Rusmir Hrvić: AS Group will continue to acquire companies and brands in BiH

Start magazine published an interview with Rusmir Hrvić, President of the Management Board of AS GROUP, in its February issue. Hrvić spoke openly with this BiH magazine about the creation of the largest BiH company, which currently employs more than 3,500 workers, the challenges they face, and their future plans.

- We will continue to acquire companies and brands in order to further strengthen our current market position – Hrvić revealed, Patria reports.

The general narrative is that it is difficult to open a shop in BiH, let alone start a serious business! However, in just over two decades, you have built a powerful company that, from its initial three employees, now employs 3,300 workers in nine companies. How did "As Group from Tešanj" actually come about?

In the meantime, we have increased the number of employees, so AS GROUP currently employs 3,500 workers. AS GROUP was founded with the vision to respond to the enormous pressure of foreign brands on the Bosnian-Herzegovinian market, with the intention of completely subordinating it to their interests. With our concept, we wanted to show that we have something to offer and that we are capable of meeting the challenge of creating domestic brands. We started from a small retail store that began operating in the late 1980s, which we closed at the beginning of the aggression against Bosnia and Herzegovina. In 1996, we resumed trade, and a few years later we entered production with the now well-known brands AS and Master. This was followed by the acquisition of the Turkish confectionery factory Kent in Visoko, then the textile industry Napredak in Tešanj. After that, we acquired Vispak, then Oaza. In the meantime, we managed to revive the former textile industry Borac Travnik by launching Fortitudo, which now employs nearly 1,000 workers. By acquiring Klas Group, which includes Sprind and Mlin i pekara Ljubače, we became the leader of the food industry in BiH.

Your first business experience, if I'm not mistaken, was as a boy in your uncle Sulejman Hrvić's grocery store! What did you learn there and how much did that knowledge help you in later business decisions?

I learned a lot. First of all, that hard work and effort pay off eventually, and then some skills you acquire by trading with suppliers, customers, and consumers. I still use those skills today, in negotiations which have essentially remained the same, but now with a much larger volume and far greater responsibility. I learned that honesty cannot be bought or compensated for. Then, that a thrifty approach is something that gives you stability and security, and that a promise, or rather a word, that you give someone, is more important than any contract. All of this helped me a lot later and still helps me in making business decisions. 

What is preventing As Group from being even more successful, from achieving a higher turnover than the 250 million KM it had in 2015?

In 2016, we expect a turnover of around 300 million KM. All three of our divisions, food production, trade, and textile, operated positively. We also increased the number of employees, as well as exports, which last year alone amounted to 40 million KM, of which half relates to the placement of our own brands and half to services we provide for well-known international brands in the clothing sector. We are satisfied with our growth and development; it is stable and secure. On the other hand, there are many factors that influence and will continue to influence the degree of success, not just for us. I think it will be increasingly difficult to find qualified labor, the business environment is largely disrupted by political instability, and state institutions do not care enough about the competitiveness of domestic producers. The real question is how we will use this time of preparation and adaptation for joining the EU. Overall, I think we will all have to put in much more effort together to raise our level of competitiveness in all segments, not just in production, but also in administration, infrastructure, etc.

The task of politicians is to provide a favorable environment for business development. What are your experiences with the government, politics in general! Have they helped more or hindered?

Our owner once said, roughly like this, 'when we were small, the state helped the big ones, and now that we have grown, the state no longer helps the big ones.' We regularly fulfill all our obligations to the state. We pay all contributions, taxes, and fees before paying salaries to employees, which are regular. We have not received anything from the state yet. True, they have neither helped nor hindered us. For example, it's not just us, but it is quite desirable for the state to stimulate exports, i.e., to provide financial assistance in efforts to open new markets. I am sure that this would help exporters in their efforts to establish themselves in fierce market competition in foreign markets.

You have very good commercials! How much did good advertising help, for example, Zlatna džezva coffee to sell well? And what is AS Group's most successful export product?

Advertising, design, corporate communication, and promotion are extremely important for the success of any brand. We have managed, with our example, to significantly encourage the entire domestic advertising industry to invest more in this segment of brand development. We recently noted together at a meeting with media representatives that more and more domestic brands are advertising and communicating in the market. Ten years ago, you would rarely see a domestic brand on domestic media. Today, the circumstances have changed significantly, which is proof of the strengthening of quality domestic brands. As for the second part of the question, Zlatna džezva is AS GROUP's number 1 brand both domestically and in exports. In the last five to six years, we have made a great leap with real Bosnian coffee in the markets of Croatia, Slovenia, as well as Sweden, the USA, Austria, Germany, etc. In Slovenia, for example, there is no serious store that does not offer Zlatna džezva. In Sweden, Zlatna džezva is sold in 500 ethnic and 500 national shops, in Croatia we are present in about 3,000 points of sale, etc. 

Speaking of exports, to which countries do you export the most?

These are mainly the countries I mentioned. Although we export to 28 countries, and from the perspective of market expansion, there are great opportunities to market Bosnian cuisine brands in foreign markets in a big way, because all these markets first react positively to this particular program of our products. This will certainly be a challenge in the next decade.

Your product is the mineral water Oaza, which has been declared the best water in the world for years, winning gold and silver medals. How true is it that Bill Clinton, the President of the United States, drank it?

It is true, Oaza was once on the White House menu. There are photos of him and other officials, but for understandable reasons, we do not want to misuse them. Otherwise, this year we have managed to achieve a lot with Oaza. We redesigned the bottle and label, with which we wanted to emphasize the advantage of its geographical origin and source, which brought it so many world-renowned quality awards. We have also introduced some new fillings, included many famous faces as ambassadors for the brand 'water that conquers', and a winter campaign with a winter 'limited edition' is currently underway.

At the same time, BiH is the richest country in water in the region, with the most drinking water per capita. And it imports drinking water worth 20 million KM annually! How do you explain that?

A paradox.

You recently stated that "you rest when you work," that "work is your natural state." You are an employer, so I ask you, what kind of worker is a Bosnian? When they work abroad, our workers are commendable, but here...?

One should not generalize either abroad or here. I must emphasize that my experiences are excellent. Most of our workers are great fighters, they fulfill their tasks in the best way, honestly and with love. The atmosphere is victorious, which further motivates me, all my associates, and the entire team. Of course, in such an atmosphere, it is difficult for those whom we colloquially call "loafers," so we do not rush things, we give them time to decide. So, they make the decision themselves, to stay or to leave. I often jokingly tell my associates that those who do not want to work, provide them with a room where they can read, lie down, do whatever they want, as long as they do not disturb those who want to work, or even let them stay home, it is better that they do not come to work, because they disturb those who want to earn their salary honestly. 

You are the largest food industry in BiH! Privately, are your tables set with domestic products, especially from As Group, or rather, "only the best, no matter where they are from"! What would a lunch made from As Group products look like!?

This sounds like a 'challenge' to me J. I start the appetizer with Vispak's Begova čorba, and after that, there are often Bosnian pot with Tajna, and Sarajevski somun, or Klas's burek, or pie made from homemade dough with Golden powder, with Vegy pickles or pickled vegetables. For dessert, I can't decide between Sprind's baklava, Lagnini pudding, Master strudel, Kent's napolitanke, or Klas's Tahan halva and Bosnian lokum. In the end, I wash it all down with Oaza, sometimes Swity homemade sour cherry or apple juice, and then with Zlatna džezva and AS sugar cubes, I take a break in conversation with family and friends.

Is there a chance that, for example, an As Group confectionery product, a chocolate bar, could be included in the New Year's packages distributed to children in Croatia or Serbia?

Anything is possible. I see no reason why this shouldn't happen in the future. Because children in Bosnia and Herzegovina have been receiving products from Croatia and Serbia in their New Year's packages for years, and no one complains about it. This speaks to our tolerance, but also our self-confidence. We are aware of our value and what we can do. We are not afraid of competition; on the contrary, I believe it benefits us. Of course, if it is healthy competition. 

Can you present the AS Group to readers in numbers! If it's not a business secret, we would be interested in the salaries of the management, or the average salary of the workers in your group!?

It varies from company to company, but also from job to job. The possibility of advancement also plays a role. It is often the case that young people recognize the opportunity and establish themselves in many effective personnel solutions.

What are the plans for 2017? Will you enrich the store shelves with some new AS Group product?

Of course. We have accustomed the market to innovations. It will be the same in the future. 

How many AS Group products can be bought at Konzum in Croatia or Delhaize in Serbia and other retail chains in the region?

Since last year, 20 of our products from the Bosnian cuisine program are available at Konzum Croatia. Before that, we couldn't even dream of something like that. We managed to establish ourselves through quality, price, and brand strength. I hope this cooperation will expand, because first and foremost, we need to make additional efforts and dedicate ourselves more seriously to improving sales in this market. We entered Delhaize Serbia with Klas's glazed cakes.

How much money did you invest in new technologies last year?

We have invested heavily in new technologies in the past period in all Group members. I will mention just a few examples... Vispak invested in a new roaster and mill, doubling the capacity for Zlatna džezva. The total investment was around 5 million KM. Sprind received a new line for the production of ready-made and semi-ready meals based on recipes for Italian pasta. Also, we continuously invest in software and new information systems, which will help us improve corporate governance even further, etc. In the coming year, an investment of about 3 million KM is planned for new technology to modernize Klas's production processes. 

Are there any interesting candidates in the labor market for you, or do you have to look for competent, professional people outside of BiH?

For now, we are managing to find personnel in BiH. I don't know if we will be able to rely solely on domestic personnel in the future. Everything is quite uncertain, especially since there is a massive outflow of quality and generally employable people abroad.

If you were the Minister of Economy in the FBiH, what would be your first move?

I wouldn't be a Minister.

You packed biscuits! How did you take over, buy, the Turkish company Kent? It was the first time a domestic company bought a foreign one!

That's right. Nothing was difficult for me to do. And Kent, at one point, represented an obstacle in the market for our overall development. We decided to remove the obstacle by including it in our portfolio. The decision proved to be correct.

You also bought Vispak, Klas, and practically saved them from ruin because these companies were on their knees! 

Our model of investing in struggling companies with the aim of first saving existing jobs and then creating new ones through new value, management style, a thrifty approach to business, and a fair attitude towards employees, has proven to be something that the Bosnian-Herzegovinian economy needs. Therefore, we will continue to acquire companies and brands in order to further strengthen our current market position. In the process of new acquisitions, we will remain within the current business framework of the existing divisions.  

You stated some time ago, I think in 2015, that you were preparing major regional projects! What was it about?

There was an idea to expand into one of the regional markets, but at that moment, things did not align perfectly. On the other hand, there is great potential for our brands to enter regional markets. As for growth, we will focus on Bosnia and Herzegovina for now. There is still a lot of work ahead of us in our own backyard that we need to complete, God willing, successfully.