Ratko Kuprešak, Director General of Jaffa Crvenka - Our products will keep their current prices

(Ratko Kuprešak)

Their products will "welcome you to the Jaffa world". In an interview for eKapija, the new Director General of Jaffa Crvenka, Ratko Kuprešak, speaks about how "sweet" brands survived the crisis, the price policy, and mitigation of nostalgia for "good old" products in the Diaspora.

eKapija: According to a market research, confectioners in Serbia registered about 10% drop in production in 2009. What was the atmosphere in Jaffa at the beginning of this year?

- It is true that the majority of the market research results show that the drop in consumption on the level of confectionery industry was between 10 and 12%. However, that drop did not affect Jaffa's production and sales. Based on the market trends, the management foresaw at the end of 2008 that year 2009 would be difficult, so that we were ready, as much as it was possible, for the year of the crisis. Having that in mind, Jaffa successfully fit into the situation in the market and brought its activities in accord with the circumstances. Thanks to that strategy, we managed to mildly increase the sales in 2009. What was the main characteristic of our performance in the previous year is cost control within the company, which provided Jaffa with a stable base for further development. And that is going to be one of the primary things we will be dealing with in the following period as well. Our expectations are that Jaffa will register about 11% growth against the last year, in terms of both volume and value.

eKapija: Retail facilities have recently announced new price lists. Increase in prices, the prices of consumer goods in particular, is justified by the changes in the Dinar exchange rate. Will these oscillations affect the prices of your products as well?

- First of all, I must emphasize that Jaffa is not an import-dependent company. That means that the major share of raw and packaging materials are procured in Serbia. A change in the exchange rate represents a real burden for all companies, including Jaffa. However, we see ourselves as a big socially responsible company that not only procures the majority of materials from domestic manufacturers, but also has no intention to change the prices every time the exchange rate is changed. At this moment, the management is not thinking about increasing the prices of products. Of course, in case some drastic changes occur during the year, it is possible that we will start thinking in that direction.

eKapija: How big is demand for Jaffa products at the moment?

- The 10% drop in confectionery production in Serbia in 2009 might have happened because supply in the market was much bigger. Over the last few years we have been witnessing an enormous growth of sales of consumer goods, which was mainly registered by domestic manufacturers that realized that they could cope with the consumers' demands only if they offered them something new. On the other hand, import of confectionery products grew, while the third factor was creation of private trademarks. That is an European trend, but it is true that the creation of private brands in our country has not been done systematically enough. Therefore, the offer of such products was much too big and it has not always satisfied the needs of consumers.

eKapija: Could Jaffa produce goods for some private trademark?

- Every manufacturer that thinks it has a strong brand, and we are definitely one of such manufacturers, should not create its strategy by focusing on the production of private trademarks. When I say that, I do not speak about qualitative meaning of the trademark production, but the company's strategic competition with itself. It is well-known that private trademarks are cheaper because smaller investments are made in them. There are no investments in the communication with consumers and some other support. The aim is positioning through lower price and lack of accompanying expenditures. That is why private trademark can be cheaper than the products of the same quality in the market, but what is important is that it can be bought in one market chain only. That is an important difference from branded products like ours. They can be found on the shelves in numerous countries and they are of the same quality everywhere. We have received many requests to produce goods for some private trademark, but, unfortunately or luckily, we do not have enough unused production capacities for such thing.

eKapija: What are your relations with suppliers? Are payment deadlines being extended?

- In general, the crisis we found ourselves in did not contribute to the occurrence of request for extension of the agreed deadlines. I think that a bigger problem today is the question of billing than the issue of its delay. We have witnessed the bankruptcy of a number of companies that were primarily engaged in trade, which was exclusively conditioned by their impossibility to cope with the harmed liquidity of the consumer goods market. That problem is transferred to the manufacturers and even to the primary production by the chain reaction. Concretely, the payment deadlines in the confectionery industry range between 15 to 30 days for small independent stores and 75 to 90 days for the largest market chains. The situations was similar or even the same even before the crisis, so that I do not think that we should not speak about extension of the agreed payment deadlines. The truth is that delays exist and that they are even bigger when compared to the period before the crisis. Jaffa has no serious problems to collect its claims, primarily because we make some very correct agreements with our partners. In the end, I think that the request of retail chains for extension of payment deadlines would additionally endanger manufacturers that are already seriously struggling to maintain the value of their companies.

eKapija: Some of the manufacturers in your branch are afraid of the Free Trade Agreement with Turkey because the products from that country are primarily considered as competitive in terms of prices. What do you expect from that Agreement?

- This is not a demagogic answer, but competition is really welcome in my opinion. Every man who analyzes the market knows that a serious manufacturer would never accept to be alone in the market if offered so. We have a strong competition within Serbia, as well as on international level. Turkish manufacturers are only a "trigger" for manufacturers such as Jaffa that should focus on developing products and seeking opportunities to offer as high quality as possible. In any case, we are not going to wait to defend ourselves in our market from potential new entrances and offers. Instead, we will seek a way to appear as a renowned manufacturer in the market of every country we sign the Agreement with.

eKapija: Is there a cooperation with the countries in the region?

- Jaffa finds the countries of former Yugoslavia the most important. Export to the CEFTA countries represents the major share of our export. Although there are some things that can be improved, communication with the countries in the region is very good.

eKapija: Since Croatia sticks to the EU regulations, although it is not its member yet, did you experience any problem when entering that market?

- Jaffa's realization in Croatian market and our plans are partially connected with the improvement of those relations. Entrance to Croatian market is a bit more difficult primarily because the market segmentation in that country had been finished few years before it was done in Serbia and it is now few step ahead of us. For example, the share of large modern market chains in the categories of consumer goods amounts up to 80%, while that share in Serbia does not exceed 50%. That is the reason why the entrance to the Croatian market is "more expensive", but I would not say it is more complicated.

- I would like to emphasize again that we are aware of the fact that we must be innovative in order to keep the existing and attract new consumers. Jaffa has already prepared some new products that will be launched by the end of the year. I can not reveal anything, but what I can say is that some existing ranges of products will be extended through introduction of new flavors and that Jaffa will also enter some new categories of products.

eKapija: Will the products from Crvenka appear in some new markets?

- We plan to increase export to the countries where there is a certain nostalgia for our products, the EU countries where Serbian immigrants live. That is why we have signed the contract with a partner from the EU that will enable greater availability of our products in Germany, Austria, Switzerland, Sweden, Netherlands...

J.Đ.