Marketing Research - Organic Processing in Ukraine - en

Marketing research Organic Processing in Ukraine
Marketing research Organic Processing in Ukraine
Prepared by Natalie Prokopchuk and Tobias Eisenring, Research Institute of Organic Agriculture (FiBL), Swiss-Ukrainian Project Organic Agriculture Certification and Organic Market Development in Ukraine financed by Swiss Confederation Published on February 12, 2012
Production Processing
Trade
Certification
Consumption
Marketing research_Organic processing in Ukraine_En - Referring to the FiBL marketing research is mandatory while using its data.
Content
Introduction........................................................................................................................................ 2 Acknowledge ..................................................................................................................................... 2 Methodology ...................................................................................................................................... 3 Results ................................................................................................................................................ 6 Conclusions ..................................................................................................................................... 26
Introduction
Marketing research Organic Processing in Ukraine was decided to be done by the Research Institute of Organic Agriculture (FiBL) due to lack of information on organic processing in Ukraine. Current situation of organic processing in Ukraine characterizes also the overall level of organic sector development in Ukraine. Research of organic market in Ukraine was limited by some surveys done for a long ago, having not systematic character and focusing not specifically on organic processing in Ukraine. There were the organic marketing research 2004 and retailer survey 2010 done by DZI1, Omnibus2 survey 2009 done by GfK3 on request of BIOLan Association4, Appleton Mayer5 survey 2010, Nefco6 study 2011 and EkoConnect7 study 2011. We hope that this Marketing research will be interesting and useful and shows the implementation of one of the organic principles in action, namely transparency of current stage of organic processing in Ukraine.
Acknowledge
FiBL would like to thank to all organic processors in Ukraine which cooperated and provided their data for this Marketing research. It is very important for all interested in organic organizations and individuals which would like to have an overview of organic processing in Ukraine.
Ukrainian National Research and Information Center for Monitoring of Commodity Markets NRIC " Derzhzovnishinform", www.ukrdzi.com 2 Omnibus - is monthly multi-client quantitative survey which requires Yes/No answers from respondents 3 GfK Ukraine is one of the largest market research company in Ukraine. GfK Ukraine is a member of the worldwide GfK Group. www.gfk.ua 4 Association of Organic Production Stakeholders "BIOLan Ukraine", www.biolan.org.ua 5 Appleton Mayer management consulting and marketing company (founded in 2003). The headquarters of Appleton Mayer Company is located in London, regional offices in New York, Tokyo and Kyiv. www.appletonmayer.com Nordic Environment Finance Cooperation (Nefco), www.nefco.org International Centre for Organic Agriculture of Central and Eastern Europe EkoConnect, www.ekoconnect.org
7 6
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Special gratitude is given by FiBL to the leading certification body of organic sector in Ukraine the Organic standard certification body8, which plays an important role in systematizing the contacts of companies working in organic sector in Ukraine. The primary list of organic processors in Ukraine was kindly provides to FiBL by Organic standard certification body.
Methodology
Methodological fundamentals
Statistical monitoring is a scientifically organized accounting and collection of mass data about phenomena and processes of public life according to united program. There are three main forms of the monitoring: statistical reporting the form of observation when according to the Law of Ukraine "About State statistics" all the enterprises and organizations in Ukraine give mandatory regular reports (in set form) about their work to statistic bodies. As Ukraine has no organic legal framework organic status of enterprises are not registered at any reports, including import/export and local trade operations what makes precise figures of turnover and/or imported/exported volume impossible to know. special statistical observation and transcriptions the collection of data about phenomena and processes of public life which are not covered by statistical reporting. statistical registers lists of entities of statistical observation.
Thus, from statistical point of view the conducted marketing research about organic processing in Ukraine is the special statistical observation and statistical register. The type of our statistical monitoring is the single-acting in contrast with existing continuous or periodical monitoring. Completeness of study entity coverage of our statistical monitoring is entire, because accounting takes all entities of researched collection without any exclusion. There is also not entire monitoring when only part of entities according to some characteristics is researched and then from this part conclusions for whole study object is done (selective monitoring (random sample), monitoring of the main massive data, monographic investigation, questionnaire supervision)9. Method of our statistical monitoring is polling because we received data by registration of answers which were given by respondents who are representatives of organizations. Any other existing method (e.g. direct measure or accounting/documentary) could not be feasible in this special statistical observation. Objective of the marketing research to collect, generalize and process data of organic food processing enterprises in Ukraine, and accordingly make conclusions about organic processing in Ukraine.
Organic standard certification body internationally accredited and recognized by EU Commission (register number UA-BIO-108) certification body. Founded in 2007 by 9 key Ukrainian organic stakeholders within the frames of FiBL-SECO Organic Project. www.organicstandard.com.ua 9 This completeness coverage is used when there are so many study objects, that they could not be covered by the statistical monitoring.
Marketing research_Organic processing in Ukraine_En - Referring to the FiBL marketing research is mandatory while using its data. 3 / 27
8
Aim of the marketing research to gather primary data from organic food processing enterprises in Ukraine. Tasks of the marketing research the united questionnaire application form which was given to all organic food processing enterprises in Ukraine (application form Annex 1). Study object of the marketing research is the set of processing food enterprises in Ukraine which do organic processing. Study entity (unit) is the constituent of the study object namely the organic food processing unit (enterprise) in Ukraine. Source of information is primary one as the whole data was collected neither via umbrella organizations (where processors are members) nor via analytical centers nor any other third organizations but directly from organic food processing units in Ukraine. We examine in this marketing research the homogeneous statistical collection. But with specific that organic processing units which are included to the monitoring are enterprises with different levels of processing (simple or complex; e.g. cleaning, drying, freezing, conservation, manufacturing, slaughtering, deboning, grinding, crush, salting, air/sunshine drying, frying, marinating, pre-packaging, packing and labeling). These organic food processing units have diversity of market sales some of them are export-oriented, other ones focuses on domestic market, and part for both export and domestic markets. For example, some processing enterprises have their own organic food growing/production, they make primary cleaning and export, other ones buy organic products from organic producers, pack it and sell it at domestic market; other ones fulfill the whole cycle of production and processing and sell final products in domestic market and/or for eport markets. Some companies are registered in Ukraine and abroad and have processing and distribution systems there, some companies are registered in Ukraine but have foreign owners. Monitoring was done counting both substantial attributive (qualitative) and quantitative characteristics. Period of monitoring: 10/10/2011- 01/12/2011. Data for 2011 were included by enterprises according to available data as of the date during filling in the marketing research application forms. After monitoring consolidation of statistics was done which included processing of primary data of statistical monitoring for getting conclusive quantitative and qualitative characteristics. Answers for all questions of questionnaire ware classified, grouping together according to characteristically features of investigated phenomenon.
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Thus, this organic processing marketing research is a qualitative and quantitative single-acting entire polling marketing research based on gathering and processing of data received from primary sources - organic processors in Ukraine. The results of the marketing research describe exclusively opinion of the processors as they are target opinion audience of the marketing research. Ukrainian organic stakeholders, producers, consumers, retailers, others could have different or same opinion. FiBL and Swiss Confederation did not bear any responsibility for misinterpretation or losses (if any).
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Results
There are 36 organic food processing units in Ukraine which received requests to fill in the application forms for this marketing research. 5 of them did not provide their data for this marketing research. 36 organic food processing units are located on the Ukrainian map bellow. Geographical allocation of organic food processing enterprises in Ukraine:
Geographical allocation of organic food processing enterprises in Ukraine:
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List of organic food processing enterprises in Ukraine (in alphabetic order) which provided their data for this marketing research: Agrana Fruit Ltd, Agrofirma Pole Ltd, Agrofruct Ltd, Aroma trade Ltd, Branch of the state food-grain corporation of Ukraine "Novoukrainsky integrated grain products plant", Darlissad Ltd, Ethno Product Group, Galfrost Ltd, Galka Ltd, Geval private entrepreneur, Groceries Factory Ltd, HiPP Ukraine Ltd, HiPP Uzhgorod Ltd, Imex Trade Ltd, KharkovNaturProduct Ltd, Korolyov private entrepreneur, Lantmannen Axa, Lysunets private entrepreneur, Natur Eko Ltd, Organic Original Ltd, Phytosvit Ltd, Prime-M private enterprise, Rivnekholod, Sadeco Ltd, Studena private enterprise, Sumyfitofarmatsia Ltd, Support centre of organic production Ltd, Tarasivka, Tizesh farm, Trade house "Pure Flora-BIO" Ltd, Vels Organic Ltd. During process of information collection we discovered that some companies which are considered as processing units in Ukraine have not this status as of October 2011. E.g. Pfanner, Efirmaslo, Olle Svensson, Neris, Italbonifica, Service APK, Verkhniosirogozskyy OPZ, etc. Some of them have status of organic producer (grow organic produce and sell for further processing) or trader and some - stopped work in organic.
A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well. Jeff Bezos, American businessman
Logos and brands of organic food processors Creating and promotion of brand is a labour-intensive and moneyconsuming task. Thats why many companies working in sphere of primary processing (with following export for further processing) do not create own brands. Some brand owners unite few producers/processors under their umbrella. It helps them to cut costs promoting each producer/processor individually, bring wider assortment and larger volume to the market. Some brands sell exclusively organic produce, some - have both organic and conventional products. Some companies have separate logo of the company and separate trade mark filling with value to become a brand. Some enterprises promote only their brands. Purely organic brands bring more clear and understandable message to consumers. It very important what your brand communicate, what value it brings for consumers, how understandable and recognisable is your brand. Gvardia All-Ukrainian rating magazine prepared a rating list of top 200 brands in Ukraine. It shows the value of 200 the most expensive food and non-food brands in Ukraine in 2011 (it correlates from 62968.94 to 128.16 million UAH10). Unfortunately organic food processors
10
According to the National bank of Ukraine (as of 13/02/2012) 1 Euro = 10.3 UAH (Ukrainian Hryvnias), www.bank.gov.ua
are not yet at the above-mentioned list11. The value of organic brands was not yet estimated by any marketing analysis. Logos and brands of organic processors:
Some specialized shops (Natur Boutique, Organic Era, Eco Chic, etc) purchasing organic produce in bulk from organic producers in Ukraine do further simple processing like cleaning, pre-packaging, packing and labeling of own brand. It helps to attract more consumers for shops making wider assortment of organic products in the shops and catering areas
11
Toepfer International has place #127 (brand value 419.23 million UAH) in rating list of top 200 brands in Ukraine. Source: Gvardia All-Ukrainian rating magazine, 2011
(e.g. sprout seeds, packed vegetable/fruits, etc). From another side we did not consider them as a simply processors in this marketing research as they are not certified by accredited independent certification body. Also there is not yet certification of organic retailers or catering area in Ukraine. In Ukraine there are some imported organic processed produce (e.g. Basso, Harmonia interna, Healthy drinks, Golden Bar group etc). Organic food processors are oriented both to the domestic and export markets. Mostly of export oriented processors export their organic produce for further processing in the target country. Organic food processors do export to the following countries (descending ordering): Germany, Poland, Netherlands, Czech Republic, France, Switzerland, Italy, Greece, Lithuania, Latvia, Austria, Belgium, Denmark, USA, China, Hungary, Israel, Moldova, Korea, Bulgaria, Norway, Singapore, Belarus, Sri Lanka and Great Britain. Export of the organic food processors:
Donotexport 45%
Export 55%
Some organic food processors to enlarge organic assortment do import to Ukraine. Some of them import ready products, some - ingredients for further processing to make the unique organic products. Organic food processors do import from the following countries (descending ordering): Germany, Columbia, Georgia, Peru, Indonesia, Uganda, Ethiopia, Poland, Hungary, Austria, Croatia, Switzerland, and Italy. Import of the organic food processors:
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Donotimport 77% Import 23%
The small share of import could be explained as a lack of demand from consumer and low interest from retail and processors for organic imported products/ingredients. See the result of the next question bellow:
For what average price does your company buy products / raw materials from organic producers in Ukraine for further processing (choose only one option from the list below)? 12 same price which equals a market price for conventional products of the same nomenclature in Ukraine for price which is up to 10 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 10 to 30 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 30 to 50 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 50 to 70 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 70 to 100 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is 100 % higher than market price for conventional products of the same nomenclature in Ukraine we do not buy
Average price for organic product/raw materials purchase
12
Nomenclature means full name of product (for example, wheat flour extra)
As we see mostly of the processors have their own raw materials/products for processing what makes for them closed value chain cycle and independence from situation on the market (price, quality, competition, etc). Analyzing the diagram (and uniting the neighboring intervals) we see that the biggest share of premium price purchase of processors for organic product/raw materials is 10-50% higher than market price for conventional products of the same nomenclature in Ukraine. See the result of the next question bellow:
For what average price does your company sell its organic ready products (choose only one option from the list below)? for the same price as market price for conventional products of the same nomenclature in Ukraine for price which is up to 10 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 10 to 30 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 30 to 50 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 50 to 70 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is from 70 to 100 % higher than market price for conventional products of the same nomenclature in Ukraine for price which is 100 % higher than market price for conventional products of that the same nomenclature in Ukraine
Average price for product selling
Analyzing the diagram (and uniting the neighboring intervals) we see that the biggest share of premium price sales of processors for organic product/raw materials is 1050% higher than market price for conventional products of the same nomenclature in Ukraine.
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Each consumer in all countries is alpha and omega of the marketing process, subject and object of the marketing impact. Who does not know the portrait of the target group cant make successful sales of the product.
Next questions specify the consumer portrait:

Target group of consumers for organic products of your company: 10.1 Export 10.2 Final consumer : Age from ________ to _________ years Sex (underline) M/F Children existence: there are children no children it does not matter Type of populated locality: village urban-type village (big village) town centre of administrative district city - centre of administrative region city with million inhabitants Kyiv capital of Ukraine it does not matter Level of income (underline) low, average, higher than average, high, it does not matter Education: elementary education fundamental general secondary education full general secondary education vocational technical education fundamental higher education (Bachelor) full higher education (Master) it does not matter
Consumer target group by age

25
20 Numberofcompanies
15
10
0 0 1 1,5 3 6 18 20 23 25 30 35 40 45 50 60 65 70 80 90 99 100 Years
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Consumer target group by sex
women 18% nomatter 77%
men 5%
A lot of previous publications presented 25-35 age women as a main target group for organic produce. As we see women got 18% only and it does not matter part of the pie is 77%. It means that in our current situation men take also decision and responsibility for family food supply, lifestyle and eating outside (caf, food delivery, etc) Consumer target group by children existence in the family
with children 32% no matter 68%
no children 0%
No matter win in the chart shows that children are not a main decision argument for people to consume organic produce. It facilitates some families to organic food consumption but it could not be considered as a main stimulating factor.
Consumer target group by type of populated locality
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citywithmillion inhabitants24%
citycentreof administrativeregion10%
KyivcapitalofUkraine 24%
towncentreof administrativedistrict1% village0% urbantypevillage0%
nomatter41%
Joining of the shares of Kyiv city and million-inhabitants cities makes about 50%. No matter shows the importance of organic food consumption without residential status. Mainly people from villages, small towns having own/rented or relatives land/dacha prefer to consume produce from own land and prepare processed (canned, slaughtered, etc) products. Consumer target group by level of income
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high 19% higherthan average 24%
nomatter 34% average 22%
low 1%
Consumer target group by education
fundamental highereducation (Bachelor)17% vocational technical education2% fullgeneral secondary education7% elementary education0% fundamental general secondary education0%
fullhigher education (Master)20%
nomatter54%
Needs of your company to achieve goals of your enterprise (you may choose either one or several options bellow): A Ukrainian Law on organic production is needed State support for producers of organic products is needed State support for processors of organic products is needed Target program of information dissemination about organic agriculture/production/processing is needed Deficit of qualified staff for organic processing Deficit of qualitative organic raw materials/products low interest of retailers to organic products Substantial investments are needed others (specify your variants please)
Needs of organic processing enterprises
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others lowinterestofretailers deficitofqualifiedstafffororganicprocessing substantialinvestments deficitofqualitativeorganicrawmaterials/products statesupportforprocessors targetinformationalprogram statesupportforproducers organiclaw
3 10 10 14 15 15 20 22 22
Under Others the following ideas were mentioned by processors: raw material producers do not completely perceive the rules of market economy and continue to grow what they know instead of what has market demand; improve of general agriculture development in Ukraine; avoid state control bodies interfere in business. The next question Does your company have any competitors in Ukrainian organic market? brought the following results. Competitors
noanswer 29% Yes 19%
No 52%
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It shows that organic market do not have competition environment. It makes some processors as monopolists and they dictate conditions to retail and price to consumer. Knowing strictly requirement of organic certification many organic processors do not see possibility for other conventional processors to enter organic market. Some processors see a 3-5 year gap between nowadays and time when healthy competition come to organic sector in Ukraine.
To your mind, what is the level of consumers information awareness about organic foods and its advantages comparing to conventional ones? less than 5 % of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovsk, Kharkiv, Donetsk, Odesa) 5%-10% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovsk, Kharkiv, Donetsk, Odesa) 10%-30% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovsk, Kharkiv, Donetsk, Odesa) 30%-50% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovsk, Kharkiv, Donetsk, Odesa) more than 50% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovsk, Kharkiv, Donetsk, Odesa) less than 5 % of population - the whole population of Ukraine 5%-10% of population - the whole population of Ukraine 10%-30% of population - the whole population of Ukraine 30%-50% of population - the whole population of Ukraine more than 50% of population - the whole population of Ukraine
Level of information awareness of consumers
0%
morethan50%ofpopulationthewholeUApopulation 30%50%ofpopulationthewholeUApopulation 30%50%ofpopulationonlyMcities morethan50%ofpopulationonlyMcities

10% 0% 0% 3%
5%10%ofpopulationonlyMcities
11%
10%30%ofpopulationthewholeUApopulation 5%10%ofpopulationthewholeUApopulation lessthan5%ofpopulationthewholeUApopulation 10%30%ofpopulationonlyMcities lessthan5%ofpopulationonlyMcities

11% 16% 19% 29%
How is better to increase the awareness of population of Ukraine about organic products: to organize organic open-air fairs to organize conferences, specific seminars about organic products Regional programs to spread organic agriculture state support for organic producers/processors to conduct promo-campaigns in sales points Information dissemination about organic products through mass media (free of charge) Advertising (on TV, in press, through Internet) Through scientific institutions Through consumers organizations
17 / 27
Marketing research_Organic processing in Ukraine_En - Referring to the FiBL marketing research is mandatory while using its data. Others (specify your variants please)
Ways to increase the awareness of population of Ukraine
others throughscientificinstitutions regionalprogramstospreadorganicagriculture organizeconferences,specificseminars throughconsumersorganizations conductpromocampaignsinsalespoints informationdisseminationthroughmassmedia statesupportfororganicproducers/processors organizeorganicopenairfairs advertising(TV,press,Internet)
3 8 9 14 15 16 21 22 23 24
Under Others the following ideas were mentioned by processors: programmes of financial support; though kindergarten, schools, education institutions; degustation organizing. Law of Ukraine
Do you think that Ukrainian law for organic production is needed?
organiclawis needed 95%
organiclawis NOTneeded 5%
Reasons of Yes answers (quotations of processors): without state support perspectives of organic production development are limited; for legislative guarantee of organic market functioning and establishment of requirements to organic products; responsibility for organic
term use; to increase organic produce at the market; precise document is needed, which will regulate legal, economical, social and organizational bases of organic production conducting, requirements on growing, production, processing, certification, labeling and marketing of organic products and raw materials; due to unfair competition appearance; mostly to regulate activities of organic producer-processor-consumer; due to demand of safety food products standard to be established, which should be understandable for consumer and consumer trusts to it; organic law will give precise definition to organic product in Ukraine, it will bring to pseudo-organic producers disappear. Organic law will support organic market forming and will protect conscientious producers. Producers will get subsidies from the state and thanks to it they will decrease price for their organic products and etc. Reasons of Not answers (quotations of processors): additional bureaucracy is not needed.
What parts (%) in total expenditures of your enterprise are: Purchase of organic raw materials - _________ % Processing of organic products itself - _________ % Costs of transportation and storage - _________ % Promo costs (promotion of organic produce) - _________ % Certification of organic production - _________ % Others - _________ %
Total expenditures:
Purchaseoforganicraw materials 41%
Processingitself 28%
Others 2%
Certification 7%
Promocosts 8%
Transportation/storage 14%
Standards:
EU Regulation 77%
NOP 17%
JAS 3% BIOLan 3%
Certification body
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Organic standard+IMO 68%
Ecocert 3% Biocontrol ICEA AustriaBio 3% 3% Ceres Garantie 3% 3%
ABCert 17%
Mainly organic processors oriented for domestic market choose certification of the local internationally accredited certification body Organic standard. For export-oriented processors the chosen market dictates often the selection of the certifier. As we see from the diagram Ukrainian certification body Organic standard and the Swiss certification body makes together 68% of the certification for Ukrainian organic processors and are leaders (in number of operators) in Ukraine.
Organic processed (simple and complex) products for domestic market: Baby food: puree (fruit, mixed grain-fruit, vegetable, meat, mixed meat-vegetable, fish), grain dairy and dairy-free porridges; vegetables: potato, beet, carrot; adjika sauce from sweet paper; fruits: apple; juices (apple, grape, pear, plum-apple, cherry, strawberry, wild rose, cornel); syrups (10 types);
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jams (12 types); stewed fruit sets, dried fruits; melons, watermelons; flakes (oat, wheat, barley, mixed); groats (millet, barley, wheat, buchwheat, pearl, maize, split peas); flour extra, 1st grade, wheat millstoned, rye millstoned, whole-wheat, whole-rye; bran, oil-cake; oil (sunflower, pumpkin); honey, propolis, pollen; raw milk, dairy products (e.g. butter, cream, cottage cheese); coffee, phyto tea (calendula, beggars-ticks, flax seeds); herbs (flax, calendula, beggars-ticks); conserved greens (John Joli); leguminous (kidney beans, soya); pastry, rusks; sauce from plum Tkemali;
Organic processed (simple and complex) products for export market: Berries fruits/ flowers and fruits (fresh, frozen, dried, puree): bilberry, cranberry, blackberries, cowberry, elderberry, aronia, sea buckthorn, viburnum, sloe, juniper, wild rose, forest raspberry, haw, cornel, wild apple) 18 types; Apple concentrated product, berry and fruit juices (14 types), birch juice (7 types); syrops (10 types); jams (12 types); sauce from plum Tkemali (3 types); wild collected mushrooms (fresh, frozen, dried) - 13 types: cepe, chanterelle, honey agaric etc; adjika sauce from sweet paper; nuts (Greek, etc); essential oils (lavender, sage);
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herbs: camomile flower, elder flower; conserved greens (John Joli); groats, cereals (millet etc).
The volume of some products (e.g. berries) could satisfy the demand for export market. At the same time some organic produce (e.g. dairy products) for domestic market are very limited and volume is not enough to meet demand.
Sales area of organic products Assortment, quantity

350 300 250 Assortment,qty Domestic 200 150 100 79 50 0 37 0 2006 50 39 11 2007 55 39 16 2008 53 26 2009 94 Export Total 215 309
86 50 36
2010
2011
In dynamic we see the growth of assortment list for both domestic and export market. Domestic: 2008 has 45.5% increase in assortment comparing with 2007, 2009 62.5% of increase comparing with 2008, 2010 38.5% of increase comparing with 2009, 2011 161% of increase comparing with 2010. Average yearly increase 2008-2011 is 76.9%. Export: 2009 has 35.9% of increase in assortment comparing with 2008, 2010 5.6% of decrease comparing with 2009, 2011 330% of increase comparing with 2010. Average yearly increase 2007-2011 is 73.1%. We should consider also that some companies have bigger number of organic products in organic certificate but market much less quantity of organic products. Despite of graph organic domestic market started from 2008 when 2 (groats of Zhmenka TM and flakes of Hercules TM) types of organic Ukrainian origin products appeared on the shelves of the supermarkets and special shops.
Sales area of organic products Total volume of selling organic products, tons
4500 4201,15 4000 3740 3500 3000 Volume,tons 2500 2000 1500 1000 500 0 0 2006 Domestic Export 1508 2510 1989 1632,5 1805,3 1601,57 2960 2325
2787,37
2007
2008
2009
2010
2011
In dynamic we see the fluctuation of volume sales for both domestic and export market. Domestic: 2008 has 31.9% increase in volume sales comparing with 2007, 2009 18% of decrease comparing with 2008, 2010 2 % of decrease comparing with 2009, 2011 12.7% of increase comparing with 2010. Export: 2008 has 17.9% of increase in assortment comparing with 2007, 2009 has 26.4% of increase in assortment comparing with 2008, 2010 12.3% of increase comparing with 2009, 2011 34% of decrease comparing with 2010. We should consider also that data for 2011 was not fully provided and many companies had their organic products on stock for the time of the data collection. Analyzing both last diagrams we observed the tendency of much faster growth of organic products number (assortment) comparing with traded volume.
Sales area of organic products Part of organic products in general products assortment of processors
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Part(%)oftheallorganicproductsintotalproductassortment
90,0 83,3 80,0 75,0 70,0 62,2 60,0 50,0 40,0 30,0 20,0 10,0 0,0 0,0 2006 30,0 22,0 Domestic Export 39,7 36,9 42,4 58,3 83,3 78,5
2007
2008
2009
2010
2011
Here we see that the share of organic in all products list of the company increased in domestic-oriented companies and fall down for export oriented companies.
Sales area of organic products Number of points of sales, quantity
800 700 600 Domestic 500 400 300 200 154 100 0 0 2006 0 2007 26 2008 2009 2010 2011 329 724
Numberofsalespoints
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For export oriented companies main buyers are processing units or traders. For domestic market less than 30% of processors provided their data about number points of sales thats why these figures could not be summing up for whole organic processing industry. At the same time for these companies we could note about considarable growth of pont of sales number within last 3 years. 2009 has increase of 492.3% comparing with 2008, 2010 113.6% of increase comparing with 2009, 2011 120% of increase comparing with 2010. Main sales places for domestic market are special shops, supermarkers, internet shops. General food stores, direct sales, farm shops, product basket delivery to consumers are not yet popural for marketing organic products. Often distributors play an important role to market organic products of producers from regions. General turnover of organic processing in Ukraine for export and domestic market could not be calculated or estimated because less than 10 companies provided turnover data for the marketing research. Ukrainian market does not have any literature in Ukrainian or Russian about organic processing. We could recommend the following books about organic production and regulation for Ukrainian readers.
Available (e-versions, hard copies) is a literature in English about organic processing, production, marketing, etc.
Conclusions
There are few valid organic processing enterprises in Ukraine which could not yet provide full assortment of organic produce for Ukrainian consumers. Many processors are oriented to export providing organic pre-processed products for further processing in target countries. Many organic processors face the problem of selling organic produce as conventional ones. Organic produce is for niche market but not mass market. Thats why it has not economies of scale.
There is a low awareness about organic among consumers, gradual degradation of taste feelings and lack of culture of organic products consumption. Due to low competition or even mainly absence of competition and growing demand we consider organic market in Ukraine as a market of seller.
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Marketing research Organic Processing in Ukraine

Marketing research Organic Processing in Ukraine

Geographical allocation of organic food processing enterprises in Ukraine:

Donotimport 77% Import 23%

Average price for organic product/raw materials purchase

Average price for product selling

Next questions specify the consumer portrait:

Consumer target group by age

0 0 1 1,5 3 6 18 20 23 25 30 35 40 45 50 60 65 70 80 90 99 100 Years

Consumer target group by sex

women 18% nomatter 77%

with children 32% no matter 68%

Consumer target group by type of populated locality

towncentreof administrativedistrict1% village0% urbantypevillage0%

high 19% higherthan average 24%

nomatter 34% average 22%

Consumer target group by education

fullhigher education (Master)20%

Needs of organic processing enterprises

others lowinterestofretailers deficitofqualifiedstafffororganicprocessing substantialinvestments deficitofqualitativeorganicrawmaterials/products statesupportforprocessors targetinformationalprogram statesupportforproducers organiclaw

noanswer 29% Yes 19%

Level of information awareness of consumers

morethan50%ofpopulationthewholeUApopulation 30%50%ofpopulationthewholeUApopulation 30%50%ofpopulationonlyMcities morethan50%ofpopulationonlyMcities

10%30%ofpopulationthewholeUApopulation 5%10%ofpopulationthewholeUApopulation lessthan5%ofpopulationthewholeUApopulation 10%30%ofpopulationonlyMcities lessthan5%ofpopulationonlyMcities

Ways to increase the awareness of population of Ukraine

organiclawis needed 95%

Purchaseoforganicraw materials 41%

Organic standard+IMO 68%

Ecocert 3% Biocontrol ICEA AustriaBio 3% 3% Ceres Garantie 3% 3%

Sales area of organic products Assortment, quantity

Sales area of organic products Number of points of sales, quantity

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