Great Ukrainian laundry
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Before the full-scale invasion, the Ukrainian laundry detergent market could well be called developed. Several signs indicated this.
First, almost all transnational brands were represented in our country.
Secondly, there was price and functional diversification of offers: the consumer could choose products in any price segment, purchase powder for different types of laundry or for things of a certain color.
Thirdly, the share of smuggling, which ten years ago could reach 20-25% of all deliveries, was minimized to acceptable levels, which was facilitated by regulatory decisions, increased control at the border and an increase in the share of civilized trade in the total volume of sales.
Fourth, more and more Ukrainians preferred and were interested in the topic of environmental safety of powders. And this is quite a progressive marker even for the European market.
Insidious addiction
Focusing on foreign trends and imported supplies played a bad joke on consumers. Products from abroad became more accessible and – due to the advertising and marketing budgets of transnational corporations – more popular.
In these conditions, national enterprises, not receiving any protectorate from the authorities, gradually lost their positions. If in 2008-2010, a third of washing powders on store shelves were represented by Ukrainian manufacturers, then last year their share was only 7% of sales.
Retail chains sold Ukrainian washing powders for 250 million hryvnias, while the total sales of detergents through network retail reached 3.8 billion hryvnias in 2022.
Every Ukrainian felt the consequences. When a full-scale invasion disrupted all the logistics chains connecting Ukraine with European suppliers, there was a significant shortage of washing powder.
Consumers who prefer products of the middle and lower price segments were especially affected. According to official statistics, the sales of expensive washing powders decreased by 44%, and the average price – by 29%.
At the same time, the demand for products in the “budget” segment doubled.
How the market has changed
The impact of the war on the detergent market was not only about the redistribution of consumer preferences. The fact is that suppliers have faced unpredictable spikes in demand.
In the first weeks of the full-scale invasion, Ukrainians, under the influence of panic, began to buy household chemicals (including washing powders) in a frenzy. The situation had barely begun to improve when the market faced a change in the “average buyer”.
Previously, these were women aged 22 to 60 who have children. But many of them went abroad. Then the part returned. Accordingly, forecasting demand became more and more difficult.
The same as predicting the final price of sales of products. After all, in addition to new costs for logistics and guaranteeing the safety of a specific batch, exchange rate fluctuations should have been taken into account.
This is important, because in a situation of dominance of imports, the national market of washing powders is maximally dependent on the ratio of the hryvnia to the dollar and the euro.
A way out of the difficult situation, most experts both then and now foresee maximum support for the development of Ukrainian production.
This is not only overcoming import dependence, but also strengthening our economy: new jobs, taxes to the budgets of various levels, possible foreign exchange earnings due to the export of household chemicals to other countries.
Experts are sure that the presence of a powerful enterprise in the state can increase the share of the national production of washing powders from the current 7% to 30-35% in the future.
And all the prerequisites for this are there – the washing powder itself is not a high-margin product, so the import of the finished product from the EU is not always interesting due to rather high logistics costs. Therefore, it is profitable to establish production in Ukraine from the point of view of logistics.
Moreover, the export of this group of goods can bring funds to the state budget of Ukraine and promote the promotion of Ukrainian goods abroad.
Solution on the surface
This will surprise many, but before the full-scale war, Ukraine not only imported, but also exported household chemicals abroad. For many years, it was a supplier of washing powders to the markets of other countries PJSC “Vinnytsiapobuthim”.
The company produced products under several brands, but probably the most famous among Ukrainian women is their powder “Eared Nanny”. This product for washing children’s underwear had a stable demand in our country, and its quality satisfied mothers outside Ukraine as well.
One of the reasons is the use of a unique production technology. This is the so-called tower method. A bit of terminology. In order to make washing powder, it is necessary to collect loose and liquid components of raw materials.
Semi-finished products – liquid glass and paste (APAR) are prepared from them, which are active components of future synthetic detergents. Next, a homogeneous composition is made. And then comes the drying time. It consists in drying by spraying drops of the composition from a tower height of more than 50 meters.
The temperature used during this process reaches 300 °C at the tower entrance. The advantage of this method over so-called dry mixing is obtaining easily soluble, homogeneous granules, which is the basis of the high quality of the finished product.
At the next stage, active components are added, which reproduce certain features in the finished product – the effect of whitening or, on the contrary, the preservation of the color of things, various fragrances, etc.
After that, the powder is ready for packaging. The company’s laboratory, which is responsible for quality at all stages of product manufacturing, clearly records all results in order to guarantee the consumer only the best solutions.
Rescued enterprise
Technologists note that the existing automation of operations and the use of modern equipment make it possible to produce more than 70,000 tons of quality products per year. Packaging lines can pack up to 10,000 packs of synthetic detergents weighing 400 grams per hour (!).
And the drying tower can produce up to 14 tons of almost finished product at the same time.
A logical question arises. If we have such a manufacturer (yes, it is one Ukrainian manufacturer, but he alone can cover almost a third of domestic demand), then why hasn’t he filled the national shelves with his products until now?
Many will not like the answer. Since 2006, the owners of PJSC “Vinnytsiapobuthim” are Russian businessmen who own the company “Neva Cosmetics”. At one time, according to the media, they bought the plant for $5 million. And for years they used it for their own needs.
But since 2014, the company has gradually lost its position in Ukraine. In 2019, its share in the Ukrainian market was 10%, and in 2021 – half as much, that is, only 5%. The turnover also decreased.
After the start of a full-scale war, the Russians did not hold ceremony with their Vinnytsia asset. Since they tried to take the stock to the territory not under the control of Ukraine, the company was arrested, and control over it was transferred to ARMA – the National Agency for Identification, Tracing and Asset Management.
Benefit for all
After the competition, the company “Krytex-Service” became the manager, whose beneficiaries – Valery Kiptyk and Ruslan Shostak – own the well-known Ukrainian retail chains EVA and Varus.
The new managers have ambitious plans. After long months of downtime, the company not only got a chance for a new life, but also expects to achieve quite high figures by the end of the current year: to receive the first 6,000 tons of washing powders, more than 500,000 liters of liquid detergents and more than 6 million units of detergents for washing and cleaning.
Does the company have the resources and technical and material base to implement its ambitious plans? So. Progressive multifunctional equipment in combination with a well-coordinated experienced team is the key to the production of quality products.
As well as the latest equipment, access to advanced technologies and the irresistible desire of the new managers to raise the national production and the country’s economy to a new level.
What in the end
Analysts have no doubts: the development of the market of household chemicals of national production is a direct way to improve the economy of Ukraine. National production of synthetic detergents can stimulate innovation and research in this field.
Manufacturers will invest in new technologies, improving product quality and developing environmentally friendly alternatives. This will contribute to the development of the country’s scientific potential and the attraction of funds in high-tech industries, will make it possible to increase the volume of exports and expand the geography of sales markets.
In the end, we can expect additional foreign exchange earnings and an improvement in the country’s foreign trade balance.
Reflecting on the future of the industry, experts name three trends in the development of the market, provided that the current military and economic situation is maintained.
First, the growth of the share of the so-called civilized trade. That is, markets and bazaars will lose positions, while supermarkets will increase sales of household chemicals.
Secondly, consumers will gradually reorient themselves to environmentally safe products. This is connected with world trends, and with the fact that now, more than ever before, Ukraine has to worry about the state of its water resources.
Thirdly, analysts predict increased support for national producers from both buyers and the state. Because it is domestic production that is the foundation of Ukraine’s economic recovery.
What is happening today with the new asset of the company “Crytex-Service” corresponds to all three listed trends.
And that inspires hope. Our country can get a powerful manufacturer of quality products of European quality and at the same time strengthen its own economy.
In any case, Ukraine will win!
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