Marketing your products and services
Market entry
UK retailers rarely buy direct from overseas companies because they employ category management techniques, and get their suppliers to handle the distribution issues. Some methods recommended for selling to UK retailers include:
- Appointing a distribution partner to handle importing and customer liaison
- Managing the customer base from Australia and finding a fulfilment company to warehouse and ship to the customers
- Setting up an office in the UK
- Sending one of your Australian staff to the UK as a representative
- Sharing distribution with another Australian company with a synergistic product range
Selling through supermarkets is often not the most desirable route for Australian producers, particularly smaller companies or new exporters. Supermarkets and independent stores 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. Large volumes, price commitments and regulations can make this an unprofitable option.
A good option is to access the independent and specialist retail sector in partnership with a UK distributor. This lets you build export sales more gradually, allowing management of supply and marketing issues. This may also provide a better profit margin, as smaller retailers usually sell to consumers at higher prices.
The most successful organic products mirror mainstream products, which allows producers to adapt recipes, rather than developing totally new products. The organics category is rapidly expanding into traditional value-added grocery lines. As with non-organic groceries, convenience is the driver for new product development.
Ready-to-eat or part-prepared lines are popular. The growth of the home meal replacement sector and the in-store bakery both provide opportunities for Australian organic ingredients suppliers, although these sectors are smaller than grocery and produce.
Australia is not considered a major source of organic food products as most imports come from within the European Union (EU) and the USA. However, Australia has a good image with consumers as a ‘clean and green’ country although this in itself isn't enough to encourage buyers.
UK consumers are very discerning when it comes to packaging and presentation of the product. It is best to work with a UK-based specialist to develop packaging or branding suitable for the market, and a 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.
You will need to tailor your presentation for each retailer in order to be successful. Visit as many stores as possible to build up a picture of the retailer’s 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. When presenting your product to a UK retailer, either direct or via your UK distributor, you will need to consider the following:
- What the value to the retailer is of listing your product
- How your product ‘fits’ in the current product offering
- Who the target buyers 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
- If you are you willing to change the product ingredients or packaging to suit the retailer
- If an exclusivity deal is appropriate
- IF you are ready to provide product samples
When presenting to a retail or wholesale buyer, try to provide as much information as possible in brochure format. Although the majority of UK companies are online, a proper brochure and letter has an immediate impact. Try to provide:
- A history of your company and of the product range
- Detailed information about the product, its ingredients and packaging
- Information about your export experience or customers in Australia
- Recipes or meal ideas if the product has unusual ingredients
- Pricing in UK pounds or Australian dollars with a current exchange rate
- Landed costs are generally preferred buy buyers to ex-factory or FOB
There are some e-tailers and e-markets online, but like much of the food industry, these tend to be localised.
Distribution channels
The main distribution channels for food in the UK are:
- retail
- food service
- food manufacturing
The percentage breakdown varies from sector to sector, and with organics, from customer to customer.
Retail
The major supermarkets dominate food and drink retailing. Eighty-four per cent of food sales go through the following companies:
Supermarkets and independent stores 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.
Selling through the biggest supermarkets is often not the most desirable route for Australian producers, particularly smaller companies or new exporters. Large volumes, price commitments and regulations can make this an unprofitable option. A better option is to access the independent and specialist retail sector in partnership with a UK distributor. This lets you build export sales more gradually, allowing management of supply and marketing issues. They may also provide a better level of margin, as smaller retailers usually sell to consumers at higher prices. Good examples of this type of retailer are:
Food service
The value of food eaten outside of the home is A$120 billion. However, very little of this is organic. There are ‘gastro-pubs’ and restaurants specialising in organic food, but most make no special effort to source organic ingredients, due to the scarcity of distribution and costs. If you are interested in servicing the organic food service sector, it is worth finding a specialist import partner. It would also be worth visiting the outlets in person to talk to the chefs about your products, because this is a small and specialist sector with limited distribution.
Food processing
There are opportunities for supply of raw materials and ingredients to the UK processing and food manufacturing sector. This area is very driven by price, and competitors from mainland Europe and the USA may well have a cost advantage. If you are interested in this sector, it is worth contacting the processors and manufacturers direct, as they all have different buying processes and requirements. They may or may not buy direct, but they will usually be able to recommend a preferred supplier.
|