Founded in 1997, Biosphere Corporation has grown from a humble start-up to a leading manufacturer and distributor of household and hygienic products, and one of the largest companies in the CIS region. With a presence in over 20 countries, CEO Andriy Zdesenko has stated the company is continuing to expand into new markets. In this interview, Mr. Zdesenko discusses the key strategies to retaining market leadership, generating brand value and keeping at the cutting edge of innovation with his products
Since your establishment, you have launched several innovative products. Biosphere, Freken BOK and Smile were named amongst the top-100 most valuable brands of Ukraine. Can you explain what inspired you to start this company and provide some insight into its milestones and evolution over the past two decades?
I had explored various industry sectors, such as pharmaceuticals, but in 1997 realized that there was a very strong gap in the market for hygiene and household items. I decided to focus on these areas and after a fair few errors, managed to unravel the right core essence for the company. I started as a distributor for several companies, such as Kimberly-Clark and Ontex. We reached quite serious results, dominating about 30% of the Ukrainian market, but I finally realized that in order to attain solid success, we needed to create something that belonged to Biosphere Corporation, not them. Focusing on distribution and logistics leads to lower margins, which are restricted to time and efficiency, but are not creative.
My approach is to generate brand value through innovation. A distributor is not free, there are strict rules from suppliers and many constrictions. I started out as a complete beginner on fertile soil, focused on finding the best ways to improve on household items, and increase production and competitiveness. We started off from scratch – researching how to produce sponges, garbage bags, wet wipes, diapers, and many other products. Around 50% of my time was, and continues to be, devoted to traveling to international shows, and locations where I can learn about the most sophisticated methodologies for production.
We quickly learned about the ‘big player’ approach – such as P&G and Unilever – they are very strong, very aggressive companies, with huge teams, very strong efficiency, marketing, and creative departments. However they couldn’t dominate the national market. Ukraine has evolved massively over the past few decades. Strong investments and effort have risen the educational level in the nation as a whole.
Biosphere Corporation has been named one of the most valuable businesses in the Ukrainian landscape. How have you nurtured a culture of innovation to get the company where it is today?
Biosphere Corporation operates with a three-pronged approach in order to attain leadership in innovation. Firstly, we study the market in depth in order to set competitive benchmarks. We leave room for creative experimentation and place great importance on gathering the best approaches from around the whole world. Secondly, we create a solid team. We have a healthy mix of various ex-marketing managers from many famous international companies working at Biosphere Corporation and homegrown professionals aided by the best consultants from highly reputable creative agencies around the world. Lastly, we pride ourselves on operating with speed. We made decisions like lightning. I’m very close to the creative process alongside our team. We do not await board approvals for months to move forward with decisions. Our focus is on how quickly we can start production, distribute and have our products on the shelf. I am a very demanding and highly persistent person, which I think is important to keep the wheels in motion.
The company has grown to almost 3,000 people, and now you can find us pretty much everywhere in Ukraine, Eastern Europe and Central Asia. My philosophy is that we are working in Fast Moving Consumer Goods (FMCG), so we must be nimble ourselves. There is very strong competition out there, a lot of creativity, and room for improvement. We need to find ways to be faster than the competitors and the locals – we know the market needs and mentality, so we can do this. We use the same approach internationally, we do not just sell products, we see opportunities and decide on a strategic brand approach for each market. The key is that we are always looking for ways to enter markets. We work with brand categories from private labels for the big chains, to professional use in business environments such as supermarkets, offices, restaurants, cinemas, train stations, even Boryspil International Airport. Only 3M uses this approach in a global way.
Today Biosphere Corporation competes with international giants like P&G, Johnson & Johnson, Henkel and Unilever both in Ukraine and internationally. Which would you say are your ambitions moving forward for the company, and what is your strategy to continue growing in the face of such competition?
When I tell my story and the scale this company has reached to others, they are shocked that it has been possible to create Biosphere Corporation from scratch in only 15 years. It’s a very short time frame for a company that operates through innovative commodities. Moving forward, my first ambition is to communicate more closely with our customer base through various sales mediums, such as e-commerce, for example. We must develop intelligent communication by making better use of technology to improve the range of our products. We have strong ambitions. This year we aim to open a diaper factory to come face to face with P&G and Kimberly-Clark – the huge players in front of us. We need greater vertical integration to produce materials as well as products through cutting edge technology. It means a huge investment, with no experience in Ukraine because we will be the first to pave the way. But this strategy will increase our efficiencies and allow us to successfully expand outside of Ukraine and into new markets. In brief, we wish to create new products, achieve vertical integration, and develop new channels of delivery and communication. These challenges need our management team to reach new levels, using new technological approaches. This is why, we would like to invite leading professional expats from the global landscape to bring us the best experiences. Success will outweigh the cost.
In 2017, you were named among the top 10 businessmen shaping the image and reputation of Ukraine in the world. What kinds of global partnerships have supported Biosphere’s international reputation and how do your brands rank in the domestic FMCG industry?
First of all, to be a leader it is important to develop skill-sets. In my case they were things such as the English language, openness, and education. I am constantly learning and evolving my taste and developing varied interests. I am not a small businessman, we are covering a huge area of space and I have worked intently to become an attractive partner and company leader. I focus on creating big pictures, and umbrella vision for partners and suppliers, and I believe in collaboration where we can create together to scale up business.
It is indispensable to detect opportunities and discover how you can bring value in mutual relationships. It’s not as simple as buy-sell, produce-distribute, new project. People mustbe involved in people, this is my motto. Trust is pivotal for long-term relationships. Things sometimes boil down to word of mouth like a pyramid – new reputation stems from previous reputation. You are building something akin to a Jenga tower… if you leave too many gaps, the whole thing collapses.
I am a complete ‘freak’ for Ukrainian appearance. People know this, and they like to work with energetic and enthusiastic people. It’s fertile ground. If they feel you can work in synergy and trust, they’ll go with you in future and you will survive together – even in the most difficult times. There has to be an openness and ability to be like a student. People help me constantly, and it is not manipulation, they know that I am after greater insight and knowledge to improve on what I have already built.
Prime Minister Honcharuck has stated that one of the most important changes that must take place in this next term, is to improve Ukraine’s international image and reputation to increase investor trust. What would you say to international investors who see potential in the country, but hesitate due to the challenges the country has faced in the past?
The most important target to achieving this goal is tackling rule of law in the country. Once the laws are solid, foreign investors and Ukrainian investors will flourish. If foreigners only hear negative rumors of the country, given our history of corruption, they will not come. Ukrainian investors must be happy and confident, this in itself will create a snowball effect, and we will have more. They will relay the unique chance to others, and speak of the incredible and unique opportunities in the country. In Poland there are so many joint ventures between Polish and European companies. I think there is a shortcut way to completely change the scale and face of Ukrainian industry. We need to make deep use of technology, which guarantees confidentiality and safety for international and local business.
Once companies see Ukraine as attractive, hear a lot of positive rumors, they will no longer see it as the brave choice, but the right choice. They will want to be here. It is a step by step strategy, but one that can be long-lasting if done right.
Which is your final message for international investors regarding why they should look at Ukraine now as a key place to invest?
Ukraine is a country with great potential. It reaches very high consumption levels because there is financial liquidity. There is a very progressive young generation, which is globally focused, and European oriented. We have incredible land potential with a strong professional base and entrepreneurial mindset. Ukraine has everything to be considered the partner of choice for world industry, and global investors can trust us.