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Launch of a cosmetics production from the ground up, development of 6 brands, own R&D facilities. How ProCare achieves a 2-3-fold annual growth. A story of the Next250 member

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Launch of a cosmetics production from the ground up, development of 6 brands, own R&D facilities. How ProCare achieves a 2-3-fold annual growth. A story of the Next250 member

ProCare is a Ukrainian manufacturer of personal care and household products. The company was founded by entrepreneurs Oleksandr and Maryna Kahan in partnership with Olena Khalypa, a chemical engineer. Their first products were handmade in a small workshop, and in 7 years they have grown to reach an annual turnover of UAH 168 mln, offering more than 500 articles. The company grows 2-3x annually.

ProCare currently employs 130 people and has a portfolio of 6 own brands: Joko Blend, Barbers, Shelly, JOLY:LAB, Tink and Touch Protect. An integral part of the company is the R&D facility for new product development, that notably provides services for the production of Private Label cosmetic products. Forbes BrandVoice is sharing the story of ProCare.

First products: coffee peelings and alginate masks

Before setting up ProCare, Oleksandr and Maryna Kahan sold online and looked for a niche to launch their own brand. In 2016, they decided to produce coffee scrubs, a popular product back then. Soon, Olena Khalypa, a chemical engineer, joined them and became the company’s third co-founder.

ProCare

Maryna Kahan, Oleksandr Kahan and Olena Khalypa, co-founders of ProCare

Initially, as Oleksandr Kahan recalls, the partners did everything manually and by themselves: they developed the formulas, the labels and the positioning of the product.

«We spent a maximum of $500 to launch the first batch. Then we started reinvesting the profits into new production», shares Kahan.

They later added a new product to the range – alginate masks. The company’s CEO says, they were not mass produced in Ukraine back then. The formula took three months to develop.

Production volumes grew gradually. A year later, the partners rented a 70 sqm workshop, expanded their team and purchased professional equipment. They have started selling their products on large online market places like MAKEUP and PARFUMS, in addition to Instagram and their own website. Oleksandr says, the company has since developed into a serious business with significant earnings.

A multi-brand company

In 2017, Oleksandr Kahan, who took over as CEO at ProCare, shaped the company’s structure and vision. «I flew back from holiday and thought about how the company should look in 5, 7, 10 years», he says. «Right on the plane, I took a sheet of paper and drew a chart. I decided to make us a multi-brand company, with each brand targeting a specific audience and price point. The main thing was not to compete with each other. We continue to follow this plan: the company’s structure is based on complementary business areas».

ProCare

Oleksandr Kahan, co-founder and CEO ProCare

Its second brand, Barbers, the company developed within three months. It is a men’s grooming brand for beards, moustaches and hair care. Kahan explains, they chose this niche because there was a demand for it in Ukraine, particularly among the professional hairdressing community.

The ProCare team then continued to analyze market needs and launched the following brands. The Shelly brand, for example, was developed for manicurists. «We offer our products as an opportunity to earn more by helping nail technicians to sell more services to their customers. Now you will hardly find a nails master in Ukraine who does not have our cream or gloves», says Oleksandr. 

Another strategy for building brands is to adapt them to the place of distribution. For the retail channel, the business launched a mass ladies cosmetics brand, Tink, aimed at the lower end of the market. ProCare portfolio now includes 6 brands offering over 500 items.

The company is also involved in developing Private Label: it handles all stages of product development, from the development of the formula to the visual appearance. More than 500 products are currently manufactured for more than 130 customers. 

«We love seeing how we grow together with our clients when we start out producing 50 liters of cream and end up with 2 tonnes in a year’s time. We have cases like that», shares Oleksandr Kahan.

He adds, Private Label has slightly lower margins compared to own-made products. But this business line allows them to quickly replenish their working capital, boost production and avoid downtime.

2-3-fold annual growth

ProCare has 2-3-fold annual growth. The company’s CEO gives the statistics: in 2019, annual sales were around UAH 10 mln, in 2020 – nearly UAH 28 mln, in 2021 – UAH 34 mln, in 2022 – UAH 54 mln, in 2023  – UAH 168 mln. 

As the full-scale invasion began, business growth slowed. Oleksandr Kahan recalls, the company had just moved to a new 2000 sqm site. They embarked on a refurbishment of the plant to ensure that production was in line with the requirements of GMP certification. For the first time, they’ve taken a loan to pay for the costs.

«We also signed contracts with retails, and in March 2022, they were expecting a large shipment from us. A full-scale war began: we have repairs in progress, and all of our working capital is invested in products. Our storehouses are full, and we have UAH 20k in our bank account. Some products were given away for free to the volunteers and we have cease our operations», says Oleksandr Kahan.

In April 2022, the company resumed its business operations. The first thing we did was fulfil our obligations to Private Label customers, and then we went back to making our stuff. At that time, raw materials were difficult to find, Oleksandr Kahan recalls, so they adapted the formulas to the ingredients that were available on the market. July saw return to pre-war growth rates, our GMP certificate, completed repairs, and new equipment purchased. It was the first time that the company took out a loan.

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In 2023, the company leased additional production and storage space, bringing the total area to 3500 sqm. The team grew from 50 to 130 people. As a result, the company has tripled its annual turnover in one year, with sales of 4 mln items.

Product design, manufacture and distribution

ProCare has three divisions: R&D, production, and sales. «They are separate entities, each with separate financial statements, revenues and profits», says Kahan. 

R&D center develops new formulas: in 7 years, a team of 6 chemical technologists has created more than 600 unique beauty products. The company’s CEO says, their focus is on innovation and complex, high-value products.

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New product development takes anywhere from two weeks to a year, depending on complexity. For example, the Shelly gloves for nail artists took 6 months to create: it was important that the gel polish did not peel off when using them.

New products are pre-tested by a specially formed group of people. Sometimes experts are invited – like professional podiatrists to test foot creams. Last year, the company also began working with the National Medical Academy. Dermatologists were involved in testing one of the company’s lines.

Production capacity is over 4000 thousand items per month. «We are constantly buying new equipment to increase our capacity. For example, preparations are underway for the installation of a line for aerosol production», says Kahan.

ProCare

The most active sales channel is the retailers. ProCare products are displayed in EVA, Prostor, Brocard, Avrora, Silpo etc. and in 130 cities across Ukraine. Each brand also has its online store, an Instagram account, and we collaborate with online retail partners. The company also gets occasional orders from oversees, but not yet on a systematic basis.

«We work with opinion leaders and promote our products at trade shows. We organize factory visits for brand ambassadors, as well as barber, cosmetology and nail art schools. For us, it’s less about marketing and more about openness: consumers have the right to see how and under what conditions our beauty products are made», emphasizes Kahan.

Looking to 2024

ProCare CEO reveals, plans for the current year include the launch of three new brands, increased production, expanded range and new products: aerosols, make up items, and perfumes. The company also plans to open a European office and start exporting activities. To help achieve this, it is currently working to get one of its brands certified.

The financial target for 2024 is the turnover of UAH 320 mln, which is double last yearʼs level.

«And in the next few years, we will be moving towards the UAH 1 bln milestone», says Kahan.

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