A better thing for sliced bread in Russia
Ibonhart manufactures automatic bread slicing and packaging equipment for the bakery industry. Established in 1979, the business is based in Norwich, Norfolk and was taken over by Chris Barfe 4 years ago
Ibonhart’s business had been largely UK focused but being such a mature market the opportunities for development within the UK were limited. Chris recognised the potential open to Ibonhart in the developing countries and was keen to investigate further.
Ripe for revival
In the early 1990’s Ibonhart had signed up an agent in Russia. This arrangement had worked initially, however, when the agent moved on to established his own business, Ibonhart’s sales suffered as a consequence. Chris realised the situation needed resolving, but wasn’t quite sure of the best approach; it was during a chance conversation with The Institute of Manufacturing that Chris was introduced to the Export Marketing Research Scheme (EMRS).
The EMRS is a UKTI Scheme providing professional advice and funding to help businesses understand the dynamics of a potential overseas market before creating an appropriate strategy for launching in this market.
An initial meeting with Julie Macken, UKTI’s Research Adviser for the Eastern Region, helped Chris to structure his approach and consider the key decisions he would need to make to revive Ibonhart’s Russian business. Rather than simply selecting a new distributor, Chris decided to take the opportunity to review alternative routes to market and determine how best to be represented within the market; also to find the optimum price point and identify the ideal products for the Russian market.
Research is key
In October 2010, Chris travelled to Russia and spent 11 days in Moscow and its surrounding areas interviewing large and small bakeries, potential agents, shipping agents, an import-export company and the bakery press.Julie helped him to prepare a structured interview guide, and ensure a robust meeting itinerary. Chris had also done some preparatory research in the UK to understand the process of opening an Ibonhart office in Russia.
As a result of the trip, Chris discovered that the bread market was very different in Russia, with smaller bakeries requiring smaller machines: in place of their normal 60-pack-per minute machine, Ibonhart subsequently developed a smaller, 45-pack-per-minute machine, perfect for the Russian market. It was clear that Ibonhart’s current pricing structure was competitive. The research also revealed the importance of strong relationships with the dispersed Russian bakery trade, so Chris took the decision to appoint an experienced agent rather than establish a Russian subsidiary. The decision on which agent to choose was also straightforward, having done the research, "there was one name which kept coming up very positively in all the interviews" explained Chris. "They clearly had strong relationships with the bakeries, were a good size and had English speakers. We also got on well, which helped us make the final decision."
Extending the model
Chris found the structured approach to his trip really useful, "It enabled me to find out more about the market place and knowing I was going to have to pull my findings together at the end meant I had to be diligent in gathering the information." As an added bonus, Ibonhart discovered that the new products developed for the Russian market also sold well in neighbouring countries with the same style of bread and similar sized bakeries.
Countries: East Anglia and Russia