Nazar Kmit is 25 now. Four years ago, he was preparing to play for Ukraine in the national football team. However, a trauma had interfered with his professional career in sports. Reflecting on what to do next, he took the advice of his father, Mykola Kmit – a famous businessman and consultant. Thinking of doing business, he decided to occupy a niche, instead of opening another trivial restaurant. His own goat farm and a small cheese factory in Uherske village in Lviv region have become the “blue ocean” for the young football player.
A family contract
Bernard Willem, a Belgian who has been living in Ukraine for several years and has been farming here was the first mentor for the young family business team – Nazar, his wife, his sister, his brother-in-law, and a family friend. His advice was to start a small goat farm and sell milk in the Lviv region. The goats, 300 heads of Alpine and Zaanensky breeds, were brought from France. The livestock and farm facilities were purchased with their own money without a borrowing a loan. The initial plan was to produce 0.5–1 ton of milk per day. “We did not pursue scaling,” recalls Nazar. “It was supposed to be a small production a la home workshop.”
“Basically, craft implies that you sell your product in the neighborhood, not spending money on marketing and logistics,” says Andrei Yarmak, an economist at the investment department of FAO (UN Food and Agriculture Organization – Ed).
However, the result exceeded expectations: as soon as people had known about the new farm in Lviv region, milk and cheese orders started to be sent and their volume was exceeding the production capacity by three times. First, goat milk is known for its valuable nutritional properties. Second, Nazar Kmit’s farm was located in a region with no large industrial enterprises that is why the product was clean. In addition, German equipment for contactless milking was originally installed to avoid extraneous odors and impurities in the milk. “Essentially, craft implies that you sell your product in the neighborhood, not spending money on marketing and logistics,” said Andrei Yarmak, an economist at the investment department of FAO. “This is good for the environment and for the local consumer, because you don’t have to transport your product for a long distance and pollute the environment. It is fresh and from a local producer, you know. And the money, taxes remain in the community, district, and region. «
The first success prompted Nazar to immerse himself in the new business. How to increase production and value added; what technologies to apply? To gain new knowledge, they headed to the Netherlands, where cheese production is known, as they say, inside out. A trip to the farms near Amsterdam made it possible to find a manufacturer of high-quality equipment for cheese producers. The main condition for concluding a contract was to organize a “study tour” for local farmers producing cheese. As a result, Nazar and his associates had met a new mentor – Hugo van de Graaff, a Dutch cheesemaker with 20 years of experience. Nevertheless, to introduce advanced foreign experience in Ukraine was not so easy. “There are a lot of nuances in the production of goat cheese,” says Nazar. “You learn many of peculiarities only in practice. You have cones on your forehead and losses in your budget. To launch a rocket into space and to make a high-quality cheese are the tasks of the same level of complexity”.
TO LAUNCH A ROCKET INTO SPACE AND TO MAKE A HIGH-QUALITY CHEESE ARE THE TASKS OF THE SAME LEVEL OF COMPLEXITY
At this stage, it was necessary to apply for a bank loan. The entrepreneurs received a targeted loan to finance the plant sector. The company leases 1,000 hectares of land; one third is used to grow feed for goats and cows, and the rest is under crop production. “Craft products is a massive global trend, which is a kind of protest against the unification of everything and everywhere. This trend has been traced in the world for many years,” continues Yarmak. “In Ukraine, it is not very powerful in comparison with other countries of the world, but it is gaining momentum.”
Today, Mukko has a small but exquisite assortment. This includes Dutch Gouda cheese made from cow and goat milk, as well as soft cheese made from cow milk (creamy classic, with herbs, chili pepper and greens). An elite cheese with addition of whiskey is for gourmets. This is a unique offer on the Ukrainian market. Packaging plays an important role. Not only vacuum packaging is used, but also packaging with a mixture of neutral gases’ filling. It slows down the degradation processes and allows keeping the product fresh for a longer time. Such packaging is more expensive than traditional, but even in this respect, quality has become more important for entrepreneurs than price.
HIGH QUALITY OF THE PRODUCT DOES NOT GUARANTEE A MARKET SUCCESS
However, even a high-quality product is not a guarantee of market success. You need to tell about yourself to the consumers, attract and retain them. To get to the shelves of national supermarket chains, which have very high product quality standards, was a key stage in business development. The presence of Mukko cheeses in food chains becomes an argument in negotiations with new partners and contributes to the further conquest of the market.
It was at this stage that the entrepreneurs had to think about effective marketing tools for promotion. A cheese product on the shelf can simply stay and be lost among dozens of other similar products. It happened that way at the beginning. The first deliveries to supermarket chains had a large return volume. “No matter how good our cheeses are, they won’t sell themselves on their own,” Kmit notes. “When we had realized this fact, we decided to be more active.” The tactics of promotion actions turned out to be the most effective approach. Consumers were able to know more about the product and started to buy after tasting it. There appeared regular customers, and in the future, the sales might grow three to four times. “There is a great demand for high-quality cheese in Ukraine,” says Nazar. “Moreover, the competition is still low: there are only several goat farms in the country, and only a few of them sell their products in supermarkets.”
“In 2018, we had to throw out 3 tons of cheese to the waste”
The introduction of a strict sanitary control is for Nazar the main lesson of the two years of operation. Hands washing seems to be a commonplace requirement; but at the beginning, it was not paid due attention. As a result, several tons of finished product were unfit for selling and lost. “In 2018, we had to throw out 3 tons of cheese to the junk,” says Kmit. “A cheesemaker should wash his hands not five to seven times a day, as an ordinary person, but up to 200 times! It was an expensive experience.” As a result, today the production processes at the enterprise comply with the requirements of HACCP (Hazard Analysis and Critical Control Points).
There is no way without certifications, Yarmak confirms. “To export, you need to have a Euro-number, which means that only extra-class milk should be used, and the producer must comply with the principles of HACCP,” the expert says.
Cheese to the world
The stage of business formation was short; Kmit is pleased with the results. As of the end of 2018, 87 tons of cheeses were sold, which is twice as much as the previous year. A rapid growth sets new goals and pushes for a logical increase in production and expansion of the area of presence. Now Mukko company is planning to increase the number of goats and to export. “We have begun the process of certification of our products according to EU standards,” Nazar shares the information. “In the UK, we have spotted a specialized company to help us with the certification. This will open the route for us not only to Europe, but to 90% of the countries over the world.”
Do the Europeans need Mukko cheeses? Kmit is confident that the company is on the right track because in the EU there is a great demand for unstabilized milk cheese. In the European tradition of cheese making, whey is the main product used as a source of protein for processing and production of other products and, in particular, sports nutrition. Mukko products have the advantage of preserving all the nutritional values of cheese using unstabilized milk and excellent organoleptic properties. Besides, it is a low-cost product.
Our cheeses cost from 10 euros per kilogram, and European – from 18 euros. And in quality, we beat many European producers.
“To enter the European market is our nearest ambitious goal,” the cheesemaker says. “Our cheeses cost from 10 euros per kilogram, and European — from 18 euros. And in terms of quality, we beat many European producers, because 90% of the cheeses produced in Europe have side impurities.”
Of course, there are problems. Take, for example, “gray” and “black” imports of cheeses from the EU: such products are sold in the same price segment as the Mukko cheeses, but they significantly lose in their nutritional value and organoleptic properties.
«OUR TASK IS TO CREATE IN UKRAINE A NEW CULTURE OF CHEESE CONSUMPTION»
The abundance of low-quality palm-oil-based cheeses in the domestic market is another pain of the Lviv region cheesemakers. Kmit hopes for a prohibitive bill, now submitted to Parliament, but he does not sit idly by. “Our task is to create in Ukraine a new culture of cheese consumption,” he emphasizes. Nazar is confident that the current success of his team is due to his sport-life past: in business, as in sports, it is very important to achieve goals and to negotiate at different levels. “You just have to believe in yourself,” says Kmit. “Any business is fraught with mistakes, but if you clearly see the goal and strive for it with all your means, everything will definitely work out.”