If you have a lot of experience in trade but suddenly decide to become a producer, the 10-year experience of finding the right partners does not always pay off, when you start asking your old ones to put your product on their shelves. Apparently, opening doors that lead to end consumers – even for local products – is more complicated than one might think. 

In Zarasai region, Raudondvaris village, EKKO LT has established a production facility, where Lithuanian rapes are used to produce ecologic oil.

Some time ago, while watching a TV show, the founder of the company has learned that the market and consumers are not familiar with ecologic locally-produced Lithuanian rapeseed oil.

Aurimas Bagdanavičius, the head and the owner of EKKO LT, recounts a recently watched programme which discussed the fact that Lithuania does not have any producers of high-quality rapeseed oil, and the only kind you can find in retail stores is imported refined oil from Ukraine or Russia, as all our ecologic rapeseed products are typically exported to foreign markets.

‘We’ve noticed that consumers still don’t know us. But you can get good oil in Lithuania – e.g., from us – we own a production facility, where ecologic rapeseed oil is produced, using ecologic raw materials we buy from local farmers,’ claims A. Bagdanavičius, who has started producing the said oil in Zarasai region 8 months ago.

He started his path in business by firstly founding a company called Foksas, which specialises in wholesale trade of food products. Approximately 90 percent of its products are ecologic or gluten-free, e.g. ecologic coffee Naturela or Bionaturalis, also coconut, olive and sunflower oils.

‘50 percent of all of our sales used to be associated with the oil brand Naturalis. That’s how we came up with an idea that we can purchase local raw materials – rapeseeds – and present consumers with our own final product, i.e. ecological rapeseed oil. Especially having in mind the fact that ecologic rapes tend to leave Lithuania, and it’s a loss to the country,’ A. Bagdanavičius explains his decision to start oil production.

In Zarasai region, Raudondvaris village, EKKO LT produces two brands of unrefined cold-pressed rapeseed oil. EKKO trademark signifies ecologic cold-pressed unrefined rapeseed oil, whereas oil Raudondvaris is cold-pressed and unrefined. 

‘We’ve been selling products in retail stores for 11 years now, so, to us, starting to produce oil by ourselves seemed to be the only logical way forward,’ Viktorija Junčė, EKKO LT Marketing and Communication Head, adds. ‘We are one of the first producers, who make Lithuanian rapeseed oil from locally-grown rapes. Typically, store shelves are full of oils, imported from Ukraine or Russia, even though many consumers mistakenly think they are Lithuanian products.’

According to the head of EKKO LT, compared to the imported ones, the price of the Lithuanian rapeseed oil is higher by 20-30 percent.

‘Compared with mass production oils, our oil Raudondvaris costs 1.5-2 euros more, because the former are mass-produced, hot pressed and refined,’ he explains. ‘However, if we compare our oil to ecologic oils of foreign producers, it becomes obvious that we offer competitive pricing.’

Getting on the Shelves Proved to Be Harder than They Thought

Due to his import business at Foksas, the founder of EKKO LT has accumulated a lot of experience of working with retail chains. However, having started producing their own products, he had to find a totally new way to get them on the shelves.  

In this case, his 11-year experience was of little use, and, even though he was able to tackle the new challenges of production quite quickly, sales and the search for retail partners has proven to be a much more complex task than he originally expected.

‘At first, we thought that retail chains would be more enthusiastic in welcoming Lithuanian products. Of course, we didn’t expect miracles in the form of huge engagement right after the product launch. The market is oversaturated, so the only thing we can do is fight for our place in it, visit exhibitions and badger potential clients,’ the founder of EKKO LT and Foksas A. Bagdanavičius says, reflecting on his evolution from a trader to a producer. 

The company has been making oil in Raudondvaris village for 8 months now, whereas all preparation for the latter – choosing the right equipment, repairing the premises and adjusting them for production – lasted for about a year and a half.

Currently, Lithuanian consumers can find the said oil from Zarasai region on the shelves of Maxima retail stores. The company has negotiated the launch of their product with many other retail chains as well, but was met with many noes or was not able to agree on the price. Nevertheless, the entrepreneur expressed hope to see their product in other stores, after proving they are worthy of being there. But he honestly acknowledges – they did not think it would be that difficult.

‘The fact that we’ve worked with retail chains before did not help. However, we really hoped that they’d be more enthusiastic about selling a local Lithuanian-made product in their stores and be more welcoming. After all, we see many ads claiming support for Lithuanian producers. But the reality is quite different,’ the entrepreneur admits.

He explains that one of the reasons of starting to produce oil was setting a long-term goal for their company not to be dependent on a couple of partners that sell the products, imported by Foksas, and create a Lithuanian product, which could be presented to the whole wide world, instead.

‘Our 11-year experience have taught us that working with retail chains is never easy. We want to avoid being dependent on several clients that may one day decide to cut ties with us,’ he claims. ‘We wanted to create a product ‘from the field to the table’, which we could sell and, that way, gain advantage over foreign producers, who make similar products.’

Lithuanian Oil in UK

It took less than a year from the start of production for EKKO ecologic oil to reach the stores in Belgium, the United Kingdom and Latvia. But the active search for partners continues, and it predominantly takes place during international specialised exhibitions.

Such live events (that this year were happening online as well) present a great networking opportunity for the company, as many meet-ups turn into negotiations and – sometimes – contracts. Even though the company has already started exporting its products, A. Bagdanavičius admits that they are yet to be welcomed into such retail giants as Tesco. 

‘The world is oversaturated – there are more products than people who want to buy them. That is why it’s hard to get your foot in the door – you must knock, create an innovative product and play catch-up with your competitors,’ he summarises.

A. Bagdanavičius says that looking for partners abroad is a totally new experience, so he is inclined to learn from the major Lithuanian exporters, who know how to network and turn contacts into contracts.

The entrepreneur explains a 3-step strategy that has helped their company to get their products into stores: first, you find out which employees are in charge of sales. Then you must contact them, offer your products and ask what must be done for the certain goods to be sold at a particular retail chain. If you are successful, the third step entails making sure your products stay where they have been placed.

Nothing But Quality

In their search for potential partners, EKKO LT seeks to accentuate the exceptional qualities of their product and the way it is made. That is why, during exhibitions, as V. Junčė claims, they focus on educating people about different characteristics of oils or their production processes.

‘We try to emphasise our uniqueness, talk about our production process, i.e. that our oil is cold-pressed in maximum 40-degree temperature, which enables it to maintain all of its nutrients. We also explain that, in terms of its nutritional value, rapeseed oil is a strong competitor to olive oil,’ she claims before adding that the company sells rapeseed cake to local farmers.

Each year, the production facility in Raudondvaris village produces 140 tons – or 5 full trailers – of oil every month.  

So far, the facility has been using only 10-30 percent of its production capacity, but A. Bagdanavičius states that the decision to choose high-performing equipment was a conscious one – in order to avoid the need of purchasing new machinery after a couple of years, when the company has more clients. 

‘While looking for equipment and filters to purchase, we purposefully chose machinery that would be different from the one used in the hot-pressing process, which often results in the cheapest product. We aim at selling value – our production procedure is different and enables us to produce unrefined oil that can be heated to up to 190 degrees. That way, when used in baking or frying, our oil retains all its nutrients and is perfect for cooking,’ A. Bagdanavičius claims.

The entrepreneur estimates that the overall investment in production has amounted to more than half a million euros, which were gained from a bank loan and the company’s profit from wholesale. In addition, the purchase of equipment was partially financed through an EU investment programme, i.e. the company received 200 thousand euros from the Lithuanian Business Support Agency.  

Author of the article: Gabija Sabaliauskaite

Link to the article: https://www.vz.lt/smulkusis-verslas/2021/11/10/rado-buda-mazinti-priklausomybe-nuo-keliu-prekybos-tinklu&IzKWf