It’s easy to drown in data. Statistics about an export market’s GPD, population growth, buying patterns and consumer trends are merely a click way. And yet, extrapolating the relevant information you need to validate new export markets can be extremely difficult.
In my experience, focus is key. While macro economic data has its uses, most F&B exporters need to understand some very specific market indicators in order to complete their cost benefit analysis. These are demand, competition and cost.
In the markets I work in across Asia, volume sales for imported F&B products come from commodity sectors including meat, dairy and fresh fruit. Products of this nature tend to move steadily, in container volumes. Conversely, value-add, premium products with no international brand recognition, especially those with handling constraints such as a short shelf life or temperature sensitivities, have a very small share of the imported F&B sector in Asia.
For many exporters, the easiest place to start is to discuss your offering with relevant distributors in each market. They will waste no time in telling you whether there is demand for your products. Just make sure that you are dealing with a reputable company and be cognisant of the fact that these distributors wield a lot of power given the vital role they play in providing market access for international food brands. You’ll need to make your pitch short and convincing.
Understanding the competitive landscape and how your product will compete in the market encompasses two elements:
1) A survey of the competitors in market and their pricing. For reliable results, it’s best to gather this information from the source, which means traveling to the market.
2) Your estimated wholesale or retail price. To calculate this, you will need to know your landed cost, once all duties and taxes are paid, and the typical supply chain margins applied in your target market. Your freight forwarder can help you with landed costs. For the supply chain margins, you’ll need to speak to an expert.
Knowing what it will cost to enter a market requires a thorough understanding of the various distribution models appropriate for your product and the norms around supporting sales. If you are prepared to put in the leg work, you can find this information yourself by speaking to various people from within the industry.
For example, distributors, retail buyers, marketing agencies and the like. Alternatively, you can enlist the help of a market expert.
FMCG brands should be prepared to pay handsomely to have their product listed in the right retail channels across Asia. Fortunately, there are no official entry costs in the Food Service or industrial sectors, however, an adequate marketing budget is still required to convert end customers and develop sales.