Sweets for the neighbor's table. How do pastry chefs from Kazakhstan explore foreign markets
Domestic market of flour confectionery products in Kazakhstan is filled with local and imported products. Therefore, export is a promising direction.
Choosing cookies or waffles for tea on the counter, which products will you choose at the end— Kazakh or the imported ones? And what will be the basis of such choice — price, taste, production place or brand promotion?
Question of consumer preferences is not as simple as it seems, but an entire industry that employs tens of thousands of people depends on the answer.
In January-October 2020, Kazakhstan produced 92.4 thousand tons of cookies and other flour confectionery products. At the same time, demand for domestic producers in internal market amounted to 60.9%, the rest – for imported products.
Kazakhstan enterprises produce more than they can sell in their own country. The rest is desirable to sell to neighbors - we make profit, while they are satisfied.
However, it is not that simple. There is a huge competition in this market, and it is quite difficult to break through to the shelves of neighboring countries. Kazakhstan enterprises can provide excellent quality, but often do not meet competition in prices and marketing. Large foreign companies can afford to reduce the price even below the cost price in order to occupy the market, and they invest a lot of money in promotion of brands. But this does not mean that our producers should give up trying to conquer foreign markets.
So, recently "Oral waffles" appeared on the shelves of Uzbek stores, which are the ISScom LLP products, that includes the confectionery factory "Shanybek" in Oral, West Kazakhstan region.
"We started sending our products to Uzbekistan this summer", says Muhammed Isayev, founder of ISScom LLP, which includes Plant bakery No.1. "This has had a very positive impact on our company. Production volumes have increased, labor productivity has grown, and people began to earn more as well. Now the plans are to increase exports, and our capacity allows to do so, but it is not easy to break into other markets.
Plant bakery No.1 gives its products to foreign partners for consignment, sends "Oral waffles" for 25 thousand dollars twice a month. This amount is significant for the company. If the partner, for some reason, fails to pay on time – it will be a significant financial blow. Therefore, the company management has requested support from "KazakhExport" Export Insurance Company JSC (subsidiary of Baiterek NMH JSC, a subordinate organization of the Ministry of Trade and Integration of the RK).
- KazakhExport provided us with support in the form of payment insurance for export operations. Company invests its working capital, and if something goes wrong - this is a serious blow to business - explains Muhammed Isayev. – We are a small company, we do not have resources to check our counterparty in another country. But KazakhExport can do this – its analysts study the market and collect information. And they decide whether or not to insure our payment. This gives us confidence that we will definitely receive our money and will be able to direct it to further production.
The Oral enterprise produces 50-70 tons of wafers per month, a third of which is exported. Production capacities allow to increase output to 200 tons — if there would be an appropriate market. Domestic market has been already filled, so the export is a very promising direction.
It should be noted that efforts of manufacturers of flour confectionery products with state support were quite successful – exports increased by 20.9 percent for the year (compared to the same period in 2019).
Mainly Kazakhstan cookies, waffles and other confectionery products are exported to Russia, Kyrgyzstan, Tajikistan and Uzbekistan, as well as to Afghanistan, Georgia and Mongolia. And it is worth to note that the sweets "made in Kazakhstan" suit their taste there as well.
