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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

Consumption

Trade

Certification

Processing

Marketing research_Organic processing in Ukraine_En - Referring to the FiBL marketing research is mandatory while using its data.


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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 Re-search Institute of Organic Agriculture (FiBL) due to lack of information on organic pro-cessing 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 charac-ter 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 imple-mentation 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 pro-vided 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.

1 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

6 Nordic Environment Finance Cooperation (Nefco), www.nefco.org 7 International Centre for Organic Agriculture of Central and Eastern Europe “EkoConnect”, www.ekoconnect.org



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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 system-atizing 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 certifica-tion 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 sta-tistics" 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 en-terprises 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 pro-cesses 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 pro-cessing in Ukraine is the special statistical observation and statistical register.

The type of our statistical monitoring is the single-acting in contrast with existing continu-ous or periodical monitoring.

Completeness of study entity coverage of our statistical monitoring is entire, because ac-counting 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, ques-tionnaire 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 feasi-ble 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. 8 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.



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Aim of the marketing research – to gather primary data from organic food processing en-terprises in Ukraine.

Tasks of the marketing research – the united questionnaire application form which was giv-en 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 pro-cessing 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, con-servation, manufacturing, slaughtering, deboning, grinding, crush, salting, air/sunshine dry-ing, frying, marinating, pre-packaging, packing and labeling). These organic food pro-cessing 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 exam-ple, some processing enterprises have their own organic food growing/production, they make primary cleaning and export, other ones buy organic products from organic produc-ers, 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 eхport markets. Some companies are registered in Ukraine and abroad and have processing and distribution sys-tems 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 dur-ing 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 characteris-tics.

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, Agro-fruct Ltd, Aroma trade Ltd, Branch of the state food-grain corporation of Ukraine "Novouk-rainsky 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, Phy-tosvit 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, Italоbonifica, 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 reputa-tion 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 money–consuming task. That’s 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 produc-ers/processors under their umbrella. It helps them to cut costs promoting each produc-er/processor individually, bring wider assortment and larger volume to the market. Some brands sell exclusively organic produce, some - have both organic and conventional prod-ucts. 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 rec-ognisable 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



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are not yet at the above-mentioned list11. The value of organic brands was not yet estimat-ed 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 clean-ing, 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



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(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 accred-ited 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 in-terna, 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 order-ing): Germany, Poland, Netherlands, Czech Republic, France, Switzerland, Italy, Greece, Lithuania, Latvia, Austria, Belgium, Denmark, USA, China, Hungary, Israel, Moldova, Ko-rea, Bulgaria, Norway, Singapore, Belarus, Sri Lanka and Great Britain.

Export of the organic food processors:

Export55%

Do not export45%

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 (descend-ing 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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Import23%

Do not import77%

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 pro-cessing (choose only one option from the list below)? □ same price which equals a market price for conventional products of the same nomenclature12 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)



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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 nomencla-ture 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 10-50% 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 can’t 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

0

5

10

15

20

25

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

Years

Num

ber o

f com

panies



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Consumer target group by sex

women18%

men5%

no matter77%

A lot of previous publications presented 25-35 age women as a main target group for or-ganic 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 (café, food delivery, etc)

Consumer target group by children existence in the family

no children 0%

with children 32%

no matter 68%

“No matter” win in the chart shows that children are not a main decision argument for peo-ple 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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village 0%

city‐centre of administrative region 10%

city with million inhabitants 24%

Kyiv–capital of Ukraine 24%

no matter 41%

urban‐type village 0%

town‐centre of administrative district 1%

Joining of the shares of Kyiv city and million-inhabitants cities makes about 50%. “No mat-ter” 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 con-sume produce from own land and prepare processed (canned, slaughtered, etc) products.

Consumer target group by level of income



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low1%

average22%

higher than average24%

high19%

no matter34%

Consumer target group by education

elementary education 0%

fundamental general

secondary education 0%

full general secondary

education 7%

vocational technical

education 2%

fundamental higher education (Bachelor) 17%

full higher education

(Master) 20%

no matter 54%

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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22

22

20

15

15

14

10

10

3

organic law

state support for producers

target informational program

state support for processors

deficit of qualitative organic raw materials/products

substantial investments

deficit of qualified staff for organic processing

low interest of retailers

others

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

Yes19%

No52%

no answer29%



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It shows that organic market do not have competition environment. It makes some proces-sors 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, Dnipropetrovs’k, Kharkiv, Donetsk, Odesa) □ 5%-10% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovs’k, Kharkiv, Donetsk, Odesa) □ 10%-30% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovs’k, Kharkiv, Donetsk, Odesa) □ 30%-50% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovs’k, Kharkiv, Donetsk, Odesa) □ more than 50% of population - only cities with minimum million inhabitants (Kyiv, Dnipropetrovs’k, 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

29%

19%

16%

11%

11%

10%

3%

0%

0%

0%

less than 5 % of population ‐ only M‐cities

10%‐30% of population ‐ only M‐cities

less than 5 % of population ‐ the whole UA population

5%‐10% of population ‐ the whole UA population


5%‐10% of population ‐ ‐ only M‐cities

more than 50% of population ‐ only M‐cities

30%‐50% of population ‐ only M‐cities


more than 50% of population ‐ the whole UA population

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



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□ Others (specify your variants please)

Ways to increase the awareness of population of Ukraine

24

23

22

21

16

15

14

9

8

3

advertising (TV, press, Internet)organize organic open‐air fairs

state support for organic producers/processorsinformation dissemination through mass media

conduct promo‐campaigns in sales points through consumers organizations

organize conferences, specific seminarsregional programs to spread organic agriculture

through scientific institutions others

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?

organic law is needed95%

organic law is NOT needed

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



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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 con-ducting, requirements on growing, production, processing, certification, labeling and mar-keting 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 or-ganic 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:

Transportation/storage 14%Certification

7%Promo costs

8%

Purchase of organic raw materials

41%

Processing itself 28%

Others2%

Standards:



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EU Regulation

77%

NOP17%

JAS3%

BIOLan3%

Certification body



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ABCert17%

ICEA3%

Organic standard+IMO

68%

Austria Bio Garantie

3%

Ceres3%

Biocontrol3%

Ecocert3%

Mainly organic processors oriented for domestic market choose certification of the local in-ternationally accredited certification body Organic standard.

For export-oriented processors the chosen market dictates often the selection of the certifi-er.

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

0 11 16 26 36

94

37 39 3953 50

215

3750 55

79 86

309

0

50

100

150

200

250

300

350

2006 2007 2008 2009 2010 2011

Assortmen

t, q‐ty Domestic Export Total

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.



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Total volume of selling organic products, tons

0

1508

1989

1632,5 1601,571805,3

23252510

2960

3740

4201,15

2787,37

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2006 2007 2008 2009 2010 2011

Volume, to

ns

Domestic Export

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.


Part of organic products in general products assortment of processors



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0,0

30,0

22,0

39,7

58,3

75,0

83,3 83,378,5

42,4

36,9

62,2

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

2006 2007 2008 2009 2010 2011

Part (%

) of the

all organic p

rodu

cts in total produ

ct assortm

ent

Domestic Export

Here we see that the share of organic in all products list of the company increased in do-mestic-oriented companies and fall down for export oriented companies.


Number of points of sales, quantity

0 026

154

329

724

0

100

200

300

400

500

600

700

800

2006 2007 2008 2009 2010 2011

Num

ber o

f sales points

Domestic



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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 – that’s 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 pro-cessing. 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, pro-duction, 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 coun-tries. Many organic processors face the problem of selling organic produce as conventional ones.

Organic produce is for niche market but not mass market. That’s why it has not economies of scale.



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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.

marketing research_organic processing in ukraine_en

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