Malý Gazda – the transformation of a family-run mini dairy company to a premium dairy manufacturer with international ambitions
The tradition of yoghurt production has deep roots in Central Europe. After all, Czechoslovakia held global leadership in fruit yoghurt production - during the First Republic, yoghurt was produced by Radlická mlékárna in Prague and as a result of its innovativeness and excellent taste, it was exported to 14 countries in Europe.
Czechoslovakia thus proved the innovative quality of its food industry. Over time, unfortunately, the traditional yoghurt production process had been abandoned in pursuit of cost reduction, which led to compromises in quality. However, last year's volume of 1.2 million yoghurts produced by Malý Gazda indicates a new trend - demand for quality and healthy products is increasing despite the accompanying growth in production costs. The well-known saying "You are what you eat" defines present customer behaviour. In cooperation with a professional food industry investor, we selected Malý Gazda for our investment platform, aiming to bring new, yet traditional, products to as many customers as possible.
The first time I met Zuzana and Jozef Ševc, the founders of Malý Gazda, was last year in Banská Bystrica - with excitement in their voices, they explained to me why they had decided to leave their jobs in 2013 (Zuzana worked in financial services, Jozef at the police) and dedicate all of their time to traditional dairy products instead. Their conviction for traditionally produced dairy products from fresh milk maturing in glass jars with no quality compromises immediately caught my attention. The high sales volume of yoghurts with no marketing or promotion activities was a clear sign that an attractive, yet not saturated, segment was emerging on the market.
Malý Gazda is nowadays a well-established company with a 7-year history on the Slovak market with production based in Prešov. They produce yoghurts from fresh cow's milk packed in glass jars, where each yoghurt matures, honouring the traditional method. The reason is simple - an unmistakable taste with minimum loss of nutritional value and naturally firm consistency resembling home-made yoghurts.
The production process is undoubtedly unique for today's food industry standards - cow's milk delivered every day from local farms is tested for quality and pasteurized to destroy potentially harmful organisms. High quality yoghurt cultures from a Danish supplier are added and the mixture is filled directly into glass jars, where it ferments at 37 - 40 degrees Celsius. The desired bacteria "consume" the lactose and when the yoghurt reaches sufficient acidity and consistency, it is cooled, sealed and stored in the refrigerator at 8 degrees Celsius. This process ensures natural preservation without any stabilizers or added preservatives.
Yoghurts made in this way have undisputed and scientifically proven benefits. They are one of the most effective sources of easily absorbable calcium, helping to prevent osteoporosis, colon cancer and cardiovascular diseases. They are a source of beneficial intestinal bacteria, which help maintain balance in the digestive tract and strengthen the immune system. They are also easily digestible, even for people sensitive to lactose - with the lactose being processed by beneficial bacteria.
Little by little, yoghurts by Malý Gazda were getting more fans and they can be currently found in over 300 stores in Slovakia and Hungary. Due to the increasing popularity of healthy and local dairy products from cow's milk in eco-friendly packaging, the company has established a stable position in supermarket chains, and you can find their products in Billa, Kaufland, Tesco, Terno, Kraj, Fresh and many others. A pleasant surprise was to find Malý Gazda at breakfast buffets in boutique hotels and restaurants.
Market research by MI agency estimates the size of the European yoghurt market at approx. EUR 30 billion with annual growth of 3 - 4 % by 2022. Growth is particularly strong in Central and Eastern Europe - average European consumption of dairy is 19 kg per capita, while in Slovakia it is 17.3 kg of which 12 kg are just yoghurts. According to our internal analysis, the estimated value of the market in Slovakia and Czech Republic is somewhere between EUR 350 - 400 million per year, while the premium segment represents approximately 5 - 10 % of the total volume and displays a constantly growing trend. MI suggests that the premium product market will have a key role in the future, as evidenced by the success of traditional dairy producers abroad.
In order to fully exploit the market's potential and professionalize its operation for further development, the founders of Malý Gazda approached us at the end of 2018 aiming to receive a growth investment to launch new product lines with the vision of domestic as well as international expansion. Since the beginning of this year, we have found the company's first investors on the Crowdberry platform. In May, we signed investment documentation that allowed the company to order a new production line and thermization machine, complete the development of new products and prepare marketing and media campaigns. The refreshed look of improved traditional yoghurts, along with new product lines will appear on store shelves of all major retailers in September. This was also made possible thanks to the Crowdberry investors who became the company's equity holders. Czech customers can expect Malý Gazda in 2020.
Malý Gazda represents a typical example of a small family-run business that can exceed its limitations by raising external capital and achieve significant growth through innovation and professionalization of internal processes. The added value thus lies not only in the improved profitability, which Malý Gazda increased by 76 % this year, but also in the organic growth of sales, estimated at approximately 10 % year-on-year, without the need for far-reaching marketing efforts. The trend of healthy nutrition and high-quality food is just at its beginning. With the help of investors and the professional team supporting Malý Gazda, the company is set to surpass its past achievements in Slovakia and abroad, keeping the nearly 100-year-long tradition of Czechoslovak dairy production alive.