Czech Business Weekly, Czech Republic
July 13 2005

>From perestroika to sweet success

We approached sweet shops and asked them to offer pieces of the cake
to their customers as free samples

As a young couple living in Moscow, Marianna Kchibovskaya and Oleg
Kchibovskiy visited Prague. After the beginning of perestroika – the
series of economic, social and political reforms spearheaded by
Soviet President Mikhail Gorbachev in the late 1980s – the university
graduates, struggling to find employment, decided to move here.

`The situation in Russia was really bad then. Even if you had a job,
the companies did not have the money to pay wages,’ Kchibovskaya
remembers.

Arriving in 1996, Kchibovskiy promptly founded a company, Vizard
s.r.o., with the idea that he would sell cars, as he had done in
Russia. Kchibovskaya, who did not speak Czech, stayed home to take
care of the family and enjoyed throwing dinner parties.

`My husband was meeting a lot of people thanks to his job, and when
we had them over I always tried to cook some specialities I knew from
Russia for them,’ Kchibovskaya says.

Kchibovskiy’s car business was not doing well, but luckily, one of
their many dinner guests was then-owner of the Barracuda restaurant
on Krymská street in Vršovice. He was so impressed with
Kchibovskaya’s medovník, or honey cake, which was based on a family
recipe, that he put it on the Barracuda menu.

The honey cakes were soon in demand at other restaurants, and
Kchibovskaya ended up baking as many as 100 each month from her
kitchen. `We approached sweet shops and asked them to offer pieces of
the cake to their customers as free samples,’ she says. `We gave the
cakes to the shops for free and said they did not have to pay for
them if they didn’t sell.’ The gambit paid off and won them converts.

In 1998 the couple rented an old bakery in Prague near the village of
Újezd nad lesy for about Kè 5,000 (e 168) per month. It took some
time to set up the premises, which were being used as storage and
work space, and to convince the neighbors to shop in the small
grocery they opened alongside the bakery. `There were days when I
sold just one lighter,’ Kchibovskaya says. `We worked 24 hours a day,
but waiting for customers in the shop was the hardest thing I ever
experienced.’

But the Vizard honey cake bakery business grew until in 2000 the
company – the two owners and three employees – decided to expand
their distribution network to include the entire country.

Vizard has since moved to Modøany and has 40 employees and yearly
revenues of Kè 50 million. Its bakery can produce about 100 cakes per
hour. The company still sells most of its cakes in the Czech
Republic, primarily in Prague, but the distribution network also
includes Slovakia, Poland, Slovenia, Austria and Germany. The company
is also trying to break into the Belgian and Canadian markets.

But the competition is getting tougher for Vizard on its home field,
where the number of companies producing honey cakes is on the rise.

A company based in Frýdek Místek, north Moravia, Miko International
s.r.o., started producing Armenian honey cakes in 2003, also based on
a family recipe. `The demand is higher than we can produce and
currently we are moving to new premises, where hundreds of cakes
daily can be produced,’ Miko representative Georg Avetysjan says.

Several weeks ago, Prague-based confectioner Smetanová Cukrárna
started supplying Carrefour with its own honey cake product.

Despite the competition, Kchibovskaya remains confident in the
quality of Vizard’s homemade cake. `What we count on are top-shelf
ingredients, consistent quality and taste,’ she says. `We are not
afraid of the competition,’ she adds.

In 2003 Vizard registered a patent for its honey cake and the Vizard
logo, which is now advertised in restaurants. `We tried to register
the license for the recipe and the label for the name medovník but
were rejected,’ Kchibovskaya says.

She and her husband, who takes care of the financial side of the
company, have been considering introducing new products, but the
bakery in Modøany is not large enough to increase production.

She says the company is looking for a space larger than 500 square
meters. Vizard recently requested a Kè 12 million bank loan but was
turned down.

`Instead of [Kè] 12 million they would give us only six,’
Kchibovskaya says, adding that Czech banks do not offer enough
support to entrepreneurs. `To put the rest together will take us a
year or two,’ she says. But Kchibovskaya has her eye on expansion. `I
have a number of traditional recipes I want to try, like Russian
suflé cake or even homemade bread.’

Sector: Confectionery
Ownership: Oleg Kchibovskiy, Marianna Kchibovskaya
Type of company: Limited liability
Founded: 1996, started honey cake production in 1998
Number of employees: 40
Main competitors: MIKO International, Gajane s.r.o., Smetanová
cukrárna a.s.
The elevator pitch:
The company emphasizes the importance of using the highest-quality
ingredients to create the true, characteristic taste of homemade
honey cake. Maintaining an open attitude toward customers and
consistently checking product quality has helped the company expand
its distribution network from the Czech capital to throughout the
region.