Six years ago, a new player appeared in the Russian food technology market – businessman Artur Zeleny, who was drawn to a healthy lifestyle, set up a company to deliver ready-to-eat portions of food called the Performance Group. In a few years, from a service created for personal needs and orders to the founder and his friends, the company became the largest player in the market with shareholders represented by Sberbank and VK. “Why do people stop cooking at home and what role does physiology play in it?” Arthur Zeleny said in an interview with Kompaniya magazine.
The pandemic has had a tremendous impact on your business – the number of orders from the Performance Group has increased 2.5 times and the company itself has become the leader in the country in terms of revenue and production. How do you explain that?
“When people are locked in the house for a long time, food delivery is a way to experience life ‘as before’ at least for a while. For a while, people cooked at home, not without pleasure, but after a month they got tired of homemade borscht and cutlets, they wanted variety and delivery started to grow very fast in this wave. The pandemic has really accelerated the development of food technology, making it common for people to use the services of adders or services like ours. And not only in our country.
Yes, but during the pandemic, people’s incomes have dropped to an all-time low. Why did this not hinder the development of the department?
– Ready portions are food for specific tasks. Some people lose weight while others gain weight. Some people are lactose intolerant, others just like to eat well. For lovers of a healthy lifestyle, the right food is generally the only thing left with the onset of the pandemic – the gyms are closed, you will not go out much. In addition, a huge number of people basically do not cook at home – if you live alone, then it is easier to order food. In a word, the motivation for ordering can be different. In every big city, there are those whose incomes have dropped, but there are also people whose lives have changed little with the transition to distance work.
There is a view that it is the pandemic that drives the tradition. Once done, will the incentive to order at home disappear?
– I would say it is not driving, but driving. It gave acceleration to all “remote” services. Anyone, absolutely. Incredible development for immediate food delivery services. See what’s happening in Ozon and Wildberries. Of course, now is another lockdown, but, believe me, the ability to order anything remotely has been with us for a long time now.
In my business, for example, there is no summer seasonal recession for two consecutive years, because if a customer leaves Moscow for Dhaka, we will bring the order there for free and he knows it. Probably, physiologists would say that the new skill is firmly entrenched somewhere at the level of the cerebral cortex. But I do not know, I’m not a physiologist.
In a recent interview you said that in the next two or three years you expect to turn the Performance Group into the largest ready-to-eat company in the world. Does this goal seem very ambitious to you?
“Ambitious, yes, but not too much. In London, for example, there are similar services, but they are small. The situation is the same in other cities. As you can see, the market situation for growth today is more than complementary. If there is no explosive growth, then you are doing something wrong.
Of course, not everything is so rosy: you have to understand well the mentality of the local customer, some traditions, what is delicious and what is not. But this is a marketing issue. The launch of the service in major cities of the world may, after some time, make the company the largest in its segment and this, in turn, strengthens its position in the market of products, equipment and advertising already worldwide.
On the one hand, the Russian market is growing quite fast. But this pace is not enough to become a really big company on a global scale in a few years, simply because our market is small. Therefore, Russian projects should try to go to other countries. Of course, not everyone will succeed, but that’s no reason to do nothing.
Politically, maybe now is not the best time for a company from Russia to enter Europe or the US?
– I do not think. Foodtech is inherently apolitical. In addition, a company operating in, say, Germany pays taxes there and employs locals. So, from a political or legal point of view, I do not see any threats for startups with Russian roots.
You said that the Russian market is small. How do you see it in the future three to five years?
Last year, the market for ready-to-eat diets and cooking kits amounted to 11 billion rubles. This year it will probably be 15-16 billion. The growth of companies is no longer as fast as it was two or three years ago. To grow faster than others, you need marketing expenses at the level of 400-700 million rubles a year. We need money to build factories, logistics and so on. Not all services can afford it, especially if the company has not yet made a profit.
I think that in the next three to five years this market will reach a turnover of 30-35 billion rubles. I am very careful with forecasts, because macroeconomic factors can not be calculated in advance. And, of course, no one included crisis situations like COVID-19 in the economic model.
In 2019, your company entered into a joint venture between Sberbank and VK (former Mail.ru Group). What gave you access to their ecosystem and what did you lose?
– I thought about a year before I agreed to sell a small package. Since the company was founded in 2015, I have become accustomed to making all the decisions on my own and being responsible for them. Immediately, it seemed to me that someone else would pull the blanket over him, but now it is obvious that this was the right decision.
Within the ecosystem, there are more opportunities for growth. Now I am not talking so much about funding, but about know-how and exchange of experiences. Ecosystem companies are now building many bridges between them, allowing the customer to move from service to service smoothly, without spending any effort. It’s not just about implementing SberID, but about many small but important things that work toward a common idea.
These are the first steps that I think in the future will allow each of the six dozen companies to compete successfully in the world world leaders. The customer chooses what he thinks is best. That’s when Russian ecosystem companies start hiring foreign service customers, then we can talk about a very serious success. This is a job for the coming years.
What is the next priority for the Performance Group: regional expansion with existing brands or further segmentation of the public?
– Both directions. National expansion is our strategic goal. Most millionaires have similar services that “teach” the market, saving us from having to do this job. In big cities, people’s behavior is generally similar and the problems are the same. Some of these problems can be solved by our services.
At the same time, the market for ready-made diets is growing at a rate of 40-60% per year. They connect a new audience that no longer needs to lose weight or gain weight, their goal is something else. Today, I see many such audiences that could become the driving force behind market growth in three to five years. Of course, you have to run the service for them too, otherwise someone else will.
Many large retail chains are now opening large ready-to-eat food productions. Are you not afraid that it will affect you negatively?
– You know, in the 90’s there was such a term – “foreign cars”. Any car imported from abroad seemed to be a marvel of technology. But then everyone realized that the new Mercedes S and the ten-year-old Renault are still different cars, albeit foreign cars. The situation is similar in our market. The more ready-made foods are produced, the faster people will get used to buying them. And then they will understand where the food is healthy and where not so much.