Sale of TOP-3 company exporter of medicinal herbs in Ukraine

The company is engaged in the procurement, processing and trade (100% export) of wild herbs, flowers, roots, berries and medicinal herbs and plants.

Over the course of five years, the company entered the TOP-3 exporters of medicinal raw materials in Ukraine. The company harvests, processes and sells more than 1.5 thousand tons of dried products per year and this figure is constantly growing.

The team consists of more than 50 employees, most of them are young and creative people, united by a common idea - to make Ukraine a key supplier of medicinal plants in the world.

Storage and processing is carried out in warehouses. The area of ​​warehouse and production premises reaches 2000 m2 (with the possibility of expansion up to 5000 m2).

The client base consists of more than 100 companies from different sectors of the economy. These are producers of herbal tea, extracts (for pharmacy, dietary supplements, cosmetics), animal feed, food industry, pharmaceuticals and cosmetology, as well as large trading companies from 20 countries.

The company cooperates with more than 100 farmers and producers from most regions of Ukraine.

Key expertise:

• understanding of the raw materials market of medicinal plants in Ukraine;
• understanding of the EU commodity market (which countries specialize in which products, who produces and sells which products);
• understanding of European demand;
• understanding of large and medium-sized players in the market;
• ability to work with quality in different segments (teas, extracts, food);
• the ability to quickly purchase batches and process them to the required quality;

Organic certification, ability to select batches based on supplies and clients.

Brief overview of the global market

During the pandemic, the market experienced very strong growth, as people began to boost their immunity in every possible way, or look for a magical cure for COVID, quite often dietary supplements and teas, the raw materials for which the company sells.

At the same time, low interest rates allowed large companies to buy large volumes of raw materials for warehouses, since the cost of raw materials grew more than interest on loans, and demand stimulated all this.

Thus, the largest buyers significantly increased their warehouse stocks, which were designed for further growth in demand for goods.

But demand began to decrease as the agenda changed in the global discourse, COVID was overcome and people began to worry more about energy resources, high inflation and the threat of military conflicts.

At the same time, the increase in the interest rate reduced the purchasing power of the population, and some goods with a higher price (cosmetics made from plant extracts, expensive feed, organic products) became no longer very competitive and, without outside incentives, began to temporarily sag.

Therefore, companies stopped so actively buying raw materials for warehouses, and began to use leftovers more.

However, our raw materials have a shelf life of 2-4 years. Therefore, we are already seeing a shortage of some goods (such as milk thistle) and the market will recover every month. Since the global trend for products belonging to the Healthy living market has been growing over the past decades and has no intention of falling, people are becoming more and more interested in dietary supplements and organic products.

Therefore, the drop in demand in 2023-2024 is an understandable market correction due to too rapid growth in 2020-2022.

But at the end of 2024 or the beginning of 2025, we will go into the normal growth trend that we have had for the last 15 years before that.

Potential in Ukraine

We see great potential for Ukraine in the niche of medicinal plants:

it is possible to increase the procurement of wild plants by 10 times (from 20 million euros to 200 million euros), this is clearly illustrated by the example of the berry market;

many people looking for work in rural areas;

the ability to cultivate many plants through favorable climatic placement and different soils;

demand for growing high-margin plants;

concentration of procurement on the right bank of Ukraine;

expected subsidies after joining the EU;

entry of major European players into the Ukrainian market.

Production model

1. Base of raw material procurers/suppliers

In Ukraine, the company works 95% with wild-growing raw materials; it is procured by people (gatherers), less often by the procurers themselves because of their teams. The company works only with large suppliers that aggregate significant volumes of raw materials.

The company cooperates on a regular basis with 40 suppliers who have proven quality and keep their word. The annual volume of procurement for them is about 100 million UAH. And there are about 100 additional suppliers with whom you can work depending on the situation with the procurement volume also about 100 million UAH.

2. Production equipment

The production facility operates with equipment that fully supports all production processes necessary for the functioning of the company, which allows it to sell goods worth 3-5 million euros per year.

The equipment complex is divided into the following processing areas:

• Drying or drying of raw materials
• Grinding
• Division into factions
• Pressing
• Fumigation

The company has about 2000 m2 of warehouse space for rent. In addition, it is possible to increase it to 5000 m2.

There is also a plot of land nearby, leased for 15 years, which can be purchased (0.9 hectares where additional warehouses or production can be built if necessary).

The production is energy-independent and can operate during blackouts (there is a 42 kW generator).

Client base: tea companies, food industry, extractor companies and pharmaceuticals, cosmetic companies, pet food and compound feed, traders.

+ about 100 companies with which we communicate from time to time.

There are regular contracts with 5 companies worth about 500 thousand euros per year and a margin of about 150 thousand euros.

Team: general director, sales manager, purchasing manager, production manager, warehouse manager, chief accountant and accountant, logistics manager of foreign trade activities

In addition, the production has all the necessary and qualified personnel (technologist, mechanic, carpenter, foremen, general workers); at its peak, 60 people worked in 2 shifts.

The core (20 people) has been with the company for more than 3 years.

Investment opportunity for 2024

In 2024, there is a unique opportunity to enter this market and get quality products at low prices and supplier loyalty.

After the market resumes, growth can continue, which Ukraine can easily provide.

What opportunities do we see in the short term (1-2 years):

the sales market is in decline.

The raw materials market is ready to work and increase volume, but there are no requests.

if there is a player who is ready to enter the market this season (summer-autumn) with money, you can purchase high-quality goods at very low prices and sell it when the sales market begins to recover in 2024-2025.

With an investment of $2 million in the purchase of raw materials within 1 year, it is possible to obtain an ROI of about 70%.

Forecast financial plan for 2024-2027

Offer for investors:

• Sale price: $900,000 (100% company)
• Material assets included in the sales structure:
• Equipment: $200,000
• Inventory: $200,000

Reason for sale: one of the founders moved abroad