Mabius founder Ivan Sidorok gave an interview on the TV Rain (Dozhd) program “Money with Lev Parkhomenko”. Sidorok, who is also the managing partner of Nizhny Novgorod Fats & Oils Group (NMGK), talked about how Russians’ food tastes have evolved since Soviet times, and the new business model for investing food products. Sidorok is also the board chair of the international non-profit organization Enactus Russia, a global student entrepreneurship competition. Here are some highlights from the 40-minute interview.
Parkhomenko: Why did you decide do it [create Mabius, Ed.], when everything was going so well with mayonnaise, oil, and soap?
Sidorok: Yes. If we talk about our products that we are mainly currently producing, the situation on the market is as follows: there are 3-4 manufacturers, which plus or minus have the same market share. Accordingly, they aren’t big enough to buy each other, and the lack of size causes price dumping, and then the competitors also slash prices.
Parkhomenko: So there is some kind of stalemate?
Sidorok: A stalemate of sorts, in the classic market sense that it is one of the least favorable situations for company growth.
Sidorok: There are many demographics that want to buy customized, tailored-to-taste products. And the size of this ‘long tail’ business model, from the viewpoint circulation, could be comparable to mainstream.
Parkhomenko: In other words, along with ordinary products that we consume every day?
Sidorok: Yes, that is what I’m saying? For me, just like for companies, the mainstream market is 100% of my revenue, and I understand that I can at least double ‘long tail’ revenues.
Parkhomenko: Can we talk more about traditional products, but maybe with some new technology? I have a friend who quite successfully sells pies, for example. On the one hand, they are just pies, and on the other, they are clearly beating out their competitors in terms of quality. This fits, so to speak, in this story?
Sidorok: Of course. For us, the criteria are economic efficiency and product margins. If we see that the product (it doesn’t matter which one) is highly innovative and that it sells well, we provide the infrastructure for the company. We have our own buying department that can solve the problem of buying raw materials at a low cost since we buy in bulk. We have our own logistics service, we have 70,000 retail points. In other words, without us, in order for startups to reach a federal level, they would need to find a lot of…
Parkhomenko: So you’re a rocket booster, roughly speaking?
Sidorok: Absolutely, yes.
Sidorok: Russia’s problem isn’t that there aren’t people able to generate brilliant ideas, there are actually a lot. The problem is that Russia hasn’t created the infrastructure, technology, and human capital for entrepreneurs to easily do business and develop their ideas here.
You can watch the video (in Russian) – here.