From Store to the Largest Producer of Zagorje Mlinci in Croatia

When we think of mlinci, our first association is Hrvatsko zagorje. One simply cannot exist without the other. Just as, of course, there are no real mlinci without traditional handmade production – just as grandmothers used to do in Zagorje. It is hard to imagine in today’s modern production that someone would manually make mlinci, but this is the business move that the Gorički family decided to take.

Bravely expanding their business from a grocery store to the production of mlinci with just two workers, Kogutex Pasta has reached an annual production of over 280 tons of handmade Zagorje mlinci. They have thus become the largest certified producer of this special traditional product from Hrvatsko zagorje (only companies from that area are allowed to produce it) and the only company in Croatia that has the right to use the label ‘Croatian Quality’ for their product Zagorski mlinci.

Tradition and Innovations

The Croatian market is fully covered by Kogutex Pasta with their mlinci, which they also export to several Western EU member states, even to Ireland. They also export to Bosnia and Herzegovina and Serbia, and have just engaged a foreign company to research the Romanian market, whose gastronomy is similar to Croatia’s. Owner Tomislav Gorički says that for the twenty-third year, they have been producing the best homemade handmade Zagorje mlinci, which have become the core of their business and account for almost 90 percent of sales, or achieved revenues. They do not give up on manual production, so only a dough mixer is used from machines, but the dough is rolled, cut, baked, and packaged by hand. They also produce rustic mlinci, which are also handmade domestic mlinci, but from a special flour mixture with the addition of buckwheat flour and spelt bran.

– Buckwheat snacks with corn are our novelty, a unique product on the market. It is a dry snack made from expanded buckwheat grains (puffed so that it becomes crispy, ed.) and corn, gluten-free, sugar-free, with no added aromas, suitable for vegans. The buckwheat is grown in Croatia and cooked; we process it. It is incomparably higher quality than the fried imported one, which is why we cannot use it in production.

No one in Croatia or abroad produces this type of snack, and there is no similar product on the market. Modern trends, especially among young people in large cities, emphasize ecological, organic, and bio products, which is why we decided to step forward with buckwheat snacks. In the last two years, their demand has exceeded our expectations, so someone from the new colleagues in the company will take more care of that.

We also sell breadcrumbs, which are our by-product. Namely, in the production of mlinci, breakage occurs, especially in the final part of baking, when folding into smaller pieces and stacking on drying shelves. This breakage is then sifted and ground, and dry bread, which we obtain from local bakers, is added to produce breadcrumbs. They are used for preparing breaded and fried dishes, for thickening homemade stews and thick soups, or with sweet dishes like dumplings – describes Gorički.

Investment in Warehouse and Equipment

Gorički visits all thematic fairs across the EU and beyond, such as SIGEP, Hosta, Anuga, Riga Food, SIAL, Südback, and IBA, and is considering investing in the company’s development and innovations in new products, but, he says, all in due time. Investment in warehouse space has only now come to the agenda because business has been difficult due to the war in Ukraine, the COVID-19 pandemic, and the unstable market situation. A larger warehouse is needed because Zagorje mlinci are a seasonal product, and Gorički produces them throughout the calendar year, creating stock for the season. However, since they are packaged in large boxes, they are considered bulk goods (those that take up a lot of space relative to weight), so a large airy warehouse with little light and a suitable temperature is needed, which can accommodate up to 500 euro pallets of finished products. €250,000 has been invested in the warehouse, and the project is nearing completion, while Gorički is already thinking about producing several types of high-quality bread. He believes that, for starters, he could conduct a pilot project in his retail network and thus obtain direct customer feedback.

– Every year we have capital investments and investments in work equipment, in the microclimate in the production facility to make our workers feel more comfortable, as it is hard to work in production, especially in summer. We strive to follow technological trends in equipment such as dough mixers, ventilation, labeling device systems, or lighting. Krapina-Zagorje County has long recognized the need for cooperation with all producers of protected products in promoting the region and the county. Every year we apply for grants and receive support as a certified producer of Zagorje mlinci, which makes our business easier because we use every incentive to acquire new equipment.

Our further plans are grand, but for now, they are just ideas on paper. Namely, due to the unsuitable location of the production facility, warehouse, and current infrastructure on the hill, access for trucks is not possible. Often, we have to transship goods from the van to the truck at the foot of the hill. As we have invested in building land along the main road in the center of Jertovec, right next to the Jertovec Thermal Power Plant, a total of 4,000 square meters, we hope to soon start our largest investment in a new production facility. It will also include accommodation for foreign workers, new premises for all divisions in our companies, and even our own laboratory – Gorički listed.

Business Collaborations

The family company Kogutex was founded in 1991 when the first grocery store was opened in Jertovec in the municipality of Konjščina, and today it has nine stores in Konjščina, Donja Konjščina, Zlatar Bistrica, Galovec, and Beloslavac. Kogutex currently employs sixty people and has been engaged in the production of Zagorje mlinci since 2003, with the production taken over by the subsidiary Kogutex Pasta in 2016. Both companies are fully owned by the Gorički family. The father of Tomislav Gorički, Stjepan Gorički, is the director of Kogutex, while his wife Mirela is responsible for commercial affairs at Kogutex Pasta. Tomislav Gorički, in addition to being the director of Kogutex Pasta, also serves as the head of occupational safety and the head of the accounting department in both companies.

– Since I was going to procure goods for retail, we noticed that there was a shortage of mlinci in the season, especially during the Christmas holidays, even though there were already brands with machine and bakery mlinci. Ambition, vision, timely detection of the shortage of this product on the market, an excellent business plan, and, of course, family support were crucial. We financed the establishment of the subsidiary from the existing business of the trading company. In this regard, our workers in production are extremely important, some of whom have been with us from day one and are certainly the greatest asset of the company because without their skilled hands, there would be no real homemade Zagorje mlinci.

And to put quite large quantities of our products on the market, we cooperate with leading retail chains across Croatia, small retailers, several trade associations, wholesalers in the country and abroad, and several foreign trading systems in the EU. We have been cooperating with Konzum since the first day of our business, and in the last two years, we have been more represented in the HoReCa channel. We also supply many kindergartens, schools, and institutions such as hospitals and nursing homes – notes Gorički.

Unstable Market

Although there are many challenges, he hopes for record sales of products this year because they have significantly increased production capacities since the beginning of this year. By tracking historical sales by month over the past few years, he concludes that they are achieving slightly higher monthly revenues. Unfortunately, this is not a true indicator of profitability, precisely due to the rising production costs that affect product prices, so sales are actually slightly weaker in total weight. He believes in favorable procurement of white smooth flour, as well as that the price of the main energy source, natural gas, will at least remain at the same level so that product prices do not rise.

Revenues in 2024 amounted to €4.74 million, which was 5.40 percent more than in 2023. Gorički justifies this by additional hiring in production, which has increased the sales of their products. In other words, he says that they finally had enough goods for all customers that year, which had not been the case for the past ten years. The net profit last year was €193,580, which was 19.02 percent lower than the previous year.

– The profit was affected by the general crisis that hit the entire European Union and the region, and inflation reached its highest rate since 2008. The cost of living has risen sharply, but it is very difficult for personal income to have increased in proportion to the percentage of the cost of living. This was also the first year in which we all felt how to live with the euro since the kuna ceased to be the national currency in 2024.

In difficult business times, we sought help from HAMAG-BICRO, which enabled us long-term financing with favorable interest rates. We certainly fear the instability of our market. The greatest concern is when some trading systems abandon real domestic products due to slightly lower prices of other products in the same category. Statistics show that purchasing power is decreasing, so customers themselves are opting for some cheaper products. This is understandable because the consumer basket for, say, this July amounted to almost €500 for a family of four – notes Gorički.

Excessively High VAT

An additional challenge for him is market competition with brands, which are increasing. And since he has built his brand for over twenty years and his Zagorski mlinci are the most recognized on the market, he is reluctant to accept cooperation in the production of products that would be sold under another company’s brand (engl. private label). He notices that in the last two years, there are fewer small retailers; some are taken over by large systems that do not have this product in their offer in all areas. He therefore finds ways to compensate for lost sales in retail, such as the HoReCa channel; thus, sales of bulk packaging have significantly increased in the last two years. For example, the change in the appearance of the bag in which they are packaged influenced the high demand for mlinci in 2016.

A barrier for us is also that due to state administration, some projects take too long from idea to realization, but we are used to it. The legislator prescribes tax payments but does not take into account whether our bills are settled. Among the countries, we have the highest VAT rate in the EU, and it is ridiculous to put the VAT rate in Croatia in the same context as that of Denmark and Sweden, much more developed countries, as indicated by their GDP.

However, neighboring Hungary has a VAT of 27 percent, but most members have significantly lower VAT rates, and they are much more developed and have a higher GDP. Despite all this, we have always been a professional supplier to customers, delivering goods on time, arranging promotions and action prices at the peak of the season; we have been persistent in our work, which we still perform today with full responsibility and professionalism.

I believe that our customers have recognized this, and we have built exceptionally quality business relationships. I would like to emphasize that logistics is a significant cost in business today. However, with our own storage capacities, about ten commercial vehicles, and exceptional coordination of our commercial team and customers, a good logistical climate has been created. Thus, from receiving orders, we deliver products within 72 hours to the most distant points in the north, east, west, and south of Croatia, including the islands – claims Gorički.

Nepalese Learn Quickly

Kogutex Pasta currently employs eighteen workers. Their number often changes, but on average, there are sixteen employees. For this type of production, it is almost impossible for Gorički to find domestic workers today, so, like many others, he had to hire foreigners. In the last year, he says, they have an excellent team from Nepal, five employees who have quickly learned to work in production, especially since they have a product in their homeland that is produced in a similar way. Since some workers have been with the company from day one, to not follow the movements in the labor market and the level of personal income, Gorički is almost certain that most of them would not have stayed in the company for so long.

He adapts to employees as much as possible. He emphasizes that he takes great care of the occupational safety system, that he is a very adaptable employer ready for all agreements. He also provides a collective annual vacation of four weeks in the summer months when it is very difficult to work in production due to the heat, despite modern ventilation systems. During the collective vacation, annual services are performed, and equipment is maintained to ensure everything is in working order when production begins. He also provides Christmas bonuses, Easter bonuses, health check-ups, and can offer employees financing with the parent bank.