The challenges faced by Greece’s many small companies have mounted as the financial crisis has gone on. The country’s manufacturers in particular have been hit hard by falling domestic sales and a desperate lack of bank credit to finance export drives.
“Small producers are among the worst hit by capital controls and the squeeze on bank liquidity, especially companies that have to import raw materials,” says Kostis Michalos, chairman of the Athens chamber of commerce and industry.
Yet small companies in sectors such as food and beverages and specialised plastic products are improving their international competitiveness by targeting niche markets.
The makers of Tuvunu, a low-calorie soft drink, uses Greek mountain tea, a local herb, as the raw material for making a rival to international iced-tea brands, doing away with the need for imported raw materials.
“We wanted to make a new drink that had entirely local ingredients, was non-alcoholic and could compete on international markets,” says Demetri Chriss, chief executive of Tuvunu. “It took a while to get the recipe right but we think we’ve got a brand with global potential.”
Tuvunu is owned by Macedonian-Thrace Brewery, a profitable beer maker in northeastern Greece with a national distribution network.
Mountain tea grows on stony hillsides across the country. Traditionally, its leaves are collected and dried by local villagers. Its astringent taste and reputation for alleviating stomach ailments and hangovers make it enduringly popular with Greeks.
Mr Chriss says Tuvunu encouraged farmers in the Rodopi mountains of Thrace, home to a sizeable Muslim minority that formerly cultivated tobacco, to start growing mountain tea as a cash crop. More than 500 growers, including many women, have signed contracts with the company. “It’s a good fit,” he says. “Most of the men in these communities work abroad, so it gives the women a regular income. And it’s not a labour-intensive crop like tobacco — it more or less just grows.”
Launched three years ago, Tuvunu produces 10,000 hectolitres annually of mountain tea in cans. Sales of about €1m a year are divided almost equally between local and foreign markets. Tuvunu exports to more than 20 territories, led by the US and Benelux countries, where low-calorie soft drinks are gaining popularity. “Normally you’d expect to have a bigger base of domestic sales supporting your international run. But these aren’t normal times, so you adapt,” Mr Chriss says.
Meanwhile, Lyberis Polychronopoulos, an Athens-based entrepreneur and chairman of Matrix Pack, is using innovative design to boost exports. In spite of the Greek crisis, Matrix Pack has become Europe’s leading manufacturer of polypropylene drinking straws, with a 10 per cent share of a market worth €150m a year.
Matrix was set up in 2010 as Greece headed into a recession that put paid to most local companies’ investment plans. “We’d already raised enough financing privately to go ahead regardless of the worsening climate,” says Mr Polychronopoulos. “We saw a chance to occupy a productive niche in Europe that was below the radar because of its small size.”
In addition to a factory near Athens, Matrix has built plants in Poland, Bulgaria and Portugal, and it aims to deliver anywhere in Europe in 24 hours.
“Europeans get through hundreds of millions of drinking straws every day that are mostly imported from Asia,” Mr Polychronopoulos says. “So there’s plenty of incentive to produce straws that are technically innovative and aesthetically exciting.”
Matrix makes straws that are biodegradable, change colour or glow in the dark. The company is also researching eating and drinking habits across Europe to determine to what extent people are using straws to consume liquid foods, coffee, tea or even beer.
“Increasingly we see young people drinking fruit juice and smoothies through straws rather than cut up and eat apples or oranges,” says Mr Polychronopoulos.
Matrix was able to raise bank loans to fund its expansion abroad as it gained market share in Greece. However, despite signs of improvement in Greece’s business environment, new bank financing is still a distant dream for many entrepreneurs.
But Mr Polychronopoulos sees the crisis as a long-overdue correction to an economy distorted by large inflows of EU funds, decades of weak fiscal management and excessive borrowing following Greece’s entry to the eurozone. And unlike others he is upbeat: “You have to look beyond the problems. A situation like this also gives an opportunity to create new things.”
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