Mykhailo Kupranets is an entrepreneur from the Lviv region who, during the war, is actively reinvesting profits in expanding production, starting modern processing and creating new jobs in the region at his “Lvivskyi Sad” enterprise operating under the “Gaderia” trade mark. Why and how Ukrainian apples have become attractive in terms of large investments, whether the war affects such business and what are the prospects for the development of this market in general, Mykhailo Kupranets told Komersant ukrainskyi 
.
Mikhail, tell us first of all about “Lvivskyi Sad”. What are its volumes and capacities at the moment?
LLC “Lvivskyi Sad” today owns 80 hectares of apple orchards, of which 12 hectares are to be planted in 2024. We have commissioned and started production of direct-pressed juices. We are also in the process of constructing a fruit spirit and spirits manufacturing plant. Separately, we are in the process of developing a project to build a biogas plant.
The war has affected all businesses in Ukraine. What is your experience of working in full-scale conditions? How does your enterprise overcome new challenges?
The first year of the war was the hardest. A large amount of “Lvivskyi Sad” products from the warehouse we simply gave for free to the needs of the Armed Forces. In the second year it became easier, because we launched full capacity juice production and got a contract that allowed us to ship 20-30 tonnes of juice every week. Regarding apples, we are focused on the premium segment. Currently, the company exports apples and juices to the Middle East countries UAE, Saudi Arabia, Qatar, UK, Sweden. We are constantly participating in international exhibitions. Only for the last two years “Gaderia” took part in profile exhibitions in Paris, Berlin, Warsaw, Riga, Dubai and others. This active position allows us to find new customers and diversify markets for our products.
I wonder why your company is export-oriented and not domestic market?
As of 2024, domestic apple growing and marketing enterprises do not fully meet the domestic market demand with their products, so as of spring every year there is usually a need to import products mainly from Poland, where for the last 30 years, with the support of financial institutions and grants from the European Union, the agricultural industry has been developing in this direction in a planned manner. We grow very high quality products, organic, environmentally friendly, which has a high production cost and, accordingly, the selling price. Unfortunately, in Ukraine the demand for such products is not high enough, while in the Middle East and Europe the prices are much higher, and we have no problems with contracts.
What, in your opinion, are the main competitive advantages of “Lvivskyi Sad” today?
A significant part of enterprises in Ukraine does not have storage areas or processing capabilities. Own differentiated processing of grown raw materials for “Lvivskyi Sad” gives significant advantages, the dependence on seasonal price for products is reduced, dependence on wholesale buyers is eliminated, there is a possibility of long-term storage and further trade of highly liquid products directly with distributors anywhere in the world. At the same time, products that should have been sold to intermediaries at the start of the season at low prices will be diverted for processing. We have ambitious plans already this year to put all kinds of vinegars produced at the company into oak barrels for aging in order to obtain authentic craft balsamic vinegar of two or more years of ageing. And, of course, I see the greatest prospect in processing of own apples into fruit sprites and making alcoholic beverages.
Why fruit spirits? Can you name at least a few key advantages of this segment for which you chose it?
In Western European countries, historically the consumption of alcoholic beverages from fruit sprites is very popular and significantly exceeds the demand and consumption of alcoholic beverages from traditional sprites in the post-Soviet space alcohol from grain derivatives. Currently in Ukraine, the culture of consumption of alcoholic beverages from fruit alcohol derivatives is just emerging, which is considered to be more noble and actually provides an opportunity for aesthetic pleasure from consumption and socialising than the effect of intoxication. Today in Ukraine it has become quite popular to drink fruit spirits especially among people aged between 25 and 45 years old, who are becoming connoisseurs of the European culture of consumption of alcoholic beverages from fruit derivatives.
What exactly was the impetus behind the launch of fruit spirits?
In June 2023, a law was passed that regulated the simplification of the conditions for the production of distillates by small businesses. This is what pushed me to the idea of building a plant for processing my own apples into fruit sprites and making alcoholic beverages. To realise the project, we studied the equipment market and chose a domestic manufacturer, “Kraft Inovation Ltd”. Construction of the plant began in August 2023, and the plant is scheduled to be completed and put into operation by the end of 2024.
The construction of the plant is to be completed by the end of 2024
What is the planned production capacity and what products will you produce? Perhaps you can already say under what trade mark?
The planned production capacity of the plant will be 230 thousand litres of cleric alcohol, or 450 thousand litres of finished alcoholic beverages per year. First of all, it is planned to process its own raw materials of apples, as well as related products from pears, quince, raspberries. Branding of products is being handled by specialists, it is still early to talk about it. First of all we have ambitious plans to join the culture of Ukrainians’ consumption of alcoholic beverages made of fruit spirits, but it is also planned to enter the export markets of the Middle East and Asia.
What role in the production structure is assigned to the biogas plant declared by you?
After the production of juices and raw materials for alcohol, we will produce a significant amount of cake in the amount of about 20 tonnes per day. This cake is an organic waste and is ideal for use as feedstock in a biogas plant. That is why we decided to have German specialists design a biogas plant for the enterprise. Construction of such a biogas plant will give the opportunity to process waste of own production, fully cover the need for electricity in the range of 800 KW per hour, which will significantly affect the cost of production and the price for the end user.
You have been growing blueberries for more than 6 years. What can you say about the market of this berry during the war?
Despite the war, which lasts for the third year, the production of blueberries in Ukraine, including organic, continues to grow annually. This is possible due to the fact that Ukraine has a large number of young plantations, which over time give higher yields, as well as increasing the area of new plantations. The export of blueberries to the European Union countries, in particular to the Netherlands, Germany, Spain, as well as the United Kingdom, is also growing annually. This has become possible due to the high quality of berries provided by Ukrainian producers and compliance with international standards of organic production and processing. All of the above makes this business profitable and investment attractive in the near future.
The area of your enterprise is located in the north of the Kiev region. Were the facilities damaged during the first months of the war?
From the first day of the full-scale invasion and until the liberation of the Kiev region, the berry plantations and production facilities of “Grona Agro Ltd”. were located in the occupied territory. During this time, the company suffered significant damage and losses, in particular, the plantations themselves were damaged, almost all storage facilities, as well as stolen company transport, all electrical tools, household appliances, garden tools and tractors were rendered inoperable – batteries, starters, generators and other components were missing. In addition, in 2022 it was not possible to start field work on time due to the occupation, and then – due to the need to inspect the liberated territories for mines and ammunition that did not explode.
Already managed to restore normal and full operation of the enterprise? What are your plans for the future?
Yes, despite the occupation, the enterprise continues its work, fully complying with the technological process of production. The total project area planned for planting is 36 hectares, of which 25 hectares have already been planted with blueberries of different maturity dates during the previous years and are bearing fruit. The remaining area is scheduled to be planted during this next year. In 2024, our company passed the annual inspection of Organic Standard Ltd. and received a certificate of compliance with the requirements of organic production. Next year “Grona Agro” intends to harvest more than 130 tonnes of organic blueberries, part of which is planned to be exported to European markets, due to a possible decrease in domestic consumption due to the war and the outflow of a significant number of women and children – the main consumers of blueberries, outside of Ukraine.
By the way, there is a mention in the press that you have invested in solar energy…
Yes, in due time we attracted loan funds and invested in two enterprises for generation and realisation of renewable energy, namely two solar stations located in Zakarpattya and Lviv regions with a total capacity of 4.6 MW.
Here, let me clarify. Today there is a lot of information about the fact that the state does not fulfil its obligation to buy back electricity at the guaranteed tariff. Therefore, under such conditions, does solar energy retain its profitability as a business in Ukraine?
Currently, the situation in the renewable energy market of Ukraine is quite complicated, because until 2030, all producers of RE at plants that are commissioned before 2020 and have a preferential “Green Tariff” and the state’s obligation to buy back all the electricity produced by producers, work under the scheme of work proposed by the state. However, over the past few years , payments for the supplied electricity have been made at the level of 40-50 per cent, which significantly complicates the work of enterprises, especially those that built the plants with the attraction of credit funds and have the need to timely service credit lines. Let’s say we are working at the break-even level.
So in your opinion, does this industry have prospects for development?
The war will be over sooner or later, but the problem of restoring production capacity for electricity generation on a national scale already exists today. In August this year, the Cabinet of Ministers presented a programme for the development of renewable energy until 2030. Taking this into account, having studied the European experience of this market and having a clear plan to expand our own renewable generation capacity, we intend to attract EBRD credit funds and in the shortest possible time to invest in the construction of solar power plants on the territory of the Beregovo community in the Transcarpathian region. The construction is planned on two own land plots of 8.00 ha each. For this purpose, the designation of the target purpose of the land plots has now been changed to “for the location, construction, operation and maintenance of buildings and facilities of energy generating enterprises, institutions and organisations” and cooperation with design organisations has been initiated. It is planned to build a solar power plant with a planned capacity of about 10 MW, 5 MW on each plot.
During the war, when investments in Ukraine are decreasing, you are on the contrary investing in the expansion of production. What is the development strategy of your enterprises based on?
I spend a lot of time travelling around similar enterprises in Europe, adopting the experience of competitors, analyzing the shortcomings of our production, trying to improve and perfect the processes of my own enterprise. Over the years, I have come to the unequivocal conclusion that growing apples exclusively is an extremely risky business. The experience of competitors from developed markets shows that the main profit comes from processing. Of course, we will keep the export segment of premium apples, but the rest of the production will be used for juices, vinegars, spirits. This is my life’s work, I want to create an enterprise in Ukraine that would be two heads above the Western competitors.
In your previous interviews you said that gardening is your hobby. However, the business has expanded. Do you continue to deal with all the directions on your own?
Of course not. It’s hard to do it on my own, I’m not young anymore. With the outbreak of war, my eldest son had to join the business. He worked in a completely different field all his life, he had been out of the service for more than 5 years, and gradually I got him involved in gardening. Now personally I am concentrating on building processing and expanding capacity, while my son has been given all other areas. Now he is in charge of financial issues, is engaged in the family fund for asset management, as we intend to change the structure and bring the reporting to international standards. Our enterprises with their products are already operating on international markets, buyers and western banks set certain requirements to corporate transparency, reporting, etc., and therefore we have to adjust and react to the realities of today.
Mikhail Kupranets with his son
So, who then and how do you make decisions in the structure of your companies?
Certainly not alone. Today, my son and I make decisions on key issues together. But, as I have already said, I have so far concentrated my efforts on the construction in Stilskoye, and I have given the rest of the issues to Igor. Firstly, we communicate every day, hold daily meetings, discuss problematic issues, and secondly, over the years we have managed to form a good team of specialists. Therefore, I feel at ease.