- Company
- Kormotech LLC, Lviv. A family-owned company and Ukraine’s largest manufacturer of pet food
- Scale
- Production in Ukraine and Lithuania; sales in approximately 50 countries; more than 650 stock-keeping units (SKUs); turnover of €150 million (2023)
- Protagonist
- Rostyslav Vovk, Chief Executive Officer and co-owner
- Decision point
- Early 2025, after the first year of the new 2024-2028 strategy
- Key concepts
- Strategic responses to crisis; adaptive business model innovation; private label; entry into new markets
1. The business model before 2022
- Value proposition: a broad range of pet food (more than 650 SKUs), sold under the company’s own brands and produced under retailers’ own labels (private label).
- Customers and channels: approximately 70% of sales in Ukraine through large retail chains; the largest and most profitable export market was Belarus, where the company held about 10% of the market.
- Finance: rapid growth, but payment terms of 100-120 days demanded by retail chains created a permanent risk of cash shortfalls.
- Management: a vertical structure and five-year strategies. The 2018-2023 strategy targeted a turnover of €135 million and a place among the world’s top 50 producers. At the end of 2021, the company ranked 52nd-53rd globally.
2. The shock: February-March 2022
- Monthly turnover of UAH 200-250 million, but only UAH 1-2 million in cash; a monthly payroll of about UAH 25 million, due on 5 March.
- Loss of the Belarusian market: the company withdrew immediately, leaving approximately €4 million frozen.
- Factories were shut down on the first day for the safety of employees; more than 50 marketing staff were left without work.
- Management overload: within six days the top team itself had become the bottleneck in decision-making.
“My first thought was: the business is finished. Who needs pet food during a war?”
3. How the business model adapted
| Business model component | Before 2022 | After 2022 | Stage |
|---|---|---|---|
| Value proposition | 650+ SKUs | “Wartime assortment”: 90 SKUs (minimum) and 250 (optimistic scenario); later, brands tailored to each market | 2022 / 2024 |
| Customer segments | ≈ 70% Ukraine; Belarus as the key export market | Exit from Belarus; focus on Central and Eastern Europe (CEE); target of 70% exports, 60% as an interim step | 2022 / 2024 |
| Channels | Retail chains | Private label as a means of entering new markets; building own brands | 2024 |
| Key resources | Production in Ukraine and Lithuania | Ukrainian raw materials ≈ 80%; financial reserve; Lithuanian plant as the base of the international team | 2022-2024 |
| Key activities | Large-scale production of the full range | Short production runs based on scenarios; brand building abroad | 2022 / 2024 |
| Cost structure | Annual budgets | Monthly budgets; minimum cash balance of €1 million ≈ 1.5 months of payroll | 2022 |
| Management and organisation | Vertical hierarchy | Three autonomous teams, then a matrix structure; board of directors and world-class supervisors | 2022-2024 |
Stage 2022 - adaptation to the shock; stage 2024 - the new growth strategy.
4. Four strategic responses to crisis
| Response | Kormotech’s decisions |
|---|---|
| Retrenchment | Factories shut down; assortment reduced from 650+ to 90-250 SKUs; staff redeployed instead of dismissed |
| Persevering | The 2018-2023 strategy was not rewritten: the targets remained, but management moved to shorter cycles |
| Innovating | Autonomous teams; the Safe Pets of Ukraine project (a fund of more than $5 million, of which ≈ $1 million came from the company); localisation of raw materials |
| Exit | Immediate withdrawal from the Belarusian market despite the loss of ≈ €4 million |
5. Key figures
| Indicator | 2018-2023 strategy | Actual | 2024-2028 strategy |
|---|---|---|---|
| Turnover | €135 million | €150 million (2023) | €500 million |
| Global ranking | Top 50 | 56th (2023) | Top 30 |
| Sales structure | 70% Ukraine / 30% exports | ≈ 70 / 30 | 30 / 70 (interim 40 / 60) |
| Plan fulfilment | - | 2022: growth of ≈ 10-15% | 2024: 89-92% of plan |
6. The manager’s voice
“We decided not to scale back. The strategy stays. We are simply playing it in survival mode now.”
“We thought: we are strong in Ukraine, so we will come to Romania, say "we are Kormotech", and they will put us on supermarket shelves. It did not work. And that is fine.”
“We no longer simply sell pet food. We build brands. And that means different KPIs.”
7. The 2025 dilemma
The first year of the new strategy showed that exports were growing more slowly than planned, while overall results were once again sustained by the Ukrainian market, where the Optimeal brand gained 13% of the premium category. Ahead of the strategy session, Vovk is considering three options:
| Option | Description |
|---|---|
| A. Stay the course | Keep the targets of 70% exports and €500 million; invest in brands in each CEE market |
| B. Adjust | Accept 60/40 as the new norm; enter new markets through private label first and build brands later |
| C. Strengthen the base | Reinforce the position in Ukraine (premium segment) and develop exports more slowly and selectively |
8. Discussion questions
- Which blocks of Kormotech’s business model changed in 2022, and which changed with the new 2024 strategy? How does the logic of these two waves of change differ?
- Which type of business model innovation (Foss & Saebi, 2017) describes each wave of change?
- How did the company combine retrenchment, persevering and innovating? Why did this combination change over time?
- Why was the company’s success in Ukraine not automatically repeated in Romania? Which elements of a business model cannot be transferred between markets?
- Which option (A, B or C) would you recommend to Vovk? How would it affect the company’s costs, revenues and partners?
Sources: in-depth interview with R. Vovk; Kyryliuk, M. V. Figures are reported as stated by the respondent as of 2024-2025.