Interview with Dariusz Zieliński - President of Ceko
What is the specificity of cheeses from Goliszewo? How do you position your company against the competition?
We have been building the Sery z Goliszewa brand for several years. When the Avallon Fund supported us in taking over the company and we did it together, we mainly competed on the market with products manufactured by Okręgowe Spółdzielnie Mleczarskie (District Dairy Cooperatives) and basically did not stand out with anything specific or special. The brand name was Ceko, and it was known for the names of some cheeses, like Bogna , Boryna or Antek, which had been given to them by the previous owners. We were looking for an idea that would help us to stand out on this red and yellow shelf of maturing cheeses. In a sense, we learnt the lesson taught by craft breweries, which were successfully competing, and in fact still are, with large volume brands. Ceko is a small plant located off the beaten track, in the middle of the Wielkopolska countryside. We are also, in a sense, a family company, although not in the strict sense of ownership. Basically, we enable whole families to be employed with us, and there is even a certain multi-generation trend here - there are examples when a grandmother who has been working here for years is just retiring, while her granddaughters are already starting working for us.
We are also recognized because of the fact that we mainly sell cheese in blocks. We offer portioned sliced cheeses, but we treat them rather as a marketing communication tool. However, in the long run, in the context of climate changes and the fight against food waste, we believe that blocks are the most appropriate form of selling high-quality cheeses. As a result, on the one hand, we produce less packaging, and on the other hand, the consumer has their cheese always fresh, regardless of whether they will want to buy just two slices or half a kilo in one piece. We cannot and do not want to compete with the size of the volume, because the potential of the plant is limited in this respect. We mainly make quality products – the ones that have the so-called short label, which makes them healthier. Still, as far as cheeses are concerned, what matters most to us is the quality of taste and the sheer joy of eating. We are not looking for pro-health programs, because this is not exactly what cheeses are about - we do not sell medicines, what cheeses can give is basically the joy of consumption. This is how the brand of Cheeses from Goliszewo was created, based on needs of consumers who are looking for food without chemicals and additives, produced by local, smaller producers not necessarily mass brands. Ceko fits in perfectly. We are a small local cheese factory with a family-like atmosphere and a lot of people of passion working for us . We can easily talk about generations of cheese makers here.
You emphasize the role of the cheese makers working for the company, don’t you?
I do, yes it is true. The face of our campaign that started building the Sery z Goliszewo brand was in fact two genuine cheese makers – a father and a son. Today the father has retired and passed the baton to his son, who is now the head of the matured cheeses production department in our company. In the era of content-based marketing messages, we are authentic. It was not a story made up for a campaign. If someone visits us and asks about the cheese-maker Mikołaj, he will meet him. If one asked employees what everyday life in the company looks like, I am sure that my words would be confirmed.
Which specific product is the most popular one? What type of consumer is most likely to choose Cheeses from Goliszewo?
We address our products to people who are willing to pay a little more for quality. They expect stable, uncompromised quality and we can offer that. Customers are looking for products with natural ingredients from a recognizable source. Such a consumer is rather a resident of larger cities with a slightly larger budget at disposal. Of course, the price must also be rational and acceptable.
Our ‘workhorses’ are our the three big maturing cheeses, found in most shops, namely: Boryna, Jagna and Antek. We have also created a range we call "cheeses of the world", which are cheeses prepared following foreign recipes, but adapted to the preferences of a Polish customer. And thus, for example, we have a Polish version of the French ‘mimolette’. We also have butterkäse cheese based on the recipes of butter cheeses popular in German and American culture. However, as I have already mentioned, our great trinity is the most important product series for us.
Ceko also produces unripened cheeses - mozzarella and its substitutes. In the case of the latter, these are commodity products and here the price plays a greater role. However, when it comes to mozzarella, it was also classed under the Sery z Goliszewa brand. In this case, we use original Italian technology. This product is aimed at a similar consumer –the one who does not necessarily order a pizza from a pizzeria, but wants to make it at home and use good quality ingredients. Not necessarily made in Italy, but using Italian technology and made from Polish milk.
What has changed since Avallon came your way and how do you remember this transaction?
These types of transactions are not easy. Private companies in Poland are in many cases managed in a rather specific way. Knowing that information is power, there is therefore not much of it in many companies. From our perspective, what was definitely missing in our company was a system of controlling. When we entered the partnership, there were maybe three Excel licenses for the entire company, and the owners received data from the accountant; for example the cash balance on the account written down on a piece of paper and delivered daily. The overall result used to be announced at the end of each month. Additionally, there was no margin analysis either, everything was done rather intuitively. This situation may be good for owners but not for an acquiring body. It took us over a year to create some history and introduce controlling which majority of companies, especially funds, are used to. The fund must know what the margins on each assortment line are, what the cash flows look like, and it cannot be informed once, i.e. at the end of the month, but on an ongoing basis. The situation was perhaps a bit easier with us because our management team included Andrzej Stecko, a long-term production director who had been working for Ceko from the very beginning. So, concluding, it was a bit easier for us on the production side, but on the commercial and business side, it was not very easy, in fact.
What were the assumptions of the rebranding?
Building a brand is a difficult and long-term process. It is not an easy task, especially in the case of private equity funds, when the time horizon usually covers only 5 years ahead, and building a brand is a cost rather than an investment from the EBIDT perspective. Therefore, we are all the more pleased that Avallon trusted that we knew what we were doing and that it had taken such a risk with us. At that time, we conducted a scenario analysis (not necessarily based solely on calculations), thanks to which we identified potential development directions for us. As a result, we decided to settle more firmly in the retail segment, and to do this, we had to build a brand. Luckily, we succeeded. It is worth mentioning that there are not many such brands among cheese producers. In most cases, the name of the dairy is the brand. Thus, our project had two goals - one was to reach consumers, and the other was to build our position as an employer. Our team received this concept very warmly and they really identified with it. Therefore, Sery z Goliszewa has now become not only a consumer brand but also an employer brand.
How does the company work with its contractors?
We have three segments here. Starting with retail products - because we are not a big producer and due to the specificity of our brand, we are focused on the so-called traditional distribution, which does not mean that it is not modern. We concentrate mainly on supplying supermarkets and local chains and on working with distributors who reach them. We are also present in larger chains, but we are less visible, if at all, in discounters, which results from the scale of our production. We work with several large chains - Tesco, Carrefour, with which we cooperate directly, and with Auchan, where the cooperation is based on the distributor. Yet, as I have mentioned, we focus mainly on local stores, those "around the corner" ones, which, as we can see, now are also having their moment, while hypermarkets begin to lose their relevance. This is the situation concerning detail sales. Our unripened cheeses are mainly used in pizzerias and here we cooperate with the so-called food-service sector and this is the second segment. Finally, whey is a by-product received during the production of cheese, which we concentrate and a whole 100% of this concentrate is sent to a contractor in Germany who uses it for the production of medicines, baby food, etc. It is a very high-quality concentrate.
How has the market changed during the pandemic?
The period of pandemic can be divided into several stages. March was a great shock and surprise when gastronomy in Poland and Europe was closed practically overnight. This hit the food-service segment of our business a lot. Ours is also a highly seasonal business, especially important in summer, because pizza consumption increases during summer holidays. In addition to domestic sales, we also export to more holiday destination countries, such as Bulgaria or Hungary - generally the southern Europe. As the industry was taken by surprise, there was a lot of risk in terms of financial liquidity. Wholesalers began to hold back with purchases because they were not sure if they would be able to collect due payments from their customers. Fortunately, it turned out that to a large extent pizzerias operate on the basis of telephone orders and on sales with door delivery, and this segment, at least in Poland, has rebuilt as much. However, the holiday season did not resemble those from previous years. We had lost some export volume - other countries had more trouble with the pandemic than we did at that time. Due to the flight and transport restrictions, the demand for our product was zero in Bulgaria, for instance.
When it comes to retail sales, there was a panic in the initial phase – shop customer limits were introduced, assistant-serviced weighing stands were closed in many stores, so our sales suffered a lot. This situation hit us harder than it did to producers of packaged cheeses. After a few months, however, the situation slowly started to return to some sort of normality and today, paradoxically, when there are many more cases of coronavirus victims, the weighing stands function normally and customers are willing to buy from them. In the long term, we believe that COVID-19 will eventually pass and customer behaviour will revert to the pre-pandemic manner. On the other hand, the climate issues will be gaining importance all the time, especially in the European Union. So now the results may be slightly weaker, but ultimately the use of plastic will be reduced. Taking care to minimize the consumption of packaging and prevent food waste will be the leading trend.
So, was the closure of gastronomy a big shock for the company?
We must have it somewhere at the back of our head that in gastronomy there are already 130,000 people who have lost their jobs, and this number may even reach 200,000. Additionally, consumers have started to save money, so in general, spending on eating out may be on the decrease as the purchasing power gets weaker. The non-essential expenses are always cut first. As I have said, we are happy to order a pizza over the phone, but the question is: what will the summer holiday season look like? It is difficult to predict what it will be like. There are serious concerns that many restaurants will not reopen.
What does work in the plant look like during the social distance restrictions?
It is easier for the food industry where, due to the quality certificates that are always in force , the level of hygiene has always been at a very high level. Disinfection and high cleaning standards are our daily routine. Still, the pandemic caused the rules to be tightened even more. We have limited visits to the plant to a minimum, we have ensured no contact between people working on different shifts and in different departments if they do not have to cooperate with each other. Maintaining the continuity of production is a challenge, because people sometimes get sick or have to remain in quarantine. Such cases do happen, but this is not a scale that would pose a serious threat to the business continuity. Fortunately, these infections do not occur on the premises of the plant.
What does business development outside of Poland look like?
For years, we have been building the export of unripened cheeses to Romania. Together with the contractor, we have built a market there and it is in the top five of our clients when it comes to the size of the sales volume. For years, we have also been present in the Czech Republic and Slovakia where our Boryna brand is very well-recognized in retail. I have already mentioned our trade activities on the Hungarian and Bulgarian markets. We also have an interesting, narrow specialization - we export kosher products to Israel. They are prepared under the supervision of a rabbi who visits our factory regularly and who comes directly from Israel just for this purpose.
What are the challenges facing the company in the near future?
Our plans are ambitious. We have obtained the suitable certificate and next year we are planning to enter the market with a new offer of bio-products. The long-term strategy is to fill the production capacity that would allow us to take a stronger position in the retail market. We would also like to limit the number of mozzarella substitutes. We want to produce only 100% real mozzarella so that only best quality one can be used on pizzas.