Marketing your products and services
Market entry
Retail purchasing in the Netherlands is quite centralised, with buying groups selling to their supermarket of wholesale members. Many of these members retain some purchasing autonomy, but the buying groups are very powerful. Buying groups include Superunie, Trade Service Nederland (TSN) and Koop-Consult.
Unlike some markets, Dutch retailers do not have a system of listing fees. However, they will expect you to help them promote your products, which will include spending money on marketing activities.
Retailers buy both fresh and grocery products from specialist distribution companies, rather than direct from the producer. In order to save costs and streamline ordering, stores have been reducing the numbers of favoured suppliers. This further restricts distribution opportunities for smaller companies. Category management, rather than ‘buying’ is the norm with the large retailers and buying groups.
Some options for entering the the Netherlands food and beverage market include:
- Appointing a distribution partner to handle importing and customer liaison
- Managing the customer base from Australia and find a fulfilment company to warehouse and ship to the customers
- Setting up an office in the Netherlands or another European Union (EU) country
- Sending one of your staff to Europe as a representative
- Sharing distribution with another Australian company – preferably with a synergistic product range
- Having your product manufactured in Europe, under licence
Of these options, the most effective is probably appointing a distribution partner. A Dutch company will understand how to best present your products, comment on changes to your packaging and will understand how to place the product in the market. These skills take time to acquire and demand exposure long-term to the market.
Dutch based companies expect to have long-term relationships with their suppliers, working together to achieve sales targets. This means that Australian exporters should consider the Netherlands as a long-term strategic market.
It is possible to identify partners with access to different sectors of the market, eg. retail, restaurants or ship supply. Companies are likely to be specialised in these sectors, and so you will need to appoint more than one partner to access the different opportunity areas.
The Netherlands is an important trading hub for Europe, and partnering with a Dutch company can be of strategic value to Australian food companies. Some market entry strategies include:
- Manufacturing under license in the Netherlands for distribution into the EU
- Packing or part processing in the Netherlands to reduce import duty and transport costs
- Using a bonded warehouse to call-off orders without incurring duty during storage
- Working with a Dutch trader to supply Eastern Europe and Russia with commodities
- Working with a Dutch distributor to supply retailers in Germany, France and UK
Dutch stores try very hard to make the shopping experience enjoyable, and will look for products that help them attract and retain customers. If you can offer an innovative range, or help them plan a promotion, they will be more receptive to your products.
There is a high level of awareness of Australia as an attractive destination, and some companies such as the supermarket Albert Heijn and airline KLM have run Australian-themed promotions recently. The rising profile of Australian wine is advantageous for gourmet food producers, especially if a joint promotion is possible.
Dutch consumers are interested in:
- Quality – appearance, taste, provenance
- Novelty – unique, innovative
- Time and labour saving – pre-prepared, ready-to-cook
- Value
Dutch consumers are very discerning when it comes to packaging and presentation of the product. It is best to work with a local specialist to develop packaging or branding suitable for the market. Your distributor should be able to help. The wrong packaging or marketing will mean that the product won’t get listed with any larger stores, and that sales are likely to be restricted.
Think carefully about your target consumer before presenting your products in the Netherlands. Don’t assume that your Dutch consumer will have the same characteristics or habits as your Australian consumers.
Because category management is common in Dutch supermarkets and buying groups, it is important to consider the following:
- What is the value to the retailer of listing your product
- How your product ‘fits’ in the current product offering
- Who the target consumers are
- Projected level of sales
- What the retail price will be
- What margins the retailer and distributor expect
- How you are going to promote the product?
- Are you willing to change the product ingredients or packaging to suit the retailer?
- Is an exclusivity deal appropriate?
- Are you ready to provide product samples?
You will need to tailor your presentation to each retailer in order to be successful. Visit as many stores as possible to build up a picture of the retailers consumer base and consider how your product fits their needs and aspirations.
Research the market and your potential competitors thoroughly before making contact with customers. Take advice from your distributor.
Dutch companies prefer to have brochures and product samples, rather than relying on websites for information. However, the use of Internet and email is high, and customers will use these.
The active food eMarkets are based in USA, UK or elsewhere in Europe, but Dutch companies are undoubtedly involved. Dutch retailers such as Albert Heijn offer online ordering for home delivery, something that is becoming increasingly popular. Many Dutch companies use the Internet for advertising and promotions.
You will need to check the paperwork accompanying your shipment carefully. A good freight forwarder or distributor can provide advice. Information usually required include:
- Health certificate (if appropriate)
- Export certificate
- Quota license (if appropriate)
- Correct commercial invoice (2 copies)
Distribution channels
Most retailers won’t buy direct from overseas suppliers, and so you will need to appoint an importer/distributor. There is a huge range of companies involved in importing food products from around the world, many specialising in specific products or customers.
Shipping small volumes of product can be very expensive, so consider working with other Australian food exporters to consolidate the shipments. You may find that working with other companies gives you an advantage with the retailers, as your distributor will be able to offer them a complimentary range of products.
Most grocery distributors will be working on a 20–30 per cent margin, and the retailer will be looking for 40–60 per cent. The level of margin will depend upon the unit value of the product, projected sales volumes and the product category.
Transport
The country is one of the smallest in Europe with excellent national and international transport links. The port of Rotterdam is one of the leading entry ports for Europe, supplying the UK, Germany and France. Around Rotterdam there are many companies with specialised storage, distribution and processing facilities.
The Netherlands is an important hub for ship and air transport, providing an opportunity to supply foods for consumption onboard. These providore products are exempt from import duties.
Sea freight to the Netherlands takes six weeks, airfreight takes two days. Sea freight is cheaper, but market conditions can change while your goods are on the water, leaving you with in a low profit situation.
Airfreight is the only option for perishable products. Pick a good freight forwarder and be prepared to pay a few dollars more for a worry-free service. It will pay to check out a number of service providers.
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