After 8 years of expansion, BlitzInform expands from publishing business to packaging and labeling
the early 1990s was to help educate Ukraine’s entrepreneurs. Now, eight years later, the company aims to assist businessmen in other ways, too.
BlitzInform made its first profits in 1992 when it launched Biznes – a Russian-language weekly business journal.
“The goal was to provide Ukraine’s entrepreneurs with a practical source of information and instruction for making money,” said Volodymyr Chepovyy, BlitzInform vice president.
The magazine was quickly embraced by the country’s entrepreneurs as a “business cookbook” of sorts, and it’s advertising revenues began to inch up.
Two years later, much of the profits were pumped into BlitzPrint – a printing shop equipped with high-tech color printers. Advertisements in Biznes soon became some of the sharpest and most expensive in Kyiv.
In 1995, BlitzInform invested profits into another publication – Natali, a Russian-language women’s magazine full of quality color photos and ads. It soon became evident that Ukrainian readers were choosing informative, colorful magazines over the Soviet-style, tabloid publications, and profits reflected this preference.
Meanwhile, company strategists recognized two things: First, that local products needed to drop the staid Soviet look if they were to succeed; and second, slick foreign products needed to be re-labeled so Ukrainians could read them.
So in 1997-98, the company bought more new equipment and created BlitzPak and BlitzFlex, sister factories designed to package, wrap and label the country’s products.
“It all started with Biznes; the factories are the new direction,” Chopovyy said.
The results: BlitzInform made more than $10 million in profits in 1999. It’s now ranked the country’s 50th most profitable company, according to Invest Gazeta’s Top 100 annual ranking. It contributed $10 million in taxes from its $61 million in production volume in 1999.
According to the SC DOM agency, a Kyiv-based market research firm, Biznes sells around $8 million in ads a year, making it the country’s most profitable publication. Natali is not far behind, selling $5 million annually for third place behind second-place Fakty ($5.8 million).
The factories, which received millions in investments, also have been successful.
“The factories are working at on a high tempo today,” Chopovyy said. “They are paying off big.”
BlitzPrint not only creates the eye-catching ads in Biznes, it also prints many of the country’s color magazines, such as Komputernoye Obozrenye and Salon, Chopovyy said.
Meanwhile, BlitzPak and BlitzFlex have built up a prestigious and broad clientele base. Today, they package and label multinational brand names sold in Ukraine, such as Nescafe, Pepsi, Procter & Gamble and local products, such as Chumak, Prima, Slavutych and Obolon, he said.
Ironically, however, not all of the BlitzInform’s publications are printed on company press machines. The black-and-white pages of Biznes are printed at state printing giant Press Ukraina, and Natali is printed in Finland.
It’s a matter of principle and business strategy, Chopovyy says.
When the company takes up a project, it strives to do the best, or not do it at all, he said. And if it takes outsourcing or importing of foreign technology to get the highest quality, then so be it.
The company recently opened 28 new affiliate offices responsible for distribution, sales and customer support.
“Five years ago, we had around 300 workers,” Chopovyy said. “Today, we have almost 4,000 employees with most of them working at the factories and in the regions.”
The expansion required more than new office space. It demanded a new approach to employees that Chopovyy said includes higher salaries, Western-style corporate management and training courses.
“If we want to be leaders in the market, we need to pay our workers at least a bit more than our competition,” he said. “They are our investment.”
Chopovyy would not reveal the average starting salary, other than to say that it was higher than his competitors.
It sounds like basic textbook business strategy: Invest in a hopeful venture, execute a good business plan, and invest profits.
It’s a strategy, however, that is highly dependent on access to capital and credits, both of which are hard to come by in a country like Ukraine, Chopovyy said.
Unlike many Ukrainian companies, BlitzInform has received enough capital and credit. Over the last eight years, the company has borrowed about $40 million from local banks, including Aval, Ukrsymbank and Raiffiensen Bank Ukraine.
“We take loans, and we pay them back on time,” Chopovyy said. “We have a very good credit history.”
Serhy Kaliberov, the head of Aval’s corporate banking department, confirmed the good relationship. He said Aval has lent BlitzInform about $4.5 million in one-year loans since 1997 at a rate of about 16 percent, which is significantly lower than the 40 percent interest that the average Ukrainian would be offered.
Chopovyy would not reveal the owners of BlitzInform, other than to say that there are both private and corporate investors, but no foreign capital in the company.
He did, however, point to BlitzInform honorary president and parliament Deputy Serhy Melnichuk as a central figure in the company.
“This is all really possible because of the leadership of [Melnichuk],” he said. “The rest of us are really just helping to realize his plans by executing them.”
Chopovyy admitted that Melnichuk’s influence in parliament helps the company, but not directly, he stressed.
“He went to parliament to improve business conditions in the country as a whole,” Chopovyy said.
When you help all entrepreneurs in the country succeed and get rich, our business and clientele base will continue to increase. Only then will our salaries really increase.”
