Nathalie Alquier, the general manager in Ukraine of French multi-national food company Danone in Ukraine, only started at her new position on Aug. 1, but she can already see that the country needs higher dairy standards.
She should know: The French-native comes with 27 years of business experience, with her last 18 being at Danone. Before accepting the job in Ukraine, Alquier held two vice president positions – one of which included overseeing the quality of fresh dairy products globally.
And Alquier is certain that her previous experience will not only help her manage Danone’s Ukraine branch, but also bring the country’s milk quality standards up to a higher level. Alquier is quite familiar with the setup in Ukraine, as she previously lead a similarly sized business with two factories. In addition to that, she has previously managed Danone teams all over the world.
As for the competition: a bit more honesty would not go amiss.
“(I’m) not sure that everybody is stating their positions fairly,” Alquier said, regarding the quality and honesty of her dairy competitors in Ukraine.
This competitive unfairness is exacerbated when the general public still purchases milk from local markets, believing that the milk quality is better.
“There is a tradition of going to markets because it remains in the consumer’s mind as perhaps more natural and so on, but in reality it is not,” Alquier said. “Dairy is a very sensitive product that can very easily become unsafe.”
According to State Statistics Service of Ukraine, more than a third of dairy processors’ milk purchases are household milk – cheap milk that is sold at open-air markets.
However, there has been progress.
When Ukraine signed its association agreement with the European Union back in June 2014, it committed to increasing its food safety and quality standards. Organizations such as the European Bank for Reconstruction and Development, the Ukrainian Dairy Sector Working Group, and the Food and Agriculture Organization of the United Nations have been investing into educating the public, as well as lobbying for changes in legislation.
“What we can see is that the (outdoor) market is reduced,” Alquier said, pointing out that the number of Ukrainians purchasing household milk has halved since 2008.
Another concern on Alquier’s mind is how to deal with industrial waste in Ukraine. This will make companies more efficient, but it will also protect the environment and reduce health risks.
Coming from France, a country with an advanced recycling system, this issue stands out for Alquier. “I see that here that (recycling) is not developed – so far it’s really at the beginning,” she said.
For Alquier, recycling is a major concern, as Danone is a packaging-heavy company.
With more than 100 products in Ukraine alone, Danone is a leader in the dairy market, employing over 1,000 Ukrainians. The company’s products include Activia and Actimel Zhyvynka yogurts, Prostokvashino milk, baked milk, sour cream, cream and cheese, and Rastishka yogurts and yogurt drinks for children.
But the company’s Ukraine market is only a small part of its overall structure – the Danone Group, is headquartered in Paris and is present in 120 countries, employing 102,000 people in 190 factories worldwide.
Danone Ukraine’s two plants – in Kherson and in Kremenchuk – produce nearly all of the products the company sells on the Ukrainian market. The Kremenchuk plant has a sub-factory exclusively for baby products as well. The two plants produce 90 percent of the entire production line, with the remaining products being imported mainly from Danone’s Belgium plant. Alquier would not specify the factories’ daily production capacity, saying it was a commercial secret.
Danone’s plants operate with milk supplied from Ukrainian farmers.
“Our intention is to operate with local suppliers, with our local factories,” she said, since to get fresh products, “the closer you are to the market, the better.”
Alquier compares Ukraine’s market challenges to those of Morocco, Algeria and Egypt. These countries have similar problems with access to high-quality milk and strict regulations.
“We want to have the best of the best, and it means that first of all, we need to develop a relationship with the appropriate suppliers and farmers,” Alquier said.
These long-term relationships are also allowing Ukraine to be an exporter. Danone Ukraine now ships its products to Moldova and the United Arab Emirates. It is now in the talks to export to Belarus, Georgia and Azerbaijan as well.
“(But) my primary interest is to develop first of all the Ukrainian market, and I believe that we have a world of opportunities here,” Alquier said. “We have the confidence of the consumer, which is being rebuilt more and more, and we can see a signal of an appetite for innovation, for new patterns of consumption, for a healthy diet.”
Some of Ukraine’s traditional cuisine – tvoroh (cottage cheese), sour cream, kefir (a fermented milk drink) and syrniki (fritters made with curd cheese) – makes the local market unique.
And even though Danone Ukraine is not planning to build any new factories in the near future, Alquier said that the Ukrainian market is growing rapidly.
“(Ukraine) is in the top 10 in terms of the fastest growing country for Danone dairy products,” Alquier said, pointing out that globally the rate of milk consumption is decreasing.
But compared to countries like France or Spain, Ukraine is only a mid-sized market, as it lags behind in terms of per capita consumption and overall economic development. Danone’s global annual revenue from sales was over $22 billion in 2016. Danone does not have country-by-country revenue data and groups Ukraine with former Soviet republics and North America. In 2016, the sales revenue for that group was $4.5 billion.
The new Danone CEO will be in Ukraine at least for three years with the possibility of extending her contract.
So far her experience has been positive.
“As a French person who used to live in Paris, I think that Kyiv is a really great city to live in,” she said. “I don’t know if Ukraine really realizes the beauty of having such a capital.”
Job: General Manager at Danone Ukraine
How to succeed in Ukraine: “Start with the people… When you are in a country with a challenging income level, forex pressure and so on, I think it’s very easy to understand that the more local you are the better, really, because you will develop in line with people’s income, with the evolution within the economy, with the ups and downs.”