Marrying tradition and entrepreneurship
Have you ever asked a foreigner what they know about your home country and ended up learning something completely new? Imagine my surprise, when, expecting a comment on the seaside, yoghurt, or even rose oil, I found out there are people in the US, who associate Bulgaria with the production of quality guitars. A little digging led me to the town of Kazanlak, heart of the country’s rose valley and home to the Kremona luthier factory, whose instruments have shared a stage with Madonna, The Gipsy Kings and many established Flamenco artists, such as Roberto Corrias and Don Soledad.
With its 90 years of history in the business, guitar- and violin-maker Kremona can hardly be classified as a startup. But if on the lookout for entrepreneur spirit, look no further than Kazanlak, where tradition meets innovation under the sounds of a guitar.
Forced restart in 1999
Named after the Italian home of Stradivari, the Bulgarian factory was formed in 1924 by gunsmith-turned-luthier Dimitar Georgiev and his two brothers. Throughout the years, it has been appropriated by the state to later be privatised again on the brink of bankruptcy and is now reviving its image underthe helm of Executive Director Elena Gamova.
Elena Gamova Photo credit: Petya Sabinova“When the company was privatised in 1999, there was almost no production, virtually no workers and the situation was quite dire, but once it was no longer in the hands of the state, things started to change,” Gamova recalls. “We were forced to start from zero.” Since then, the factory has restored its production to about 1.200-1.500 instruments per month, relying on investment, EU funding and partnerships abroad.
“I wouldn’t say we are a hugely successful company, but we have succeeded in shaking off the crisis and we are doing well, more or less. We are currently keeping our business alive and hope to be much more successful in the future,” says Gamova. The company still has a long way to go, as financial statements show that despite revenues of about 1,35 million euros, Kremona ended 2012 on a loss of 47.000 euros. Partly, this can be attributed to the fact that guitar-making is a very specific business and margins aren’t very high, due to the amount of manual labour and the specific materials needed. In fact, the factory’s annual costs for materials are on par with labour costs, making it hard to invest in innovation and improvements.
As a result, Gamova has had to be inventive in taking up renovation projects. For a company with such a long history, startup funding programmes are out of reach, so Kremona’s team has turned to various funds to achieve the same effect that an accelerator would have on a startup. The most recent option they took on is led by the European Social Fund. “This programme is mostly targeted towards our workers,” as Gamova says “the bulk of the 95.500-euro grant goes for analyses to help us better organise the production process and establish safety procedures.” The funding also covers new uniforms for the 120 workers, who have already seen their environment drastically improve with the new ventilation that reduces the fine dust, resulting from their work with various wooden materials.
Focused startups are a winning approach
Apart from figuring out ways to improve the working environment, however, the Kremona team also needed to get creative with their sales tactics. The key: cooperation with startup businesses dedicated exclusively to selling their brand. “Our US distributor, who we started with 6-7 years ago, was completely new to the musical instruments business, and developed the market with a lot of personal efforts to the point where we currently sell about 2.000 guitars a year in the US, mostly from our more expensive lines,” says Gamova. With guitar prices starting at 220 euros and going up to 1.500 euros, the US business has regularly seen its annual turnover surpass 500.000 dollars. Similarly, a French company that used to mainly deal with retail in a chain of small shops started distributing the Kremona brand exclusively last year. In that time, they have managed to establish a network of close to 80 distributors and reach the same sales volumes as the US, which comes to show, Gamova points out, that when a company is small and focused on a single brand, the results come quickly.
And while the Kremona brand has already built a following in the US, Germany, France, and lately Russia, there is still a long way to go in convincing buyers from Central and Eastern Europe and even its home market of Bulgaria. Gamova admits with some regret that there is an image problem in the near region – “people from these countries somehow still do not tie our brand with quality, because we are a Bulgarian company. And this is quite sad.” This, coupled with the abundance of China-made musical instruments on the CEE market makes them focus on the bigger markets for now, where tastes seem to be a bit more refined. “Sadly, the Bulgarian customer still doesn’t have an eye for the good, quality instruments,” says Gamova.
Photo credit: Petya SabinovaTurning a sale into an experience
Speaking to Gamova, it is evident that the local image issue plagues her, and her efforts are into rectifying it through bold decisions tying together tradition and entrepreneurship. One such move is not keeping an online store. “We do not want to rely on online sales, because selling our instruments, we sell the history and the manual labour that went into them. We don’t want them to be just a product you can purchase online, even though this may conflict with contemporary thinking” she says.
So in lieu of an online store, the factory keeps its doors open for various visitors. Apart from consultants and students, tourists are also allowed to look around and observe every step of the production process of a guitar. Kremona works with tourist agencies, but also accepts individual visitors, completely for free and all part of the effort to showcase its tradition, processes and quality.
After an experience like that, the new technologies come back into play, and social media prove valuable in spreading the word about Kremona’s history and quality. Gamova says that forum mentions are overwhelmingly positive, which helps improve the company’s image.
Photo credit: Petya SabinovaStarting early
In another ingenious move that both helps spread the word and ensures a new generation of qualified workers, the company supports a luthier class in the local professional music school every other year – the factory’s chief luthier, Hristo Nikolov, who studied in Cremona Italy, spends part of his workday teaching students his craft and the class spends about a month helping with production.
Focused on establishing brand loyalty early, Kremona stands out from its competitors by producing the full scope of student guitar sizes, all 11 of them, a product line that has turned hugely successful. To top it all, the company also responds to every request for a customised instrument – sometimes these even make it into their product lines. It is this flexibility that helps grow the brand and keep in tune with our customers, says Gamova.
And just when the number of ideas that have been put in motion by this relatively small company seems overwhelming, Gamova mentions another funding programme that they are hoping to win – this time in the field of innovation – to support and develop their ukulele line. You did read that right, even though you may have trouble pronouncing it – ukuleles, made in Bulgaria.
The small Hawaian guitars with a very distinct sound are currently gaining in popularity, largely thanks to the ease of use and the rise of YouTube and short tutorials, and the Kremona team is trying to be among the first in Europe to catch that wave. Ukuleles are now mostly produced in China, in a more budget-oriented version, but the Kremona team have developed a prototype of the Tenor model and is now in development of the Soprano model. “The EU funding we are hoping to win is for the development of these models and their mass production, and we hope that this will be considered innovation because we have developed those models on our own, completely relying on in-house expertise.”
And if this new line of instruments is successful, do not be surprised if future contestants in the annual Miss Kazanlak Rose beauty pageant are also required to do the hula!