— What a strange metamorphosis. An IT specialist becomes a chocolatier. Why?
— The idea of this business grew from my childhood memories. On festivals, my parents used to hide chocolate eggs and figures in the grass, and we competed to see who would find them first. That was when I started dreaming of finding “my own” chocolate. It is my hobby! I devote all my spare time to it. At first it was simple, but now the chocolate production is building up, and it is becoming more and more difficult to manage the business processes. I repeat, for me, this is not work, I devote my whole life to it. As for my IT company, the business is running well and brings in a steady income.
— You spent around 300,000 euros on setting up your own chocolate production in Russia. How successful has this investment been?
Our market is different from the European one, and consumer tastes differ too. Europe is experiencing stagnation, whilst our experience is different, one of rapid growth. And the culture of consuming handmade confectionary here is in an embryonic state. Every day, we have people coming to us who have never eaten confectionary other than that which is mass-produced. We have tastings where we tell people about natural chocolate and how it differs from substitutes. How wonderful it is when a customer comes back again and no longer wants to run with the “herd”.
On the one hand, the niche for premium chocolate production in Russia hasn’t been filled and is highly sought after. And that’s not just in the capital and large cities, but also in the regional centres and small towns with a population of less than 300,000. On the other hand, starting a new business in Russia is not particularly easy. Entrepreneurs encounter the problem of not having sufficient regulatory documentation for chocolate production. The quality of raw materials fluctuates, and, due to the sanctions, supplies and prices have become unstable. And in Moscow now, a tax on commercial premises has been imposed. To open a small fully fitted-out workshop costs no less than 20,000 euros. And then there is however much on rent and wages for the initial period. And if your little shop is going to be next to Red Square, then you can add a few noughts to that!
But, clearly, Russia has many optimists and chocolate lovers. Because, despite all the difficulties, chocolate works are opening up all over the place. Their numbers are growing. So is the competition. For now, there is room for everyone. Having my own small workshop and a small outlet, I can only welcome the new arrivals! I don’t see them as competitors: we are all different, and there is enough trade to go round.
— I already had experience of opening a chocolate business in the Czech Republic. But I can’t get my tongue around calling it successful. Prague, where I started it, is quite a large city by European standards, but the Czech market as a whole is quite small. I delivered Belgian chocolate to several shops in Prague. At the time, it was not in demand. I lost a lot of money then. But you learn from your mistakes, as they say. In Russia, everything is far more attractive: a huge market, great opportunities. More than twelve million people live in Moscow alone. For the number of inhabitants, this is more than all of Belgium. After looking at the way things are in Russia, I decided not to open in Moscow itself due to the high costs of running a business there, so I opened in Dubna, not far away. All our main clients are in the Russian capital, by the way.
— Your company Alexandra Le Chocolat is so far only aiming at quite a narrow and specific market. You mostly deliver Belgian chocolate to expensive hotels. Are you planning to develop your business?
— This autumn we are opening our first shop of our own in Moscow. All the confectionery recipes have been developed especially for the Russian market, using chocolate with a minimum cocoa product content of 71%. We want to test the market. We make chocolate for clients who need better than the average, and there are quite a few of them in Moscow. We are now producing exclusive things, hand-made chocolates One-off products! But in the near future, we shall start mass producing chocolate decoration components for companies which make cakes and gateaux. We are engaged in what is customarily called “import replacement” in Russia. We also plan to sell our firm’s chocolate online.
— How do you make your chocolate products?
— We use exclusive chocolate which we produce ourselves from aromatic varieties of cocoa beans. In preparing it, we carefully stir the raw semi-finished product and add the required ingredients by hand. The whole mass is then poured into moulds for sweets or figures, and we add fillings made to our own recipes: fruit, coffee, chocolate, praline, truffles – more than 20 kinds altogether. We buy the cream, vegetable oil and butter for the fillings from Russian suppliers, and import the rest from Belgium.
1. Listen to people.
Listen to everything people say. Try to understand what those round your business want.
2. Study the market carefully.
One of the key tasks for a businessman is to understand what the market wants at each specific moment. Conditions for doing business here change very rapidly.
3. Move gradually.
Not without reason is there a proverb in Russia: “If you hurry, you’ll make people laugh”. Carry out your business plans cautiously, step by step.
4. Try out your business.
What works in Europe may not work in Russia. Europeans and Russians differ even in their passion for chocolate. You must know not only how to adapt to others’ tastes, but also how to promote your own.
5. Learn to speak Russian.
I didn’t know a single letter of Russian when I came here. Not all that many people in Russia know English. The language barrier is a great hindrance to business. So I studied a teach-yourself book, socialized a lot, and finally I was able to speak it.
— You spend the greater part of your life in Brussels. That is where all the decisions about sanctions against Russia are taken. What do your fellow countrymen think about what is happening in Russia, and about the fact that you are working in that country?
— All the European politicians are in Brussels. The people of Brussels and Belgians in general are not happy about what is happening. These are political decisions, and the population does not like them. Those who have a business relationship with Russia suffer the most. They do not support these decisions. The closure of the Russian market results in serious financial losses for businessmen. At the same time, I personally very much like the policy being pursued by the Russian president. He is arranging contacts with China and the BRICS countries, developing the internal markets and replacing imports.
— Does your chocolate business in Russia bring you any money, or only worries?
— I had hoped it would proceed more quickly. But sometimes the circumstances are too strong for us. At the present time, we are working towards the business paying for itself in the “high season”. So far, production is no more than 300 kg, but virtually all of that is sold. Now we are on the up and up. We have begun preparing for the “high season”. That is what we call the autumn-to-spring period, in which the main festive celebrations take place in Russia: a sequence of corporate festivals, the New Year, Christmas, 23rd February and 8th March. After that the season is in decline. And in summer, there is little desire to eat chocolate. Sales fall by 50-70%. Even the big chocolate-making firms know this very well.
— How many people work in your business?
— In summer we have a skeleton staff of 7-8 people. In the “high season” we bring in more; there are then about 15 people making chocolate. Our head chocolatier is a Russian woman, Larisa Belyakova, a top-class confectioner. We sent her to Belgium on courses to improve her skills. She is constantly going to master classes which are held by the Belgian chocolate companies, and she is up-to-date with all the most fashionable trends. I only opened my first production two years after I first came to Russia – in 2009. I named it in honour of my 27-year-old daughter, Alexandra Le Chocolat. She is a fashion designer by profession, and worked out a logotype and style for the firm.
— Let’s talk about your varieties of products. What are they?
Moscow’s chocolate confectionary market, like other markets, is feeling the effects of the crisis. Chocolate is not on the list of sanctioned goods; some goods, and several ingredients, are imported. Consequently, it is the weakening of the rouble which is having an effect on the final cost of chocolates. On the face of it, the situation appears tolerable: the market volume of chocolate goods in terms of financial indicators grew in comparison to 2013. But, if the figures are adjusted to take account of inflation, it is clear that the market has dropped, albeit not greatly (within 8%).
Figures for chocolate consumption in Moscow are comparable with those in the West. Although preferences do differ slightly. Here, as before, people like the kind of chocolates sold by weight. It is worth pointing out that chocolates sold by weight have been left virtually unscathed by the crisis.
Entering this market is fairly expensive. This is first of all down to having to import equipment and some of the raw materials. Furthermore, as said earlier, the market is close to saturation. Which means that under current conditions, profits are more likely to come not from one’s own production but rather by acquiring some kind of business from other market players. In the first scenario, the recoupment period can be up to 10 years. In the second, it is less, but it depends on the cost of the business. That figure is always an individual matter.
Regarding the prospects for the chocolate confectionary market, one can say this: the market is indeed large and, in a time of crisis, it feels tougher than usual. Substantially better, however, than other sectors. Furthermore, with a return to stability in the Russian economy, the market has every chance of quickly reaching pre-crisis levels again.
— Sweets with various fillings. Chocolate figures: cars, hares, pistols, musical instruments. For each New Year, we cast figures with the current sign of the horoscope. As it turned out, in spite of the fact that virtually every large hotel has its own chocolatier and confectionery workshop, it was of interest and profitable for some of them to have us produce Belgian mini-chocolates with the logotype imprinted on the wrapping and on the chocolate itself. In external appearance and quality, they were better than anything else on the market at that time. Some were interested in the taste itself, and the complex production technology, at an acceptable price. Our service for printing photographs on chocolates is also of benefit to us, It is in great demand at any time of year. And now we are fulfilling a large order for the Swiss Hotel “Krasnye Kholmy”.
— Belgians are selling their chocolate to the Swiss?
— We began working with them when their management was French. We spoke French with them; that was unusual for them! Since then, we have been cooperating. This year is their tenth anniversary, and they have ordered a chocolate tower from us, a copy of their hotel on Paveletskaya. This is also a very interesting and creative line of work.
— You have lived in two countries, Belgium and Russia. How do they compare?
— I very much like Russia as a whole. I want to stay here to live, and I have Dubna in mind. It has long been my dream. Firstly, I like the town. Secondly, I am not bothered about comfort, life here satisfies me completely. In Europe we have everything, but people are discontented. In Russia they know how be happy with little. A Belgian would not be particularly pleased even by a big present. But a Russian is as happy as a child to receive a small one. I am here because of the Russian way of thinking. And, of course, the Belgian chocolate.
And what about having friends to a meal in Belgium and Russia? Chalk and cheese! I was invited to a cheese and wine party by friends in Belgium. Eight people just sitting there, all quiet, calm and peaceful. I week later I held just such a party in Dubna. It was fantastic!
— How do you like the Russian river Volga?
— I dived into it last October. It was my birthday. I have a dacha in Dubna. We held a picnic on the bank and went for a dip after a sauna. A fortnight ago, I took a boat trip on it. It’s impressive!
— Seventy per cent of your sales are corporate orders and deliveries to Moscow hotels – the Atlas Park Hotel, Lotte, the Swiss Hotel “Krasnye Kholmy” and others. In your view, why do big clients prefer the products of a small company?