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Lessons from F&B exporters

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The diversified Asian market has few things to offer as a common denominator for successful export. FOODs Singapore-based correspondent Manali Pattnaik writes.

The diversified Asian market has few things to offer as a common denominator for successful export – a clear know-how of the ground reality and the right contacts to pursue the goals.

Irrespective of the size, from small businesses to big enterprises, meeting the export needs through effective entry strategy is imperative for sustainable market growth and profitability.

Securing right ‘contacts’ and ‘contracts’ are integral aspects of pursuing business in Asia.

And ‘soft skills’ prove valuable in this regard.

Best thing to do is to do a reconnaissance of the market through proper research, even better, is to visit the market oneself and meet the distributors.

Asia beckons exporters

Asia’s resilience during the financial crisis of 1997 and now, the effective handling of the threat of terrorism and bird flu, has reinforced its image of being hardy.

Keeping this in view, exporters feel confident that Asia will be able to tackle both its economic and political issues to further secure a sound business environment.

Speaking in the context of having started exports to Singapore just a year ago, Danielle Ferry, the director of The Cookie Barrel told FOOD magazine: “The proximity of Asia to Australia, changing demographics, westernisation of the Asian palate, and over-night delivery time made Singapore a lure. We are further targeting to expand our focus to Hong Kong, Bangkok, Kuala Lumpur and China.”

Simplot Australia, one of the brand leaders in many key ‘shelf stable’ and ‘frozen foods’ category, primarily exports its niche Leggo’s branded products to Malaysia, Singapore, Taiwan, and Thailand.

“Malaysia, Singapore and China share strong economic growth, their people are becoming wealthier and more educated, and aside from Indonesia, there has been relative political stability in the region,” Simplot Australia international marketing manager – retail Gemma Trivisonno said.

“There is no such thing as one Asian Market, with each country having its own particular features and requirements.”

A fresh start-up

Established 12 years ago, The Cookie Barrel has been baking cookies, muffins, slices and cakes in Australia.

Exporting cookies was the first logical thing to do as the cookies have a shelf life of nine months which is much longer than the shelf life of cakes, muffins and slices, explained Danielle.

Cakes, muffins and slices need to be frozen for export and being a SME, they lack the capacity and structure to meet this requirement.

“We were prepared to commit the time and dedication to developing the market. We gave ourselves a timeline of one year to educate ourselves and strategize entry - which came to fruition well on schedule,” says Danielle.

The Asian Odyssey

Understanding the changing face of economics in the region, Australian exporters have fared well in their ‘trade journey to the East’.

One of the players, Carman’s Fine Food , selling muesli, breakfast bars and honey, has proved just that!

In the course of her odyssey from being a part-time employee in Carman’s Fine Food at the age of 17, to becoming the owner of the same company, Carolyn Creswell has turned it into a thriving small business with a turnover in excess of $2.5 million annually.

In October 2002, Carolyn received from Malaysia, her first export order of 8500 muesli bars and 720 retail muesli packs.

Today export accounts for 10% of the total sales of the company and is expected to be 25% by 2007. This thriving Melbourne based business, wholesales muesli to more than 2000 outlets in Australia and overseas.

Despite employing only 3 full time staff (and sub contracting to 10 contractors as and when required), Carolyn’s extensive research and risk appetite, made her click at home and overseas.

Strategy

Market entry is quite a daunting task.

There are no short cuts available, but the exporters vouch on the help they received from Austrade .

The entrepreneurs interviewed revealed that Austrade helped facilitate trade introductions and logistical contacts on the ground in Asia.

“We worked very closely in the New Exporter Development Programme (NEDP) and did an analysis of different potential countries for export, with the export advisor and came to the conclusion that Asia was the best bet,” mentioned Carolyn.

Carmen’s entry into Asia was facilitated by introductions from different sources: Malaysia - introduced by Austrade at Fine Food Melbourne trade show; Hong Kong - via state Government funded Overseas Trade Show Hofex; Singapore - via Consolidator - Bemco; and Maldives - via Consolidator – Senselle foods.

One size does not fit all

Asian tastes are very different from that of Australians.

Changes need to be made in the product to suit the ‘palate’ and ‘pocket size’ of the Asian buyers.

Packaging, colour, wording and size matters!

Hence, Carolyn appointed an export consultant.

“Advice from the consultant made me realize, what works in Australia will not necessarily work in Asia”.

She reduced the packet size of her muesli bars- from six muesli bars to four, changed the name of the breakfast bars to energy food bars, changed the pack colour from black to red and introduced a new flavour profile – mango, paw paw and coconut.

Similarly, the 8 to 10cm size of the Australian Cookie Barrel cookies were reduced to 2 to 5cm for Asia.

However, Danielle of The Cookie Barrel speaks out of her own experience and expresses a word of caution:

“In hindsight, we perhaps were at one stage, trying to tailor make our product to the Singaporean market too specifically that it fell outside our production parameters. This in turn, created extra pressure on our production runs and could have added pressure on our local market supply had we continued this way. We have now reached a happy medium between our clients’ needs and our boundaries.”

Good fit

Building relationships, working out the packaging, pricing, establishing the brand image are some of the things one needs to sort out with due diligence.

Bottlenecks may spring up.

Carolyn’s experience in the Philippines was that they were very stringent about filing and stamping forms. It is a long drawn process which involves a lot of time and money.

Similarly, Indonesia is strict about tariffs.

Singapore, even though very transparent and advanced, possesses problems when it comes to bulk exports given the small market size with a population of just over 4 million.

In spite of the bottlenecks, success stories are not hard to come by.

SMEs like The Cookie Barrel and Carman’s have the advantage over the big exporters in being nimble and being able to react quickly to change.

For example, Carolyn reduced the cinnamon content in her cookies after she received feedback from her Malaysian customers. And that helped boost sales further!

Carolyn adds that her products are “made in the kitchen and not at the chemist”. And that is the unique selling point for her muesli bars.

Ground rules

Several factors need to be addressed in the export arena: prioritising markets, securing long term contracts with selected buyers, maintaining comprehensive intelligence and actively pursuing new innovative approaches.

Gemma says “It is vital and extremely important for companies, no matter what size or product, to spend time researching and planning ahead of making any financial commitment. Although the planning and research phases may be tedious, long and expensive, they should be regarded as an investment towards a successful achievement of their business objective.”

Some of the things that should be done include, collecting basic information of doing business with retailers, identifying all ‘hidden’ costs within the supply chain, validating the time taken to formulate a legally binding agreement, as well as conducting basic consumer research, especially sensory and price elasticity.

A successful company will need to plan for the long term, be prepared for minor returns in the short-term, and be flexible enough to alter their product/service strategies to ensure that the strategy reflects ongoing market and consumer findings.

According to Danielle, “The major obstacle perhaps is the time spent in building relationships prior to the first sale actually occurring. It requires a great deal of patience and commitment from a company to follow the process all the way through.”

Once that is established, it’s a ‘cake-walk’ literally!

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