The brand Floreo was founded by Zoralek in 2015 with the support of the European Bank. Together with the digital marketing agency Nova Solution from Bitola, they have created 10 products from their portfolio, starting with brand name, logo, website and other social media activities.
The Floreo brand has large production and processing capacities. They own 500 bee families, and plan to increase the capacity to at least 1.200 bee families in the next year. With the establishment of the brand, online sales began, as well as the positioning of products in several stores on the domestic market.
Despite the representation and market presence in certain stores, organic producers still complain about the placement of their products on the store shelves.
A number of factors that make the market placement difficult are discussed below:
Negotiations between major markets and manufacturers to position organic products on their shelves often stop at the price. Market demands are sometimes overwhelming and even unrealistic. At the purchase price offered by the manufacturer, the markets account for 15-20% rebate, plus 15% profit margin. To make the product’s way to the shelves more complicated, supermarkets impose an additional 6% rebate on their distribution. So, if the purchase price of a jar of organic honey costs 100 denars, it would be reduced to 75 denars for the total percentage of rebates. And increased by a 15% profit margin, the shelf sale price of the product would reach 115 den. This selling price does not cover the costs of the manufacturer and its profitability threshold is negative. If the manufacturer enters the market with a lower purchase price, it has to lower the prices in other retail outlets, as to not create competition between the products.
Purchase and distribution
The distribution of organic products is also a big challenge. The markets impose 6% rebate on their own distribution. While inventory control and coordination is a complicated process, as Alexander says. In order for the manufacturer to keep up to date with the quantity of inventory in the markets, he must constantly communicate with the responsible market managers and constantly check, even sometimes in person. Market managers are not able to monitor the status of organic products constantly to report to the manufacturer.
Only one of the retail outlets, Zegin Healthy Food, have stock-monitoring software in place and know in a timely manner what organic products should be purchased.
Mutual competition created by beekeepers on the domestic market seriously impedes the sale of organic honey. Many beekeepers, who produce honey at home, are often not registered as legal entities with the Food and Veterinary Agency. So in the sales process they have no serious obligation about the product itself. Free from stickers, labels and many other activities that they would have for the product if they were legally registered as an entity.
If this way of selling is subject to increased controls by the competent authorities and they are registered as legal producers, all legal entities that are an integral part of the process of selling and marketing the products would benefit.
However positive the subsidies appear to be, they have a negative impact on production and sales. Many times, manufacturers only make a fictitious increase in sales. That is, the number of bee families can increase from 50 to 100 baskets, while the amount of honey production stagnates.
Often the quantity of honey is reduced, and this is due to the secure income stream they receive as a result of the subsidies, so the bee keepers do not invest much in increasing honey production.
The price of organic products is not only a problem factor in itself, but it is also a challenge when it comes to placing products on the foreign market. Alexander says he often received comments that the purchase price was too high for distributors. Serbia and Bulgaria are listed as the main competitors for Macedonia. He says that the purchase price of organic products is much lower than the price on our market. The reason for this is the large volume of production and sales, which is due to the education of the producers, the consumers and the high level of awareness of the consumption of organic products.
A lot of the honey in Macedonia is imported from Serbia and Bulgaria, as much as 80% of the honey placed on our market is from foreign producers.
One way to overcome these challenges is to educate both producers and end consumers. According to him, one should work on increasing the awareness of the consumption of organic products, ie emphasizing the value and benefits of their consumption, as well as educating consumers on how reliable the manufacturer is from which they buy organic products. In addition, manufacturer education would cover several key steps:
– Highlighting the most favorable way of production;
– Emphasize the quality and quantity of organic products, not the quantity of bee families;
– Optimal utilization of subsidies for organic production.