company won the Private Label Award in 2014 and their private label products can be found not only in Ukraine, but also in Germany, the Czech Republic and other EU nations. Another testament is steady growth: from 2012 until 2014 private label sales increased 51% for peanuts, 22% for pistachios, 300% for chips, and 21% for roasted sunflower seeds. These numbers are particularly impressive given the regulatory hurdles for export from Ukraine to the EU, and the high demands of private label customers, since it is the client’s image which is on the line.
In selecting S. Group for its Quality Award in London, the BID One committee was particularly impressed by two other details. The first was the company’s commitment to good corporate citizenship in the form of raising money and forming a Volunteer Assistance Center to support soldiers who are currently in rehabilitation in the Mechnikov hospital by providing them with medicine, clothes and equipment.
The second detail was the open bid solicitation found on its website. Transparency is one of the hallmarks of a company committed to quality, and September tenders for services (Internet Service Providers, Broking and Dispatching, Outdoor Advertising, and others) along with raw materials and machinery were published along with a contact phone and email. In a day when many companies use secretive bidding processes, the committee found this level of openness to be refreshing. Because of its commitment to continuous quality improvement, S. Group has been selected to receive the BID Quality Crown Award for 2015 at the convention in London.
ABOUT BID AND THE INTERNATIONAL QUALITY CROWN AWARD:
BID is a private and independent organization founded in 1984, whose primary activity is business communication orientated towards quality, excellence and innovation in management. A leader in the broadcasting of Quality Culture, BID recognizes those companies and organizations which lead the most important activities in the business world, and is considered the founding organization in the broadcasting of the Culture of Quality, Excellence and Innovation in 179 countries. The trophy symbolizes a pledge to the principles of Quality Culture. The QC100 Total Quality Management Model, together with the Quality Mix program, media coverage of the convention and its impact on the community and business sector, create an unmatched platform for continuous improvement within the organization and awareness of the achievements of the company at an international level. Awards are given only to those who are committed to improving their Quality Culture based on the principles of the QC100 Total Quality Management Model. Candidates are proposed by the leaders of previously awarded companies who they consider worthy of the award. Especially meritorious candidates may also be nominated. The International BID Quality Award Selection Committee then chooses the winning companies who will receive the award in New York, Paris, Geneva, Frankfurt, Madrid and London.