Model, Massachusetts Institute of Technology (MIT) alumnus and now entrepreneur running a health food company, Elena Shifrina is the face of a Russia that could be. Young and ambitious, she abandoned a flourishing modelling career on the runways of Paris and Milan to launch a food processing company that is now exporting from Russia to over a dozen countries.
The idea for the food bars came to her in the dinning room at MIT, where she did a short stint as an exchange student in 2011. Six years later she has already been honoured as one of Russia’s top young entrepreneurs, and sells her products in Europe, Japan and the Middle East.
The MIT course was so demanding Shifrina and her classmates had no time to make meals, so many grabbed snack bars from dining areas. Not sugar-filled sweets, though — the kind of nutritious and calorie-lean bars that runners and other athletes consume.
At the time, there were no healthy snack bars in Russia except a limited line of high-priced imports. Shifrina was thinking about the bars as she returned for her final year at Russia’s preeminent business school, the Skolkovo Graduate Business School in the Moscow area. When an entrepreneurship professor asked her class to come up with a senior project — a product or service they could build a start-up around —she knew what it would be.
“The Russian snack bars that were available then were basically sweets, containing sugar syrups and preservatives, which completely contradicted the idea of a healthy diet,” she said. “I thought: Why not turn my own commitment to a healthy lifestyle into a business?”
And her timing was spot on, a conclusion backed up by her initial market research. After over two decades of transformation, Russia's emerging middle class has become more urban and internationalised, which is manifest in slowly changing lifestyle choices. Vodka consumption is down and wine drinking is up. The disappearance of fancy French cheese following President Vladimir Putin’s decision to sanction Europe’s agricultural imports is bemoaned by a section of the population. And fitness and health are in. Russia’s health food industry was growing at 7% a year, she learned, but the healthy snack niche was entirely empty.
Shifrina, who is now 34, started BioFoodLab in February 2011. She committed initial capital of RUB7mn ($120,000) out of her own pocket, money she had earned as a model in Paris and London before working in the Russian oil industry for the former Russo-British joint venture TNK-BP as well as in the banking industry.
Shifrina said a master’s degree she obtained at Regent’s Business University in London before starting her Skolkovo studies provided her with practical business lessons that would prove valuable when she started BioFoodLab.
“All of the professors were proven businesspeople,” she said. “We covered a lot of interesting business case studies, and talked with a lot of successful businesspeople.”
However, like every start-up, Shifrina’s had significant challenges to overcome, made all the more difficult by the caustic business environment that all small and medium-sized enterprises (SMEs) face in Russia.
She was determined that everything in her Bite snack bars would be natural, with no preservatives or additives. When she couldn’t find the ingredients she needed in Russia, the only alternative was to import the raw materials, which, of course, would increase the cost.
In addition, she learned that the equipment she needed to manufacture bars that would last without preservatives wasn’t available in Russia. She found it in Germany. It was top-quality, but German equipment isn’t cheap, adding to her start-up expenses.
The reason she was so pernickety about the equipment was that she was determined Bite would have the same six-month shelf life as Russian products with preservatives. That required special equipment to eliminate bacteria that could spoil the bars before the six months were up.
Although eliminating bacteria in the manufacturing process was crucial to reaching the shelf life she wanted, Shifrina also learned that non-standard packaging would be needed.
“We use a three-layer package,” she said. “It prevents light from penetrating, prolonging the shelf life.”
For the first six months, BioFoodLab sold Bite only through online food stores in Russia. As word grew about the bars’ quality, and the marketing team learned more about selling a healthy snack bar, the company switched to brick-and-mortar sales. This included health food stores, coffee-shop chains, department stores and other retailers, and the company went into profit after only eight months.
It has since added thousands of points of sale and some glittering names to its stable of distributers. The biggest name in Europe to date is Sainsbury’s, Britain’s second-largest supermarket chain. BioFoodLab has also cracked the difficult-to-penetrate Japanese market, selling bars through Rakuten, the country’s second-largest online retailer. And it has a toehold in the United Arab Emirates too, where healthy ingredients are crucial to sales.
But the domestic market remains the biggest source of revenues and also has the greatest potential for growing sales. Some of the big Russian names selling Bite are the supermarket Perekrostok and specialty-foods chain Azbuka Vkusa.
As Bite gained momentum, BioFoodLab opened its own website with international delivery to market the bars in a model Russian media have favourably compared to the online sales vehicle created by Jessica Alba’s The Honest Company. It also promotes the bars on social media. But most of its sales continue to be from brick-and-mortar locations, with more than 8,000 points of sale in Russia alone.
Consumers want wide food choices these days, so BioFoodLab started with five Bite flavors, but is now up to eleven, Shifrina said. It takes an old-fashioned, let’s-see-what-works approach to creating flavours, she said. “We buy dried fruit, mix it in various combinations, and see how it tastes.”
A tight-knit team of food technologists are in charge of developing flavours, which makes them “a vital component” of the BioFoodLab organisation, Shifrina says.
Their concoctions have included figs with cinnamon, banana with peanuts, apple with carrots, cranberries with almonds, and lime with hazelnuts.
When Shifrina was drawing up plans for her operation, she was thinking of Bite as an adult food. But customer feedback indicated that children were big fans, too. Shifrina capitalised on this opportunity by creating a separate line for kids, known as Biteys.
BioFoodLab got a promotional bump not long after Bite sales started when Nike’s running clubs in Russia approached her with a partnership idea in October 2013. The clubs said that if BioFoodLab would provide bars to those competing in their events, they would promote the brand. Shifrina knew a good deal when she saw it, immediately saying yes. Another early publicity boon came when Russia’s edition of Forbes magazine named BioFoodLab its Startup of the Year in 2013.
The Nike and Forbes ties underscored Shifrina's belief that promotion is a key ingredient of a company’s success. One of her brassiest promotional moves came on a day when Russian Prime Minister Dmitry Medvedev visited Skolkovo Innovation Park, a business-incubator complex he had started. Shifrina waltzed her way through his security contingent to tell him about her start-up. She left with a photo showing her standing next to the prime minister, who was grasping a Bite bar.
Another promotional coup was a tie-in with Disney’s two new Star Wars films, “Rogue One” and “The Force Awakens”. BioFoodLab produced special Star Wars packages for the bars, which it sold in stores nationwide. The campaign went viral, with consumers sharing thousands of photographs of their bars on social media.
She was delighted when the organisers of the 2017 London Marathon voiced an interest in working with Bite. Not only did the marathon’s programme list it, but it was also in the goodie bag that the thousands of contestants received.
Partly because of her time in the West, Shifrina was determined to have BioFoodLab display the social consciousness that the world’s most renowned companies do.
Among its philanthropic activities are supporting the Naked Heart Foundation’s annual Running Hearts charity run, which raises funds for families raising children with disabilities.
This year promises to be a momentous one in BioFoodLab’s expansion, Shifrina said. To start with, it has begun laying the groundwork for entering the US market. The Russian Export Centre gave a boost to the company’s efforts by naming it the country’s 2016 Exporter of the Year.
Another important goal is expanding Bite’s presence in Europe from the current handful of countries to continent-wide. Shifrina's team is also gearing up for a major expansion of BioFoodLab’s fledgling presence in China and Saudi Arabia. She’s thinking about Africa as well — for two reasons. First, it is a huge market. And, second, it has a lot of raw materials for its bars. “Sub-Saharan Africa has the chance to become one of the world’s leading nut and dried fruit suppliers, if not the biggest,” she said. “It already supplies 40% of the world’s cashews, generating income for about 10mn people. BioFoodLab is already having in-house discussions about a manufacturing operation there to supply its product to Africa and beyond,” she added.
In addition to 2017 being an important international-expansion year, BioFoodLab is on track to achieve a major financial milestone: RUB1bn in sales ($17mn). Not bad for a company that has gone from a graduate student’s dream to a profitable and growing international operation in just five years.