Tiuliakov Mykhailo, head of the finished product department of the Trading House “NOVAAGRO”.
To be a leading flour exporter, you don’t need to own a group of flour mills. It is highly important to be able to hear the consumer and respond to his requests correctly. Mykhailo Tiuliakov, head of the finished product department of the Trading House “NOVAAGRO”, told Latifundist.com about this valuable skill, a new trademark and inevitability of emerging new players in the milling business of Ukraine
Latifundist.com: Is your company developing and planning to launch its own trademark soon? How have you come to this?
Mykhailo Tiuliakov: We often worked with other trademarks, and, in fact, promoted them. But after all, our company orders at enterprises a product, which meets our requirements, then monitors the production process, controls it. Therefore, we wanted to be recognized not only as the group of companies “NOVAAGRO”, but also to be recognized by our products under the trademark “Daryslava”.
Latifundist.com: When do you plan to launch a new trademark?
Mykhailo Tiuliakov: The registration process takes some time. I think that within the next six months consumers will see products under our trademark. We will provide flour, grits (buckwheat, pea, wheat, barley) in both large and small packaging.
Latifundist.com: Will these products be sold only in the home market?
Mykhailo Tiuliakov: No, they won’t. We plan to export products under the trademark “Daryslava”.
Latifundist.com: Is it difficult to introduce a new trademark to retail store networks?
Mykhailo Tiuliakov: Not easy. But we are negotiating with retailers, both local and national. We faced with the fact that each retail network is more interested in developing such products as flour, cereals in the low price category under its own private label (TM).
Latifundist.com: And what price segment will the products under the trademark “Daryslava” be positioned in?
Mykhailo Tiuliakov: Average and above average.
Latifundist.com: NOVAAGRO is one of the leaders in flour export, and the company does not have its own processing facilities. Such dependence on suppliers carries certain risks.
Mykhailo Tiuliakov: It is important for us that the company can produce goods that meet both our state and international standards.
Latifundist.com: What is the key criteria while choosing a plant?
Mykhailo Tiuliakov: The main thing for us is whether an enterprise can produce output that meets the requirements of our customers. The logistic component is also important. For example, if the customer is within the area of 100-200 kms, of course, we are looking for a plant in Kharkiv region. If further — then, accordingly, we will cooperate with the flour mill in other area.
Latifundist.com: Does your company still sell 40% of flour in the home market and 60% — in the foreign market?
Mykhailo Tiuliakov: Yes, it does. The ratio has not changed. And it reflects the general situation in Ukraine with flour consumption in the home market and supplies for export.
Latifundist.com: Does the demand for flour products change in Ukraine?
Mykhailo Tiuliakov: I cannot say that the consumption of flour products in the country is declining. The structure of demand is rather changing. For example, if the family used to buy French bread, then today it buys bran bread, etc.
Latifundist.com: How is competition changing in the Ukrainian flour milling industry?
Mykhailo Tiuliakov: It is growing. Flour mills are modernized, improving, developing. New players appear. They are gradually replacing old energy demanding, inefficient enterprises, which still remain quite a lot. In general, flour production in Ukraine keeps on growing. And so it will in the years to come.
Latifundist.com: Perhaps you have read on our website “Confessions of a grain trader”, who among other things told about “gray” schemes in the oil and fat market. Is there such a thing in the milling market?
Mykhailo Tiuliakov: Unfortunately, the milling industry is not an exception. And it is sad to say that this shadow market is supported by producers themselves. You can often read various advertisements: “sell wheat for cash”, “buy wheat for cash”, etc. This is a shadow market. Another thing is that wheat is cheaper than oil-bearing crops, so there are not such volumes.
Latifundist.com: Do flour manufacturers leave such advertisements?
Mykhailo Tiuliakov: Yes, they do. As well as companies that use flour as a raw material.
Latifundist.com: Then the question arises: how much do home prices for flour differ from export prices?
Mykhailo Tiuliakov: It is difficult to compare. Because in each case the situation is different. In fact, these are different products, with different indices and technical requirements.
Latifundist.com: What products do you supply to the home market and abroad?
Mykhailo Tiuliakov: Each country has its own peculiarities of consumption. Someone produces bread, someone produces pita bread, pasta, khinkali, part-finished products, etc. Thus, each individual customer has his own request: flour is light or darker, so that dough turns out thick or spread. So, while communicating with the consumer, we carefully study his needs. After all, requests can be very different. For example, representatives of the former French colony needed flour for baking baguettes.
Latifundist.com: Does a special department in our company study needs and preferences of this or that market? Or is this information collected in the process of communicating with customers?
Mykhailo Tiuliakov: While communicating with customers personally. If we responded to customer requests with just emails, the business would have collapsed. Mostly, I or my managers communicate with a customer personally, ask in detail what output he wants to produce, and only then we offer the right raw materials.
Latifundist.com: What are the most exotic requests for you?
Mykhailo Tiuliakov: For example, Vietnam ordered feed flour for shrimps.
Latifundist.com: Have you succeeded?
Mykhailo Tiuliakov: Yes, we delivered the goods. Then they found a better offer somewhere in a neighboring country.
Latifundist.com: Last year there were complaints about the quality of Ukrainian wheat and its finished products. It was about a low gluten index. Has the situation changed? What is the “reputation” of Ukrainian wheat abroad now?
Mykhailo Tiuliakov: Problems with wheat quality remain. Although for us it does not present too much of a threat. Because we can choose from the amount of raw materials that the company buys. We select grain for flour based on the customer’s needs. The company sells the remaining volumes of raw materials, which do not suit us due to certain characteristics, to traders.
Latifundist.com: Are there any specific features of new wheat crop?
Mykhailo Tiuliakov: High rate of gluten. This index is more important for processors. Each class of wheat has its own gluten level. But I repeat once again: the company’s work is structured in such a way that we have something to choose from and to offer our clients.
Latifundist.com: Please, share with us the preliminary results of this year for the company.
Mykhailo Tiuliakov: The company fulfilled the plan. Not “scraped through somehow”, but confidently fulfilled. We started to produce grits at Vovchanskyi grain plant. The company has a universal line for buckwheat production, production of wheat and barley grits, as well as peas. The main product will be buckwheat, but the range will be adjusted to the market demands. This season we plan not only to reach the figures of the past year, but also to increase production and sale of grits.
Latifundist.com: And if you put it in numbers?
Mykhailo Tiuliakov: We plan to exceed the figure of 1000-1100 tons of raw material processing per month, or sales of 600-800 tons of grits. I am sure that we will reach our aim. If we consider that the company has not dealt with this field before, I believe that the aim is very realistic.
Latifundist.com: And how many grits do you produce per month at the present moment?
Mykhailo Tiuliakov: On the average we managed to produce 800 tons of grits per month.
Latifundist.com: How much flour and grits do you produce and process?
Mykhailo Tiuliakov: Last season we processed 11.5 thousand tons of grain, which is 8-9 thousand tons of flour per month.
Latifundist.com: What are the wholesale prices of flour in the home market?
Mykhailo Tiuliakov: If we talk about flour of the high grade, then the range is considerable: from 7 UAH to 9.5-9.8 UAH per 1 kg. Various factors influence prices: the remoteness of the production complex from the consumer, the quality of raw materials and products, the cost of packaging, etc. Moreover, it happens so that weather conditions in the eastern part of Ukraine make it possible to harvest crops of significantly better quality than in the western part of the country. Accordingly, flour in Western Ukraine may cost less.
Latifundist.com: Do you think new players will appear in the Ukrainian milling market?
Mykhailo Tiuliakov: Yes, they will. I have already said that new modern enterprises will gradually replace all old energy-demanding plants. Inefficient players in the market will disappear. Because they produce expensive products. If we consider that the cost of transporting goods will grow, it is obvious that production should be of maximum effect.
Latifundist.com: Farmers complain on problems with grain-carriers, how are you dealing with logistics?
Mykhailo Tiuliakov: We transport products by covered railway cars or use container shipping. The problem is that most of the covered railway cars are no longer suitable for transportation and we have to negotiate with private carriers, rent foreign cars.
Latifundist.com: How is your working day going? Have you ever considered how many calls you have to answer a day?
Michael Tiuliakov: I try to plan my day: meetings, calls. But often life makes adjustments and I have to adapt. Therefore, like of many our employees, my working day is rather active. I have never counted phone calls, I really get a lot. I can say that the contact list is updated so quickly that at 19.00 I cannot see who I was talking with at 9-10 am. But the methods of communication today are rapidly changing, so a lot of negotiations, clarifications, tasks solving we do through social networks, work chat rooms, instant messengers, etc.
Latifundist.com: Who do you communicate with more?
Mykhailo Tiuliakov: As I deal with finished products, both home and abroad, I communicate with various companies. As I have been working in the company for a long time, I know many our clients. I know many personally. In my free time I can call them to talk not only about work, but also about family, fishing, etc, even if I personally do not deal with this client. To develop and maintain normal relationships with our customers, it is important to be able to hear and understand them, not only in work.