TBY talks to Arman Aldabergenov, General Director of Kazakhstan and Central Asia of Lactalis, on the success of the company in the country, challenges in the agriculture sector, and expectations for 2017.

 Arman Aldabergenov
Arman Aldabergenov is General Director of Kazakhstan and Central Asia for Lactalis. He has over 20 years' experience in the business.

How would you assess the success of your operations in the country?

In 2005, Lactalis acquired Food Master, a local company that showed signs of success and progress. After 12 years, we have seen significant growth of Lactalis in Kazakhstan in terms of turnover and business expansion. Today, Lactalis has over one-third of the market share both in terms of volume and in terms of value, and our target is to increase it by innovation and new products. We have identified several factors for our success. The first is being a French company with global expertise in production and thus operating according to global standards in Kazakhstan. Secondly, we have 16 different quality control steps in our factories, which ensure the quality of our products produced in Kazakhstan. Another is our leading position in the market and our large distribution network covering the entire country, ensuring our products are available everywhere. Today, we have a professional team and 1,860 employees in Lactalis Kazakhstan. Another factor of our success is our presence across all segments and categories. We have a range of 200 SKUs across different price segments.

What is the importance of Kazakhstan in the global Lactalis portfolio?

Lactalis has in its portfolio the President brand, which is well known worldwide and sold in over 145 different countries. Kazakhstan is among the top-10 countries globally in terms of sales of this brand. This is a matter of great importance as Kazakhstan has a population of 17 million. Despite the different preferences of consumers, Lactalis is represented in every family in Kazakhstan. Even if someone does not drink Ultra Fresh Lactalis, they have President Butter or President Cheese in their fridges. We are in 100% of the fridges of every family in Kazakhstan.

Where do you want the company to be in five years' time?

We have ambitions to grow our business in the country; one-third of the market share is not much and we have the potential to grow and understand where this potential lies. It takes time to grow the company organically, from organizational growth and growth of equity, people, and portfolio with a careful pricing strategy. No one could have predicted two years ago that the devaluation would come at the rate of 20-25%, reaching a cumulative devaluation of 86% over two years. The key in 2016 was that we gained experience of doing business in a difficult economic environment. We did not lose in volume and even grew by almost 2% in terms of volume in 2016 versus 2015, though due to devaluation we lost in terms of value. Now we are on a positive track and will reach pre-crisis levels, which is great. I believe we can go beyond pre-crisis levels.

What is the status of the agriculture sector in Kazakhstan and what challenges need to be overcome?

There are still many challenges; however, it is important that the government and president are ready to push the development of the agriculture sector. There is a new program that the Minister of Agriculture will elaborate on soon; for me this is critical. It is a matter of great importance and is why Lactalis continues to invest where we see ongoing support from the government. The government's financial support with subsidies, which we receive on an annual basis, is significant. There is a great future in Kazakhstan for Lactalis. We have only one-third of the market share and envision growing by perhaps 10% in the next five years.

What are your expectations for 2017?

If the situation is stable with no devaluation, then I expect volume growth and cash flow growth. I am positive about the overall situation within the country; I do not expect a large jump but the situation will be stable and things will gradually start to improve. Our government predicted 2% GDP growth in GDP so the inflation rate is 7%, which I believe is great.