REVAMPING THE BUSINESS MODEL OF A LEADING CIS AGRIBUSINESS
One of the largest producers and exporters of crops in the Black Sea region – exporting >2Mtpa of wheat, corn, soya, rapeseed, and sunseed from 400kha of farmland – solicited Bryanston’s advice to transform its business model and increase its service offering to its customer base in order to improve its overall margins.
In 2015, Bryanston was asked to assist the company in evaluating a number of growth strategies aimed at enhancing value creation. We concluded that transforming its production-based business model to become more service-oriented would be a strong platform for growth. Our recommendation was focused on the hypothesis that increasing the service offering to its customers (farms) would generate value both for the company itself as well as its customers.
Bryanston evaluated the range of services offered by the company to its customers, identified a list of further service areas it could integrate into and detailed the value potential, risks and requirements of including each new area into the business model. These services included distribution, elevators, barging, origination and blending as well as financial services such as lending, financial derivatives and crop insurance.
Full-fledged business cases were developed individually for each new service to quantify the profit potential, listing challenges and key assumptions, defining pricing and deriving the revenues each service can generate. We also provided an extensive detailing of the costs allocated to each service. The profitability analysis provided a comprehensive view of the EBITDA contribution on a per-service basis. These services were then ranked by attractiveness / profit to produce a prioritized list.