General manager of the company Nestlé Ukraine Ansgar Bornemann about the long-term business in our country, which for 20 years has grown to record profits, and continues to develop actively, constantly improving and expanding the product line.
The opportunities that Nestlé discovered in Ukraine are unlimited. And the results that the company shows over 22 years of presence in Ukraine, only confirms the correctness of the once-passed decision. Helping to maintain leadership positions and the unchanging principles of Nestlé, — the quality and safety of the products produced, as well as regular monitoring of the needs and preferences of consumers. Ansgar Bornemann told about the most important asset in any business – the team, about fair competition, which Ukraine lacks so much and about the readiness of Ukrainians to uphold their convictions, which evokes respect, in an exclusive interview for LDaily.
LDaily: Ansgar, tell us please about the origin of the Nestlé company. How did it begin? What was the idea of creating this business?
A. Bornemann: The Nestlé company was founded by the pharmacist Henry Nestlé in 1867 in Vevey, Switzerland. During his work he faced a big problem of that time, many newborn babies were dying because of indigestion of human milk. They could not gain weight and were dying. And one of Henry`s friends had the same problem with his own child. Being a pharmacist Henry Nestlé invented formula for feeding such babies and this formula appeared to be a remedy to save their lives. So, Nestlé company started it way from the company of child nutrition after extending its products line manufacturing chocolate, sweets, coffee, noodles and cold sauces.
About extending Company`s activity to Ukraine. After communism failed being not able to enhance and further develop the quality of life of people and with a decision of Ukraine to go to a free economy and to allow economic factors to evolve in Ukraine. Nestlé identified Ukraine as a great opportunity and a potential market, because in Ukraine there are 42 million consumers and those millions of consumers have wishes, expectations and demands. We discovered what we could do for them, what are their eating preferences and what can we do for them as a food company.
LDaily: Is Nestlé company satisfied with the results of the development of business in Ukraine?
A. Bornemann: Yes, absolutely. Nestlé has been already working in Ukraine for 22 years, and we have developed our business from zero to about 7 billion hryvnia turnover. During this time, we have grown every year via internal growth and via several acquisition of Svitoch chocolate factory, Torchyn factory, which produces cold sauces, mayo, ketchup and the last acquisition was the Mivina factory. Fighting with other competitors you are number one food company in Ukraine.
LDaily: Are the values of Nestlé Ukraine the same as the values of Nestlé company all over the world?
A. Bornemann: Definitely, all Nestlé companies worldwide have the same values. Everything we do all over the world has to be in line with our values and purpose – to enhance a quality of life and contribute to a healthier future.
We are working to enhance the quality life and contribute to the healthier future of Ukrainian consumers through our products and social initiatives as we are an active member of Ukrainian society.
One of the programs is elementary school program that teaches Ukrainian kids to understand basics of balanced diet and physical activity and helps children build healthy eating habits to make sure that obesity, as one of the main challenges in developed countries, will not address Ukrainian society.
LDaily: Does it mean that Nestlé company makes special researches and investigations?
A. Bornemann: Sure, in Ukraine we have Market Research Department and we constantly do research to identify changes of consumer needs and expectations, which helps us to propose better products for our consumer. As we are working in competitive environment, we fight for consumer at the point of sale as that is where most of them decide which product to buy.
LDaily: You became the head of Nestlé in Ukraine in the 2015. How did the company change with your arrival? Did you change the business model and management model?
A. Bornemann: No. I came one year after Euromaidan Revolution and my predecessor faced different challenges than those that I faced when I came. I did not change the management system and we still work on the principles of the Nestlé management. What I do — I implement and manage and I lead the organization on certain personal beliefs I have. My belief is — the biggest asset the company are people. Everybody can buy machines, IT equipment, but the way you work with machines, the way they are used it depends on people. So my strong belief and my strongest focus is on managing people, developing people, giving opportunities to them, making sure that our employees enjoy coming to work and feel comfortable, motivated and enjoy every day coming either to Nestlé factory or the head office.
LDaily: Does it means that there is friendly comfortable atmosphere in Nestlé?
A. Bornemann: Yes, I want to create an atmosphere where we feel like one family. There are not always pleasant days in the family too. There are also discrepancies in the views. There are problems and disappointments, but people love to work with us because of the family atmosphere. In general, this is my understanding of the foundations of success and great future. All other elements are also needed. You need to keep track of competitors, provide workers with hardware and software, but the most important indicator of good work is when you see that in the end you have become more successful than others. The core of Nestlé values is rooted in respect to ourselves, to others, to diversity and to the environment.
Every two years all 360 000 employees of Nestlé, as well as 5500 employees of Nestle in Ukraine have the chance to participate in a questionnaire and give feedback to the organization. They tell anonymously what is not working in Nestlé, what works perfectly and recommendations for improvement. We take these results seriously, analyze them, understand the areas what we have to improve and plan programs and activities to change the areas where we could get better.
LDaily: So, this research among all employees is very useful for the company?
A. Bornemann: It is one of the examples of our core value of respect: to ask our people what is good, what is bad, what do you expect, what should be different, what should we do better for employees to have more motivation to work better in Nestlé. The same we do with other consumers. We go and ask the consumers – “Do you like this taste?”, “Do you want this product?”, “What do we need to change?”, “How can we improve it?”. The same applies to our people. And people honor that they are respected, that they are taken seriously and that the management board is listening to them. We try to fulfill that we are capable of change. This creates the atmosphere of respect and trust. But that should not drive us from our major task – to grow profitable business, but with engaged and motivated people you can achieve your goals much easier.
LDaily: Could you name top 5 difficulties your company faced with while working in Ukraine?
A. Bornemann: Five is a lot I`ll try to give you three.
I would say, at the moment the biggest challenge is consumer purchasing power. Initiated through the revolution, a strong economic crisis hit Ukraine and the people with significant price increase for products, sometimes doubling, utility price increase; consumers had to pay more for gas, electricity, for water, for services and for food. But salaries did not increase the same way.
People have less purchasing power, which led to reduced consumption, and the food categories we are working in declined by 25-30 %. The size in the market we operate is smaller than it was and we dropped volume. If you have factories you have to produce, and you produce less you face a lot of challenges. In the last three years, the average income in USD or in EUR has reduced significantly and consumer reacted. Today the biggest challenge is to help consumer market and consumption to increase again. This is number one.
The second challenge is fight for people and talents. As I told you, we need best people in our company. If we have the best motivated people – we have more opportunities to grow, and deliver our expectations. The fight for talents will increase every day. Today we face challenges at our factories. For example, at our chocolate factory in Lviv we see difficulties to hire enough qualified workers because with the good news of the visa free EU a lot of people start working in Poland where they get simplified work permit. Also, we face competition with new factories that primarily produce for Europe and are getting the revenues in Euro, where we are producing for Ukraine and get revenues in hryvnia. So those companies can easily pay more salaries than we can pay because if we increase salaries, we have to increase price for our products which make more difficult for consumers to buy it.
The next point is fair competition. We definitely know that there are local companies that do not follow the law. We know that they pay 80 % in cash in envelopes and 20% official. Thus the government does not receive enough taxes. Social payment, they have lower costs than we have. We also know that this way of doing business is not for everyone, there are even small companies that follow the rules and respect the law. The fourth challenge Nestlé faces is creating a good image of Ukraine outside Ukraine. When the people see news about Ukraine first of all they hear about war, corruption, and I say that Ukraine is significantly better than this. And we also have to convince and explain to our office the real situation here. It will it make easier to attract foreign investors and convince Nestlé headquarters to invest in Nestlé Ukraine. Now we are in competition with Nestlé Poland, Nestlé Romania, Nestlé Hungary, with Nestlé Germany, because the headquarters will not invest in every office, it will invest in the best opportunities, so the image and perception plays the major role.
LDaily: Could you tell that these challenges you named are the first obstacles for the flow of the investments to Ukraine?
A. Bornemann: The four points I named are the challenges for the sector we operate in, I cannot judge for others. But I can admit that Ukraine is going through the deep valley, it is growing. Looking at the macroeconomic data, we can say that it is extremely positive. Ukraine with 42 million consumers is a big market and investors look at the economic facts, taxation, laws, and financial stability. We see that during the last two-three years more changes happened than during previous 22 years. There is no country in Europe which has changed so much and which has initiated changes the same as Ukraine. It became better. And this has to be communicated and announced all over the world.
LDaily: Does Ukraine move in the right direction?
A. Bornemann: Of course. You always could do better but politics is different from business. Three years ago Ukrainian people took a serious decision and this decision was to go to West direction. Ukrainians wanted to embrace and share European values like stability, opportunities, freedom, economic growth and Ukrainian people paid a lot for this. But Ukraine is on the right track but a lot is still to do. The speed has to be kept or accelerated.
LDaily: What Ukrainians could not afford themselves ten years ago?
A. Bornemann: I can’t` tell you how the situation was ten years ago in Ukraine, but the one thing I know from the economic perspective that there are more opportunities of growth, increase of living standard and consumption over the last twenty years, compared to Soviet Union. Ukraine started it way twenty five years ago, and if compare with other countries, for example Poland, it did not improved as much as it could. Changes cannot happen in one moment, they require small everyday steps.
LDaily: What traits of character of Ukrainian people you like most of all?
A. Bornemann: What personally I like and what Euromaidan Revolution showed
is that Ukrainians want to decide their destiny against obstacles, fight for their beliefs, be engaged and have a clear vision where they want to be, what they want to achieve, what they want to have and work hard for this.
LDaily: On the territory of Ukraine there are a lot of factories and facilities. What role does Ukrainian representation play in the total production of the Nestlé company?
Bornemann: Ukraine plays a very important role in Europe because we produce very good quality product because we have very good qualified people, we are producing very efficient, and our production is very cost competitive. 30 % of our Mivina noodles we produce in Kharkiv are exported to other Nestlé companies in Europe. We have just built our new production line in our Torchyn factory which is only producing for European markets. We have started to produce tablets for the Hungarian market at our Svitoch factory. In Lviv, we have the biggest service center with 1200 employees servicing other Nestlé markets with back office activities.
LDaily: What would you like to wish Ukraine?
A. Bornemann: I wish all the desires and dreams of the Ukrainian people that they put in the Maidan revolution, where many people died for freedom, for better future, that all these wishes would come true.