How to do business on the seeds

Food industry Groceries

Sunflower seeds are a cult product for Russians. They are loved by everyone who has teeth. Although they can not be called either food or appetizer, still in 2000 they were finally ranked as snacks. Then, many manufacturers rushed to earn on this product.

The segment of packaged seeds truly sprung up in 2004-2005. Crackers by that time managed to largely exhaust the growth potential, and their producers in their delights reached the point of using the taste of red and black caviar. But the seeds only gained momentum. The consumer has become more demanding on the caliber and grade, and the producers either remembered or saw that seeds are a healthy product, and began to write about it on the bags, playing up to consumer interest. The market also grew quantitatively: if in the early 2000s 15–20 companies roasted seeds throughout the country, now in each region of Russia there are five or six plants. Now the growth rate of this market in value terms is 11–16% per year, and the segment called “other snacks”, which includes seeds (along with peas, seaweed, etc.), has occupied 50.7% of the snack market. Its volume is estimated at 1.4 billion dollars.

New players in this business are primarily attracted by its simplicity and low entry threshold, which even the owner of 100 thousand dollars can overcome. And, of course, the almost complete absence on the market of federal brands that could spoil the game for small producers on the ground.

The business on the seeds is a small workshop with a roasting oven and a packaging line. To open such a production, you do not need to know much, just purchase equipment and certificates. Domestic equipment, including a furnace and a packing line with a capacity of 50 tons per month, can be purchased for 50 thousand rubles. Imported productivity of 150-160 tons per month, will cost from 350 thousand. Another 50 thousand dollars will be spent on the purchase of the first batch of raw materials in the amount of at least 30 tons (confectionery varieties of sunflower seeds cost from 30 rubles per kilogram), rental of premises and other expenses. In general, it turns out that you can open production with a capital of 100 thousand dollars. True, these calculations are true only for the regions. According to estimates of players near Moscow, the initial investment will still be at least 500 thousand dollars. Nevertheless, this business is unique, if only because it is possible to repay investments in three months. Sunflower seeds product in demand and resourceful. Selling price per kilogram of packaged seed

chki reaches 70 rubles in the regions, and in Moscow - sometimes even 100. In addition, distributors are even ready to take goods on an advance payment from reputable manufacturers.

But by all estimates of experienced entrepreneurs, you won’t earn millions here. Those who took it seriously bought cars and houses for themselves - but this is the ceiling, experts say. However, those who desperately need their own business, and there is not much money, do not have to choose: they grab their teeth at the opportunity to successfully “start”.

Small players are in no hurry to discuss the future of their business.

Their business is completely dependent on suppliers of raw materials, with which the main problem in this market.

The fact is that in summer the raw materials may end, there will be no carry-over for the next season. Large companies will begin to sell raw materials at small prices at "frantic" prices, actually squeezing them out of the market.

Seasonal raw material shortages can be exacerbated by poor harvests. The worst thing is precisely for small producers who are forced to buy everything from suppliers, including poor-quality rancid raw materials that have been lying in the warehouse for months.

It is clear that agricultural producers have the most chances to crush the market for themselves. Roasters and packers are also not averse to go into agriculture, but finding free land and learning to grow a moody culture is certainly more difficult than frying.

As for the federal producers, who fry from 500 tons per month, their plans are quite ambitious - to increase volumes and move to neighboring regions with an eye to cover the whole country, building federal brands.

The truth is that “strangers” are reluctant to enter local markets. . At least, if we are talking about the main channel for selling seeds - convenience stores and stalls. By the way, according to market players, up to 90% of the packed seeds are “pumped” through them.

In addition, regional manufacturers, in addition to relations on their territory, have a more significant advantage — a low price, an insurmountable barrier for those who are used to working with high margins in the premium segment.

It is easiest for federal players to penetrate local markets through networks, although so far this format of trade does not give much momentum to the market for packaged seeds. Entrance there even for large companies is not an end in itself, but rather an opportunity to advertise your product.

Meanwhile, retailers, who agreed to allow seeds on their shelves only two years ago, managed to evaluate their turnover. Therefore, almost all of them already sell seeds under their own brands. It is clear that networks traditionally declare prices for products under their own brand name 10–40% lower than the market average. And it also happens that large retailers are trying to reduce the price of a manufacturer’s product to such an extent that they are forced to refuse such cooperation. In general, network conditions put forward tough, and sometimes not even acceptable for manufacturers.

As for the advertising strategy of seed producers, in the face of increasing market competition, players have to use different methods of promotion, sometimes coming up with completely innovative techniques.

Thus, the Region and Razdolie companies succeeded in expanding the sales market by persuading Rospechat (which is 700 branches around the region) to introduce seeds into their assortment. In addition, Razdole intends to promote seeds also at sports and recreational events such as football matches and beer festivals. At the same time, the company is trying to convince the consumer that seeds are not a weedy product, developing special packaging that consists of two glasses, one of which is designed for husk. Thus, "Expanse" is trying to bring seeds to theaters. And we already have a positive experience of cooperation with CenterFilm in Moscow. The only thing cinemas fear is that selling sunflower seeds will overshadow popcorn sales.

But this is not the whole arsenal of means of promoting the company on the market. There is one more move in stock: in supermarkets that have not yet managed to become a full-fledged advertising arena for seed producers, Razdolye is going to conduct promotions with the participation of girls dressed up as old women, and even with canvas bags.

In general, in this market a lot depends on the advertising strategy of the players. According to experts, within two or three years, large companies that are able to competently promote their product will be squeezed out of the market by small producers. And by 2010, the market will already be divided between several federal brands.

Based on an article by Vera Kolerova published in the journal Business Journal

* The article is more than 8 years old. May contain outdated data

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