Serbia's Trailblazer
By Bernard Pacyniak
Pionir’s
president and this year’s 2010 European Candy Kettle Club recipient, Miroljub
Aleksic, has set his sights on making the company the largest confectioner in
the Balkans.
Miroljub Aleksic
didn’t plan on purchasing a confectionery company. Yes, the telecommunications
engineer turned banker had a passion for both finance and production, and was
interested in finding an enterprise worth rescuing. But in 1998 he hadn’t yet
decided on what kind of company would
met his criteria for a turnaround in then economically depressed Yugoslavia.
Thus, when
Aleksic had agreed to his attorney’s request to attend a meeting in Subotica, Serbia,
about 180 kilometers north of Belgrade,
his primary goal was to see if he could collect on debts Pionir owned his bank.
Accompanied by
his lawyer, the casually clad entrepreneur was advised to “stay close to the
door,” because the meeting would most likely be tempestuous, Aleksic recalls.
Having lapsed
into bankruptcy, the company’s future hung in the balance. Today, Pionir’s
managers were being grilled by more than 900 angry workers about how they
allowed a once-proud and profitable company to go belly up.
After 10 minutes
of “not so polite” discussions, one of the workers admonished the group for
their rudeness, saying there were important guests in the meeting hall,
including a banker. All eyes turned to the two individuals sitting toward the
back of the room.
“Everyone assumed
that my lawyer was the banker, since he was dressed in a suit and tie while I
was only in jeans and a T-shirt,” Aleksic explains with a wry smile. Taken aback by the young and casually dressed
financier, the workers then asked Aleksic what he would do with the management
team who had plunged Pionir into a financial black hole.
Speaking softly
to quiet the room, the young banker told them that he would never allow the
management team to set foot in the factory again. Asked what he would do to
rescue the company, Aleksic went on to say he’d use “shock therapy,” namely a
self-evaluation of all workers in the company by the workers themselves,
thereby establishing a cadre of experienced and motivated employees.
Inspired by his
candor and realism, the workers urged Aleksic to purchase the company and
rescue it from bankruptcy.
“’How can I
purchase the company without evaluating its assets, brands, debts?’ I told
them,” he says. Within minutes, the ledgers were brought out and Aleksic found
himself immersed in figures and facts.
On Nov. 22, 1998,
Alco Bank, the financial institution run by Aleksic, purchased Pionir for 47
million Deutschmarks. There was only one other company bidding on Pionir and it
fell well short of Aleksic’ bid.
The purchase set
off a three-year turnaround program, one whereby the company was
“reconstructed, refurbished and re-equipped” and transformed into Serbia’s
leading confectionery company.
Zoran Boganovic, production manager at Pionir's Subotica facility, checks on production of Lovely dessert products.
He trimmed the number of employees from 934 to 500, employing the self-evaluation process mentioned earlier.
“I had looked at the company, which was founded in 1917,” he explains. “It had a few good brands, a very skilled, hard-working and disciplined labor force and weak competition. If I couldn’t make Pionir a better confectionery company than what was there in the market, I might as well flush it all down the toilet.”
Giving himself two to three years, Aleksic applied a simple philosophy to the turnaround process, one he says works for all enterprises. “
You need to have a good organization, you need to estimate the opportunity, take advantage of the opportunity by being braver than your competitors and then simply execute,” he says.
In the end, it’s all about taking the risk and having the courage to act out one’s convictions, Aleksic asserts. And like Burnham, he didn’t make any small plans. Having rescued Pionir from bankruptcy, Aleksic has now set his sites on making Pionir the leading confectionery company in the Balkans. During the past four years, the company has invested 104 million euros in infrastructure and production technology, installing six new production lines: hard candy depositing; snack and energy bars; chocolate bar moulding line; specialty marshmallow lines; a wafer line; and a biscuit/cracker line. Several other production lines, such as an automatic panning and specialty baking line are in the process of either being installed and/or are on the drawing boards.
In the end, Pionir has embraced automation and technology in a manner few other companies can compare. Perhaps what’s even more amazing is that this spending spree has come at a time most companies have deferred investments and cut back R&D spending.
But as he demonstrated at that fateful meeting 12 years ago, and in the years that followed, Aleksic doesn’t believe in waiting on the sidelines. His push behind investments in technology and automation go beyond simply improving quality, enhancing efficiency and boosting outputs, although all those are part of the payback. The monies spent go back to Aleksic’s philosophy of maximizing the opportunity quickly and intelligently.
As Zoran Bogdanovic, production manager at Pionir’s Subotica facility, the largest of four plants in the company’s network, points out. “We want to be the ones setting the benchmark for others. We don’t want to follow Kraft, Nestle, Ferrero.
“Currently, the market in Serbia is in transition, especially since the borders have been opened to free trade,” he continues. “Our goal is to set standards for our competitors by offering better value, more variety. It’s the marketplace that challenges us.”
As a full-line confectionery company, Pionir carries a broad portfolio of products, more than 200 items encompassing four major segments: biscuits, candies, desserts and chocolates.
At Subotica, a Solich Candymaster conveys Look swirl cream hard candies towards packaging.
Its recent launch of Look multi-flavored (Strawberry & Cream, Caramel & Cream and Cherry & Cream) swirl hard candies stems - in part - from the company’s investment in a new Candy Master hard candy depositing line supplied by Sollich and Chocotech. The push toward new product development parallels the company’s intense investment policy, with 40 new products having been launched in 2010. Recognizing that its broad range of products enables the company to target consumers from the youngest to the oldest, Pionir has emphasized development of confections that meet market and consumer needs.
The Lovely dessert items begin with a biscuit base topped with a fruit dollop, followed by a marshmallow crown, which is then enrobed in chocolate and decorated with a white chocolate drizzle.
More importantly, the product has universal appeal, Aleksic explains. “When we presented the Lovely product in April to our U.S. buyer, he virtually purchased all production capacity we had for the item,” he says.
As it stands, Lovely’s sophistication and price point has great appeal to the export market, a segment that’s critical to the company’s future growth and success.
Currently, exports comprise nearly 70% of Pionir’s sales, which topped €80 million in 2010. The bulk of those export sales (80%) cover countries within former Yugoslavia, but do extend to a total of 31 nations within Western Europe, North American, Eastern Europe and Russia.
A Solich Conbar line, also at the Subotica plant, produces a variety of snack and energy bars. Here, the mass into a roller former, cooled. separated into strings and then cut into bars.
The Diamond line launch dovetails with a broad-based media campaign involving television, print, outdoor billboards (present throughout Belgrade), radio and point-of-purchase. Another major marketing campaign that coincides with another new product launch is Vitanova, an energy snack bar that has Serbian swimming champion Nadja Higl as its spokeperson.
The Vitanova energy snack bars, available in corn and apricot as well as corn and raisin varieties, represent another push by Pionir to take advantage of emerging global trends, such as healthy and better-for-you confections and snacks.
And while Aleksic recognizes that not every new product launch succeeds - as he says, “Every bullet doesn’t kill.” - he’s confident that enough shots will hit their target. “Perhaps 15 out of 60 survive,” “Aleksic says. “But we’re in a different position than the multinationals. We’re operating in a smaller market, say 600 million consumers. We can take the risks.”
Moreover, those risks are delivering on the rewards. The new brands haven’t been shooting blanks; they’ve generated a 20% sales increase. As a recent treatise published in the Czech journal Perspectives of Innovations, Economic & Business detailed, Pionir was the most successful of three leading Serbian companies in launching successful new products.
It placed 85% of its products, giving it a 70% cost effectiveness percentage. According to the survey conducted by authors Victorija Bojovic, Ljubomir Pupovac and Maja Strugar, of the nearly 55 products developed, 45 made it onto market shelves. From those 45, 40 became part of the existing product mix.
Expect more to come, albeit at a somewhat slower pace, next year, say Pionir marketing and production teams. Current projections call for Pionir to roll out more than 30 new items for 2011.
In doing so, the company looks to target Eastern Europe and Russia for a major export initiative. Aleksic also told Candy Industry that he plans to enter the German market with a new line of Swiss roll cakes and a new specialty marshmallow product.
He’s confident that the products will capture consumer interest with the same mixture of “raffiné” and value that underscores Pionir’s ongoing transformation. It also ties in with the company’s continuous improvement program that’s prevalent in all four plants. In addition to the Knobel chocolate moulding line installed for the Diamond launch, the Subotica facility had three additional lines put in: a Sollich Conbar line for energy and snack bars; a Chocotech marshmallow line for Lovely production, and an Imaforni Swiss roll line.
At the Paracin, Serbia facility, a Hebenstreit wafer line turns out a wide range of wafer products.
Having overseen the installation of four new lines in 2010 in Subotica, Bogdanovic’s goals for 2011 revolve around three key points: reducing energy costs, reducing the amount of handwork in packaging, and launching new products.
“We’re looking to realize energy savings through improved monitoring of our usage,” he says. “In additional, we want to better manage and optimize our water consumption.” As far as automating packaging, the company looks to install primary robotic systems on the Lovely line as well as secondary packaging investments such as carton-erecting and carton sealing equipment.
Several of the new product introductions planned in 2011 revolve around product extensions for the successful Lovely, Diamond, Look and Vitanova debuts.
“With Lovely, we’ll be introducing a new variety that includes a sour cherry placed atop the fruit filling,” Bogdanovic says. As for Diamond, there will be new varieties added to the brand, some with inclusions involving hazelnuts, almonds and other ingredients. Here, too, Pionir benefits from its production network as well as it being a subsidiary of the Alco Group. For example, at Zemun, cereal items are shipped to Subotica for the production of energy and snack bars as well as for use as inclusions in chocolate bars. Biscuit bases produced in Paracin are also shipped to Subotica while compound coatings, chocolate and creams manufactured in Subotica are transported to Paracin. And fruit fillings made in Hissar find their way to Subotica.
Another synergistic complement of being part of the Alco Group involves two important subsidiaries: Tipoplastika, which fabricates and prints packaging material; and Cobex, which procures raw materials, such as cocoa, sugar, milk powder and other ingredients critical to confectionery production.
Both subsidiaries have proven critical in helping Pionir remain competitive and innovative. They’re also play an integral role in the Aleksic’s self-fueling growth vehicle for Pionir. “
Thanks to lower ingredient and packaging costs, we’re able to plough our profits back into the company, which allows us to invest in new lines and develop new products,” he explains, illustrating the concept on a yellow note pad.
He then looks up and shares some proprietary information with the reporter about plans for the future. Indeed, Aleksic’s confidence underscores his ambitions for Pionir. Again, he’s made no small plans.
At a Glance
Pionir d.o.o.
Headquarters:
Belgrade, Serbia
Plants: Subotica
(candies, chocolates, desserts, biscuits); Zemun (extruded, coated snacks);
Paracin (wafers, cookies, crackers); and Hissar (Chocoaltes, praline, desserts,
jams and marmalades)
Employees: 1,200
Sales: €80
million ($133 million)
Output: 32,000
tons
Products: Hard
candies, fruit-filled candies, toffees, gummies, chocolate bar, pralines, snack
and energy bars, biscuits, wafers, cookies, Swiss roll cakes, specialty dessert
products, snack crackers, jams and marmalades.
Product Mix:
Candies – 37%; chocolates – 23%; biscuits – 21% and desserts – 19%.
Brands: Pionir, Look, Menthol, Karamela Lesnik,
Diamond, Galeb, Kidy, Mony, Lesnik, Choco O’clock, Vitanova, Lovely, Medeno
Srce (Honey Cake), Rola la!, Choco Ola la!, Negro, Minjon, Picanto, Mania, Sun Mill, and Napolitanka.
Management team:
Miroljub Aleksic, president, Zoran Denic, sales manager; Branimir Kopilovic,
investments manager; Radisa Nikolic, director; Slavica Jovanovic Kunji,
marketing manager; Ildiko Kovac, export manager; Ljiljana Lalic, R&D
manager; Zoran Bogdanovic, production manager - Subotica
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