Crisis Strategy: Find the Leak and Plug It with Kvass

Crisis Management: Or the Story of How I Looked for EBITDA in the Dairy Rivers of the Far East, But Found It in a Yogurt Nobody Wanted to Make.

Prologue: The Panic Paradox. Why The Best Solution is Never in the Manual.

People often ask me: what’s the secret to successful crisis management? The answer is always the same: it’s the ability to ask simple questions and to hear not what people are saying, but what they really mean (or are holding back). Plus, a sense of humor. Without it, you quickly go up in flames in this line of work.

You know, there’s a wonderful paradox in anti-crisis management: when everyone around is panicking and screaming, “We’re sinking!”, the smartest thing to do is calmly find the leak and plug it, not with what the “instruction manual” dictates, but with whatever you can get your hands on. Sometimes that “something” turns out to be yogurt. But let’s take this from the top.

In 2013, I got a specific request to find “quick, effective solutions to save” a dairy plant in the Far East. Yep, that’s right: save it quickly and effectively. No more, no less. I’m certainly no rescue worker, but given my respect for and the reputation of the person who made the request, I decided to fly out anyway and try to figure out why such a strategically important enterprise for the country was hemorrhaging cash, like that tanker that got stuck in the Suez Canal.

Chapter 1: A Business Trip Across the Country, or “Welcome to the Land Where Money Goes Sour.”

Vladivostok greeted me with sunny, gorgeous weather, a very sad and rattled Investor, and very tense faces from the dairy plant’s top management. It was straight from the plane to the fire: we immediately dashed to the facility, located 230 km from Vladivostok. This route—Moscow to Vladivostok to the dairy plant—later became almost like home to me over the course of 1.5 years.

The first thing I saw wasn’t the workshops or the equipment. It was mountains. Mountains of accounting reports, invoices, and closing documents. It was as if they still hadn’t heard of the concept of “electronic document management.” The first conclusion: chaos doesn’t start on the shop floor; it starts in the mind. Or in the documents that reflect those thoughts. A quick glance at the management reports made it clear what was so upsetting to the Investor and driving him to daily planning sessions with Johnny Walker and good old Jack Daniel’s: despite a 20% revenue growth over the last year, EBITDA had dropped to negative values due to rising logistics and advertising costs. Financial gaps widened every quarter, and the Investor, in an attempt to save the situation, kept tossing yet another cash infusion into the cash flow, like coal into a furnace.

Chapter 2: The Anatomy of a Crisis. The Far Eastern Flavor.

To grasp the scale of the catastrophe, you need to know the specifics of the Far East:

• Territory: Almost 7 million square kilometers (like two Indias).
• Population: 7.8 million people (which is 40% less than in Moscow alone).
• Milk Consumption: 61.8% of the norm (No dice! People just aren’t big on dairy in the Far East).
• Logistics: To collect one tanker of milk, you have to drive around several farms and private households, racking up hundreds of kilometers.

At the same time, the state was strictly regulating retail prices. The cost of production was through the roof, and profit was plummeting into the red.

I dove into the financial statements, studying operating expense line items while simultaneously analyzing the company’s business activities.

The problems stood out as clearly as a lighthouse on a sunny day:

• Scant Product Line: Only perishable goods with a 3-day shelf life.
• High Operating Expenses: Logistics were devouring everything like a hungry beast.
• Advertising Budget: Comparable to the budget of a small region.
• Zero Financial Control: Accounts receivable was disappearing into the “black hole” of the subsidiary Trading House.

The picture was depressing. But the most interesting part was yet to come.

Since I had my own boutique advertising agency in Moscow, naturally, I studied the media plans, double-checked the placement costs, and was “in awe” of the creative concepts. The advertisers were operating on the principle: milk must be everywhere! So, the brand’s advertising was EVERYWHERE:

• On billboards, not just in cities, but also on empty highways leading into the city. Even near villages where everyone has their own cow or goat.
• Radio and TV in primetime—milk is a HIT, after all!
• Branded ceiling handles on public transportation—the apotheosis of the advertising strategy! Passengers could hold onto a brand that was losing money faster than they were losing their balance.

This was a masterpiece of budget misallocation. Fellow advertising pros and friends (especially the digital folks), let’s all collectively express our admiration for these marketing geniuses! The reach was huge, the relevance was virtually nil. I immediately recalled a story from my childhood when I decided to win over a girl I really liked with coins: the exact same mistake—spending on something that brings no practical benefit, but only creates pointless noise.

Chapter 3: The Moment of Truth, or How Yogurt and Good Old Johnny Saved the Company.

After 2 weeks of audit, I was practically ready to recommend closing down. The Investor invited me to a restaurant to discuss possible solutions. On the way, we stopped by a store, where he bought a couple of packs of Quark Yogurt “Rastishka” and a packs of Drinking Yogurt “Actimel” for his children. I automatically looked at the prices and was stunned: they were almost 3 times(!) higher than in Moscow supermarkets. And there were no local (read: affordable) alternative products on the shelf.

It was about a 15-minute drive to the restaurant where the meeting was planned. All this time, I silently watched the Investor, who was sighing heavily and clutching his head. I couldn’t find the right words and tried to convey my thoughts to him “by telepathy” (smile, friends, I was truly stumped).

After the first “opening statement” from Mr. Johnny Walker in an elegant blue suit, the gift of speech returned to me, and I was able to ask the Investor a question: why he was buying yogurts at triple the price, yogurts that had flown into the region from 8,000 kilometers away, all while having his own dairy plant? The Investor sighed irritably and, like a broken record, probably for the hundredth time, replied: “The equipment is expensive, you have to find it, order it, ship it, set it up. There’s no technology! No recipes! Gotta get certification! It’s Long. It’s Expensive. And therefore Shitty.” Of course, he used another word instead of “Shitty,” but that’s not the point: it reflected the same thing.

In those words, I heard the sentence the Investor handed down to himself (or rather, to his business). A direct 3D visualization of the collapse: Long. Expensive. Shitty.

When Mr. Walker had half-exhausted his reserves, I suggested the Investor simply “sketch out/estimate” the costs and time required to develop and implement a new line of cottage cheese and drinking yogurts. A calculation was made right there, practically on a napkin. He was surprised when he realized that he already had 70% of the equipment and that he would lose more money in the next six months if he left everything as is. And when the Investor calculated how much the logistics costs would be reduced (yogurt shelf life is 14–30 calendar days + reduction in unit cost for the mass and volume of the product), his eyes lit up. He was practically bursting with energy (or from the incomparable Mr. Walker). The cherry on top was the fact that regulatory action does not extend to yogurts (read: you can set any margin based on market realities).

Chapter 4: Transformation, or How Kvass Became the Dairy Plant’s Sales Leader

We carried out a restructuring:

• We scaled back the production of unprofitable items.
• We launched a new product line.
• We optimized routes and lowered the unit cost of goods.

But the main breakthrough was… KVASS! (Kvass is a traditional, mildly carbonated, fermented Slavic beverage made from rye bread or malt, similar to a very low-alcohol craft beer or unhopped ale.) It’s amazing how we sometimes dream of Eldorado, rushing off to find our Klondike, and fail to notice the gold right under our feet.

Among the plant’s technologists was a specialist who knew how to make a very tasty kvass. Using some personal recipe. He made it in small volumes, only for personal use and only on holidays. The Investor knew about it and praised the kvass highly.

During a subsequent brainstorming session, it was revealed that the potential of kvass was huge:

• Shelf life up to 9 months.
• Sales geography sharply increased (all neighboring regions were included in the pool).
• Demand is seasonal, but very high (sales are still there even out of season).
• Competition is moderate (2 federal brands and not a single decent regional one).
• Margin is high (compared to the expensive logistics of competitors, our Kvass price was very attractive, despite the high markup).
• No new equipment required (everything is available).

We launched kvass into production. Very quickly. And very successfully: we hit the peak season perfectly. In the very first year, kvass became the dairy plant’s sales leader, surpassing all dairy products in profitability. And in the second year, it generated 60% of the entire company’s revenue. This was the triumph of anti-crisis management—we found a hidden asset and turned it into a goldmine.

Epilogue: We cannot change the world around us, but we can change our attitude towards it. And when we do that, we will be surprised that the world has begun to change around us.

This experience with the dairy plant became an benchmark case study in anti-crisis management for me. You won’t read about this in any textbook, nor in any University or MBA course. I wouldn’t have gained such an experience if it weren’t for “His Majesty” chance, which brought me 8,000 kilometers from Moscow. Today, with over 15 years of crisis management experience, I highlight the key skills I gained in that project:

1. Systemic analysis of operational activities—the ability to see interconnections between various business processes. Sometimes entirely non-obvious ones.
2. Financial modeling—the ability to calculate scenarios and find break-even points.
3. Optimization of logistics chains—expertise in reducing operating costs.
4. Revision of the product matrix—understanding the economics of different product categories.
5. Change management—the ability to carry out a transformation without halting operational activities.

And an important skill: operational decision-making based on data. A crisis is always an opportunity to find non-obvious solutions and create a sustainable business model.

The story of the dairy plant is not a story of miraculous rescue. It is a story of methodical problem dissection and decision-making based on data, not emotions. The key success factor of this project was “teamwork”: the Investor was open to discussion and testing any experiments, actively participated in all activities carried out, and showed his fighting spirit.

The conclusion I drew over 1.5 years in this project: a crisis rarely requires complex solutions. More often than not, you just need to stop, cease doing what is losing money, and find that very hidden asset or opportunity that people see but don’t consider significant. You need to abandon the philosophy of “trying harder” and focus on the philosophy of “thinking correctly.” It is this skill—seeing the system and interconnections—that is key to anti-crisis management.

If this story resonated with you not just as an interesting case, but as a recognition of the pain in your own business, then we have something to talk about.

My key crisis management competencies, refined by 15 years of practice:

1. Deep financial analysis and audit. I don’t just look at the P&L (Profit and Loss Statement). I conduct due diligence of operational activities, identify points of cash flow leakage, and analyze the specific indicators of cost and margin for each product or service. I find what is hidden behind the glossy reports.
2. Optimization of business processes and operational management. My task is to build processes so that they bring in money, not consume it. This includes business process re-engineering, the implementation of KPIs and motivation systems tied to results, plus strict control over execution.
3. Strategic marketing and profitable positioning. I help eliminate senseless spending on advertising and build marketing that works for profit. This includes auditing marketing effectiveness (ROMI), market segmentation, positioning, and developing a product strategy that considers the real needs of the market and the company’s economics.
4. Anti-crisis communication and team management. I know how to speak the same language with owners, creditors, investors, top managers, and staff. Sometimes the cleaning lady can tell me things no one else knows. My job is not to sow panic but to be a stabilizing factor, communicate a clear recovery plan, and motivate the team to execute it under stressful conditions.
5. Development and implementation of a Financial Recovery Plan (FRP). I don’t stop at recommendations. I develop a detailed crisis exit plan with clear success metrics and help your team realize it, ensuring monitoring and control at every stage.

Crisis doesn’t wait. Every day of uncertainty costs your company money, reputation, and competitive advantages. I’m not a consultant; I’m a crisis manager who will take responsibility for making difficult decisions and implementing them.

I don’t promise quick wins, but I promise open, professional, and focused work on results. Work based on numbers, logic, and years of experience.

In any case, for me, having a cup of coffee and talking to a smart person is always a new opportunity, new experience, and a new, interesting business story.

Sincerely Yours,

Business Pathfinder

P.S. Well, that’s all, dear reader! I hope you found it interesting. Your opinion is important to me, too: please support me with a “like” or write a comment about what you think of this story. And if you really enjoyed it, you can leave a tip for my creative work. Any amount will be a pleasant sign that I am not doing all this for nothing. Thank you!