Building a sustainable lifestyle and business in Croatia

By Claire Ricklefs

Biovega shop front

The EBRD is helping build sustainable lifestyles and successful businesses in Croatia.

Starting a business in war torn ex-Yugoslavia requires real vision. A husband and wife team from Zagreb certainly had the required stamina and personal dedication when they started their organic food company, Biovega in the early 1990s.

Biovega's rise to prominence

“We wanted to create something positive at a time of crisis and great tragedy,” says General Manager Jadranka Boban Pejić. “Our motivation was not solely material; it was and is about the influence we can have on our environment, as well as our own health.”

The couple first opened a restaurant which used only organic foodstuffs in 1991 and Mrs Boban Pejić travelled the region giving lectures and seminars on how to lead a healthy lifestyle. “At the time there was little awareness or choice in organic produce in ex-Yugoslavia,” says Mrs Boban Pejić. “If you wanted to buy organics you had to travel to Austria or Italy.” A business idea was born.

“We wanted to offer high quality products, and develop Biovega as a producer not just importer and distributor,” says Mrs Boban Pejić. The first retail store opened in Zagreb, Croatia's capital, in 1994 selling basic organic health foods such as grains, beans and sweets without sugar.

Today, Biovega provides the complete range of organic produce from food and food supplements to household products and natural cosmetics. It is very much a “lifestyle” brand, including retail shops, organic restaurants, book stores and beauty centres. There are currently seven bio&bio stores in Croatia, four of which are located in Zagreb. Mrs Boban Pejić is also the author of eight books on leading a healthy lifestyle, published by Biovega’s sister company Planetopia.

Growth and expansion

Despite their obvious success, Mrs Boban Pejić admits that her company’s rapid growth is not easy to handle. “The first years were driven by passion, not knowledge. But with the desire to improve your business comes the realisation just how much you don’t know.”

“Growth and expansion can easily create imbalances if based on weak foundations,” she stresses. With the help of friend and business consultant Renata Brkić, she set out to create a stronger base for her company. Both woman had heard about the EBRD’s Business Advisory Service (BAS) for micro, small and medium-sized enterprises (MSMEs) and decided to contact the local BAS team for advice.

Together with Renata Dieuri, National Director for BAS in Croatia they developed the first BAS project in 2006 and undertook a comprehensive review of the franchising business. “We needed to go back to the beginning, i.e. the source of our products,” says Ms Brkić. “With Biovega growing so fast, the company was selling a vast range of products but not all items were equally important in terms of revenue. We urgently needed to optimise and increase our stock rotation.”

In a second phase the team set out to identify the right mix of products for the market. With the help of an expert in merchandise and consumer behaviour, they developed a large-scale costumer survey to determine who was buying their products. “No such data existed in Croatia previously, and the results were of very high value to us,” Mrs Boban Pejić stresses.

The survey revealed many surprises: a high percentage of Biovega’s costumers is highly educated but with only moderate or average income. Most costumers are either single or have grown-up children and not young families as the team had assumed. “Also, some products are not as popular as we thought,” says Ms Brkić. “We also realised that selling cosmetics over the counter doesn’t work. People like to try cosmetics before buying them, so we rearranged our products accordingly and sales increased by 50 per cent in just one month!”

The team recently introduced a loyalty card which will help them continue tracking consumer behaviour. Other ongoing improvements include the enlargement of two stores, one in Split, Croatia's second-largest city, and another in Zagreb. There are plans for an even bigger store in the tourist city of Dubrovnik. The company is currently signing a new contract in the seaport city of Pula and are negotiating the opening of new stores in various shopping malls. By 2010 Biovega will have 11/12 stores throughout Croatia.

BAS: supporting small businesses

“Programmes such as BAS are very much needed in this region, where MSMEs are vital to economic development and social cohesion,” says Miguel Marques, the EBRD’s Alternate Director for Luxembourg. Luxembourg has been supporting BAS in Croatia since 2006 and has so far provided €280,000, which has been committed to 64 BAS projects. “The programme has demonstrated excellent results in helping companies in transition economies define their business needs and assisting them to grow by enhancing their competitiveness, improving their marketing and financial management, as well as introducing quality management systems and strategic business planning,” Mr Marques explains.

TAM/BAS Director Charlotte Salford emphasises that, in the current financial and business turmoil, BAS's contribution to increasing the competitiveness of SMEs is more important than ever.

“This kind of cooperation – not just financial but also business support – can really make things happen,” agrees Mrs Boban Pejić. “It helps you realise that you are not on your own but that somebody else cares and is following what you are doing. It motivates you to continue even if the general environment is not favourable to running a private company. We think the results of our cooperation show that the EBRD had a good reason to invest in Biovega.”