Interviews · 6min read
Interview with Yani Dragov from Smart Organic
Learn about competitiveness, risks and challenges in the organic ingredients market.
About Smart Organic
Since its founding in 2009, Smart Organic has established itself as one of the leading producers and distributors of organic food in Europe. Smart Organic’s products are currently available in over 60 countries around the globe.
About Yani Dragov
Yani Dragov is the Founder and CEO of Smart Organic as well as the CEO of the organic food brand Roo Brands. Prior to that, Yani worked as an Asset Manager for one of Bulgaria's leading financial groups. He holds a Master of Science in Economics from Ludwig-Maximilians-Universität München.
Smart Organic was founded on the concept of making healthy food affordable for everyone. What efforts are you undertaking to maximise the overall quality and affordability of your portfolio?
We are focused on getting as close to the source of our raw materials as possible and are highly committed to ensuring consistency in the quality of our products. We also try to maximise our production efficiency. We automate where possible and look for long-term solutions. To give you an example, we recently invested in solar panels which will reduce our costs in the long-term. Finally, we do what we can to make our products more affordable.
What measures do you have in place to ensure that your ingredients and products meet the highest quality standards, even at lower price points?
We have a strict monitoring plan, particularly regarding raw materials from the European Union. This includes extensive laboratory analyses to ensure our products' organic integrity. We also implemented extra measures for some products to check that they really do not contain heavy metals or gluten. As we have grown significantly over the last few years, which has resulted in larger production volumes overall, we are now able to conduct these quality checks without affecting the cost of our products.
As a B2B organic ingredient supplier, how do you typically negotiate pricing and payment terms with your customers?
We mitigate our credit risk with credit insurance for each client. If our insurance company grants our clients a credit limit, we offer them 30-day payment terms. Clients who do not receive a credit limit have to pay in advance.
What are some of the biggest challenges you face within the food supply chain? And how is your team working to overcome these?
Our biggest challenges at the moment are in shipping. Shipping prices are skyrocketing because of the global shortages. We have even experienced shipments being delivered to the wrong ports due to supply chain blockages, which resulted in further delays. We have no control over the rising freight costs, so we are forced to raise the prices we charge our clients if we cannot carry the extra costs.
To compensate for the delays on the containers, we are keeping as much stock on hand as we can. We even increased our credit line and are currently building a second warehouse to facilitate this. We are, of course, hoping things will settle down, but as entrepreneurs, we will continue to adapt and do the best we can despite the circumstances.
Looking at ingredient and food procurement of tomorrow, what top trends do you predict will dictate food industry developments in upcoming years?
Vertical integration is likely to increase. I am seeing more and more companies processing their own crops in the industry. In fact, this is happening in both directions—growers are starting to process their ingredients, and processors are taking up growing (or collaborating with growers) in the long term. I believe this is a good thing because the consumer will benefit from that in the end. Vertical integration allows for more predictability as well as more control over the supply and prices.
There is also a lack of consistent information and transparency in the organic market. Unlike conventional products, we lack a commodity exchange in which everyone can access the current prices and bid on products. The organic market is still plagued by significant discrepancies. Some buy products at a high price while others sell them at low prices due to the unequal distribution of information. I firmly believe this needs to be addressed in the coming years.
Learn more on smartorganic.com