Under continuous change, it’s the customer who creates the future
Conversation with Armen Papazjan
The pandemic triggered many changes in consumer trends and pushed the FMCG sector to a major reconstruction. How to effectively meet customer expectations then? Interview with Armen Papazjan, CEO and Vice President of the Management Board of Brand Distribution Group – an international distributor of FMCG products operating in 100 markets.
28 years of experience speaks for itself. Please, tell me about the most important achievements of the group.
We are a distributor of fast-moving consumer goods available in retail chains, wholesalers and in other stores around the world. We have come a long and interesting way – we started as a family business founded by Angelika and Wiktor Sawosz. I think that the very fact of reaching the global player’s status is the essence of our success.
Brand Distribution Group has opened branches in Germany, Singapore, Spain, Great Britain, we are opening an office in the USA soon. In recent months, we have expanded our reach to new markets, including African countries, Peru, Chile, the Philippines and Arab markets, where we have acquired many new contractors.
In addition to being present in key global markets, the important part of the strategy was our ability to adapt the offer to the diverse needs of consumers and market requirements. These are specific to each geographical region. This is our strength that determined our presence in 100 countries.
Dynamic expansion would not be possible without a well-thought-out assortment strategy. Introducing distribution brands to the offer was an equally important development factor – this is a significant competitive advantage itself. We also wanted to educate and build a new quality. When we launched the Triumf and Voll brands (both free from harmful substances), the ecological trend that is so strong today was not a thing back then. Meanwhile today, the choice between what’s effective and what’s safe for health and the environment is not a necessity. We also complement our portfolio with innovative food products, e.g. from the superfoods or functional food categories. We are glad that we could have contributed to it and that these past business decisions rank us today among valued and reliable distributors.
How did you deal with the pandemics and numerous constraints? Was this the time difficult to prepare for?
In 2021, the entire world economy changed significantly, and the market became more competitive. However, we have been operating in international trade for many years, we have experienced many shocks and we are used to operating in a dynamic environment. Like others, we faced challenges we had not experienced so far (lower consumer spending, temporary drop in production, shortages, longer order times, drop in margins, increases in prices of transportation and raw materials), which resulted in the increase of our fixed costs. This prompted us to make new management decisions. Early identification of disturbing market signals, quick response, as well as the ability to create and implement alternative scenarios for operating in borderline situations were crucial for us. We increased the pace, reorganised the processes to maintain their continuity and to guarantee a diversified offer and security for customers throughout the entire supply chain. Of course, like everyone else, we switched to remote working. We observe that companies that were flexible in managing risk coped better with the crisis in the first period of the pandemic.
How did these changes affect your plans for 2022 and beyond?
Society and business have learned to live and work effectively in new conditions. The situation on the market is changing dynamically, as are the priorities and needs of our clients, and it’s them who determine our strategic goals. It is the customer who decides how we will change! We have started the process of group transformation, which is based on three main pillars: team development and its competences, the omnichannel idea in B2B distribution and further expansion on foreign markets. We cheer to our foreign subsidiary BD Iberia, which is intensively growing its team and is developing with impetus. We are planning further investments, and we are expanding the assortment offer.
Development is key. Is innovation one of the most important requirements today to remain competitive on the FMCG market?
Many famous brands underwent an identity crisis during the pandemics. Having the perfect product is not enough, success is determined by understanding how and why consumer expectations and behaviours change. The battlefield for customer interest has shifted from the point of sales to a variety of learning points. The need to personalise products and ensure the right experience at every stage is now as important as the functional features of the product. After all, innovation does not only concern the product itself – it also includes, for example, packaging, recipes, modernity, and effective logistics. Our contractors are looking for attractive brands that build real consumer commitment through their authenticity and elements of social responsibility.
How to meet the ever-growing expectations of trading partners on the international arena?
We operate on a highly competitive market and, apart from the products, we offer a comprehensive goods distribution service, transaction security and the continuity of logistics processes from the producer to the customer. By reaching manufacturers directly, we offer them access to international retail chains, comprehensive export consulting, outsourcing of sales and marketing forces, and full logistics chain service. Everything in one place.
A modern business model is …
First of all, it’s the one focused on knowing the customer’s needs and solving their problems. Modern also means the brave, the one that does not copy the solutions of others but looks for inspiration. In the open innovation model, the client is involved in the creation of ideas and services, and actively participates in the development processes. This allows for a high level of individualisation and personalisation of the offer. We are supported here by reliable data analysis (big data), on the basis of which phenomena such as “as a service” models (where basically everything can be a service) or the “internet of things” take real shape. Business engineering integrated with the customer and based on digitisation opens new, exciting development opportunities for enterprises.
The wide scope of distribution is also an important advantage of the Brand Distribution Group.
Our clients are primarily international retail chains, e-shops and local distributors around the world (often from very exotic destinations), who are looking for high-quality products of well-known brands produced in the USA and in Europe. A wide range and access to exotic markets is our strength. We purchase selected, unique goods from the most distant places in the world, often regional products manufactured according to traditional recipes. Many of our new products come from Poland, where the cost of production remains at a competitive level, while maintaining the highest quality standards. This allows us to provide contractors with a favourable price-quality ratio. The range of our activity allows us also to position excellent domestic food products as delicacies or even exotic products on distant markets.
Comprehensive commercial, marketing and logistics solutions for FMCG would not be possible without a good, professional team …
I believe that the driving force behind every company are people who give it their commitment, skills, and time. About 200 people work for the Brand Distribution Group. We are constantly hiring employees for new positions – this was the case even in the most difficult Covid-19 time. The success in our industry is largely determined by a qualified team of traders and logistics specialists – thus, we are looking for warehouse employees, assistants and export sales specialists, buyers, transport, and logistics specialists.
We also care about the constant development of employees, and we invest in modern tools. Recently we have brought together teams of people who have a similar approach to their duties and who speak a common language. This not only significantly increased the efficiency, but also positively influenced the energy of individual teams.
The increasingly visible crisis became a springboard for changes for our team and triggered a process of incredible transformation. We understand that it is the customer who sets the direction we follow. We reorganised our work to respond faster and better to the needs of our contractors. We diversify sales channels and use our scale of operations even better to ensure the company’s stable development. We have also embedded our business in a digital reality, and we benefit from it largely. We also managed to make the necessary management changes: move from micro-management to modelling. Therefore, we are entering 2022 definitely stronger – both in business-wise and as a team.
The interview was published in Food from Poland magazine (No. 38/2022), edition for ISM Cologne, Gulfood oraz ISM Japan.