Prerequisites for Company Transformation

Yurii Shevchenko: I am convinced that any change starts with a need. It can be a personal need or the need for change within the company. In our case, we initially began to change our company, and only then did we undergo personal transformations. Ten years ago, we had one sunflower seed processing plant in the Poltava region. We were among the top five producers of packaged oil in Ukraine, with a market share of about 13-15% for packaged oil and 30-40% in the export segment. At one point, we noticed that the business was "stuck" at its current level of development and all signs and external contexts indicated that profits would decline. Competition was becoming fiercer, as large players entered the oil and fats market and increased their processing volumes. This was the moment when we realized that something needed to change.

Why did you choose a transformation strategy rather than a development strategy?

Yurii Shevchenko: A development strategy involves increasing sales volumes, expanding the customer base, and venturing into new territories, etc. But we needed not just development, but a radical change. Before developing our strategy, we analyzed the external context, particularly the market. It turned out that the capacity of processing plants far exceeded sunflower production, and this imbalance grew each year. Therefore, margin and sunflower prices increased as competition changed.

At that time, we had up to 10 different brands in various segments, and we sold products in "ATB-Market," NOVUS, "Silpo," etc. Upon researching the market, we realized that packaged oil had become a commodity, where the brand was no longer important to the end consumer, but price was key.

Market Research

Before developing a strategy, it was important to assess global trends and tendencies in our industry. We noticed an increasing demand for healthy products with added value, specifically organic products. This trend was steadily growing. We particularly studied the U.S. market, which accounted for 50% of organic product consumption and experienced a growth rate of 10-15% annually.

Moreover, we began to look more broadly — at how consumption patterns were changing worldwide and what challenges the food industry faced. We observed that some of the most common issues included cardiovascular diseases, obesity, diabetes, and allergies. This prompted us to investigate the effects of fats and sugars on human health more closely.

In particular, we focused on high-oleic sunflower oil as an alternative to palm oil. By that time, there were already initial observations from farmers growing high-oleic sunflowers and companies working with this product. We began experimenting with processing and saw not only the potential for developing a new direction but also a strong economic perspective.

It became clear that this was more than just a niche product; it was a direction around which a new business development logic could be built. At the same time, we honestly assessed the situation within the company. The volume of our own brands was decreasing, and with it, the profitability of the business. However, over the years, we had built a strong reputation, a team, and an environment of people capable of handling complex changes.

At that point, our vision of the company began to change. We increasingly focused on creating products with added value — professional culinary and organic high-oleic oils, as well as directions related to healthy eating.

We made radical decisions to transform the company. We closed and removed many of our own brands that were in retail because their profitability was virtually zero. As a result, we exited the competitive battle for standard sunflower oil and began producing high-oleic sunflower oil. In other words, we moved out of the "red ocean" and started working with a new product.

Olena Maltseva: You had almost 100% conventional oil. To restart the company, you needed to find a new farmer and a new customer, which is no small feat.

Yurii Shevchenko: Any changes are complex processes, and changing the mindset is also difficult. Repackaging the idea in the minds of sellers and the entire company isn't always easy. Now it’s essential not only to produce but also to know who you will sell to. You might produce 100% of the oil, but your goal is sales, not just production volume.

Yurii Shevchenko: To effect changes, it is vital to realize that success is only possible when the team moves in the same direction. This is what I mentioned earlier. Understanding the value of our product and conveying it to customers is crucial. Customer orientation is our primary value. The second is high margin, innovation, organic nature, professionalism, and proactivity.

Transition to a New Level of Management

Changing the management style was an important step towards the company's transformation. For 15 years, we had an authoritarian management style as we built the business from scratch and controlled all processes. This became entrenched, and ultimately, nothing could be decided without us. Therefore, we decided to hire a CEO to form an independent team with a new culture. Step by step, we built a democratic management style — everyone has the right to express their opinion and advocate for it.

Yurii Shevchenko: During the company’s transformation, we formed an independent management team that can make decisions without us, determining what to sell and what not to sell.

At the same time, we significantly strengthened the analytical function. This enabled us to better predict financial indicators, see dynamics, and react faster to problems. Today, the company's management largely relies on systematic analysis and regular work with financial reporting. The founders transitioned from operational management to the role of managing partners.

You consciously chose to enter a niche segment. How did this decision shape up, and what was the basis for this strategy?

Yurii Shevchenko: During our studies, we realized that we needed to move towards products with greater added value. We researched the market, formulated a vision, and built a plant for processing organic sunflowers. We also focused on processing high-oleic organic sunflowers. Today, we remain the number one leader in the Ukrainian market.

Olena Maltseva: It’s important to consider that when you had a single seller, you could not sell what you could produce. So, you had to hire new people who specialized in organics and transfer them to a new unit where they would only deal with this product. Essentially, this requires creating a new business unit, which is indeed a complex decision.

Sometimes, launching a new product necessitates creating a separate department, as a completely different sales culture emerges. Long-term relationships are crucial here, and not every seller is ready for this. Because a product will not exist without trust — deep trust in the production process.

Yurii Shevchenko: When the team believes in the idea, the business works.

Olena Maltseva: There’s a joke in management circles: what distinguishes hired managers from founders? The founder can hold onto this belief, whereas executors ask: “Did you calculate?”

Yurii Shevchenko: In reality, if we had initially understood the costs of building an organic line, we might not have started working with it. Owners are willing to invest in development, not just scaling. It’s risky, and in our country, there are no factories that exclusively process organic products. There are factories that handle both organic and conventional oils.

When it comes to profits and dividends, our obligation is to pay significant taxes. This year, we’ve become part of the "white business" club. And this includes not only dividends but also salaries, taxes, and foreign currency earnings.

The foundation of our customer relationships is strategic control and stability. We have long-term relationships with partners over the years, and this will always be important. During the COVID-19 pandemic, we hardly felt any impact because our main clients from the U.S. did not terminate contracts even when delivery times increased from two to eight months. Meanwhile, after the full-scale invasion, we had to hold personal meetings to convey that everything was fine in the company and that the supply chain was adapting.

Our advantage lies in the fact that, although we are not as large as other players, we make decisions quickly and are very flexible in adapting our business model. If one strategy doesn’t work, we look for alternatives, change logistics, find new packaging formats, or new delivery methods. For us, the most important thing is to maintain quality relationships with all participants in the process — from the farmer to the customer.

The Impact of the kmbs Community

The connections and community that emerged during our studies at kmbs became key elements of our success. It was particularly valuable to learn alongside managers from completely different industries. Several classmates have become important partners in our projects.

I believe in the power of collaboration, in the quality of interpersonal relationships that open new horizons. And I am confident that our company will continue to transform in response to the challenges that arise.