Russian frozen foods producer succeeding with seafood private labels
Ledovo Group (Russian major frozen foods producer with headquarters in Moscow) has had good returns from investing into production under private labels, according to the report of President of Ledovo Group Mrs. Nadezhda Kopytina prepared for the Second International specialized conference "Strategic Challenges on Russia's Seafood Market" (organizers http://www.imperiaforum.ru/).
The success has not come by chance, because the decision to go for PL was made after a thorough consideration of the market.
Use of own labels has made it possible for retailers to decrease their margins by 15-20% because private labels do not require large expenses for market promotion.
Taking into account the above benefits, private labels have become profitable both for consumers and retail chains. High quality and cheap PL products help boost sales and encourage consumers' loyalty to the chain's shops.
It is well known that the use of 40% of the producer's capacities for PL products is quite instrumental for efficiency. For Ledovo Group production of PL range means appreciation of the quality of products under TM Ledovo by the end users. More advantages of PL production are given as below:
- 1. Such cooperation is a fine opportunity to strengthen partnership relations with large trade chains;
- 2. The value of TM Ledovo grows with the company perceived as high quality producer. As a result, rates of the holding's capital growth also increase.
- 3. PL cooperation enables the company to generate guaranteed sales of large and stable volumes of products under its own TM Salmon.
- 4. Without extra expenses the producer can diversify its product range to satisfy the demand from various strata of the population.
Shellfish/mollusks private labels
PL cooperation of retailers and producers also encourages a further growth of consumer interest in shellfish and mollusks.
Several years ago private labels in Russia included a limited list of product categories such as dairy products, eggs, bread or convenient meat items (cheap products characterized by stable consumer demand).
Shrimps and other shellfish and mollusks were considered elite which could not be afforded by all the consumers (lack of culture of shellfish/mollusks consumption in Russia).
For the producer the decision to launch PL range means:
- 1. Strengthening positions of shellfish and mollusks on the Russian market;
- 2. Stable growth of sales volumes of packed products.
Most evidently producers will respond to the PL competition by advertising their labeled products. However, the decision will require serious investments and far from all the producers are ready to make it.
A way-out from the difficult situation has been hinted by the world practice: producers should enter into partnerships and make products under the private labels of retail chains within the long-term contracts. Besides, they should continuously increase the efficiency of their production facilities and develop novelties in order to raise their margins.
Development of producers' own premium labels is another possible way to boost sales.
Ledovo Group was established in November 1994. The group works in three adjacent segments of frozen products: shellfish/mollusks, mushrooms and rice-based mixes. Besides, the group produces marinated delicatessen. Ledovo produces the range under own labels of Salmon, Snezhana and Bon Appetit. The group's annual turnover amounts to 25 million USD. In the coming years the company plans to further boost its turnover to 100 million USD by means of commissioning new production facilities and launch of new products.
According to experts, Ledovo Group is now one of Russia's three leading suppliers of frozen shellfish/mollusks, vegetables and mushrooms to the domestic market. The company is also one of Russia's leaders in production volumes in the above three segments. In general, Ledovo's products account for ca.35% of the Russian market of shell-on shrimps, 25% of the nation's market of cleaned marine delicatessen, 95% of marinated shellfish and mollusks, 8% of deli rice mixes and 11% of frozen field mushrooms.
Ledovo has become Russia's pioneer in production of healthy food meeting the international standards of quality and ecological safety. The group's policy is to use the most up-to-date technologies in the sphere of production and storage of frozen products. Its partnership agreements with leading international suppliers of cold store equipment and packing lines enable the company to march in step with the current trends in the sphere.
At present Ledovo imports the bulk of vegetables from Europe, shellfish and mollusks from Canada, Chile, Norway and Denmark and marine delicatessen from China. At the same time, the company has set a target to develop national base for production of high quality frozen products. Use of a large number of Russian-made ingredients will enable the company to be more competitive on the market. Therefore Ledovo Group invests hard into the development of Ledovo Agrocomplex. Besides, the company has been actively attracting commercial loans and has gained a borrowing record, Kopytina reported at the conference. Ledovo Group has established successful longterm cooperation with the Russian and international credit organizations.
Ledovo Group is a member of the RusBrand Association uniting Russian and foreign companies in their fight against counterfeits and black import in order to set single rules of operating on the market. The group's membership in RusBrand proves high quality of its products and its strong reputation in the business circles, Kopytina underlined. Besides Ledovo Group takes an active part in developing programs for small and middle agricultural business in Russia.
Nadezhda Kopytina is President and owner of Ledovo Group. The group's staff amounts to 300 people. Ledovo's managers are skilled market experts often participating in business events, forums and conferences.
Ledovo Group is a holding uniting six production and trade companies: JSC ZAO Salmon Corporation, JSC ZAO Kholodilnyi Terminal, JSC ZAO Ledovo PK, JSC ZAO Agrokompleks Ledovo, JSC ZAO TВ Salmon International, OOO TD Ledovo.
The group's production facilities are located in the village of Dolgoe Ledovo near Moscow and in the town of Sevtlyi near Kaliningrad. Ledovo processes shellfish and mollusks into frozen products and marinated items marketed under the TMs of Salmon, Snezhana and Bon Appetit.
Ledovo Agrocomplex is the world's third agrocomplex growing field mushrooms with the complete production cycle and Russia's second largest complex in terms of its production capacity.
JSC ZAO Kholodilny Terminal operates the largest cold store in Moscow Oblast (the region surrounding Moscow) with the total capacity of 10,000 cubic meters, equipped with modern cold store equipment made by Starfrost UK Ltd.
JSC ZAO Salmon Corporation is Russia's largest operator on the national market of frozen products. The company owns a wide dealer network and it is in close cooperation with large retail chains. The corporation supplies products practically all over Russia.
More information from:
Central Office of Ledovo Group; 123242 Moscow, Novinsky Bulvar, dom 31, Novinsky Passazh Trade-Delovoy Centre; tel.: +7 495 7776077, 7776078, fax: +7 495 7776076, e-mail: email@example.com