Organic Growth Masterclass: Knjaz Miloš, backed by Mid Europa
Filip Kisdobranski, Operating Executive of private equity firm Mid Europa, explains how new product development helped their portfolio drinks business Knjaz Miloš deliver organic growth.
Filip Kisdobranski, Mid Europa Operating Executive, says: “We acquired Serbian-based drinks business Knjaz Miloš in 2015 and sold the company to PepsiCo/KMV in 2019. At the time of our initial investment, it was a market leader with legacy spanning more than two centuries, but at the same time, the company was under managed and on a consistent decline for a number of years.”
He explains: “The first step was to bring together the right management team. We knew we needed to bring in new blood, so we used our network to hire a new CEO and a strong management team who came from established strategic consumer companies.
We then created a governance model that management could work within and grow. At the same time, through our board presence, we looked to provide the right guidance and support the management.
Together, we developed a long-term strategic plan focused on repositioning the business for the future; connecting with younger consumers and bringing innovative products to the market. We invested significantly in new product development, assessing where the opportunities and gaps were in the portfolio, and plugging those gaps with new, innovative products. This, in combination with salesforce execution, led to a very successful growth trajectory over our holding period.
We leveraged the breadth of local and international experience at the board level and our network of experts to analyse the business and the global trends in the beverages market, and marry them to local consumer preferences.”
Kisdobranski says: “Knjaz Miloš’s brands were deeply rooted, yet still neglected and overly traditional for modern consumers; the core consumer was ageing. Our team was able to work with the business to segment the market and really understand who the consumers are, what their needs are and which platforms to use. We looked for a sizable opportunity or gap in our portfolio, we approved additional investments to create such products and bring them to market.
We focused on bringing the company into the 21st century through buyer segmentation and engaging with the consumers in new and targeted ways, for example through events and social media, using digital platforms to increase consumer engagement, and improve customer loyalty, ultimately leading to recurring purchases.
Examples of our marketing strategy included sponsoring music festivals, creating interactive apps and platforms to more traditional aspects like traditional media advertising, trade marketing and out of home visibility. The refreshed look of the products, the innovative approach to consumers and our different style of marketing was, to a degree, bold and experimental.
We used our route to market and our strong distribution backbone to deliver new products, including placement on the competitive carbonated soft drinks shelf, where we managed to take market share from international giants such as Coca Cola and PepsiCo.”