homepage_name! > Editions > Number 115-116 > Interview - Matjaz Vodopivec

Matjaž Vodopivec, General Manager of the Strategic Business Unit Snacks, Atlantic Grupa

Employees Are Our Best Brand Ambassadors

Soko Štark entered Atlantic Grupa with developed brands and an identity, but with a new owner it obtained a serious and responsible strategic partner whose goal was to improve business operations and provide long term success on the regional market. This means that investments are not just made into brands, but more importantly into people, their development and various HR support programs, since employees are our best brand ambassadors. We do everything with the goal to ensure our employees have a positive and inspiring work experience, says, among other things, Matjaž Vodopivec, General Manager of the Strategic Business Unit Snacks, Atlantic Grupa.

Matjaž Vodopivec, General Manager of the Strategic Business Unit Snacks, Atlantic Grupa, spekas for PROFIT magazine.

1.The confectionery industry in Serbia has recorded a surplus, and in the first 6 months of this year it was between EUR 9 and 10 million, whereas exports grew by 18.5%. What business results has Soko Štark achieved in 2018?

The previous year will be remembered as a year of yet another historic record at Soko Štark, with sales of more than 29.000 tons, which when compared to 2010 upon entering Atlantic Grupa, the increase is almost 6.000 tons. At the same time, sales results on an annual basis recorded a 4% growth in quantity as well as an economic growth of 7 percent accompanied by the completion of plans and greater profitability, which guarantee the financial stability of the company, and the Atlantic Grupa as a whole. As for geographic sales, the structure of the Serbian market is still dominant with a 65% share of revenue, while a third of sales is accomplished on other regional markets and beyond, through the so-called ethnic sales channels where we are present on almost all continents. We have gradually opened new markets such as Romania, where Štark products were first presented to the consumers in 2017. We focus on having a leading regional position in the categories within which we have renowned brands, which serves as a good foundation for further internationalization. An example of that is the Smoki snack, which is an absolute leader in the flips snack category and represents one of the main pillars of the company. The point is, regardless of the generally ambitious approach to the further development of our brands, we try to be infinitely rational on every market.

2.What do you think about the Serbian confectionery industry and which comparative advantages do our confectioners, and especially Soko Štark have?

The confectionery industry is one of the healthiest industries in Serbia which keeps up with trends and can surely take pride, not only in its product quality, but also in following new technologies and standards owned by the world’s largest manufacturers, which is proved by the fact that apart from the free import of confectionery products, the confectionery industry is still growing and recording an export surplus. In the previous year, growth was seen in all segments of the confectionery industry, exports increased, while imports decreased, which clearly shows that Serbian companies keep up with leading multinational companies in terms of product quality. Therefore, we surely do not lag behind European and global manufacturers in terms of quality, although it is in such harsh market competition that we need to fulfill complex standards by means of production efficiency and flexibility but also retain consumers’ trust and meet their expectations. Štark has managed to do that and it constantly generates, not only an increase in sales, but also in profitability, which indicates the stability of the company’s business operations as well as risk management and financial risks.

3.How much has Soko Štark invested in the modernization of its business processes so far and to what extent has it contributed to the development/ profit of Atlantic Grupa?

Investing over EUR 20 million over the past ten years in the production processes and renowned brands, some of which have regional or even global potential, has contributed to the achievement of additional value and business plans[K1]. What’s more, its record business results in 2017 meant that the historic maximum in sales was accomplished as well as income of over EUR 90 million. What I would particularly like to point out is that the core of good business results lies primarily within people themselves, which means that investments are not only made into brands, but firstly into employees, who are our best brand ambassadors. We try to create an inspiring work environment, which entails specially designed premises intended for socializing and entertainment, we celebrate minor and major successes collectively, we have elaborate development, motivation and reward plans as well as a healthcare plan and an ambulance in the factory grounds. As a socially responsible company, we create opportunities for the young, inexperienced people. We offer paid apprenticeship, support various student initiatives and associations and every year at the group level, open about fifteen new positions through the “Atlantic Trainee Program“. We also have our Values Day, when we volunteer and help our local community, various institutions that look after children, people with special needs and elderly people. Or, we take part in environmental protection, clean green areas, paint street furniture in parks. In that way, we cherish our common corporate values - creativity, passion and growth - and try to put them into practice and our everyday activities.

4.In 2017, an import levy for powdered milk and butter was cancelled. How did it affect the confectionery industry, and did it consequently reduce production costs?

The cancellation of the levy on powdered milk and butter contributed to a reduction in raw material purchase costs and contributed to greater competitiveness of domestic confectioners in export markets. The point is that, prior to the levy cancellation, domestic manufacturers had expected the government to adopt measures that would provide equal business conditions in relation to competitors. What is also vital to us are the price movements of flour, sugar, and vegetable oils and the fact that the Ministry of Agriculture monitors market trends in order to, in the event of unforeseen circumstances, take appropriate measures regarding monopolistic tendencies and redemption prices. We support the program for economic-financial incentives towards agricultural cooperatives adopted by the Serbian government because this supports the raw materials basis of the processing industry. In addition to that, they are raising the awareness with farmers so as to use available European funds, since they are not exempt from balanced regional development.

5.The competition in the confectionery industry is strong, both in Serbia and in the region. What are the strengths of Soko Štark in the race against the competition?

We are aware how important it is to be different, so with equal devotion we are developing our range of products and our business practices, since this is what makes a difference. Consumer orientation implies higher flexibility to all our processes so we are able to incorporate market feedback as soon as possible and launch new flavors or products. In this way, we last year manufactured 439 different products and developed 14 new recipes. The increased sales volume led to a more complex production process accentuating the need for effective management and further investment in energy efficiency of production, as well as improvement of product safety, which ultimately contributes to cost reduction with enhanced competitiveness and continuous product quality. For years, Soko Štark has been the dominant manufacturer of flips snacks and chocolate and it manages to raise the bar every year. This year, we also expect to realize the sales plan and growth, as based on current data for the first nine months of this year compared to the same period last year, we have recorded a sales increase of 5.5%. Consequently, in the next couple of years, we will continue with planned investments in the development of chocolate and flips products, assortment innovations as well as investment into our employees, partners and suppliers, based, above all, on market feedback.

6.Soko Štark is celebrating another important anniversary this year - 80 years of Bananica, whereas last year we celebrated two important anniversaries - 45 years of Smoki and 95 years of the brand, Najlepše želje. What do you think is the recipe for the success of these brands?

Almost all Štark brands have this spirit of long-standing tradition which is reminiscent of our childhood and our children’s childhood. This unrepeatable experience that consumers have with Štark is our most important attainment. We have preserved authentic, traditional recipes and this is the taste that is remembered and loved. Najlepše želje is still strictly made from cocoa butter and this is why we like to say it is genuine chocolate. Smoki has become a generic name for flips snacks and as the first product of its kind in the Balkans, produced back in 1972, it represents a flavor benchmark in the category of peanut flips. The first Bananica was manufactured back in 1938, and up to the very present day, it has been manufactured in the same way with a gelling portion of Agar-agar, which is a natural solidifying agent obtained from algae. Naturally, we are constantly introducing new technology, but we adjust the recipes to the modern ways of production while preserving the authentic ingredients. In this way, we have retained the recognizability ofŠtark flavors, which remind us of our childhood and evoke emotions, but new generations bring new trends. This is what inspires us to do better and be more innovative and develop new brands in-line with new behaviors and expectations of consumers, upon whom it depends whether some new flavor will remain in permanent production, or just in a limited series.

7.Raw material procurement and its changeable price in global stock markets affect the company’s overall business plans. How do you cope with such enormous increases and still manage to make your products affordable for Serbian consumers?

By means of central procurement, continuous monitoring of fluctuations in cocoa prices, and planning purchases at the best possible moment, we manage to avoid large price movements and always try to comply our production price with the optimal ratio of quality and price competitiveness, with no effect on our consumers.

8.What are the strategic and primary plans for the next period and do you plan on conquering new markets?

In Štark sales, the Serbian market is still dominant with a 65 percent share in revenue, and although Soko Štark products are available in all continents, we export mainly to markets in the region. The goal is to achieve recognizability on the global market and is based on a rational export strategy focused primarily on having a leading regional position in the categories within which we have renowned brands, as is the case with Smoki, which is an absolute regional leader in the flips snack category. This orientation serves as a good basis for further internalization and that is why we are present with our entire portfolio on all markets. For instance, we do not place chocolate on the Croatian market because of the position which is occupied by Kraš, despite the fact that we are leaders on the domestic market. If we consider Najlepše želje and Menaž, we are positioned ahead of the popular chocolate brand, Milka.

9.Soko Štark is considered to be a company which invests a great deal in research and development. Tell us more about that.

The driving force behind our business system is the philosophy of constant improvement of all processes, which entails investment in every segment of business operations, from purchasing, production, market development and research to communication with our consumers. We allocate 50% of total investments towards the development and maintenance of quality so that we create a dynamic environment that can smoothly be adapted to any change in the business environment with maximum process optimization. We build our own corporate practices based on the best standards in the world, which integrate and combine requirements for business process management (ISO 9001), the highest level of product and service safety (FSSC 22000, HACCP, GMP) and requirements for environmental management (ISO 14001). We try to transfer our quality system of business process requirements onto our suppliers because a good quality product can only be obtained from good quality raw materials and incoming materials. Thus, we are directly connected to all our suppliers through a digital platform so as to exchange information and documents which are important for incoming material quality management.

10.What are the leading global trends in your industry? In which fields do you recognize the opportunity for further development and what does the process of creating new products look like?

There is always room for further development in the additional improvement of technology, innovations of products, production processes and marketing activities, which lead to creating a comparative[K2] advantage and growth acceleration. Main Štark brands and the development of their portfolio is an obvious example of creativity leading towards new perspectives, especially with the innovation of renowned brands. Following trends last year, Najlepše želje launched a new flavor of coconut and noissette chocolate, Menaž launched an innovation of Menaž chocolate glaze in a glass. Smoki Mega Hrsker got a new HOT flavor and a sub-brand, Smoki Fun, was launched as well. Redesigned biscuits expanded their portfolio by Keksići with a double layer of cocoa cream and caramel, while Integrino offered a sugar-free biscuit in two flavors. The waffle category went through multiple innovations and the segment of waffles without toppings was enhanced by a new double-layered product structure. Bananica, the favorite snack of all generations, with its variation, Skroz Čoko Bananica, solidified its market share despite very strong multinational manufacturers. I want to say that there are constant investments in portfolio innovations.

11.If we consider the fact that consumers are starting to pay closer attention to the label and ingredients, how do you cater to their more demanding needs?

One of the main benefits to contemporary consumers is transparent labeling, ingredients and product safety, which has a direct correlation to traceability and constant quality control of materials constituting the product itself. All raw materials which Štark uses in its production process undergo a special selection through a central procurement system with the selection of suppliers who fulfill all the given parameters of quality control because this is our obligation and responsibility as well as a way to distinguish ourselves from competitors. Focus is also placed on our product ingredients by our consumers who pay closer attention to a healthier raw material composition of a product. Communication on the source of raw materials with an emphasis being put on simple, locally known and natural ingredients is a global trend we are trying to keep up with. We have gradually replaced artificial flavors with natural ones, we use natural colors and have replaced hydrogenated oils with non-hydrogenated vegetable oils. We also decided to develop healthier product categories: Integrino biscuits are a highly successful brand that have managed to gain popularity among the consumers very quickly due to its ingredients, exceptional taste and distinctive identity. In the whole wheat biscuit segment in Serbia, it holds an enviable position. In the flips snack category, Smoki has for years been in the top 10 most recognizable brands of Southeast Europe, it is made from natural ingredients such as corn flour, peanuts, vegetable oil, soy flour without any additives, flavors or flavor enhancers.

12.Štark is putting more effort into the development of its retail network, which currently consists of 13 stores. Will you be working on further broadening it and is it a trend in our country for manufacturers to have their own retail network?

Our retail network represents a place of special atmosphere because our store’s interior embodies all the values Štark cherishes. Our long-standing tradition is a huge commitment, which inspires us to do better each time we communicate with our consumers, which we achieve in the best possible way in our stores. The point is that we provide our consumers with the exquisite delight of being surrounded by Štark’s assortment, evoking memories and smells from childhood in this cozy place... We do not plan to spread rapidly, but by means of several retail stores in Serbia, polite service and positive experience, we plan to build a recognizable reputation of every single Štark store.

[K1]achievement of GOALS?