The Ukraine-EU Association Agreement came into force, and that made it much easier to establish cooperation in the education, culture, business and many other sectors. More and more products “Made in UA” make their way to European markets, and Ukrainian specialists come home with degrees from leading European universities. The opportunities offered by open borders erase boundaries and open new space for personal, commercial and social achievements. As part of the information campaign “European Integration: the Power of Opportunities”*, The Point will tell the stories of people who experienced that firsthand.
This time, we talked to Dmytro Butenko, the owner of a farm raising and precooking snails. The experienced businessman came across this idea by chance, but making it come true required a lot of time and efforts. For he had to deal with technologies unknown to domestic producers, and his products were a novelty for Ukrainian consumers. But today, supplying snail fillet and caviar to stores, restaurants and ordinary household kitchens, the Eko Ulitka team is already planning a conquest of the European and global markets. Dmytro shares the story of persistence in the conditions when the market is forced by crisis to take an endurance test, while the unusualness of this business raises doubts in others as regards its future success.
From selling cards to a farm on a nobleman’s estate
I was in business for my almost entire life. My first experience was three outlets selling mobile account funding cards in 2002-2003. In 2005, I was running a scrapyard from where we shipped scrap metal to factories as a secondary raw material. At the same time, I studied financial analytics and traded online on an American stock exchange. After the crisis of 2008, factories began delaying payments, there was a fierce competition, but most importantly, it wasn’t something I really wanted to do. Therefore, I decided to close down the scrapyard and drastically revise my life and my work, asking myself where I wanted to be and what I wanted to do. The crisis really helped with that.
I was able to make a small fortune on the stock market, some $35 thousand. One month after collapse of the securities market (it was 7 December – I was working that day, and watched the market nosedive), the crisis made itself felt in Ukraine. While collecting analytical data and studying experience of other countries – America of the 1930s, the postwar revival – I decided that food business has the biggest prospects in the time of crisis.
A friend of mine heard about my idea, and suggested to bring snails from Lithuania. In spring, I gave him money, some 350 euros, and two weeks later, he brought me two boxes of snails.
For the start, there was an opportunity to open a few food stores in Kyiv near the central railroad station to see whether I would like that business. And when I started to work on it, I found out that competition there is not any lighter than in my previous business, and a few stores have no prospects at all: in order to generate sufficient income to survive in the city, there should be 30-40 of them.
One day, when I was selecting goods for my trade, I noticed snails produced in the Kaliningrad Oblast. That was when an idea struck. Some time earlier, I was offered to buy a property in the Vinnytsia Oblast – an over a hundred year-old mansion of some Polish nobleman who was manufacturing bricks for railroad stations. The property was attractive and the price affordable. I talked to my friends and partners, and became the owner of that mansion. So, I recalled that when I had a meeting with my friends there, we saw snails in the apple orchard just like those. I began to study these creatures more closely, and realized that my estate has very good conditions for growing them: shadow, moisture, soil acidity. Eventually, I knew that I want to close my stores as I didn’t see any development prospects for that business, and plunged into the new idea.
I studied more and deeper the information about raising snails. The Internet could offer little, but my persistence helped me find the necessary literature: research theses and even the book which was prepared for that business in the Kaliningrad Oblast.
I couldn’t wait for spring to come to start the business. But where to start? Again, I had no clue. A friend of mine heard about my idea, and suggested to bring snails from Lithuania. In spring, I gave him money, some 350 euros, and two weeks later, he brought me two boxes of snails. I took them to my orchard, and saw that they indeed are identical to those which already lived there. I began watching them, simultaneously studying information. In slightly over a year, I was able to grow enough snails to sell them. But how could they make their way to the store shelf? If I were to sell them as raw food, I would have to face fierce competition from other farms, charge low price and settle for low earnings. So, we decided to sell them as cooked food, but for that, we had to learn how to cook them the right way.
We tried, experimented, and in the evenings, invited friends to taste them. The snails were so-so: they had bitter taste and were like rubber, even though we seemingly were doing everything right. My cousin has a culinary school degree and works at an elite restaurant. I consulted with him, told him what I do and how, and he was making corrections. Overall, by trial and error, by studying culinary books and available technological processes, we came up with a recipe. It took over three years, but the recipe was so good that people who made a purchase wanted to buy again and again, and that was an indicator that they like it.
When we started, there were three photos in Google and Soviet-era books. Today, setting everything up is much easier, and our payback level can be reached faster.
Exotic business: the price tag
Equipping the workshop set us back by slightly over 12 thousand dollars. We had no time to check how properly it was equipped – we had to cook, and for that, we needed a stove, kitchen utensils and refrigerating equipment. Of course, this process doesn’t stop, like construction: when the time comes, something needs to be replaced or written off again. When there are sales and revenues, a certain part of it is accumulated, and then, we buy something new or do repairs.
Calculating the price of cooked snails or profitability was difficult, and therefore, everything was estimated on the basis of cost price. Back then, long-term investments weren’t taken into account, as well as the exchange rate: for 10 years in business, it grew from 5 to 27 hryvnias per dollar, so we priced the product to make sure that exchange rate fluctuations do not affect it. The price is formed based on the expense per ton of product, revised once every six months. We try not to overprice the product and keep it affordable, even somewhat underpricing it. Today, our price is substantially different from prices charged by European suppliers. But later, that will change, because expenses (such as electricity costs and premise lease payments) are growing. In September, we are going to revise the price again, setting it for the nearest year or two on the basis of updated expenses.
The largest order we had was for 700 grams of caviar to one customer. And speaking about stores and logistics warehouses, the largest order from them was for 250 kg at once.
The project paid itself back in seven years. We started from the scratch, from the lack of understanding; information had to be double checked, and every error cost us a lot of money. That’s why we moved slowly, for there was no flagship to follow. Moreover, upheavals in the country, as a rule, throw a business back, and regaining the foothold becomes harder. If we were to start today, I think it would’ve been much easier, because methodologies are already available, legislative framework has changed, new rules of the game are in effect, compliance checks are of somewhat different nature and character. Equipment and workforce are more readily available today. One can get a step-by-step instruction on organization of a farm and simultaneously develop one’s own recipe. And back when we started, there were three photos in Google and Soviet-era books. Today, setting everything up is much easier, and our payback level can be reached faster.
Snail delicacies: caviar, fillet and the taste of borscht
In our production process, we place emphasis upon stuffed snails. We have a product line featuring six names of cooked snails: Burgundy-style, Limousin-style, Dijon-style (a French classics), with gorgonzola (Italian classics). We also have Ukrainian recipes with the taste resembling borscht: with cured tomatoes and garlic. Plus, snails with saffron sauce, best digested with dairy products. A separate item is precooked fillet packaged into a shell and frozen, for restaurants or home cooking. You can take it out of your freezer any time, cook, make your favorite sauce and serve. And on top of that all, snail caviar.
Snail dish is a festive food, and therefore, we receive more orders during holidays. So, whatever period has more holidays, that’s the season. The largest order we had was for 700 grams of caviar to one customer. And speaking about stores and logistics warehouses, the largest order from them was for 250 kg at once.
We work to order, but always keep something in stock. The volume of 10 tons takes some five years to accumulate, and to generate it, we need another 3-5 tons every year. The snail that wasn’t processed goes into reserve, continues to grow, accumulates for the sake of the company’s continuing existence. The production cycle is three years long. But today, there are farms in Ukraine that have brought the Spanish snail growing in just two seasons. If fed intensively, it could be raised in even one season. But mostly, it is used as raw food for European companies.
We expect our caviar to be represented the most on the European market, for that market is not so saturated and caviar is a more universal product that doesn’t depend on local tastes.
Reaching the customer: tastings, festivals and exports
This business is very hard to run in Ukraine, unlike Europe that has a huge market, sufficient household income to buy healthy food, and the snail eating culture. And to develop this culture in our country, we participate in various events, festivals like Made in Ukraine or All.Our, various wine festivals and tastings at retail stores. We offer treats to people to try and understand what kind of product it is. We have to conduct huge explanatory work among consumers. This process requires a lot of efforts, and during the entire period, it takes place simultaneously with production. For releasing a product is not enough – it also needs to be sold. The fact that it is an exclusive product was helpful, so we work in the mollusk and healthy food segment.
Our potential European clientele are mostly restaurants and large retailers. One of retail chains in Spain is already waiting for us. And by the New Year, we want to send a test shipment to France. Talks are underway, and documentation is in the works. When entering the markets of EU states, the Enterprise Europe Network (EEN) will become a useful tool significantly simplifying the search of partners. By the way, one of the factors of a successful European export is the zero duty rate accorded to us thanks to the Free Trade Area with the EU. Another helpful tool is the European Commission’s service Trade Helpdesk offering answers to questions concerning the sale of any goods.
Besides Europe, we also have Kazakhstan, explore sales opportunities in Azerbaijan and contemplate the United Arab Emirates. To be sure, we won’t have enough for all of them, so we’re trying to work based on our optimal budget, without getting long-term loans. The European market is just another additional motivation.
Europe itself is ready to sell its raw foods on the global market, and therefore, farmers raising snails have to look for new sales markets today, not gearing toward Europe alone. And also, they have to know how to pass certification, know washing and drying technology. There are many potholes which you can find out about only through your own experience, not by studying prepared information.
To make sure that our producers successfully enter the European and global markets, all public bodies must coordinate their efforts. The speed with which a product passes customs clearance has direct bearing upon the product’s quality when it arrives at the customer’s doorstep. We need communication with public authorities, some mobile organization helping with handling formalities.
The successful team and contribution of the family
My team are the people who know their job and all its nuances. Among them are those who raise snails at our farm, those who prepare them for precooking and those who stuff them. The full-time team is comprised of about 15 persons handling production, and during the processing season (summer-fall), it grows up to 70 persons, depending on workload. I myself handle all orders and contact customers on all matters, consulting, if necessary, my staff.
Persistence and sense of purpose were the key factors of success, because for 5-7 years, many laughed at our idea. Today, everything has changed. We needed a belief that the goal is real. That’s when it can be reached, and the next goal is set. For instance, we reached the sales turnover of six tons a year. If we want to reach 7 or 10 tons, we have to change something in our work procedures or hire additional personnel. If there is interest and understanding that we can do it, we go ahead. Without these qualities, we probably wouldn’t have done it.
I felt support from my family – everyone knew that I was result-oriented, and tried to free time for me, taking up some routine tasks they could handle. They contributed substantially to the success of our enterprise.
Plans for the future and advice to beginners
This year, we opened a snail raising school called Ravlyk Ukraine. We want to create about 10 small farms that could make money themselves, and also, help us increase the required volume of live snails sufficient to enter the European market. We cannot create these farms that quickly themselves, because we’re currently working with another species of farm-raised snails than what Europe wants. Therefore, we have opened a school for people who want to learn this trade, and can provide them with information support and help them move forward much faster than we did.
Our strategic goal is to strengthen our foothold on the Ukrainian market, expand the sales market, and introduce a new protein variety to our compatriots. Next will come the European and Asian markets – we are going to expand our presence there are gradually conquer them, glorifying our country on the international market. I think we can do it in the nearest 2-3 years. We will improve our quality, additionally introduce new original recipes, diversify our Ukrainian cuisine.
Our advice to those who want to follow our path: do not take up opportunistic or risky projects, double check information and have a sales market ready before entering it, for if you’re not prepared, everything could come down to disappointment. And of course, believe in yourself.
* The information campaign “European Integration: the Power of Opportunities” is conducted by the Office of the Vice Prime Minister for European and Euro-Atlantic Integration of Ukraine with the support from the EU and Association4U project.
The article was originally published on The Point