At the moment, the company's office is located in the northern part of Moscow. It is cozy, the staff is friendly, Georg is charming and has a wide smile. We are holding the conversation in a conference room.
Tell me about the company's history, please.
The company Luxlite was established by three founding members, who have been cooperating since 1992. Officially, Luxlite exists since 2001. At the beginning, the company was selling lighters, they are still the fundamental area of our business. Meanwhile, promoting the lighters' range, we had always been conscious of the necessity to diversify the portfolio. Later, the range came to include condoms, playing cards and electronic cigarettes. The condom range began with simple classical items, being enhanced over time. Such ranges as "Maximum" and "Exclusive" appeared. They are items of particular use that we call "playing" ones. Nowadays, we are working on promoting these products, we are going to do their rebranding. The existing range will enjoy some new design, we are taking pains to raise their quality and, what's important, we are going to save the existing price level. The only factor able to modify the price is a significant deviation in currency exchange rates. We've got really ambitious plans, so, now the sales management is object to our personal attention.
Can you explain how a company making lighters ended up selling condoms? Was this shift motivated by the idea of a gentleman's pocket usually containing a lighter, a condoms and a deck of cards?
To date, we've arranged a genuine gentleman's kit: a lighter, an e-cigarette, a deck playing cards and a condom. But in fact, this kit has been arranged due to other reasons. All these items are sold at the cash desk area. They are always the same people, taking decisions, specific people at the outlet. Despite the fact that these items' manufacturing principles are different, their factories have nothing in common, still, these pieces are forming a group of non-food industry and their shelf life is long or unlimited.
As for the company's development, as I have just said, it began with selling classical condoms, then transformed into playing ones. Why are condoms closer to lighters in comparison to lollipops, chewing gum? That's their shelf life! If a company works with lighters, with their shelf life practically unlimited, it is difficult to start selling products with longer shelf life- from 6 to 12 months. The company would have to realign the whole process. But in case items of several-year shelf life are added, it proves to be much easier.
Do you mean, it is explained by the processing peculiarities, on the way from the manufacturer to the outlet?
It involves both business processes and warehousing. It is hard work to switch from a long to a shorter shelf life, saving the lighters' sales rates at a good level. That's why we chose to deal with non-food products. We have been developing for the cash desk area, we are still doing so. However, this development is not focused on intimate sphere.
Our female examiner has already tried condoms called "Hawaiian cactus". This range has got different sizes, hasn't it? Are these condoms of usual composition?
Both their length and width are standard. We are working on improving our items' quality at the moment. As with any mass consumption goods, they are of average size. The rule we follow is simple: we work with the same manufacturer. For 15 years, we have been cooperating with the same people. We've got almost family-like relationship with all the factories and their CEOs. Fifteen years, a big term. We are doing so to have the possibility of establishing a dialogue. One of our employees spends half of his time in Moscow and the other half-travelling abroad on business in order to control all stages of manufacturing. And we are constantly discussing the ways of raising the quality. The usual smooth condoms and the playing ones have got the same stuff, as they are made at the same factory.
Do you personally use your items?
I do. No problem with them. The only thing I left behind is a lighter. I gave up smoking.
Tell me more about your plans, please.
When the crisis of 2014-2015 broke out, the demand dropped, the prices went up, and this let us realize which processes of ours need further alignment. The company is currently going through global changes of every type, including the partnerships, the inner processes and the warehousing. We are strict at observing deadlines, the warehouse system is automatic. We used to do "business as usual", but nowadays, we are planning to get to another level. Our plan is to move to another office. A building of our own, of 4.5 thousand square meters is being built. And we are working to guarantee a cutting-edge equipment at our new warehouse, to avoid this type of problems: "someone put it somewhere and forgot about it, then found, so, what do I have to do with that?" Should we throw this item away or put it on sale, realizing the reputational risks-to-take? For one year and a half the work on avoiding this has been done, we don't plan to stop it.
The average end customer of ours is used to the following practice: rushing to a drugstore, buying anything they offer and feeling satisfied. How can you make people buy your brands?
For selling at drugstores a number of papers are necessary, we are getting them ready. The process of certification takes long. We have been waiting for more than 18 months. Not every company can afford it. We can, as we've got a variety of business lines. A crisis on vape industry market has taken place recently. The companies that have been developing this unit exclusively, failed, many of them are closed at the moment. Due to a number of lines, those of them that are successful help the vulnerable ones to get over a crisis. In our case, they help to get through an eighteen-month process of certification, not mentioning the costs it requires, they are numbers with six figures, though.
So, you would like to see your condoms being sold at drugstores, wouldn't you?
Yes, we would. As soon as those drugstore market's specific certificates are ready. They are not meant for the whole brand but are given for every trademark, every package separately. Now, the papers are getting ready for the newly designed condoms. It means that we are working hard on improving the quality, it is always worth improving, being our supreme goal to arrive at a new quality level. The consumers will be able to compare our condoms with the famous brands' items. For this sake, we undertook the certification, the rebranding, the quality management and a global allocation on market, including our plan to engage a pharmaceutical channel. We will take pains to get it, but we realize this is an ambitious, challenging goal.
Does your plan include selling those playing condoms at drugstores?
The playing ones are part of a specific profile. We are trying to enhance it. There are some chains ready for such challenge. By now, we managed to make a deal with some stores of draft beer, in the Siberian Federal District. We put one or two articles on their shelves to see whether they are sold. Are condom sales a peculiar, non-massive channel, as we used to believe? Probably, they will be demanded not only at sex shops, but also at traditional retail stores. We started with the most ordinary items to avoid people's embarrassment. If the sales at these chains are successful, we intend to diversify the portfolio.
Are your products represented in other cities, apart from Moscow?
Our company sells in every region, in every million-resident city, we are present at federal chains, but this is true for other items of ours. As for condoms, we are going to win the market and get expanded.
Later, we had a walk to take a look around the office, and Georg went on telling us about the company.
Here we are, in the office of the founding members. There are three people, and what makes our business different from the majority of others, these people come here daily. Each one has got specific things to do, each one is responsible for a specific business line. For example, one of them is basically responsible for sales. He is always here, until the late evening. We believe that the business should be under the founding members' permanent control, if not, it will get in trouble, sooner or later.
The room where the staff works, the logistics department, the accounting office, twelve sales agents working in the Moscow area, and two warehouses, the cool one and the heated one. As we plan to move to a new office before the year ends, the investment for the former office development is frozen. The existing office takes two floors. We've got our own machinery-six lathes for printing on ligthers and souvenirs, and making our logos on any kind of pieces. Our manufacturing is one of the biggest in Moscow, there are six lathes, one of them is four-coloured, it allows us to apply four colours at once, one ultraviolet printing lathe and a unique lathe, the only one in Russia, for tape-wrapping the lighters. We have got the largest warehouse of lighters in Europe. In particular, we make the flattest lighters in the world.
Thank you for an interesting story and your sincere fascination with your business!