Are you brave enough to attack the Russian market ? Armies of leading consumer brands have aimed at Russia, one of the few remaining large markets with significant growth potential. Negotiating the Russian landscape is not for export novices, but companies with a long term time horizon may say “Da” to the market.

Why Russia ?
Russia is an important country, with 140 million people, twice the population of France or the United Kingdom. Importantly, Russia boasts of tremendous wealth in natural resources, including substantial oil and natural gas reserves. Russia’s powerful economy ranks 11th in the world and the largest market in Central and Eastern Europe. Retailers and Brand owners are “rushing to Russia” as “modern trade” represents only 14 % of sales versus 90 % in the balance of Europe. Sparkling Superstores from Auchan and Metro spread their footprints, creating important new outlets for the worlds leading brands.

Meet the Consumer
Russia’s Middle Class totals 35 million people with sufficient disposable income to purchase international brands. Housing and utility costs are relatively low, allowing consumers to devote up to 60 % of their incomes on food and beverage products. Russian’s spend less on automobiles, vacations, and non-food electronic items than western Europeans, leaving more money for food purchases. In the past, a shopping experience required lining up at state run stores for basic market basket items. Today, Russians living in major cities have access to vast new stores, bursting at the seams with products from around the world. Inflation is still a concern, with prices surging 9.4 % in 2009. Another consideration is the visible “upper class” which includes up to 80,000 “dollar millionaires” living in Moscow alone.

Retail Dynamics
Russia’s market offers strong growth potential ,but remains one of the most fragmented markets in the world. Traditional supermarkets and hypermarkets represent only 14 % of sales. Currently, the modern trade sector is dominated by a mix of local retailers such as X5, Magnit, and Dixy competing with well known international players. Global retailers have studied this attractive market and encountered mix results. Auchan and Metro enjoy hard won success in the Hypermarket and Cash and Carry sectors. Rewe’s Billa unit has starting slowly in Moscow through a partnership with the local group Marta. Carrefour, Ikea, and Edeka have signaled their intention to retreat from Russia due to the complexities of government bureaucracy and corruption. Walmart recently joined the Russian retailers association and reportably conducted financial discussions with the St.Petersburg based Lenta group. Most are betting on the long term consolidation of the market to traditional supermarkets creating enormous potential for retailers and brand owners.

82 Distributors & Importers
A common entry strategy is partnering with a distributor or importer to enter Russia. This allows you to link with a local expert who has an understanding of local trade practices, consumer habits, and government regulations. Most distributors of international brands speak English, but communication can be a challenge. Export Solutions distributor database tracks 82 different distributors and importers . These local companies maintain a broad spectrum of options from category specialists (Confectionery, Beverage,Non-Food) to geographic specialists with focus on Moscow, St. Petersburg , or other regions. As always, Export Solutions strongly recommends extensive due diligence of potential distributor candidates, especially reference checks with existing international suppliers and Dun & Bradstreet.

Getting Started
Russia is a strategic market that requires a measured approach to market entry. Don’t waste your time with a few containers of opportunistic shipments to a small Russian partner that speaks excellent English unless that is your long term view to the market. Our first step focuses on category analysis. Purchase your category data to understand size of the prize, competitors, and basic consumption and pricing information. Schedule a market visit to leading supermarkets in Moscow and St.Petersburg. Visit World Food , the largest food trade Show in Russia. In 2010, World Food will be held in Moscow between Sept 14-17 and attract around 50,000 visitors to 1,100 booths. Purchase Export Solutions Russia Distributor list to gain an understanding of potential partner candidates. The development of a logical market entry plan can be completed following this country and category assessment step. Normally, international brands may elect to start by targeting leading international and local chains based in Moscow and St.Petersburg. There are also a number of opportunities in the Gourmet/Delicatessen sector as well as Foodservice/Horeca.

Outlook
Leading consumer products manufacturers are focused on the famous BRIC nations. Russia has the smallest population of the four “BRICS”but features the highest per capita income. It’s proximity to Western Europe is another plus. A core strategy is to “follow the retailers” and Auchan and Metro in Russia supply an initial entry platform. A cautious approach is required, as mountains of examples of frustration and failure exist. Export Solutions point of view is that a strategic launch with a strong local distributor merits consideration as a viable route to market in this pivotal powerhouse.

1. Distributor Specialization: View the “comments” field of each distributor listing for clues on Distributor category specialization and brands represented.

2. Web Site: Visit distributors web sites for more company information. No web site listing indicates a smaller distributor. Export Solutions subscribers enjoy ”one click, live access” to distributor web sites.

3. Right Match: Prioritize candidates which are the “right match” for your brand requirements. Bigger distributors seek big brands with marketing budgets. Smaller distributors are open to smaller/niche brands with limited brand support plans.

4. Priority List: Target 5-10 distributors from your Export Solutions list with greatest potential “match”. Do not email every distributor on a list, with hope for a response!

5. Introductory Email: Send a brief company overview and a link to your company web site. Do not send attachments or pricing on your first email.

6. What Distributors Want to Know: What makes your brand unique? Where has your brand enjoyed success? What are your plans for my market? How much do you plan to invest?

7. Telephone Follow-Up: Call the leading 5-10 candidates. Best bet is to phone 2-3 days after the initial email was sent. Request a phone meeting if you speak with a secretary.

8. Personal Meeting: Try to arrange a personal meeting with the distributor at his office or a trade show. Amarket visit indicates that you are serious about the country.

9. Persistence Pays Off: Export Solutions country distributor lists track an average of 45 distributors of different sizes and specializations. Awell defined action plan with focus on points 6, 7, and 8 above should result in some interest from potential partners.

10. Export Tips: Export Solutions has published 54 articles on export strategy and distributor development. Read “Finding & Hiring the Right Distributor” and “What Every Distributor Wants to Know” at the Export Tips section of our web site.

Veteran sales and marketing executives have spent years of our careers preparing for and participating in sales calls on buyers ( now called category managers). Did you ever wonder what it would be like to switch places with your buyer at a major account for a day? Many of you are probably smiling pleasantly at the prospect of make loud, unrealistic, demands on your squirming buyer for a change. As you wake up to reality, the concept of “Buyer for a Day” merits consideration. Most suppliers would quickly discover that many buyers are bored by the daily parade of sharply dressed sales people with promises of the new “miracle meal” solution . Anti-social buyer behavior probably reflects the trauma created by the intense pressure to grow sales ( and extract money) in a shrinking, competitive retail environment. Listed below are our thoughts on understanding buyer motivation and how to adjust our business plans to sync with their objectives.

“Your Place and Mine” – Buyer for a Day
It is a worthwhile initiative to pursue a “sharing exercise” for a day with one of your buyers. Basically, the idea would allow you to sit in (“shadow”) a buyer for a days activities. In return, the buyer could spend a day with you at your office gaining insights into your business responsibilities and management objectives. Clearly, you would obtain first hand insights into “under the radar” buyer roles and responsibilities. The buyer would also benefit through exposure to requirements and practices to serve as a commercial sales manager for a supplier. Certainly, there are issues of confidentiality and avoiding competitive information sharing, but these are manageable if both parties are open to operating “outside the box” to secure a new learning experience. Naturally, the challenge is to find a willing buyer. Strong distributors may be able to arrange the exchange for a leading brand or pick a mid-size account where you have a good relationship.

Buyer Report Card
Another idea is to ask your buyer “What are the key metrics that you are evaluated on” ? No one will be surprised about buyer objectives related to sales increases and gross margin gains. However, you may learn that your buyer also has critical targets related to inventory turns, order fill, sustainability, or private label development. Another question is “How does your buyer spend his time ?” You may learn that the buyer sees suppliers two days a week and spends other blocks of time on category insights, merchandising meetings, store visits , or in other areas that you had never even considered. Learn how your buyer is judged , how he spends his time ,and align your own objectives wherever possible.

What’s New ?
My experience is that most buyers love the business and are thrilled by vendors sharing of truly new information and consumer insights in the categories they handle. Buyers often manage multiple categories and struggle to have time to analyze the causal factors behind the numbers. Sales representatives that avoid the trap of sharing “old news” will be welcomed . Why not invite a buyer on a “field trip” to a different market to study your category or to your product development lab to see your companies new innovation process first hand ?

Show me the Money !
I’ll never forget the experience of participating in a top level presentation with the global procurement officer of a top 10 international retailer. After a few cursory slides on the chains new store opening plans, he proudly unveiled his “incremental funding” report card. He openly stated that he was judged on “How much money he could extract from his suppliers”. He maintained a spreadsheet that tracked how much money he had received in trade incentives from major suppliers versus the previous year. The senior executive at the retailer claimed that he had no brand loyalty or favorites. In fact, he liked to play two leading category suppliers off one another to create a state of panic that would result in incremental spending plans by both manufacturers to sustain their market shares. This example would not shock anyone. We must never forget that a retailer is in business to make money, just like we are. However, large retailers have the benefit of making money through sales of access to shelves or slots or flier advertising space without having to actually having to sell more cases.

Implications
Buyer for Day presents a thought provoking concept. Even without a physical exchange of activities with a buyer, we can all take 30 minutes to think about your buyers job responsibilities, assessment metrics, and how he must spend his time. Think about what would interest you during a new product presentation. Also consider that a buyer spends his days listening to all category vendors and may be skeptical because each category participant claims that his product tastes better or works faster. Create a plan to gain credibility as a source of new category information and ideas that sync with a buyers own objectives. Lastly, a successful “Buyer for a Day” initiative will bring you closer to a key buyer , establishing a stronger personal connection that will ultimately translate to a more favorable impression for your brands and business ideas.

Everyone knows their own salary. But have you given much thought to your compensation structure for your distributor partners? Distributor compensation is often a “murky” issue, buried in a calculation created years ago focused on a combination of distributor margin plus other income for services rendered. Brand leaders periodically review their distributor compensation structure and compare it to the requirements to service their business in 2010. Listed below are Export Solutions “Ten Tips” for analyzing your distributor compensation model.

1. Convert Distributor Margin to Gross Dollars Earned: Margins percentages are important, but another critical measure is absolute income derived from representing your brand. This simple calculation of gross margin multiplied by invoiced sales provides a baseline number. In some cases, manufacturers should add bonuses or other payments and incentives to develop a rough number of distributor compensation for a market. This is the first step to understanding your true distributor compensation.

2. Shared Service Model: Typical distributor services may include importation, warehousing, delivery, selling, merchandising, invoicing, and collections. In some cases distributors reinvest a portion of their margin in trade discounts or in store marketing activities. Another major distributor expense is people, including senior management and a brand management team. Income from your brand margin buys your company a share of total distributor resources.

3. Value Equation: Distributor vs. Local Subsidiary: An important exercise is to evaluate the services received from the distributor relative to what they would cost if you needed to create your own independent subsidiary in a country. Your analysis should include subsidiary allocations for buildings, information technology, telecommunications, travel, and entertainment. Normally, the result demonstrates that the distributor model is an efficient outsourcing alternative. The key is to balance your brand objectives versus the requirement to function in a “shared services” environment where you are “buying” only part of the distributors time.

4. Pay For Performance: Most food and consumer goods industry executives operate in a compensation structure which includes a bonus incentive for achieving and exceeding assigned goals. Some brand owners have extended this approach to distributors so that the entire team is aligned on a common mission. All distributor bonus schemes should reward cases moved into consumption versus warehouse inventory.

5. Price Increases means Distributor Pay Raise: Many suppliers were fortunate enough to execute price increases in 2008 and 2009. In a margin driven structure, this often translates to a pay raise for the distributor, with little incremental effort other than implementing the price increase. On the other hand, a price decline means a reduction in distributor compensation and the distributor needs to execute his own “salary” reduction!

6. Contracts and Margins from the 1990’s: Many distributor contracts and margin calculations date back to the 1990’s or many years earlier. These agreements are rarely revised or reviewed based upon the realities of competing in today’s marketplace. When was the last time that you reviewed your Distributor contract, margin, and service requirements? Does it still make sense?

7. I don’t know my distributor’s margin: This happens more frequently than you might imagine. In many arrangements, the distributor buys your brand at a dead net price and applies their own internal methodology for margin development. Some distributors are protective of this practice with a rationale that manufacturers should not “pry” as long as shipments maintain a positive trajectory.

8. Best in Class Distributor Compensation: Leading Distributors offer an open book approach based upon a cost to serve model. Financially astute distributors provide new suppliers a detailed template identifying key services and manufacturers requirements to operate the business. Smart manufacturers will benchmark their distributor margin versus similar brands in the market. Key inputs include complexity of your product line, logistics inputs ( temperature controlled, case weight) and size of your business.

9. Total Compensation: More than Gross Margin: Examine every line item in your market price calculation to understand total distributor revenue sourced from your brand. Distributor may increase his income by through promotional funds, added margin for logistics services, or periodic bill-backs.

10. Distributors have Profit Targets Too !: Distributors are in business to make money too ! It is quite reasonable to expect that the distributor should realize a net profit of 3-5 percent. Everyone hopes to grow their salary base and receive bonuses for excellent performance. Winning long term relationships exist when both parties profit from business success.

Strong consumer goods distributors are deluged with representation inquiries from around the world. The emails are usually supplemented by a product catalog and promise to mail a price list! In a best case scenario, this type of approach may lead to a request for more information from a good distributor. More likely, the distributor will skip your inquiry and move on to the next opportunity in his mailbox. Listed below are Export Solutions tips for “breaking through the clutter” and providing the right information to generate excitement and interest from the distributor community.

1. What is your USP ( Unique Selling Proposition) ?
USP defines your competitive edge versus all other brands battling for the same shelf space . The USP can revolve around quality, value, assortment, or packaging. However, you need to validate your claims. For example, a statement such as “tastes better than competitors A & B” should be supported by market research of consumers or blind tests of a sufficient panel group that backs your quality claim. Similarly, a retail price review can demonstrate a “better value” position. Your USP must also pass the litmus test : Is your USP relevant to the purchaser and consumer? For example, you might offer the only coffee with orange and lemon flavors, but is anyone really looking for this product ?

2. Have you done your homework on my market ?
The food/consumer goods industry is relatively transparent. Typically, brand owners simply need to visit the leading supermarket chains to obtain a “snapshot”of local category assortment, pricing and merchandising practices. The assortment and shelf space allocation will provide clues regarding consumer preferences from a taste/usage standpoint and potential gaps in the market. Syndicated data providers such as Nielsen and Euromonitor supply reams of data tracking category sales and trends. New brand representation offers to distributors that demonstrate a degree of understanding of local category market conditions will always receive an appreciative response.

3. What will the brand owner invest ?
The most important consideration after the USP definition! A distributor believes that he needs the right financial spend levels to aid him in achieving the results that he is capable of. The correct spend level usually reflects an appropriate mix of trade development funds ( listing fees/shelf space/flier participation) and consumer awareness activities ( sampling/pr etc.) The brand owner must acknowledge that there are fixed fees to enter virtually every market. Some distributors are willing to split these fees. It’s usually not enough to case rate spending unless you have a very strong proposition. Bottom line: If you are unwilling to invest in your brand…..why should the distributor invest his time and resources building your brand?

4. Where has the brand been successful ?
Your track record at building brands counts! Share your record proudly, particularly if the target country or retailer are well known and reside in an adjacent country. On the other hand a “Made in the USA” success story may not be impactful if you don’t intend to duplicate the conditions that brought you success such as local production and measurable marketing investments.

5. How tough is the job to launch your brand?
Are you attempting to enter a competitive category dominated by heavy spending multi-nationals ? Or are you aiming at an attractive niche? What are the brand owners expectations in terms of product availability and sales volume?

6. Can the distributor make money with your brand ?
Distributors seek to obtain a fair profit for their activities to support your brand. Profit must be measured in dollars contributed versus percent of sales. Distributors rarely make money during year one of an introduction as they allocate a disproportionate share of their resources to launch a brand. On the other hand, new brands in current categories for the distributor can bring new profits with minimal incremental effort. Globally recognized brands bring prestige to a distributor’s portfolio and may serve as a magnet to attract other brands. Brand owners must present a convincing case to the distributor on the incremental profits that your company can generate.

Who created the distributor lists ?
Our proprietary lists were compiled by consumer/food products professionals with 28 years working with distributors, importers, and brokers in Europe, Latin America, Middle East, Asia and the USA/Canada. The carefully researched lists contain distributors, importers, and brokers who are the leading local companies at supplying supermarkets and other trade channels. Many companies represent easily recognized global brands. Today, we are grateful that leading distributors submit their company data to be included free of charge in our industry leading directory. View our company video for more information.

How accurate is the contact data ?
Export Solutions distributor lists are updated every day ! Approximately 150 New distributors are added each month. Distributor company names and web sites rarely change. The distributor’s key contact for new product inquiries and their email addresses may change as a result of job moves or organizational shifts. We employ three separate mechanisms to keep up to date with changes. Please note that our China list changes frequently reflecting the pace of development in China.

What product categories are included ?
Distributors include specialists for branded food products, health and beauty care products, non-food brands, confectionery/snacks, beverage, natural/organic foods, gourmet products, specialty food, and general merchandise. Many distributors can handle any product that is normally sold through Supermarkets, Convenience, Foodservice/Catering, or Pharmacy trade channels.

How many countries are included ?
The database covers 90 countries with the highest retail sales globally. Subscribers enjoy unlimited access all countries in the entire database for one year. This includes all new distributors and countries that are added and any updates in contact information. Purchasers of individual Country lists receive the most current list as of date of purchase, with no access to our frequent updates.

How many distributors are listed per country ?
Most countries list an average of 45 unique distributors. The lists provide a mix of large, medium size, and small distributors, importers, and brokers. The larger distributors tend to prefer partnership with established global brands while the smaller distributors tend to be more entrepreneurial and open to pioneering new brands and smaller companies. The USA Distributor/Importer list contains 260 distributors and importers, organized by State.

Does Export Solutions have additional information on the distributors ? Export Solutions knows many of the Distributors in our database. Clients of our Premium Subscription or Talk to An Export Expert Services can gain access to our insights on the best distributor candidates in any country for your brand.

Tell me about your Category Distributor Lists
Export Solutions now offers popular lists focused on Confectionery ( Candy,Snacks, Biscuits),Fine Food/Gourmet, Hot Beverage, Ambient Beverage and CPG/FMCG (Big Brand) Distributors. Normally these lists include distributors who focus solely on one product sector ( i.e Confectionery) or work with a variety of categories, including the featured one. In 2010, we will also offer category/sector specific lists such as Natural Food Distributors, Ethnic Food Distributors, Beauty Care and Healthcare/OTC distributors.

How do I use the contact lists to find the right candidates ?
The comments section of each distributor listing supplies important clues on each distributor’s specialization or brands represented. Our listings include web site addresses for seventy percent of distributors in the database. Visit distributor’s web sites for more detailed information on company credentials. Export Solutions strongly recommends extensive due diligence on potential distributor candidates. This includes reference checks with existing brands handled and Dun & Bradstreet financial analysis. Export Solutions is available to help qualify distributors through our Strategic Services or Talk to an Expert programs.

What is the best way to reach the distributors ?
We recommend sending an introductory email with a link to your company web site. No one opens large attachments ! Follow-up with a phone call to your highest priority candidates. Schedule an in-country interview at the distributors office or an introductory meeting at a major trade show.

Can Export Solutions locate distributors in countries not listed ?
Export Solutions can locate distributors for most branded “supermarket product” in any country worldwide through our Strategic Services division. Our 2010 goals are to provide coverage of 5,000 distributors in the 90 countries with the largest economies

Hiring the right local partner is the third most important step in optimizing your sales. This follows creating a product with a unique consumer value proposition and willingness to invest in brand development activities. Listed below are some practical tips on selecting the right company to represent your brand.

Identify a Pool of Preliminary Candidates
Create a large group of potential candidates. This could include distributors, importers, brokers, or local producers of related products. Highlight companies that are specialists in market sector that you are aiming at. Export Solution streamlines this process with our online directory of more than 4,400 distributors, importers an brokers for 90 countries.

Establish Partner Selection Criteria
What are the key attributes of your ideal candidate?
Product specialization? Service portfolio ? Existing results for current brands?
Choosing a Large, “Best in Class” partner versus a “Small, Hungry” company willing to pioneer a new brand is an important preference.

Determine Candidates Preliminary Interest Level
Send a brief summary of your product proposition and company credentials to the 5- 10 most promising candidates. A follow-up phone call to your top candidates is an appropriate personal connection. Distributors expressing an interest should complete a brief company overview recapping their corporate capabilities: Sales, Logistics, Marketing etc.

Schedule a Meeting in the Candidates Office
Normally, we recommend interviewing at least three candidates depending on the size and scope of a project. Schedule the meeting 3-5 weeks in advance. Provide a specific agenda at least 2 weeks in advance, including pre-work such as category market analysis. Meet the distributor’s team that would work on your business, as well as senior management. A distributor’s office provides clues on company culture, scale, and capabilities.

Prepare Interview Questions and Assessment Grid in Advance
Create a list of key questions to ask each candidate. Topics could include local category dynamics, cost of entry, and Distributor success stories. Create a standard grid to evaluate and compare all candidates on a common platform. See page 4 for a sample distributor assessment grid.

Conduct an Independent Evaluation of Candidates Performance for Existing Brands
Visit target outlets for your product to observe category conditions. At the same time, evaluate each candidate’s performance for his existing clients. Do his current brands maintain a strong presence in the market? Or are his brands hard to find? Conduct these visits to leading retailers independently, as an accompanied visit may lead you to select stores which may not be representative of marketplace reality.

Reference Checks Represent an Important Next Step
Request references of 5 of the distributors top 10 clients. Call at least three references and request insights into performance and capabilities. Acknowledge that these are likely to be positive references, but they always provide significant value. Run a Dun & Bradstreet or other type of credit report on leading candidates. Export Solutions is often hired to conduct independent, confidential, reference checks.

Invite Top Choice to your Corporate Headquarters
The visit should include meetings with senior management, factory visit; launch planning, and mutual commitment. The visit serves as an important bonding and relationship building experience between your company and your new partner.

Finally, the opportunity to close the book on a “mixed” 2009 with a fresh start to 2010. Many companies have been engaged in the 2010 planning process for months. January has arrived and now is the time to translate plans to action. In today’s business environment, execution of the same plans and same promotions as the past will deliver mediocre results, even for leading brands.Try something new ! Insert some excitement into your brand plan and challenge your distributor team to get behind it !

Listed below are a few ideas to make a difference in 2010.

Launch Breakthrough:
Think Big! An adjustment in mindset towards “What if” can deliver game changing results for your business. The consumer goods industry contains many success stories where hungry innovators challenged existing status quo to achieve Breakthrough results. Breakthrough is about delivering extraordinary results by employing unique strategies and perseverance. The beauty of Breakthrough is that everyone can participate. Each team member needs to analyze his business and identify one sale or achievement that would deliver maximum impact. Breakthrough objectives should focus on “Big Wins at Big Accounts” and be aligned with your companies overall growth strategy.

Co-Branded Promotional Campaign
Retailers generate excitement through theme events around a group of complimentary items or common cause. Reach out to Brand Owners of products that sync with your product. For example a low calorie sweetener manufacturer could do a joint promotion with a coffee manufacturer. What about a Barbecue event with Barbecue related products : Charcoal, Meat, Snacks, Drinks, Condiments etc. Another example is a retailer promotion celebrating their company anniversary or support of their designated Charity ( Breast Cancer, Diabetes etc.). In many countries, leading distributors sponsor an annual event for all the brands they represent. Many countries export offices organize annual events at leading supermarkets for all food brands from their country. In each case, manufacturers pay for a portion of the event as costs are spread out among all brand participants.

Hot Countries
Business may be tough at home, but certain regions will boom in 2010. GDP growth is positive for most of Asia, with particular strength in China & India. Oil prices have recovered from their lows and are replenishing the coffers of most Middle East countries. Dubai is still a concern, but Abu Dhabi’s deep reserves should prevent a panic. Brazil is ready for a major run, as they begin to source benefits from newly discovered oil deposits and invest for the 2016 Olympics. South Africa will benefit from the 2010 World Cup. Chile, Poland, and Romania will experience growth in excess of their regions. Iraq, Algeria, Bolivia and Indonesia will also grow but maintain a higher risk profile

Distributor of the Year- Sales Contest
Sales people love to compete. It is incredible the results that can be generated for a modest prize. Consider a Distributor of the Year program. Normally, I like contests that are 50 % dependent on shipment performance versus quota, 25 % on achieving new product launch acceptance ( or other major initiatives), and 25 % for intangible activities: Breakthrough performance, success despite adversity etc. The key is to strike a balance between shipments (what counts) and other factors as in many cases shipments don’t tell the entire story. Publish periodic updates and rankings. This pushes leaders to remain focused and laggards to increase intensity.Everyone loves to be part of a winning team.

Underperforming Markets- Distributor Change
All Companies have problem markets! The first step is to admit that the market has a problem. It’s a natural instinct to rationalize poor results and hope for future improvements. We must remind ourselves that chronic underperformers impact our ability to achieve our personal sales and profit targets. Organization change is a last resort, but sometimes the best avenue to reinvigorate your brand. A new distributor brings energy, focus, and commitment. Make the decision today, in order to have your new distributor make an impact on second half 2010 sales.

A natural goal is to achieve "Preferred Supplier Status" with retailers and your distributors. Satisfied trading partners generate superior results. It is highly desirable to achieve formal or informal recognition as a "Preferred Supplier". Listed below are 15 tips to be viewed as a "Preferred Supplier" with your distributors and retail customers.

1. Invest in Brand Support- Marketing activities drive incremental sales and cultivate the health of your brand and category. Supplier investments in consumer awareness and retailer development activities help everyone achieve their sales objectives.

2. Innovate, Innovate, Innovate: The CPG/FMCG industry is fast paced, with frequent new product introductions. Companies which invest in research to deliver new product ideas out-perform and lead the category.

3. Provide Realistic Growth Expectations: Single digit sales increases are the norm for our industry. Calibrate your expectations for growth and success based upon market dynamics. If a market/category/retailer are growing at 5 %, you must make a case based upon your brand plans for a sales increase beyond the overall market growth rate.

4. Distributors Need to Make Money Too! Retailers, Manufacturers, and Distributors seek to achieve a reasonable profit. Distributors ( Importers/Brokers) are often "squeezed" as middlemen. Distributor Margin reductions translate to cutbacks in sales personnel, customer service, investments in technology, and ultimately impact results for your brand. A financially healthy distributor is a productive partner.

5. Focus on Priorities versus Minutiae- All partners are guilty of getting absorbed in the details of the business. Maintain attention on the key elements which drive business success. Minimize "non-essential" reports.

6. Keep the Supply Chain Filled- Short shipments cause a chain reaction of problems throughout the supply chain. Seek to attain a 98% case fill rate or better.

7. Visit the Market, But not Too Often- Distributors and Retailers welcome your periodic visits. Insights on market development and problem solving "face to face" are invaluable. On the other, you need to provide distributors the time and freedom to build the business without distraction of preparation and management of frequent supplier market visits.

8. Calibrate Time Commitment to Compensation- A first step is to evaluate what your brand represents to a distributor ( or retailer) in terms of annual revenue/profit contribution. Reflect on the activities requested to service your business in relation to your contribution.

9. Keep Your Commitments- Preferred suppliers are viewed as trusted partners. Reliable suppliers secure more than their fair share of retailer and distributor focus. Last minute cutbacks in marketing support are sometimes necessary, but damage your credibility.

10. Respond to Local Ideas- Distributors and Retailers know their markets. Give them the support they request on a new promotion idea or sales campaign. Let them build ownership of an idea and the ultimate results. Good ideas will build credibility and sales.

11. Pay Bill-backs on a Timely Basis- Many distributors are small businesses with tight cash flow. It is always positive to be viewed as a "Prompt Payer" of legitimate invoices.

12. Support Distributor with Corporate Headquarters- Many companies enjoy long term relationships with their distributor network. The Distributor depends on you to serve as their advocate with senior management of your company. Fight for their ideas and defend their business performance, where appropriate. Remember that all organizations experience a mix of "good years and bad years".

13. Share Best Practices- Industry participants are all "students of the game" and are generally open to learning about strategies from other markets/retailers. On the other hand, we must recognize that all markets have subtle differences and not all approaches are transferable.

14. Provide Proper Lead Time to Achieve Desired Results- The consumer goods industry is relatively organized with established protocols and timelines. Exceptions can be made in case of product recall or breakthrough innovation. Everything functions better when timelines are adhered to.

15. Recognize Achievement- Take the time to say "Thanks" or "Well done". This acknowledgement may be in the form of a personal note, phone call, or public recognition.

Fact: The Caribbean Basin represents the largest international business for many exporters. Surprised ? 80 million consumers live on Caribbean Islands plus Central America. In many categories, these small countries lack the local manufacturing to provide the depth of product assortment that their consumers require. Proximity to the Southern USA has created strong trading relationships between local distributors and leading cpg manufacturers.

Key Business Drivers
Consumer awareness of USA/European brands is high through tourism and cable television. Wal*Mart is dominant in Puerto Rico plus core Central American countries of Costa Rica, Guatemala, Honduras, and El Salvador. Suppliers extend their relationships with Wal*Mart to the region. English language packages are accepted for sale in most countries, requiring little added complexity for manufacturers. Most middle/upper income consumers have visited the USA and are familiar with our brands. Tourists from USA/Canada/Europe are important contributors to the Foodservice sector.

Best Prospects
Puerto Rico represents the largest market. Familiar retailers such as Wal*Mart, Sam’s, Costco, & Walgreens serve as natural customers for USA brands. Panama & Costa Rica offer sophisticated retail environments and serve as important tourist and retirement destinations. Dominican Republic, Trinidad, & Jamaica are the largest Caribbean markets after Puerto Rico. Guatemala’s 15 million population creates a worthwhile market. British brands enjoy strong acceptance in Jamaica, Bermuda, & Barbados. French brands do well in Martinique and Guadeloupe. Spanish products enjoy good sales in Puerto Rico & Dominican Republic.

Preferred Organizational Model:
Strong distributors exist in each country. These distributors are familiar with all requirements for the import and commercialization of branded products. The Export Solutions distributor database contains 292 distributors for 16 Caribbean Basin countries, an average of 18 per country. Access the database at www.exportsolutions.com. Direct sales to leading supermarket chains are a possibility. However, problems emerge as you have no merchandising representation at store level and out of stock situations created by an uneven supply chain.

Seasonality:
December-April represent the key months for consumption, particularly in the Islands. This means that inventory must be in place by September-October to capitalize on the peak selling season. June-August are slow months. Central American countries do not experience seasonal shifts except the normal Christmas surge in business.

Pricing Sensitivity:
Pricing strategy represents the largest challenge. Manufacturers seek to recoup the cost of freight to the region, resulting in higher prices versus the mainland USA. Caribbean retailers often compare local prices to prices available from USA wholesalers and "cherry pick" to obtain the lowest cost of goods. This frustrates local distributors who lose sales. On the other hand, manufacturers are reluctant to reduce their margins to the Caribbean to match mainland USA prices. Export Solutions has helped many manufacturers deal with this issue.

Export Solutions Can Help!
We maintain excellent contacts with distributors throughout the Caribbean Basin. Contact us to learn how we can help build your business in 16 Caribbean Basin countries or Mexico or anywhere in Latin America. We speak Spanish and can help you navigate the Caribbean !

Every job performance review measures results versus shipment objectives. In the export world, shipments are the key indicator of success, but can be manipulated by inventory sitting idly in a distributors or customers warehouse. In reality, the way to improve shipment results is to attack and focus on causal factors that drive the business as well as other metrics of success. Export Solutions has worked with several of our consulting clients on developing scorecard metrics to calibrate progress in the marketplace. Listed below are metrics for measuring Export Success

1. Market Share and Market Share growth Trends
2. Per Capita Consumption of your product, trends Measure: Scanner sales
3. Value/Volume Sales Trends (dollar /euro sales,units sold/kilos sold etc.)
4. Product Availability Grid Score – This measures authorized items listed versus potential listings at most important retailers in a market or territory. This score should be weighted based upon a retailers share of market.
5. Promotional/Marketing Spending as a percent of Sales Volume Case rate spending levels/trends
6. In Store Presence Grade/Trends – This is for brand owners that employ a system of grading each individual store
7. Sales growth in excess of overall market growth. i.e. Market is growing 5 % and your brand grows 10 % , so your brand is growing at +5 points versus overall market growth
8. Share of Category assortment versus market share
9. Share of Category shelf space versus market share
10. Share of Category Displays versus market share
11. Share of Category Promotion Activity versus market share
12. Weighted Distribution, Trends – “# doors of availability, by item”
13. Out of Stock levels, trends
14. Market Profitability – Margin, Total Value, Trends
15. New Product Launch – Sales, weighted distribution, market share
16. Days Outstanding/Trends, Bad Debt as a percent of sales.

Retail stores serve as showcases for our products. This is the point of sale where inventory is translated to a consumer purchase. However, many manufacturers spend the bulk of their energy against securing the headquarter listings, chasing shipments, while store conditions flounder at the middle of the priority list.

Increased focus on in-store conditions is critical because it delivers benefits every single day. Listed below are Export Solutions tips for winning the battle at the retail shelf.

1. Define and publicize your Shelf Objectives – The first step is to insure that each member of your sales team is “crystal clear” on your brands in store objectives. Create a shelf conditions standards book, including photos that can be distributed or shared online. I’ll always remember a store visit in northern Argentina when I was a manager for Clorox. The distributor representative proudly brought me to his “best’ store. The store was not bad, but below objective because our brand only owned 50 % of shelf space versus our 65 % market share. When I mentioned my disappointment, the representative accurately claimed that “no one had ever shared” this shelf objective with him before.

2. Create an Objective Mechanism to Evaluate every Store – How did your brand look in the last store visited ? Was it an “A,B,C, D, E, or an F” ? Why ? Establishment of a grading system allows you to provide an objective report card for each store. Normally, a system of awarding points for share of shelf space, retail availability, and off shelf merchandising is simple to execute.

3. Focus on Basics: Distribution, Availability, Shelf Space, Shelf Position, and Off-Shelf Merchandising.
All authorized brand sizes should be tagged and in stock. Brand should maintain share of category space equivalent to or greater than market share and placed next to the targeted competitor. Incremental points should be awarded for off shelf displays or secondary locations. Fair pricing is also important, but normally tightly controlled by central buying.

4. Establish a Baseline for Store Conditions – Introducing new store conditions tracking metrics can be a shock to your retail sales team, as existing conditions are likely far below minimum acceptable standards. The idea is to create a baseline of performance and measure monthly or quarterly progress towards objective.

5. A Market Wide Retail Audit creates an Accurate Benchmark- This requires the participation of 2-4 people ( depending on market size) from your company matched by an equivalent number of people from your distributor/retail sales team. Each 2 person team is committed to spend a full day at retail and is assigned a certain city or section of town. Teams can usually visit 10-15 stores per day giving you a broad spectrum of results across the market. Each store should be measured by the same criteria. Ideally, the entire group should meet at the end of the day to share observations and next steps. Audits can be tied into a major sales drive such as a new item rollout, peak seasonality etc. A good distributor will work hard to fix problems in advance of a previously scheduled market wide retail audit.

6. Sponsor a Retail Sales Contest – This retail contest can be tied to the launch of new retail sales objectives or a “grading” system. Structure the contest for maximum number of winners. Reward most improved from a pre contest baseline. Contest should be one –two months in duration to optimize excitement and focus. Get creative with a theme such as “A Room with a View” with first prize being an overnight stay at a 5 star hotel room with a view for the sales representatives stores have the best “view” for your brand.

7. The retailers schematic/planogram serves as the official record. Request that each distributor forward the planogram for each of the 2-4 largest retailers for each market. Reward key account sales people for implementing changes in the official planogram.

8. Provide at least one Shelf Objective for every month- A monthly objective for your brand or company forces the retail team to look at your brand on every store visit. The objective can be oriented against moving your brand to an eye level shelf, improved shelf space allocation for a particular size/flavor, or against reduced out of stocks. Track the objective with a question that can be answered by “Yes/No” or a numeric response. This will allow you to participate with software on handheld retail reporting devices.

9. Focus against accounts with problems with retail execution- My experience tells me that some accounts are better at maintaining attractive category showcases and in stock conditions. Other high volume hypermarkets are plagued by frequent “wiped out” categories. Certain accounts prevent representatives from touching the shelf due to union policy. Persistent out of stocks may reflect insufficient shelf space, low warehouse inventory, or problems with automatic replenishment systems.

10. Visit stores on every trip to the market- Your attention to store conditions will linger after your plane departs. “Retail is Detail” and the “Distributor respects what the brand owner inspects” are well known comments on retail. Send a signal that you are focused on your retail showcase and watch your brand presence improve !

Everyone loves a trade show. Where else can you rent a booth and witness lines of customers and distributors waiting to see you to talk about your brands ? Trade shows represent sizable investments and valuable booth time can be wasted with non-productive meetings. Visit www.fmcgtradeshow.com for details on the Food and Consumer Goods industries Top 100 trade shows for 2010.

Read our Ten Tips to maximize your trade show productivity.

1. Create Sign : Distributors/Customers Wanted – List countries where you are searching for a distributor or retailer partner. This serves as an invitation to distributors from those countries to stop by. This strategy also acts as a deterrent to discourage distributors from visiting from countries where you already have a partner or maintain limited interest.

2. Use Export Solutions Database to Pre- Screen Distributors and Schedule Meetings-Over 1,000 companies have used our proprietary database to find qualified distributors. Quickly.A common technique is for distributors to list the countries where they hope to expand one month in advance of a major trade show. Then they use the Export Solutions database to pre-screen candidates and identify the five candidates per country with the highest potential. Then, they email these distributors in advance of the trade fair to schedule a meeting.

3. Create a template to recap capabilities of potential distributors- Request that prospective distributors complete the template in advance of a meeting. Think of the template as a distributor CV or resume. How long has the distributor candidate been in business, sales, employees, key brands, length of service for key brands, and most importantly references from other brand owners and in country retailers.

4. Prepare a One Page Recap of your Company Credentials – This should include product “beauty shot”, current export countries, and unique product characteristics. List export manager contacts and a photo on the back with a space for notes. Professionally print this on a one glossy page handout. This will serve as an important reminder for the meeting when the retailer or distributor returns home with hundreds of business cards.

5. Participate in Show Sponsored Matchmaking Events- Most trade fairs organize matchmaking events. The formats can vary, but basically they can arrange meetings with interested buyers or distributors. As always there is a mix of good meetings and bad, but the approach is worth consideration.

6. Take Photo’s of Potential Distributor Candidates – First take a picture of the distributors business card. Then take a photo of the potential new distributor. After hundreds of short meetings, this will help you remember the candidate once you begin serious due diligence after the trade show.

7. Bring at least 500 Business Cards – I am serious. We have all run out of cards at a trade show. Better yet. Bring 1000 business cards.

8. Schedule a Group Event for Current Distributors- This event is an efficient way to launch a new product or announce “Distributor of the Year”. You must schedule the event before or after show opening times. Best bet is a Breakfast or a dinner if you schedule it four months in advance to avoid conflicts with other events.

9. Get to the Show Early and Leave Late – As a trade show visitor, it is normally much easier to reach senior decision makers of a supplier before 1000 am or after 400 pm.

10. Create a Trade Show Exhibit Planner –Trade Show’s post a listing of all exhibitors on their web site in advance of the show. Many also have a routing software that will allow you to add exhibitors of interest to your private list and plot a route based upon your selected exhibitors. Exhibitors that maximize trade shows schedule most of their meetings in advance.

Visit www.fmcgtradeshow.com for details on the Food and Consumer Goods industries top 100 trade shows for 2010.

Is your distributor (or importer) network “Best in Class”? Alignment with a strong partner will deliver superior results for your brand. Export Solutions evaluates and analyzes hundreds of distributors per year. Frequently, our point of view is requested to establish criteria for selecting the best distributor candidate for a brand owner. Recapped below are points for consideration for evaluation of your existing distributors or potential new partners.

Size Counts !
Critical mass translates to the ability to offer broader services and deeper sales coverage at a competitive rate. Retailers are dependent on large distributors, creating a “two way” street on tough negotiations. Larger distributors leverage their scale to obtain benefits for the niche brands in their portfolio. In times of financial turbulence, larger distributors get paid first. Bigger is not always better ( see Big Distributors vs. Small Distributors article), particularly if you are a small brand. An important metric is distributor rank in terms of sales revenue to key retail customers within your category.

Countrywide Coverage
All distributors normally feature good presence and contacts with major retailers and stores within the capital city. Best in class distributors offer superior coverage countrywide. Look for distributors that maintain sales offices and warehouses outside the capital city. Request a map pinpointing where the distributor’s field sales people are based. Typically, the major cities represent only 50 % of a countries volume. An opportunity exists for best in class teams to obtain higher brand development outside the major cities where second tier brands do not have coverage.

Information Technology-Reporting
The sophistication of a distributor’s information technology platform creates a statement regarding the distributors commitment to future growth. Best in Class distributors offer online portals where their suppliers can log in to view sales trends, inventory levels, invoice status, and results versus key sales initiatives in “real time”. Leading distributors supply their field sales teams with handheld computers to transmit time sensitive information on orders, pricing, in store conditions, and competitive activity. Other key areas for evaluation include a distributor’s supply chain management software, ability to handle multiple EDI transaction sets, as well as data security and back-up plans.

People- Multinational Expertise
Many distributors trace their origins to family run operations. The most successful entrepreneurs recognize the necessity to bring in professionally trained talent to bring their organization to the next level. Best in class distributors hire executives with experience with strong companies such as Procter & Gamble, Nestle, & Unilever to manage key departments. Progressive distributors incent these senior executives with a route to gain ownership shares in return for their services.

Multi-Channel Focus
Global brands source sales from multiple trade channels: convenience, foodservice, discount, pharmacy, cash and carry, natural, gourmet, and wholesale in addition to traditional supermarkets and hypermarkets. Best in Class sales teams offer coverage of all trade channels and deploy dedicated specialists with channel specific expertise. Similarly, small shops still represent 50 % or more of food sales volume in Latin America, Asia, and the Middle East. Leading teams feature focused programs for reaching “down the trade” retail outlets.

Marketing Department-Creative Ideas
Is the Distributors owner the “marketing” department as well? Your primary point of contact at the distributor has the greatest ability to impact brand results and influence the distributor’s organization to achieve your priorities. Strong distributors establish full- fledged marketing departments with experienced university graduates filling key roles. Successful marketing managers bring new ideas to your business and adapt your brands marketing message to the local market. Look for an energetic marketing team that adds value and creativity and avoids the mistake of simply passing through your standard presentation and plan.

Brand Presence at Point of Sale
The retail store is a showcase for our brands. Best in class field sales teams “own the store” and can obtain more than “fair share” of shelf space for the brands they represent. Are your brands at eye level, with share of space in excess of their market share? Or are your brands buried on the bottom shelf, with only one facing per item? Strong distributors maintain excellent store level coverage to insure fundamental focus on correcting out of stocks, price tag placement, correct pricing, off shelf display, point of sale placement etc. Speed to shelf timing on new products is another key metric to evaluate distributors. Always request the retailer’s official schematic (layout) to measure the authorized shelf space and positioning for your brand.

Financial: Cost to Serve
The last 12 months reinforced the priority to be aligned with a financially solid partner. Savvy manufacturers are requesting new credit information and running Dunn & Bradstreet reports on all distributors in all markets to preempt the difficult situations that transpired in other countries. Best in Class Distributors offer competitive margins and provide ideas to generate cost savings in your mutual business. The best distributors pay on time, promptly submit promotional reimbursement requests, maintain good financial tracking systems, and secure reasonable payment terms from retailers.

Logistics: Service Level 98 % +
Logistics represents a core component of a distributors service offering. Advanced distributors promise 24- 48 hour delivery countrywide and maintain sophisticated inventory replenishment systems. In large countries, look for distributor warehouses outside the capital city. In some instances, distributors may outsource logistics operation to another third party specializing in logistics only. This strategy normally works well as long as the logistics company delivers excellent service without incremental costs. Remember, most distributors were founded as sales and marketing specialists that provide logistics services to satisfy the needs of their brand owners. My opinion is that the distributor dedicates more focus to brand building if the distributor can find another company to effectively manage logistics. The key metric is 98% + service level and minimum out of stocks at store level.

Results
Best in Class distributors ( large or small) deliver results in excess of total market and category growth year after year. The best way to measure topline distributor performance is to compare total retailer growth and total category growth (excluding your brand) with your brands performance in a country or at a retailer. Are you getting your fair share of growth? Best in Class suppliers recognize that there are substantial costs in investing and developing a best in class team. Suppliers must recognize that distributors are also in the business to make a reasonable profit. The “Best in Class” relationship allows both parties to grow and prosper from a sales and profitability standpoint.

Export Solutions believes that our industry shares many common operating procedures across borders. Clearly each country maintains a unique set of habits and practices. On the other hand, I find that brand owners everywhere dedicated against the fundamental challenge of getting their brands listed with good shelf space while buyers are perpetually requesting (demanding ?) more favorable terms.

Recapped below are some key differences between the European industry practices and the USA as you consider your market expansion plans.

1. USA supermarkets stock 40,000 unique items vs. 18,000 items in Europe – USA stores average 35,000 sq. feet, almost twice the size of European stores. This is good news for suppliers looking to sell to the USA. Bigger stores mean more room for new brands. USA suppliers may find it more challenging to secure listings in Europe. Smaller European stores mean that each item must be unique and create real value for the category. USA suppliers should forget launch plans that include the USA tradition of securing distribution for 4-10 new listings for a brand. Consider yourself lucky if a European retailer accepts 1-2 items of your new product rollout.

2. Terms and Conditions vary by retailer in Europe- European buyers are tough negotiators and each retailer may enjoy slightly different wholesale pricing and payment terms. In the USA, a law called Robinson Patman states that all retailers should get the same price opportunity. This does not mean the same price, but in practice most USA retailers receive the same everyday list price structure. In the USA, there tends to be more flexibility around deployment of trade marketing funds and slotting allowances.

3. Private Label a Big Factor in Europe- Private Label value share reaches almost 50 % in countries such as the UK or Switzerland. Many European retailers might prefer selling your product under their label versus your brand. In the USA, private label is growing, but from a low base. Retailers are pushing private label in the USA, but with mixed success aside from a few commodity categories. Most middle-upper income USA consumers still associate private label with lower quality products and the price gap versus national brands is small.

4. Category Review vs. Annual Negotiations- Many European countries have extensive annual negotiation processes for all suppliers that may last from September until February of the next year. These difficult negotiations represent a series of tense meetings where buyers extract more preferential treatment in terms in conditions in return for new item placement, promotional support, or in some cases just remaining on the shelf. A salesman serves as a “negotiator” almost in a diplomatic sense. In the USA, most categories are reviewed once or twice per year. At this time, the buyer will perform a deep dive analysis of category trends and performance. This Category Review process is heavily dependent on key account and market level data. Each category participant is invited to present his view of the category, often following a designated template of requested information. At this point, the buyer typically adjusts category assortment and shelf planograms. A USA salesman must be an “analyst” as well as a salesman!

5. USA shoppers may visit 5 to 6 different retailers each week. It would be typical for a USA family to visit 2 different supermarkets, a Club store (Costco/Sams), Mass Merchandiser (Target or Walmart), a drug store and perhaps a gourmet store (Trader Joes or Whole Foods) every week. It’s easy, as most consumers have access to big stores with huge parking lots. Gas is only about 2.79 per gallon ( or .50 euro cents/liter). USA consumers “ cherry pick”, buying certain items or categories from each channel specialist. This keeps prices competitive and national brands are used to drive store traffic. Shopping patterns are different in Europe. Families may prefer to visit a hypermarket to make a stock up purchase 1 or 2 times per month. Then, smaller stores and specialty shops are visited several times per week for fill-in requirements. Shopping can be more of a hassle in Europe due to smaller parking lots, cost of gas, and usually narrower choices of retailers. Many European cities feature only 2 or 3 chains to choose from. Note to Europeans: for a good view of the American retail scene, visit an American city such as Atlanta, Dallas, or Cincinnati. Cities such as New York and Boston are not representative of the USA, as market leaders such as Walmart, Kroger, and Costco are difficult if not impossible to find.

6. Hard Discounters such as Aldi or Lidl represent a growth channel in Europe- These discounters feature small stores of around 12,000 square feet, low service, and around 2,000 private label items sold at prices of around 20 % less than the national brand. These stores account for at least 10 % market share in most European countries and up to 30 % market share in Germany, the largest country in Europe. In the USA, a discount store is usually seen as Walmart’s “Division 1” store format that sells non-food , apparel, and Health and Beauty care items. Aldi and a chain called Save A Lot do represent the Hard Discount sector in the USA. This sector is growing, but represents 1 % or less of the overall market.

7. Coupons, Loyalty Cards, Buy One Get One Free or EDLP in the USA- The USA industry relies on a variety of promotional tactics to drive sales. New products and big brands often distribute coupons in the Sunday papers offering vouchers for price reductions ( 25 cents to $1.00) on the purchase of a product. Loyalty cards are common, with discounts in each category available with a card. Many supermarket retailers offer weekly fliers jammed with discounts for that week. On the other handle, successful retailers such as Walmart and Costco boast of every day low prices (EDLP) and no specials. European promotions tend to be directly tied to consumer marketing events such as a special offer, sales demo, or sweepstakes. Brand owners negotiate a certain number of annual campaigns to promote their brand which may integrate several components such as display, price reduction, or bonus pack.

8. Expect to pay slotting fees to enter USA supermarkets- Slotting fees average the equivalent of 1-2 free cases per item per store. This fee can vary depending on the category, with frozen products paying more in slotting while Health and Beauty Care items pay less. Slotting fees are normally paid via check and you may get a bill (or deduction) from the retailer prior to delivery of your first order! Walmart and Costco do not charge slotting but request equivalent consideration in form of lower prices. European retailers normally do not charge slotting per se. However, there are always costs to secure distribution of new products. Usually, a package is negotiated where the retailer provides some level of in store marketing support for payment of a flat fee.

9. European Food Distributors offer broader services vs. USA Food Brokers- In major European countries, many big brands deal directly with leading supermarkets, outsourcing some services for alternate or smaller channels. European Food Distributors and importers specialize in imported brands and are often very important players in smaller-mid size European countries. Distributors are an attractive alternative as they handle all aspects of your commercial relationship, including logistics and financial. Food Brokers play a high profile and dominant role in the USA supermarket industry, handling even famous brands such as Nestle, Mars, or Unilever. The top 3 USA food brokers are massive, with more than 10,000 employees each and capabilities equal to or greater than most USA brand owners. Food Brokers perform key account selling, category management, retail coverage, and administrative service. USA Food Brokers do not offer logistics or invoicing services.

10. Shelf Compliance is a Key Issue in the USA- In Europe, listed products normally enjoy excellent availability at store level where authorized. As a result, a tremendous amount of energy is focused on getting the listing. In the USA, it is a little easier at getting your product authorized. The big challenge is retail integrity versus authorized planograms. Store level labor cutbacks translate to uneven shelf conditions. Missing shelf tags, out of stocks, wide fluctuations in brand positioning and space allocation are typical of the largest chains. Most brands invest in Food Broker services for retail coverage to improve brand presence at the point of sale.

11. Data Transparency leads to Fact Based Selling in the USA – Chain level sales figures are widely available in the USA as well as store level information in some cases. This allows manufacturers to thoroughly analyze trends for their category and perform detailed post promotional analysis, even on a demographic cluster basis. “Analysts” are core members of any USA sales team. Data is used to make fact based presentations to support a brands selling story. Data sharing is improving in Europe. However, most manufacturers purchase only country level data. In some case,European retailers do not share their data. Sales presentations still are heavily weighted towards negotiations on terms and conditions.

1. Quarterly MBO Meeting with Distributor Senior Management-One of the most effective tools for increased focus is to create a regular process for Distributor senior management engagement in your business. The Management By Objective (MBO) system (or similar approaches) allows you to meet quarterly on a pre-planned schedule to review past quarter performance on key initiatives and firm up plans and commitment for the new quarter. Discussions should focus on key business metrics and account specific results. Meetings can be held via teleconference if you can not visit personally 4 times per year.
2. International Distributor Network Conference-This can include all your global distributors or those from a specific continent/region. Program can be 1-2 days in length and can include Corporate Business Review, New Product Roll-Out, and requirement that each distributor give a presentation on a success story from their home market. Meeting location can tie in with a major trade fair such as SIAL or FMI to reduce expenses. Alternatively, the meeting can also be in a resort location to serve as an incentive. Export Solutions is available as a conference meeting speaker to discuss a variety of distributor optimization strategies and retail trends.
3. Sales Contests- Sales contests bring energy, excitement, and focus to your brands. Sales contests should be about six weeks in duration and offer the opportunity for "everyone" to win. Prizes can range from cash incentives to trips to merchandise for the winners. Sync contest objectives and measures to your key initiatives for your peak season or a new product launch.
4. Key Account Business Reviews- It is appropriate to conduct key account business reviews with each of the distributor’s top 3-5 accounts once per year. Meetings should include senior level management of the retailer. This strategy requires distributor analysis of the accounts business and opportunities for mutual growth. This also provides you with an avenue to develop a personal relationship with local customers.
5. Retail Audit- Retail execution is critical to the success of any brand initiative. An important element in a new product launch or preparation for your peak selling season is the pre-scheduled Retail Audit across a market. The Manufacturer would bring 2 or 3 people from their company and match them with distributor personnel for a day in the field checking retail conditions. In one day, the 2-3 teams can see 30-50 stores in the market to judge the markets "readiness" and progress. Distributor personnel are competitive and will work hard to make the market "look good" for the Retail Audit.
6. Plant Visit- Invite your distributors for a plant visit and/or a trip to your corporate headquarters. Distributor can be introduced to members of your senior management team. Distributors should be encouraged to bring a large customer as well. This type of trip can serve as a "bonding" experience and create a renewed sense of commitment to your business .
7. Bonus Payment- Incentive pay for performance usually works well with sales teams. Sync bonus with your key objectives. Reward performance on achievement of retail distribution, profitability, as well as sales volume objectives. Volume based objectives alone may encourage questionable shipments that could be diverted.
8. Distributor Sales Meeting Participation-Most distributors schedule monthly or quarterly meetings for their entire sales team. This is a primary format for the distributor to communicate direction and priorities. Most distributors allow their manufacturers to make a presentation on a new item or key sales drive. Supplement your meeting presentation with a small gift for all meeting participants such as a pen, key chain, or calculator with your company logo.
9. CEO Market Visit- Distributors appreciate a visit from your CEO or other member of your senior management team (CFO, VP International etc.). This gives them the opportunity to demonstrate their results and share their input on the markets development. It is magical to watch certain market issues get "solved" immediately prior to a senior management visit !
10. Share Best Practices- Create a process for sharing best practices and success stories within your global distributor network. These can be communicated via a monthly newsletter or email. Distributors are proud to share their achievements or innovative new strategies that they are using to build their business. Manufacturers may elect to reward distributors with the "best success story" each month with a "free dinner" or other incentive.

There is a cost of doing business in each country in the world. Retail shelf space is viewed as valuable real estate and owners want to extract the maximum productivity from each centimeter of space. A frequent question is “What is an appropriate spend level” to enter a new country. Read below our tips at identifying an appropriate spend level for your brand.

Determining Category Sales -“Size of the Prize”
A first step is to estimate size of your category in the country that you plan to enter. Data may be sourced from syndicated data providers such as A.C. Nielsen, Government reports, projecting sales from one local retailer, or local distributors. Category sales normally grow through the excitement generated by the entry of a new player.

Align Brand Development Expectations
Exporters must identify their brand development expectations for the market. Normally, there are three different scenarios:
Category Leadership         Top 3 Category Brand         Niche Player
Each of these scenarios requires a different spending strategy.

Evaluate Existing Category Spending
Data exists to show media spending. Current retail customers can share input on standard category spend levels. Retail store visits will reveal discounts, special pack, and promotional campaign activity. Remember, as a new entrant, you will be expected to spend at a level higher than existing competitors. Additionally, existing brands often increase spending to thwart competitive entrants.

Identify Fixed Costs of Entry
Each country has certain fixed costs that are routinely paid by all new brands. This could include Product Registration Fees, Slotting Fees/Listing allowances, Shelf Space rental etc. Your local distributor can usually provide an accurate estimate for your category. It is important to separate which of these costs are negotiable.

General Guideline- Look at Your Home Country
Another useful benchmark is to look at the costs to enter your home country. Imagine what spending would be required for a new entrant to gain traction in your home country. Look at the 3 different scenarios: Brand Leadership, Top 3 Brand, and Niche Player. Take this projected spend level for your home country and adjust for population. For example, if you have a Preserve/Jam brand in France ( 64 million people) and estimate that it would take a competitor 500,000 euros to become a niche player in “Preserves” in France. This equation could suggest that it would take roughly 125,000 Euros to achieve similar results in the Netherlands, a country with 16 million people, or 50,000 euros to enter Paraguay, a country with 6.8 million people. Please note that certain markets (Italy, Hong Kong) feature a notoriously high cost of entry, while others (Middle East/Central America) have more modest requirements.

Good Distributors Stretch Marketing Budgets
Many Distributors ( Importers/Brokers) are masters at stretching marketing dollars to secure the maximum results based upon your allocated budget. Entrepreneurial distributors will accept a limited budget and create a plan to optimize your available investment, even if it is below thresholds. It is important to set approval/tracking mechanisms in place to insure transparency in marketing/trade spending.

Final Step: Calibrate Expectations to Spend Level
This is the cardinal rule. It is acceptable to set aggressive sales objectives when you are backing a brand with a serious investment level. On the other hand, it is unfair to expect miracles or category leadership with a modest spend level. Calibrating expectations usually involves some negotiation between partners. Trust your instinct as well as the expertise of your local distributor !

You are busy! There are many projects on your “must do” list, but all your efforts are focused on delivering this months volume objective. Or you have created a great plan to enter________ and you wish you had someone to get a second opinion on the distributor, launch strategy, or contract ? Export Solutions can help !

Export Solutions Strategic Services division serves as a valued partner for consumer goods /food companies of all sizes. Our strategic services division offers rapid, timely feedback and advice on most topics related to international market development. Listed below are a few areas where we’ve helped more than 200 companies.

• Obtaining on Your Brands
• Personal Distributor Introductions: 90 Countries
• New Market Prioritization & Launch Plan
• Distributor Margins, Contracts, & Fee’s
• Best Practices Export Strategy
• Selling to Walmart International
• Meeting Speaker

Fee’s are based upon a cost to serve basis, with phone consultations available starting at $150 and in market visits at $2,500. Interested ? Contract Greg Seminara at gseminara@exportsolutions.com

Every supplier should organize a contest to recognize their Distributor or Sales Team of the Year. This strategy has proven to be one of the most efficient and effective business building ideas.

Sales People Love to Compete-Let’s face it. Sales people are competitive and if they are not………you may be aligned with the wrong sales team. Winning “Distributor of the Year” validates that they are a “winner” and truly are the best at what they do. Conversely, under performance signals to the participant that they need to act quickly to avoid finishing at the dreaded bottom of the heap. Distributors, Importers, Brokers and sales teams everywhere burst with pride when they show off their Distributor of the Year award, even if it is for one of their smaller brands.

What works ? This depends on the size and scope of your business. Global brands can recognize winners for each continent: Asia, Europe, Africa, and Americas with an overall international winner. Brands with a narrower presence can base their awards upon a region of their business: For example, you could have an overall winner for Latin America based upon regional winners for South America, Central America, and Caribbean or in Total Europe with Western, Central, Southern & Northern Europe competing.

Contest Rules and Structure- Announce the contest in January. Normally, I like contests that are 50 % dependent on shipment performance versus quota, 25 % on achieving new product launch acceptance ( or other major initiatives), and 25 % for intangible activities: Breakthrough performance, success despite adversity etc. The key is to strike a balance between shipments (what counts) and other factors as in many cases shipments don’t tell the entire story. Publish periodic updates and rankings. This pushes leaders to remain focused and laggards to increase intensity.

Other Awards- Some suppliers extend the contest to include “Retail Field Sales Team of the Year”, New Distributor of the Year, Most Improved, and even award retailers for supportive performance. Others institute a program that rewards “runners up” or honorable mention. In general, structure the contest to maximize the number of winners.

Prizes and Recognition- The prestige of winning Distributor of the Year is the biggest incentive. I’ve witnessed sales organizations delivering incredible results to win a Plaque valued at $50. The award winner should always be recognized with a plaque or trophy that can be permanently viewed in their board room or waiting room. The award should be accompanied by a press release that the distributor can share locally with their trade magazines. Larger manufacturers may want to host a local dinner or party for the entire team of the winning organization. Smaller suppliers may reward their Distributor of the Year with a trip to the supplier’s home country with a dinner with the CEO or company owner. Announcing the award at an annual meeting, distributor conference, or at a major trade show maximizes impact. The key is for all competing distributors to commit that “next year they will win Distributor of the Year”.

Most companies have just completed their annual budget planning exercise for 2010. I thought it would be interesting to conduct an informal survey of leading brand owners around the globe regarding expectations for 2010. No surprise that America based exporters remain optimistic about 2010 prospects while the Europeans are more cautious, if not pessimistic in their outlook.

2009 represented a “decent” year for USA based companies, as leaders benefitted from the strong shift to meals consumed at home. Price increases executed in late 2008 allowed manufacturers to achieve their revenue objectives, even if their unit volume was flat. USA exports appear steady, with growth in Asia and the Middle East balancing out declines in Europe.

European brand owners prefer to escape the dark memories of 2009 as soon as possible. Global producers based in Italy, Spain and the UK appear absorbed on dealing with problems in their core markets as well as brush fires in countries such as Hungary, Ireland, and Latvia. Tremendous pressure exists company-wide when your home market is hurting.

The proverb suggesting that the “grass may be greener on the other side of the fence” may apply as we approach 2010. Certain markets appear poised for a rebound while other countries are braced for another tough year. Countries are segmented below based upon input from respected international sales managers.

Good Growth: Asia, Middle East, & Brazil
GDP growth is positive for most of Asia, with particular strength in China & India. Oil prices have recovered from their lows and are replenishing the coffers of most Middle East countries. Dubai is still a concern, but Abu Dhabi’s deep reserves should prevent a panic. Brazil is ready for a major run, as they begin to source benefits from newly discovered oil deposits

Stable: Better than 2009- USA/Americas, Australia, UK, Germany, France, Japan
Business in the USA is stable, as tight fisted consumers continue to eat, shampoo, and clean their homes. Key question is whether consumers will gravitate back towards premium products or maintain the bargain hunt. Germany & France are creeping back towards more normal trading levels. The UK is less optimistic, but recent indicators suggest that 2010 will be better. Japan & Korea represent pleasant surprises, with recent trends signaling a measurable upturn in consumption

Another Tough Year: Italy, Spain, Russia, Turkey, Mexico
Italy & Spain represent two of the world’s most important food producers. Soft demand in their home countries is dampening their enthusiasm to invest aggressively abroad. Russia remains the riskiest of BRIC nations, with recent GDP figures revealing a 10.9 % decrease versus previous year. Russia’s performance ranks next to last in developed markets, surpassed only by Turkey’s -13.8 % decline. Mexico’s economy is still closely tied to the USA and may not improve until USA consumers resume discretionary purchases and remittances from the USA to Mexico increase.

Export Managers need to compare their shipment trends in a country versus overall market results. It is likely that your trends sync with the overall market in most cases. However, you may identify countries where your performance lags, signaling the requirement to analyze investment levels, competitive activity, and distributor capability.

2010 winners will be brands that are flexible to invest in recovering markets.
Companies applying a blanket policy of “business is bad everywhere” will experience a self fulfilling prophecy of another challenging year. I always remember a philosophy shared by an Argentina based veteran of “boom-bust” cycles. He commented that he was most optimistic at the abyss of a market cycle, because he believed that meant the market was closer to the eventual uptick. The time for caution was during periods of peak shipments, because a crisis was lurking just around the corner.

There are 195 countries in the world. How many is your company selling to ? International expansion to new countries is a strategic imperative for most exporters. The challenge is to determine which countries will deliver the greatest financial return for your investment of time and resources. Listed below are “Ten Tips” to facilitate new country prioritization for your international expansion program.

1. Determine Category Size: Data exists to allow you to capture the size of your category in target countries. Syndicated data suppliers such as A.C. Nielsen and IRI sell category sales information and trends. Government agencies track sales for core categories impacting their local producers. Category size may be estimated by sourcing the information from a friendly retailer and projecting country level sales based upon that retailer’s market share. Distributors are often resourceful and may find success at locating category sales data. Remember, category sales often grow as a result of a major new entrant.

2. Population: Just One Factor: Virtually all people maintain a fundamental need for food products, personal care products, and household items. A logical conclusion would translate that large countries like China and India would represent the greatest opportunity. Population levels are relevant, but not the only factor. A classic case study is the story of Brazil and Puerto Rico. Most USA based consumer goods manufacturers sell more product to Puerto Rico, a commonwealth of 4 million people than to Brazil, a country of 190 million people.

3. GDP: Follow the Money: Per capita, gross domestic product (GDP) is an important consideration. International exporters are known for marketing premium, value-added brands. The higher the countries purchasing power, the more likely that middle income citizen’s can afford our brands. This appears as one reason that European markets such as Germany, France, Italy, & the United Kingdom may create a larger opportunity than countries such as Pakistan, Indonesia, or Bangladesh that have far more people.

4. Growth Rates: Think to the Future: Export development often represents an investment for the long term. Your country prioritization analysis should look at population and GDP growth rates. This is indicative on future potential for the market. I worked in Saudi Arabia in the early 90’s when the population was around 14 million , but growing at 8 %. Today, Saudi Arabia’s population is more than 28 million. Which countries will be the largest in 2018 versus 2008 ?

5. Proximity to Manufacturing Plants: Transportation costs contribute one of the largest line items in your pricing calculation. Logically, shipping to a neighboring country is likely to cost less than shipping half way across to the world to Brazil or India. Citizens of adjacent countries have probably visited your country and may have seen your brand or a commercial for it. Canada occupies the northern border of the USA and is the single largest export market for USA consumer goods manufacturers ( and vice versa).

6. Extend Current Retailer/Distributor Partnerships: Global retailers such as Carrefour, Metro, Walmart, and Tesco operate in many countries ( and continents.) Asian and Europe feature regional distributors. Your brand has established a track record with these leading players. Your company is already proficient at working with their operating models. Leverage these relationships to enter new markets. Warning: this can be a risky strategy when you base your plan on a large global retailer that happens to have a small presence in your target market. Examples: Tesco- USA, Whole- Foods UK, or Walmart-Argentina.

7. Cost to Enter: There is a cost of doing business in each market. Markets such as Italy and Hong Kong maintain notoriously high cost of entry into the supermarket channel. Latin American/Asian markets require investment, but at more modest levels relative to Europe or the USA.

8. Market Complexity: How difficult will it be to enter the market? Certain markets are consolidated with a few major retailers and many qualified distributors. Other markets are complicated, with multiple trade channels, fragmented retail environment, and a disparity in usage profiles for your category. Larger markets are challenging to enter. However, a 5 % market share in a large country may deliver greater long term dividends than a 50 % market share in a small country.

9. Competitive Environment- Get Ready for Battle: Evaluation of the competitive landscape in your target market is critical. Does the market represent virgin territory ? Or will you face 2-3 major, multinational competitors? In competitive markets, existing market combatants will typically spend heavily to defend their brand position to blunt a competitive introduction. It is likely that you face competition in every market. However, it is important to calibrate the existing competitive environment.

10. Availability of Enthusiastic Local Partner: Selection of a qualified, local partner is another key factor. Strong distributors and importers exist in every market. Pro-active contact from a leading distributor indicates that this market expert sees potential in your product. This is favorable and may encourage you to prioritize this type of market. However, you must conduct due diligence to insure that this enthusiastic distributor ( that you meet at a trade fair) maintains the critical mass and skill set required to succeed in building your brand.

These factors all play an important role in determining the “Size of the Prize” in new markets. Veteran exporters will weigh each factor to establish the right path forward for their export development plan.

A great Clorox sales theologian named Tom Palmer introduced me to . The core philosophy was that if you focused on execution at store level that incremental volume would be pulled through the system. This concept represented a departure from the old adage that a "loaded customer (warehouse inventory) was a happy customer".

Retail stores are showrooms for our products. Our distributor and broker teams should be motivated to create the most attractive brand showcase possible. This serves to entice the consumer to buy our brands during the 10 seconds she allocates to making a purchase decision.

has five fundamental components:

Retail Availability
Our brand must be available on the shelf, with a shelf tag and sufficient inventory to make it through the peak weekend sales period. All authorized sizes/variants must be placed on the shelf fixture.

Pricing
A price tag must be up for all products as well as on all displays. Each country has different legal requirements that may limit a distributor’s ability to discuss pricing. In general, a fair principle is for distributors to seek a fair margin for your brand consistent with overall category margins.

Shelf Management
Brands should be allocated shelf space proportional to sales turnover. Each item should have a minimum of two shelf facings to insure that a complete case can fit on the shelf. Brands should be positioned next to the designated category competitor. Normally, manufacturers/retailers establish a preference for vertical or horizontal brand arrangements. Eye level shelf placement is desirable for most brands, with the bottom shelves to be avoided in most cases.

Incremental Merchandising
This includes off-shelf displays of any type: end cap, aisle, stacks, modular’s, shippers etc. It also includes secondary placement in front of an adjacent category or display. Point of Sale (POS) placement can also boost brand sales. Certain retailers allow local store management to designate brands for "in-store specials".

Min-Max Compliance
Chain stores with multiple outlets dominate sales. Many of these chains design a central plan for retail assortment, shelf space allocation, pricing, and merchandising. The retail sales team is responsible to insure that these minimum levels of performance are executed. In most cases, individual stores have the flexibility to add shelf space to brands that that sell well locally, adjust prices to meet competition, and put up discretionary displays. Retail sales people should accept the challenge of obtaining the maximum possible for the brands they represent at store level.

challenges sales managers and distributor retail sales teams to organize their activities around tangible, measurable objectives on the five "causal" factors discussed above. Success at improving the in store showroom should result in incremental consumer purchases. This will pull inventory from retailer’s warehouses generating reorders for the distributor and manufacturer.

Walmart sales outside the USA now exceed 100 Billion dollars. Many USA based suppliers and global brands seek to extend their relationship with the world’s biggest retailer to new countries. Walmart’s thought provoking Global Branded Imports (GBI) program simplifies the export development process. Credit Walmart for proactive efforts to promote global brands and bring product innovation to international markets. However, Export Solutions point of view is that Brand Owners should base international expansion strategies on a model to serve all major retailers in a country versus only one retailer. Additionally, manufacturers need to remember that few brands will succeed overseas without fundamental investments in consumer marketing and sales coverage at the retail level.

Overview:
Walmart’s GBI was tested in Japan in 2008 with the objective of assisting Walmart Japan (Seiyu) with the direct importation of product, bypassing Japan’s complex wholesaler system. Basically, Walmart’s GBI system speeds the route to international markets and also provides dedicated logistics partners and mechanism’s for manufacturers without significant international infrastructure and resources. Walmart offers several alternatives within GBI, but the most simplistic approach is that the manufacturer ships to a Walmart Distribution Center or logistics partner in the USA, completes required paperwork, and Walmart and their logistics partners handle the rest.

Participating Walmart International Locations:
Walmart divisions in Japan, China, Brazil, Central America, Chile, & Mexico participate in this program. This is positive, as Japan, China, and Brazil are always challenging to navigate on an independent basis. Unfortunately, it appears that the United Kingdom and Canada do not participate in the GBI program, as these are 2 of Walmart’s top 4 overseas markets. Consumer habits, practices, and brand preferences in Canada ( and to a somewhat lesser degree the UK) are closest to those of the USA.

GBI Program Benefits
GBI should produce incremental volume, particularly for manufacturers that have limited resources and exposure overseas today. It is tempting to leverage Walmart’s well defined route to market with simplified logistics procedures and the ability to interact with English speaking, USA based buyers ( Senior Project Mangers in Walmart lingo), for foreign markets. GBI promises streamlined decision making, with a 45 day turn around on new products which is “lightening fast” on international timelines.

Key Issue # 1- What about other Market Customers ?
Obviously, Walmart’s program is designed for manufacturers to sell exclusively to Walmart outlets in a country. Normally, this may represent a starting point for a manufacturer, but a logical progression usually involves selling to all major customers in a market. Selling to Walmart through their direct import model may provide some short term volume, but may prevent you from broader expansion to other market customers in the mid to long term.

Key Issue # 2- Marketing Investment
Fundamental investments in consumer awareness activities (sampling, tv, radio, couponing etc. ) are universal requirements to stimulate consumer trial and repeat purchase. The GBI program appears “transactional” with focus on price, terms, and logistics versus brand building. On the other hand, I am sure that Walmart welcomes investment in local marketing, but how do you service consumers who may become aware of your media message but shop at outlets other than Walmart? Or can you afford measurable investments in marketing with sales only to one customer ? Or who will translate and manage marketing campaigns in Spanish, Chinese, Japanese or Portugese ?

Key Issue # 3 – Pricing
Walmart operates in a fair, transparent, fact based, manner when analyzing pricing. It is likely that most manufacturers will offer Walmart GBI a price equal to their current USA price to Walmart. What is the impact if you really need to be at a lower price point to compete effectively in an emerging market like Brazil or China where consumer spending power is very low ? In a second phase of international market development, manufacturers typically invest in marketing, local infrastructure, and a local distributor. Experience tells us that these costs are difficult to recoup later in form of a price increase.

Key Issue # 4 – Local Brand Oversight/Merchandising
Focus on brand presence at the point of sale is critical in all markets, but even more so in markets like Mexico, Brazil, & China. In these markets, leading local brand leaders invest in “armies” of merchandisers that are permanently in stores managing in store shelf conditions. Who will watch these functions at the point of sale for your brand when it is sold directly from the USA ? How will you know how your brand looks without regular visits?

Some Thoughts- My Experiences
Walmart should be recognized for a conscious effort to pioneer international brands with an efficient system. The GBI approach may provide some incremental volume to a manufacturer who would be content with shipments just to Walmart in a place like Japan or Brazil that they will never navigate on their own. The major consideration is how much volume can be generated without marketing and local support from a distributor/broker. Imagine the sales an unfamiliar Japanese brand would get at your local store in the USA or Europe if it just appeared on the shelf one day without any promotion ? I remember working in Argentina when Walmart first launched there in 1995. Someone from my company sold Hidden Valley Ranch salad dressing to Walmart from the USA. I was happy to be able to able to purchase Hidden Valley in Buenos Aires, but I was probably the only one. The product soon gathered dust, went out of code, and disappeared from the shelf.

Think Big! An adjustment in mindset towards “What if” can deliver game changing results for your business. In today’s business environment, execution of the same plans and same promotions as the past will deliver mediocre results, even for leading brands. The consumer goods industry contains many success stories where hungry innovators challenged existing status quo to achieve Breakthrough results. Breakthrough is about delivering extraordinary results by employing unique strategies and perseverance.

Getting Started – The beauty of Breakthrough is that everyone can participate. Each team member needs to analyze his business and identify one sale or achievement that would deliver maximum impact. Breakthrough objectives should focus on “Big Wins at Big Accounts” and be aligned with the companies overall growth strategy. This objective should be documented as part of their annual performance review process. Appoint one person in the organization to lead the Breakthrough campaign at your company.

Examples- What if you could gain category exclusivity for your brand, by knocking out your competitor? What would happen to your business if your major account would provide a front page feature advertisement with pallet displays in all stores? Imagine the impact on your business if an account accepted every single item in your product line? My personal Breakthrough occurred as a young sales manager for Procter & Gamble calling on Charley Brothers (now Super Valu/Pittsburgh). I achieved 163 % of my sales objective by convincing them to promote all my brands instead of just Tide.

Publicize Breakthrough- Breakthrough performance contests succeed when the organization recognizes its importance in your business plan. This could include motivational speeches on Breathrough by your CEO or outside speaker, frequent updates through your company web site or newsletter, and recognition for individuals achieving Breakthrough results. Circulating examples of Breakthrough performance motivates others to strive for their own Breakthrough and creates the opportunity to replicate new “Best Practices”.

Breakthrough for Distributors- The Breakthrough concept can also work well with a distributor network. Challenge each distributor to identify one Breakthrough as part of your annual business plan. Share “Best Practice” Breakthrough’s throughout your distributor network. Reward breakthrough performance with a personal note, plaque or a “Dinner Out”.

Breakthrough Forever- Breakthrough serves as a motivational tool to challenge your team to alter the way they think about their business. One mid-size company generated over 1,100 Breakthrough examples as part of a year long campaign. Experience suggests that an organization that successfully executes Breakthrough will permanently change the way their team thinks about the business.

What recovery you are asking if you live in Italy, Spain, or Mexico. On the other hand, Asia and Brazil are enjoying good growth and it appears that the USA, Germany, and France are poised for a better 2010. It’s true that while shipment trends have stabilized for many, that a prediction of a global upturn may be premature. Listed below are Export Solutions “Ten Tips” to prepare for the inevitable upturn in business.

1. All Countries will recover at a different pace: This requires different strategies for different scenarios. Segment markets into “Growers”, “Stabilized”, and “Laggards”. There is plenty of economic data available to monitor the progress of individual markets. Invest in growing markets, as they may represent your future growth engines. Balance declines in lagging markets with sales increases in your growing markets. If you starve investment in all markets, then you are guaranteed to achieve less than your fair share of new business.

2. Say Yes to local ideas: 2008/9 stifled innovation. Export Managers rejected most local business building ideas in an attempt to conserve resources. Now is the time to recreate the spirit of entrepreneurialism by encouraging field based campaigns.

3. Launch New Products: Many companies postponed new product launch activity in 2009, as consumers focused on replenishment of basic market basket items. Create some excitement in your category with a new item launch. I think that you’ll find that the cost of consumer marketing activities has decreased, providing a window for a cost efficient launch.

4. Return of the Road Warrior: Many companies enacted travel limitations. Export managers were forced to conduct business via phone and email. An old adage applies: “Distributors Respect what the Brand Owners Inspect”. A market visit will allow you to refocus your distributors against your priorities and reconnect you to the details of the people and business in distant countries.

5. Share your Sustainability Plan: Sustainability has emerged from the recession as the new “buzzword” for 2010, much like its predecessors ECR and category management. Key retailers have identified sustainability as a top industry priority. As the marketplace shifts back towards growth, companies with a solid sustainability platform will lead the way.

6. Expand into New Markets: Time to look at your global export map and evaluate white spaces in your global coverage map. BRIC ( Minus Russia) countries are leading the road to recovery. The Middle East, Asia, and South America are all well positioned for 2010. Export Solutions distributor database covers 90 countries. Let us help you find partners in new countries.

7. Visit Big Retailers in Recovering Markets: Retailers will shift marketing plans to capitalize on the gradual recovery in consumer confidence. A visit to a strategic retailer provides an opportunity to question the retailer about their future plans: Any major promotions planned, categories receiving new focus, what’s “in” and what’s “out”. Apply these insights to other markets as all markets will eventually recover.

8. Boost Morale: Restrictions on salary changes, headcount freezes, and reductions in business entertainment characterized 2009. Recognize top performers for their contribution. Sponsor a Distributor Sales Contest. Look for inexpensive ways to reward your team.

9. Make Tough Decisions on Under Achievers: In good times, positive market conditions mask the failures of certain organizations to achieve growth consistent with the market. The recession eliminated the shield and revealed the structural weaknesses of some distributors. Distributors should not be penalized for the fiscal instability of a country. On the other hand, each brand owner must seek the strongest partner possible moving forward to capitalize on the recovery.

10. Don’t Forget Your Value Equation: Now is not the time to push through price increases and launch super premium products. The consumer has gained a new appreciation of “value” and in some cases has migrated down the food chain to more affordable alternatives. Consumers will crawl back to value added brands in time, but won’t immediately return to their free spending days as the recovery emerges.

Export managers receive baskets of offers from distributors desiring to represent well known brands. Distributors should structure their company credentials presentation to address key assessment points for the brand owner. Listed below are Export Solutions tips for distributors looking to enhance their position as a viable candidate for an important new business.

1. What is your Distributor USP ( Unique Selling Proposition) ?
Most distributors maintain an area of strength in a market. This point of difference may lie in category expertise ( examples: Confectionery or Beauty Care Specialists), size ( countrywide coverage or small, personalized service) , channel specialization ( Pharmacy/Foodservice/Small Shops) or as niche product “Brand Builders”. Look at your portfolio of brands and services and highlight the one or two areas where you are “the best”. Sync your new brand marketing efforts to companies which match your core competency.

2. Have you done your homework on my category ?
All distributors are local market experts. Distributors are well positioned to provide category reviews detailing an opportunity for a potential new principal. Manufacturers are impressed when they receive market intelligence that required the distributor to invest time and effort to prepare. Hint: make sure that the information submitted is accurate, relevant, and attractively presented. Sloppy, error laden, information sends a bad signal to the manufacturer on your reporting capabilities.

3. What are your success stories pioneering other new brands?
Past success launching other international brands is an indicator of traction in the marketplace. These case studies are particularly impressive if they involve a similar category or buyer. List references at both suppliers and retailers.

4. How do you market yourself on the web?
The first stop a brand owner will make will be to a distributor’s web site. This is a distributor’s first test to make a good impression. A brand owner cares about your critical mass and how you are organized to support your brands. Details on sales force structure, warehouses, brand building philosophy, etc. are positive. Case studies, client testimonials, and marketplace/retailer information also demonstrate local distributor expertise. Show photos of the sales force and management team. Provide a web portal for existing brand owners to access data. No web site, “under construction” or a “dated” web site are indicative that a distributor is not modern enough to compete in 2009.

5. What is your plan to build my brand ?
Manufacturers display unshakable confidence in their brands and most likely harbor optimistic expectations about their brands sales potential in a new market. Brand owners respond favorably to a distributor willing to provide the framework of a logical, financially sound,action plan for market entry. The plan could include recommended products, timing, price points, investment levels, and corresponding volume. Most distributors profess enthusiasm for a new brand during the interview process. These words of enthusiasm should be backed up with concrete, fact based, recommendations to facilitate market entry.

What works ? Export sales are an important growth driver for many companies. However, there is a clear distinction between those brands which have built vibrant export businesses and brands which have largely failed to gain presence outside their home country. Common advice I give our clients is to think of the requirements for a new brand to enter their home country: ( research, spending, partners etc.) and then apply those same fundamental requirements to their own business plan to the export to a new country while adjusting costs for population.

Listed below are Export Solutions Ten Tips for export success.

1. Conduct a category assessment visit prior to market entry.
Visit the country and spend a day at retail visiting stores that would be likely customers for your brands. Create a template to capture basic information such as competitive product assortment/variants, sizing, pricing, shelf space allocated to the category and merchandising practices. Arrange a “fact finding” visit to local distributors, market contacts, and your countries foreign trade office for insights into common launch strategies, cost to enter, and margins. These store checks can help you estimate the “size of the prize” or you can purchase official category data from Nielsen or Euromonitor. Do your homework !

2. Establish a meaningful USP ( Unique Selling Proposition)
Most markets will not support another “me-too” brand. Meaningful new product innovations race across the globe in record time. The key is to review the competitive intelligence gathered during your market assessment (point 1 above) and sync with your own core competencies. What “news” can you bring to the category ? Innovation, nutritional claims, sizing, pricing, incremental category profits, unique advertising, or “Heavy Spend Plan” all serve as meaningful USP alternatives.

3. Create a well defined plan
This includes all the fundamentals: product assortment, pricing, marketing support, trade channel targets, timeline for key activities, and measures. A collaborative plan reflecting the insights and agreement from your local partner is critical.

4. Extensive Due Diligence to Select the Right Distributor/Partner
The first steps is to establish selection criteria. The choice between looking for the biggest distributor in a market versus a niche specialist is an important decision. Export Solutions maintains an extensive distributor identification process which includes starting with a broad range of candidates ( our database tracks about 45 distributors/country), meet with 3 companies in market with the greatest interest level, check their results in-store for existing brands, and conduct reference checks with current brands and financial organizations. Ultimately, we look for a category specialist, with a solid plan, that is enthusiastic about to representing our product.

5. Find the right person at the distributor to lead your business
Careful attention should be placed at selecting the person who will manage the “day to day” issues on your business at the distributor. Is it the company owner who controls the resources , but has little time ? Or is it an energetic college graduate with great ideas , but less clout ? The key is to select an individual who combines the ability to influence their organization with the passion and creativity to build your business.

6. Invest in Consumer Awareness Activities
Today’s consumer has many choices. Successful brands invest in marketing to gain consumer trial. Sampling works well in virtually every market and naturally advertising is powerful if you can afford it. The trade will be motivated to support your programs if they know that consumers will come to their store looking for your brand. “Best in Class” distributors can create a marketing plan even with a limited budget.

7. Invest in Trade Incentives
There is a cost of doing business in every market. The retail trade is in the business to make a profit and “trade incentives” is an important source of income. The key is to convince your customer regarding the benefits of reinvesting some of this money into in-store activities, reduced prices, or participation in their special offers flier.

8. Strong Focus on Store Level Presence
Retail stores represent the showcases for our brands. Winners dedicate significant focus to achieving in store objectives on assortment, pricing, shelf space/location, and off shelf merchandising. Attention to store level presence is a 365 day per year task, not just a one time only event.

9. Management Oversight from the Brand Owner
It takes two parties working together to create a winning export proposition. The brand owner must be engaged in key issues and visit the market periodically to measure progress versus key initiatives. The “distributor respects what the brand owner inspects.”

10. Establish realistic expectations/measures
Manufacturers that follow points 1-9 above will gain a realistic viewpoint on their brands potential for the market. All brand owners are optimistic and it is okay to set “stretch” objectives, particularly in year 2 or year 3 of a brands life cycle. However, a better strategy may be to plan for modest initial results and be pleasantly surprised when your brand exceeds expectations.

All Companies Have Problem Markets!
The first step is to admit that the market has a problem. It’s a natural instinct to rationalize poor results and hope for future improvements. We must remind ourselves that chronic underperformers impact our ability to achieve our personal sales and profit targets.

Four Warning Signs

1. Low development for your brand relative to adjacent countries and size of category
2. Large country- small shipments
3. Current distributor is too small ( or too large) to meet your requirements
4. Distributor failure to reinvest in the business: People, Training, Technology

Segment Existing Markets According to Results
Markets can be labeled "Leaders", "Achievers", and "Laggards". Normally, 15 % of the markets should be categorized as "Leaders", 70 % as "Achievers" , and 15 % as "Laggards". Take lessons learned from your "Leaders" and apply them to other markets

Turnaround Strategies
Focus on the Fundamentals-Evaluate core elements of your brand and their relevance vs. other brand alternatives. Adjust pricing, promotion, packaging strategies, if required.

People with Passion- The right person managing your business can make a significant difference. Insure that the person assigned to your brand can influence the organization to achieve your goals and has sufficient time to dedicate to your business.

Distributor Change-Organization change is a last resort, but sometimes the best avenue to reinvigorate your brand. A new distributor brings energy, focus, and commitment. A former boss would terminate one distributor per year to send a message to other distributors that the company would not tolerate sub-par performance. Export Solutions database features over 4,600 distributors in 90 countries.

Pay for Performance- Sales people everywhere respond to incentives and sales contests. Incentives could range for a corporate bonus to a distributor who achieves a 10 % shipment increase to "ipods" or other merchandise to all sales people who hit their "stretch objectives". Strive to offer programs where "Everyone can win".

Increase Visibility- Increase the frequency of your market visits to problem markets. Invite the distributor to your corporate office for a meeting with top management and a factory tour. These "bonding" activities will improve communication and commitment.

Suppliers review their Distributor contracts for two reasons: At the start of a new distributor relationship or when the current distributor has resigned or failed. Most exporters simply revise their standard distributor contract with a new name and make a few minor adjustments when entering a new partnership. Export Solutions frequently reviews distributor contracts as part of our distributor identification process. The current financial crisis has created recent opportunities to analyze numerous distributor contracts. We do not pretend to be lawyers but our broad conclusion is that most current distributor contracts were written to reflect business practices of the 1990’s versus the business reality of 2009. Listed below are points for consideration as you seek to refresh or renew your distributor contracts.

Contract vs. Letter of Understanding
A Basic question: Do you really need a contract with all distributors in all countries? Formal contracts make sense when the manufacturer plans a strategic launch, supported by investments in trade and consumer activities. A contract is mandatory in transferring an established business from a direct organization to a third party or from one distributor to another. A Letter of Understanding may suffice in cases dealing with an opportunistic sale or testing a new product concept. The Letter of Understanding simply outlines the roles and responsibilities of each partner, expected outcome and plan of action, and ability for each party to exit the relationship without much complexity. In some situations, a manufacturer may elect to operate without a contract or other legally binding document. This may function in some countries, but in certain markets such as Puerto Rico (Law 75) a relationship with responsibilities is created with or without a formal written agreement.

Financial: Payment Terms, Currency, Pricing, & More
Our financial world has changed. We no longer compete in a world of 30 day payment terms, stable currency and prices, and easy credit. At least half of the severe distributor issues today relate to financial breakdowns versus traditional brand underperformance problems. Adequate treatment of this topic requires hours of discussion. Our fundamental suggestion is to huddle with your financial director and review the impact of the financial traumas of the last 12 months. What are the lessons learned and how do we protect ourselves legally in the other countries where you conduct business?

Information Technology Requirements
Most industry participants would be utterly and completely lost without our computers. Yet most contracts do not specify any Information Technology requirements for our distributors. New contracts often specify that a distributor must handle designated EDI transaction sets, Electronic Funds Transfer, and online portal to share shipment and financial information. Data security and back-up requirements also warrant inclusion.

Global Retailer Impact
Retailers such as Carrefour, Walmart, and Metro maintain a presence in many adjacent countries. Their cross border sourcing activities create challenges for distributors, as retailers buying practices may interfere with protected territories. New contracts should address the role of Global Retailers and responsibilities for each partner to maintain the integrity of the territory.

Modern Supply Chain
Historical distributor contracts required minimum inventory levels of 8-12 weeks supply or more based upon long supply chains and challenging routes to market. Dominant supermarket chains today keep about three weeks in the pipeline. One week’s business on order, one week’s business in the warehouse, and one week’s business in-store. Leading edge retailers share point of sale data that can sync with supply chain solutions such as SAP. The right inventory level is the minimum amount for a distributor to maintain 98% service level or better.

Termination Clauses
Most distributor contacts are rarely revisited until the possibility (or probability) of termination becomes likely. Long term contracts lasting 5 years, with one year notification periods do not make business sense for the distributor or supplier. More realistic is a three year contract, with escape clauses for either the manufacturer or distributor to resign if minimum sales levels are not attained. Termination notification periods of 6 months to one year can be harmful for a brand. A better option is a 3 month notification period, with succession plans formalized at point of notification. The USA broker community has functioned with 30 day standard, renewable, contracts for at least 30 years.

Next Steps
Respectfully, most suppliers and distributors desire to avoid frequent contact with their lawyers. The financial realities of the last 12 months revealed that many distributors and manufacturers are not adequately protected. A review of existing contract templates to measure relevance for today’s business practices is warranted. Export Solutions advocates a balanced approach favoring commercial sensibilities.

“BRIC” nations of Brazil, Russia, India , and China hog most of the spotlight today. This attention is warranted, but many companies forget Mexico, a giant market located just across the border from California and Texas, the two largest USA states. Export Solutions believes that visibility in Mexico represents a more important strategic imperative for most companies than that long road to BRIC success.

Success in Mexico Builds your USA business
The basic concept is that by building your brand in Mexico, you will accelerate brand development for your brand with USA based Hispanic consumers. When Mexicans migrate to the USA for “career” purposes, they will already be familiar with your brand through exposures to your brand in Mexico. The USA Census bureau projects that Hispanic population will reach 47.8 million by 2010 and 73 million by 2030. Hispanic population accounted for 50 % of USA population growth since 2000. Approximately 65 % of the USA Hispanic population maintains Mexican roots. These data points reflect official population statistics and do not count up to 10 million Hispanics that may be living illegally in the USA.

Mexico - 11th largest Country in the World
Mexico’s population totals 111 million, the 11th largest in the world. The GDP ranks 13th worldwide, larger than the economies of Australia, Netherlands, or Turkey. Economic growth in Mexico is stimulated by USA investment. Many companies establish manufacturing facilities in the north of Mexico to supply the USA market. Mexico can be divided into four markets: Affluent North: Shares many common bonds with Texas. Monterey is major city. Mexico City: Second largest city in the world. The economic and political capital. Tourist Zones: Cancun, Cozumel, Puerto Vallarta Poor South: High unemployment, low spending power

Synergies with Global Retailers
Walmart is the largest retailer in Mexico, with sales of approximately 20 Billion US Dollars through almost 800 supermarkets and club outlets. Costco and HEB, two other top ten USA retailers also boast a measurable presence in Mexico. All three USA based retailers maintain high profile programs to facilitate the movement of USA sourced products to their Mexican outlets.

Key Issue – Currency Instability
The peso has devalued several times in the last 10 years. In 2009, the peso dived from roughly 10 pesos to $1 US dollar to approximately 13.5 pesos to the dollar. As a result, brands sourced from the USA and Europe command a significant premium versus their local competitors. Ultimately, most successful marketers end up producing in Mexico to reduce currency exposure and take advantage of lower labor costs in Mexico.

Key Issue – Partner Identification
Export Solutions distributor database covers more than 80 Mexican distributors. Extensive due diligence is required as most larger brands maintain direct sales forces, leaving distributors to handle imported brands and those with lower sales rotation. Financial complexities of the last several years have strained some manufacturer –distributor partnerships.

Key Issue- Investment in Brand Support
Many companies recognize the potential of Mexico, but are stingy when it comes to investment in brand support and trade incentives. Mexico is a country of 111 million people and marketing spend levels are relatively efficient compared to other countries. Winners make significant investments in Mexico consistent with a strategy of long term brand building.

Key Issue- In Store Merchandising Armies
Visit any Mexican supermarket at 800 am and you will view armies of merchandising squads permanently based in each store. These merchandisers stock shelves, facilitate orders, maintain the product “showcase” and even conduct in store sampling. Failure to partner with a distributor or retailer that offers this service will dramatically reduce your brands store level presence.

Export Solutions Can Help !
Mexican warrants your focus and investment. Success in Mexico offers a sizable new market, adjacent to the USA plus the added bonus of helping your companies efforts to penetrate the USA Hispanic community. Don’t make the mistake of treating Mexico like a small export market . A strategic focus will build a business that could be an important revenue generator for years to come. Export Solutions has completed more than 10 projects for Mexico. We speak Spanish and are familiar with the distributor community and market entry requirements.

The USA ranks as the worlds largest consumer market. The USA is receptive to new product entry, with more than 100,000 new products introduced every year. The USA’s large stores stock an average of 40,000 unique items. A small market share in the USA can represent more business to your company than a dominant market share in a smaller country. Read our Ten Tips on building your brand in the USA.

1. Conduct a Category Review: Visit potential retail customers for your brands to investigate competitive brands stocked, flavor/sizing trends, retail prices, and merchandising practices. Store visits should be in a city like Atlanta, Dallas, Denver or Cincinnati that feature a wide assortment of different retailers and formats. Markets like New York or San Francisco are not representative of broader USA conditions. Syndicated category data can be purchased from Nielsen, IRI or Euromonitor.

2. Target a Trade Channel: Consumer goods sell through as many as 13 distinct trade channels in the USA. Each channel has its own distinct set of operating practices. Supermarkets represent around 60 % of sales for a food brand, followed by Hypermarkets (Walmart) with a 20 % share. The Discount and Pharmacy channels may represent 65 % of sales for a Beauty Care or OTC/Healthcare product. Most Supermarket retailers will expect payment of a “slotting allowance” of $50 to $100 per store. Slotting fee’s are less common outside the supermarket sector. Many international specialty food brands start with natural/ gourmet channel retailers such as Whole Foods or Trader Joes.

3. Broker, Importer, Distributor or Direct ? Choosing an appropriate organizational model represents a logical next step. Food Brokers appear as the dominant partners to the supermarket trade, but don’t offer the logistics capabilities required by international brands. Importers provide an integrated service offering, but may lack the scale and retail coverage required. Leading retailers such as Walmart and Costco prefer a direct interface with their suppliers. Distributors must be segmented into wholesale distributors who carry a full range of products and importer/distributors which market a select group of brands. Finding the right organizational model may represent a hybrid approach using different models depending on your category, primary channel, and sales expectations for the USA. Export Solutions database covers more than351 Food Brokers and 260 Food Distributors/Importers covering all regions and trade customers of the USA. These companies will represent any branded food product normally sold through a supermarket, gourmet store,or foodservice.

4. Selling to the Buyer: Larger retailers publish a schedule of review dates for each category. These retailers would only accept a new product during the category review which might occur only once or twice per year. Buyer interest focuses on traditional elements: What makes your product different versus current assortment? What is your brand marketing plan to generate consumer sales? A positive difference is the absence of European Style, “annual conditions negotiations”. A law called the Robinson - Patman Act creates a fairly level playing field on price and promotion levels across the USA. Requirements are naturally less demanding to sell to smaller retailers in alternate trade channels. Sustainability practices of your company is emerging as an important metric.

5. Category Management Maintains a High Profile: Data transparency and availability in the USA is unique. Manufacturers routinely access and evaluate sales, pricing, and merchandising data to the store level detail for their brand as well as competitors. The role of Category Management analytics is significant, with all suppliers expected to supply fact based analysis and in some cases consumer research to support your product “story”.

6. Retail Coverage is Mandatory: Your brand should include store level coverage for the supermarket and hypermarket (Walmart) channels. This practice is required to insure compliance with account headquarter authorized plans. If you do not have a broker covering stores, your product may be available on the shelf in 60 % of authorized outlets and likely has unfavorable location and space on the shelf fixture. Certain retailers and channels maintainer higher compliance levels than others; Our guidance is to invest in retail coverage at Supermarkets and Walmart.

7. Marketing Investments Average 10-20 % of Sales: New brands should budget 10- 20 % of sales for investments in trade development activities and consumer awareness promotions. Common trade activities include Temporary Price Reductions ( TPR) or participation in the grocers weekly flier. Discount coupon vouchers offering a savings of 35 cents to 75 cents is a popular consumer trial vehicle. Leaders like Walmart and Costco demand marketing support, but offer Every Day Low Prices (EDLP), with limited periodic promotions.

8. Cost Calculation- Key Factors: Importers Margin averages 20-30 %. Brands requiring a wholesale distributor should calculate 20 % for this service. Broker fee’s range from 2 – 10 % , but 5 % is normally fair for a new brand. Retailer margins average 25 %, but could be as high as 40 % for specialty foods and chilled products. Walmart and Costco margins/prices would be 10-30 % less than the general market. Another requirement is your 10-20 % accrual for marketing and trade promotion. Sales tax (VAT) policies vary by state and product, with some states having 0 tax on food products to others with almost a 10 % maximum sales tax level. Note: Sales Tax is not included in USA retail price tags.

9. Trade Shows: The annual Fancy Food Shows in San Francisco and New York are the most important shows for the branded food sector. The All Candy Exhibition in Chicago is essential for the Sweets industry. The NACDS convention is critical for manufacturers of Beauty Care and OTC/Healthcare products. Other industry channels ( Convenience Store etc.) and product sectors ( Natural Food, Frozen Food,Bakery) feature annual trade shows. Other shows of interest are the PLMA (Private Label),NRA (Foodservice), & FMI.

10. Export Solutions Can Help!: The USA is an attractive market with well defined routes to the store shelves. Export Solutions can help your company build your strategy and presence in the USA market. Visit http://www.exportsolutions.com/talkExpert.aspx for more information.

Savvy exporters deploy new web based tactics to identify new distributors and connect with global consumers. Most companies maintain a basic web site featuring an “international section”, but few sites are designed to promote export sales. Listed blow are Export Solutions “Ten Tips” to unleash the power of Web 2.0 to drive new business in 2010.

1. Language Translation Software increases your reach. Popular software such as Babel Fish can be placed on your site to translate your International page to different languages. These tools provide instant translations without formal redesign of the web page.

2. Code your site for Tracking Analytics- Available measures include visitors by city, time spent per page, and key search phrases driving web traffic. Search Engine Optimization (SEO) raises your ranking with Google and Yahoo,

3. List Current Distributor Contacts- This makes it easier for potential customers and consumers to locate your brand in their home country. The distributor listing on your web page also reduces distributor inquiries from countries where you already have a partner.

4. Distributor Wanted Postings: Define countries where you are searching for a partner. Your “Distributor Wanted” section should link to your Companies Distributor Selection Criteria. A sample statement could outline basic requirements such as “Beverage Company A seeks partners with significant beverage category expertise and demonstrated success marketing other international beverage brands. Distributor candidates must be highly motivated with countrywide coverage across all trade channels.”

5. Automate Process to Capture Distributor Candidate Credentials. Create an online template to summarize a new distributor candidate’s basic information: Company size, current brands represented, references, web site etc. Alternatively, you can develop a process to automatically email a similar template to interested candidates. Create an email box called newdistributors@yourcompanyname.com.

6. Establish an Intranet Portal for Existing Distributors: This password protected gateway serves as an entry point to a data warehouse of information. The Intranet could include product catalog, brand images, syndicated data, presentations, and a chat function to share ideas.

7. List local retailers stocking your product- Advanced applications include ability for consumer to search for retail stockists by postal code. Basic approaches include a simple drop down menu stating now available at with names and/or logos of leading customers.

8. Product Request Form- An online product request form captures names and contacts of consumers interested in your brand. This information can be used to prioritize export expansion areas measured by level of inquiries. Upon entry into a country, the contact data facilitates targeted marketing or to demonstrate to a retailer level of consumer interest.

9. Publish an International Newsletter- This newsletter may share new product information, success stories, recipes, contests, or any other method to create engagement with distributors, retailers, and consumers. Tools such as Constant Contact make creation and delivery of online newsletters simple and cost effective.

10. Photo’s add a personal touch- Pictures of the export department team add life to the export department, particularly for small-mid-size exporters. Other web pages include photo’s of the “Distributor of the Year” or senior manager visits to international markets.

Export represents a dynamic growth opportunity for most companies. However, most companies make mistakes, particularly in the early development cycles of their export development.

Listed below are some common mistakes:

1. No Category Research
Some companies assume that their category development is consistent everywhere. They fail to conduct basic research on competitive dynamics and pricing. There are many similarities between eating and consumer products usage between the USA and Europe. However, eating habits in Asia are dramatically different! I remember having an argument with a leading producer of branded Indian Food about export opportunities to Latin America. He refused to believe that the market for Indian food was so small, because he had not conducted research or visited the market. Do your homework !

2. Little – No Investment in Marketing & Trade Spending
Few brands are so innovative and exciting that they will sell without investments in consumer awareness activities and trade incentives. Yet, many exporters believe that they can offer a “net price” and a distributor will create a significant business, without support. There is a cost of doing business in every market. Ultimately, your results will be directly proportional to your marketing investment.

3. Another Me –Too Product
Innovation sweeps the world at a rapid pace. Manufacturers fail when they do not create a unique selling proposition (USP) for their brand. Why is your product different versus current options ? Is the differentiation meaningful ? A better price ( value) or heavy marketing investment can also differentiate your brand. I recently visited Europe’s largest food trade show. I saw a “lonely” exhibitor from the USA with little interest in his commodity food products. Why would a European retailer or distributor want to import a product that can be sourced locally at a better price ?

4. Pricing is Too High
On many export projects, the price to the consumer can be twice the price from your home market, by the time that you add in logistics costs, duties, distributor margins, and taxes. Yet, much of export growth is sourced from emerging markets, where spending power is low. So, the result is high priced product being marketed to people with limited funds. In many cases, the consumer will pay a premium ( 10-30 %) for a quality, imported product. However, once your product is priced 50 % or higher than the local competition, you are just appealing the top 10 % of the population in most cases.

5. Product not Labeled in the Local Language
English is a global language, but obviously your brand will obtain a better reception if it is labeled in the local language. Many countries have laws requiring labels or at least nutritional information in the local language. Another similar issue is that some brand names do not translate on a global basis. What does your brand name mean in the local language. Does it sound similar to something else which has no correlation to your brand? I remember consulting for a large, global non-food brand. They were puzzled over a failure in Czech Republic and Hungary. The issue was they sold only English language packaging and their brand name meant nothing in the Czech Republic or Hungary.

6. Insufficient Due Diligence during the Distributor/Partner Selection Process
I am amazed at the number of relationships based upon only a short meeting at a trade show. I love trade shows and believe they are a great place to meet prospective distributors. However, you must conduct due diligence on your prospective partner in their home country, before beginning your relationship. This includes interviewing the distributor as well as other candidates at their local offices. Visit the stores to see their performance for their current brands. Conduct reference checks and run financial checks with Dun & Bradstreet or similar credit check agencies.

7. Diverting- New Customer Pick Up at your Plant
Export managers are flooded with requests by distributors/buyers wishing to purchase well known brands. Many of these inquiries are legitimate, but a significant percentage are from diverters. I’ve written a separate article on this subject, so I’ll only share a few comments here. If your export price is less than your standard price, display extreme caution in dealing with new distributors/buyers. Complete the required “Due Diligence” referred to in point 6, including a visit to the distributors warehouse. Do not allow pick up at your plant or at a local port by a new distributor, if your price is lower than your standard price. Ship to the distributor product labeled in his native language and be cautious about promises to sticker the product at the port. Savvy diverters can make more money through “grey market” trading than by shipping the merchandise back to the intended country, warehousing the product, and selling it to a retailer.

8. No Focus on the Shelf
Too many exporter/distributor discussions concentrate only on container shipments and orders. A critical element is the need to focus on activities to generate consumption. Some export projects fail, because the exporter does not dig deep to track progress against fundamentals of acceptance at major retailers, assortment, pricing, shelving, and merchandising at store level.

9. Exporter Fails to Visit the Market
The internet has facilitated global communication. However, there is no replacement for a periodic, face to face, market visit to discuss issues and measure progress. “Out of sight……….out of mind”.

10. Unrealistic Expectations
Exporters are optimistic by nature. Launch plans project volumes based upon category size and the famous statement “If we secure only a 10 % market share…”`You know the rest of the story. Reality is that the 10 % market share is possible, if you focus on avoiding the mistakes discussed in points1-9 above.Good luck !

Early indicators suggest that 2010 will be a better year , with the global outlook being much brighter than 2009. However certain markets, retailers, and distributors are still in the doldrums, suffering a severe hangover from 2009.Listed below are twelve signs that a distributor or retailer may be experiencing financial trouble.

1. Country facing Economic Crisis – There were warning signs in Iceland, Hungary, Latvia, and the Ukraine that these markets were in turmoil. So why were some surprised when distributors and retailers in these markets went bankrupt ?The Economist Intelligence Unit and other services provide regular updates and outlook for country level economic data. Our consumer oriented businesses tend to track pretty closely with overall economic trends in a country.

2. Reduced Inventory – Normally distributors like to keep 6 weeks of sales inventory on hand and retailers approximately 2 weeks warehouse stock. These can vary widely depending on your supply chain efficiency and turnover. Look for shrinking inventory levels or “emergency” rush orders to prevent an out of stock. Similarly, delayed or reduced orders to support a major promotion or peak seasonality are also warning signs.

3. Distributor loses a Major Brand – Brand owners maintain the right to change partners. For distributors, there is an “ebb & flow” of business lost and business gained. Trouble could be lurking, if the brand lost is a #1 or #2 line or if the brand has partnered with the distributor for many years.

4. Distributor Brand Manager ( or Buyer) has a heavier workload. This could reflect a loss of business, employee turnover, or organizational cut backs.

5. Margin Hikes or Retail Price Increases – In some markets, distributors have the flexibility to take price increases. They risk shipment loss, but their total profits may be up if they can gain more realization per case sold. The same applies to retailers who may be able to pass on discrete price increases.

6. Payment delays –Most manufacturers track Days Outstanding and maintain contractual agreements with distributors and retailers regarding payment terms.

7. Distributor Logistics Outsourced to a Third Party- This may represent a business enhancement in some cases. Coupled with other negative indicators, logistics outsourcing could indicate a problem. Distributors can raise cash by selling/leasing his warehouse and secure incentives for outsourcing his logistics business.

8. Organizational Cutbacks –Employee Turnover – Employee headcount is usually the largest single expense at any distributor. Look for cutbacks on the retail sales team. These are easiest to miss, as the retail sales people and merchandisers do not come to the office. Spend a half day working with a retail territory manager and you will learn “what is going on”: Organizational change, brands lost etc.

9. Out of Stocks at Store Level – Abnormally high out of stocks provide a clue that the retailer or distributor may have trouble with credit or payments and can not replenish warehouse inventory. Ask a store level clerk how long the product has been out of stock.

10. Unusual Bill-backs- During tough times, we see the emergence of unusual bill-backs. Look for higher cases sold on promotion versus history, increases in costs for promotional support, or unique fees or penalties assessed. For a while, some USA retailers made a fortune on “post audit deductions”. This practice involved an accounting firm who would process deduction for actions 2-3 years earlier. Since most manufacturers did not keep their records, these questionable deductions passed as valid.

11. Calls from Other Suppliers – There are few secrets in the industry. Veteran exporters pick up the phone and call an industry peer when something appears out of sync. I recall a flurry of activity and phone calls from frantic suppliers in advance of two high profile distributor bankruptcies in Europe.

12. Shipments lag behind expectations – All of the above activities impact shipments. Evaluate a distributor or retailer’s purchases and compare to overall market conditions or trends across your other markets. Why is this distributor or retailer out of sync with broader trends?

What are the major reasons that export initiatives fail? The chief reason is that manufacturers obtain a case of “international amnesia” and forget the fundamental steps that are required to build a brand in any country: Research, Marketing, Investment, and Selecting the right sales partner.

Listed below are Export Solutions Ten Tips on why export programs do not meet expectations.

1. No market or category research prior to launch
Every market is different and you need to gain basic category information prior to committing to a launch strategy. Basic market research can be sourced by conducting a few store checks with likely retail customers. “You won’t get a good grade if you don’t do your homework!”

2. Failure to establish a meaningful USP ( Unique Selling Proposition)
Retailers scrutinize every new product offer to stock brands that deliver true innovation. With the increased visibility of private label, it is becoming tougher and tougher for a new brand to “break through” to retailer acceptance particularly in Western Europe & North America. What “news” does your product bring to the category ? Is this “news” important to the consumer ?

3. Lack of a strategic launch plan
Unfortunately, many launch plans consist of a product catalog and price list. Some manufacturers sell an initial container to a distributor with few clues on how the distributor intends to build the brand in his market .

4. Insufficient Due Diligence to select the Right Distributor/Partner
Too many distributors are selected based upon a quick meeting at a trade show without extensive due diligence. Would you select your wife after only one date ? Every country has a wide variety of distributors of different sizes and specialties. Export Solutions database tracks an average of 45 distributors/brokers per country. Proper partner selection should include consideration of at least three candidates, interviews with the company in their home office, local store checks to measure presence of their current brands, and reference checks with their existing brand partners.

5. Wrong person at the distributor leading your business
Careful attention should be placed at selecting the person who will manage the “day to day” issues on your business at the distributor. The company owner controls distributor resources , but may have little time to dedicate to your business. An energetic college graduate may have great ideas, but limited clout to influence the distributor organization. Manufacturers should always request to meet the person who would manage their business during the distributor interview process to determine if the proposed brand manager is a good “fit”.

6. No/Limited Investment in Consumer Awareness Activities
You can not maintain high expectations for your brand to sell well without marketing investments. I remember a proud colleague boasting of sales to an international Walmart division. However, the brand did nothing but gather dust on the shelf without any activity to attract consumer interest. Sales expectations should sync with your investment in brand support.

7. No Investment in Trade Incentives
There is a cost of doing business in every market. The retail trade is in the business to make a profit and “trade spending” is an important source of income. Distributors can stretch your dollars, but they can not create miracles without the appropriate investments to “play the game”.

8. No Focus on Store Level Presence
Some distributors and manufacturers feel that their work is complete once they have secured headquarter authorization for their new product. Certain markets are more organized than others, but in most cases the job has just begun. Brand owners invest in huge merchandising teams to fight the battle for shelf space at store level. If your distributor does not have retail sales coverage or there is no focus against shelf objectives, you will lose at the critical “point of sale”.

9. Brand Owner does not visit the market
Some export managers manage “the world” and find it difficult to visit markets on a regular basis. Distributors require the active participation and presence of the brand owner to optimize shipments. Failure to visit, leaves the distributor free to direct their resources against brands with higher visibility.

10. Unrealistic expectations
Manufacturers that fail to do their advance “homework” may have unrealistic expectations on market potential. Most brand owners and distributors are overly optimistic. Unfortunately, investment levels do not match the levels required to meet shipment expectations. For a new brand, a “crawl, walk, run approach “ may .

Outsourcing of sales functions to channel specialists is a common organizational strategy in the USA. Third party service providers include Food Brokers (now formally known as Sales & Marketing Companies), Distributors, Importers, and Merchandising Service Organizations. Most retail channels require a unique approach. This can present challenges in identifying the appropriate partner, as there are more than 322 broker organizations and 260 importers in the Export Solutions database.

How do I determine the right strategy for my brand?
Project Sales by Trade Channel to Determine the Source of Your Volume. In the USA, there are 11 trade channels: Supermarket, Supercenter, Mass, Club, Natural Foods, Convenience, Drug, Dollar Store, Gourmet, Gift, and Military for most food products. Hardware is important for Non-Food products and department stores for personal care brands. Normally, supermarkets account for 60 % of sales for a food brand, but only 30 % of sales for "non-food" categories like cleaners, personal care, or health care.

Determine the Services Required and the Complexity of Ongoing Maintenance.
Certain categories require a high focus on store level activity and speed to shelf. In other categories, it is sufficient to "sell in" at headquarter level and let the retailers systems execute for their stores.

Evaluate your Internal Resources.
How many direct people will your organization have focused against customer development and sales execution ? What can your own organization realistically handle ? Do you have people based locally close to the retailer and people with experience against leading retailers or trade channels?

Determine the Channel Specialists
Many companies employ a food broker for the supermarket channel (at minimum: retail services) but prefer to deal directly with Club,Drug, and Dollar Store Channels. Importers and Distributors function well for natural food products, gourmet specialty foods, ethnic foods, and imported brands.

Hybrid Approach May Be Optimal
Wal*Mart prefers to negotiate directly with its vendors. Many manufacturers hire a broker for retail services at Wal*Mart to supplement their own activity at headquarters. Merchandising Services Organizations excel at dedicated, short term projects and handling time consuming reset work.

Watchout:
Most outsourcing to third parties represents a "shared services" approach where the manufacturer is effectively "renting" a portion of the broker or distributor’s sales force time. These third parties profit by reselling this sales force to many manufacturers, sometimes up to a 1,000 companies in the case of a national broker. A constant battle exists for a manufacturer to get their "fair share" of the sales forces time. On the other hand, manufacturers must be realistic on their performance expectations relative to their amount of compensation to the third party.

Conclusion:
The old adage that "No one can execute better than yourself" does not apply in most cases in the United States consumer goods industry. In every sector, there are local specialists with significant critical mass that can execute a well defined brand proposition in an effective and efficient manner. Manufacturers should focus their attention on direct relationships with global leaders such as Wal*Mart & Costco that require a high level of senior management interaction.

A common industry debate revolves around the size of the distributor (or broker) you choose to represent your brands. Does your company prefer to be positioned as one of many brands in a leading distributor’s portfolio? Or is it your company strategy to be a "big brand" in a smaller companies operation? Read below to understand the "pro’s and cons" of each alternative.

Big Distributors Can Deliver Big Benefits
Large distributors offer scale versus smaller competitors.
Their strong portfolio of brands gives them more clout with retailers, and deeper coverage, particularly outside the main cities and "down the trade to smaller shops". This critical mass usually generates logistics efficiency and cash flow that a distributor can reinvest in people, technology, and broader services. A successful big distributor shares "best practices" from their different principals. Importantly, a big distributor is an essential partner to their local retailers, with good access to senior management and the ability to get paid "first" in challenging economic environments. A big distributor (or broker) thrives by bringing more principals into their "model" to offset the cost of fixed investments in people, technology, and infrastructure. This presents a challenge, as many manufacturers compete for the same resources and share of attention.

Small Distributors –Entrepreneurial Spirit
Pioneering a new brand or smaller company is a challenge. Smaller distributors are willing to accept the mission to build a brand they believe in. Small distributors offer the same fundamental services of key account sales, retail coverage, brand management, and logistics. Their size does not provide the scale or depth of coverage as a large distributor. Small distributors have fewer principals, so they tend to be responsive and flexible. The distributor (or broker) owner will probably be involved in the management of your business. These companies are "hungry" and are experts at delivering results with limited investments in marketing support. Key challenges usually relate to the financial resources to compete in technology and store level coverage. This can be an issue as a brand strives to build market share towards leadership in a large category.

When is Bigger Better ?
Big distributors tend to be a better solution when you have a large, existing, business that requires a full array of services at a competitive rate. They succeed in countries where it is necessary to maintain massive "in-store" sales and merchandising teams to cover small stores and remote areas. Big distributors are also a good choice in countries where financial stability is a consideration, as they can leverage their ample brand portfolio for prompt repayment .

Good Results in a Small Package
Small distributors function well in a start-up situation for a new company or smaller brand. Their entrepreneurial spirit can deliver good results with limited investments. They often have excellent relationships with retailers that can be leveraged on your behalf. Small distributors (or brokers) can be a good alternative in countries with lower population or consolidated retail environment. Smaller distributors serve as an option for larger companies that seek to be the leading principal for a distributor or in countries where they allocate lower investment levels of marketing support.

People Make a Difference!
There is no magic formula to determine whether a big distributor or small distributor is the right choice to build your business. My preference is to identify a passionate team who demonstrate enthusiasm and the time and commitment to develop the brand. Most markets feature many distributors with the basic "tool kit". The key is your ability to motivate your partner to apply distributor resources for the benefit of your brand.

Kraft Foods recently announced their 10-10-5 strategy. Kraft will focus on 10 countries,10 brands, and 5 product categories. A few years ago, Procter & Gamble unveiled a “Big, Big, Big” strategy. This translated to resource allocation to “Big Brands, Big Countries, and Big Retailers”. Other manufacturers prefer to focus on small-mid size countries that don’t require large marketing budgets to enter and generate solid profits due to lower levels of competition. Most of us dream of having the scale of P & G or Kraft with the ability to dedicate large teams to strategy development. Fortunately, creation of a logical, international strategy roadmap is achievable for all manufacturers.

A good strategic plan should be visionary, conceptual, directional, and compatible with the companies overall business goals for a 3-5 year period. This contrasts with your annual business plan which represents a short term operational plan focused on measurable tactics. Strategy is about making business choices, including tough decisions on which countries to enter, the right brands to support, and where to allocate company resources. One approach that encompasses both the Strategic and Operational aspects of the business is “OGSM”. OGSM stands for the process of developing a document outlining “Objectives, Goals, Strategies, & Measures”. OGSM serves as a vital link between long term strategy and short term business demands.

The first step is to review your existing strategy document. How are you doing? Based upon 2008 results, are there adjustments in tactics required? Frequently, the international /export division of a company needs to adapt the corporate strategy to a plan more appropriate for international development. Create the right environment to review and polish your strategy. Best bet is an off site meeting, scheduled for a Monday or Tuesday, before the pressures of a work week have drained your energy. Advance publication of key questions in template form sets the tone for meeting participants that are well prepared. For small-mid size companies, it may help to include company board members, peer, non-compete manufacturers or other experts to share ideas. Export Solutions has helped companies all around the world with international strategy development.

Strategy 2011 begins with the simple question of “Where do you want your business to be by the end of 2011?” This includes segmentation and prioritization of countries and brands. Core questions for International exporters include:

• Which countries will deliver the greatest growth and best return on investment? Which countries are under developed relative to potential ?
• Where are the gaps in your Export coverage Map ?
• Where is the profitable “low hanging fruit”?
• Which Retailer/Distributor partnerships can be extended into new geographies?
• What tactics/countries are delivering superior results?
• Problems: Countries/Distributors, Retailers, Brands

Strategy is not a once a year event. All activities should ultimately sync with our strategy in some way. Featured prominently on my messy desk is our company strategy as well as key tactics and measures. Sometimes our strategy gets buried under the minutae of day to day tasks. However, I am pleased to say that Export Solutions has made excellent progress towards of our goal of serving as a valuable resource for the international consumer packaged goods community.

Good store versus Bad store ? How do you evaluate whether the store you just visited was a “good store” or “bad store” in terms of your brand presence? Clear communication of a brand’s in store objectives is critical to achieving good visibility at store level. Your retail sales team (direct or outsourced) should be aligned with your expectations on what constitutes exceptional results versus unacceptable conditions for your brand for each store. A new headquarter listing is a first step, but the work has just begun !

Retail Showcase: A retail store is a “showcase” for our brands. A visually appealing showcase will entice the consumer to purchase our brand in the 10 seconds she has to consider our category. I’ll never forget my first store check in Cordoba, Argentina with a distributor sales representative. The rep. proudly brought me to a store where he had established a decent vertical block set, with 50 % of category shelf space allocated to our brand. His broad smile quickly faded as I mentioned that our brand had 70 % market share and never wanted to be positioned next to a price brand. His valid point was that “No one had ever shared what our specific objectives were for in-store execution.” You can guess the rest of the story: We created a Shelf Management binder for each rep, with objectives, photo’s, before and after score sheets and kicked it all off with a “Best Store” sales contest.

Recapped below are considerations for developing your own In-Store Presence program.

1. Establish a Report Card System: This approach awards points for achieving key in store presence objectives. This includes shelf management and incremental merchandising. Naturally, each representative should strive to secure the highest point score possible in each store.

2. Retailers Official Planogram/Schematic: Outlets may vary, but the schematic is the official record of how the shelf should be arranged for the key account. Actions should be in context of the retailer’s footprint and what can be influenced at store level.

3. Start with the Fundamentals: Basics should include all authorized items being tagged on the shelf, with correct price tags and in stock for the consumer to purchase. Your brand should be shelved in the correct category and sub category.

4. Space Allocation: Shelf space should be allocated according to sales velocity is the general rule. A brand with 40 % market share should maintain at least 40 % of the shelf space. Make sure that the best selling items have proportional space. In an ideal situation, you should strive for one week’s sales inventory on the shelf with the ability to stock one full case on the shelf. Counting facings (fronts) is an easy way to measure share of shelf.

5. Positioning: Do you prefer vertical or horizontal alignments ? Is there a brand that you want your brand placed next to ? Are there brands that you do not want to be positioned next to ? Which sizes/flavors should be placed at eye level ? Which sizes/variants should be placed on the bottom shelf ?

6. Off Shelf Merchandising: Does your brand have secondary placement ? Is there an off shelf display with incremental shelf stock ? How big is the display ?

7. Point of Sale: Do key brands have point of sale ? Point of Sale can be supplied by the manufacturer or adapt the retailers proprietary point of sale materials.

8. Visit Retail Stores on Every Market Trip: Make it a point to visit stores each time that you visit a market. Alternate cities checked within a country. Request that the retail sales manager or territory manager accompany you on the store check, so he can receive direct feedback on the results.

Getting Started: Huddle with each Country Retail Sales manager. Establish clear objectives for the market. Look at each of the major retailers and establish specific, measurable goals for each retailer. Participate in a “Kick Off” meeting with the retail sales team to share shelf objectives, with a contest for those who achieve the desired results. Provide specific guidance, as well as photos of ideal sections. Your workshop can include handling potential objections. Measure “before and after”conditions. Conduct periodic retail audits to calibrate progress. Each member of your sales team should be able to grade each store. Normally, the store level grades may start low, but competitive sales teams drive improvements within a 3-6 month time period.

Consumer goods manufacturers pay high end consultants substantial fees to create strategies to enter BRIC countries (Brazil, Russia, India, China,). My experience is that “I” often stands for “ignored”, as companies prioritize resource allocation to the other members of this elite group. Many feel that India deserves their reputation as complex, fragmented, distant, and poor. These points have some merit, but a recent trip to India revealed an excellent opportunity to get into an enormous, English speaking, market on the ground floor. India represents a gem for consumer goods producers when you consider key market entry considerations:

• USA/EU packs are acceptable
• Importer applies small sticker with local info
• Minimal cost of entry fees
• International brands enjoy good awareness and acceptance

Export Solutions believes that now is a good time for brand owners to begin their “Passage to India”.

Country Facts
India is the home to almost 1.2 billion people, the second most populous country in the world. India is also a large country, ranking seventh in the world in land mass, almost one third the size of the USA. India’s robust economy grew at a 7 % rate in the past 10 years. 2009 growth rate is projected at 4 %, a good achievement in the current economic environment. India represents the world’s twelfth largest economy, but is expected to be ranked #5 by 2025. Per capita income is still low at $2,800, but India’s dynamic middle class totals over 50 million people, close to the entire population of France. McKinsey reports suggest that the middle class could increase ten fold to 583 million by 2025. In May, the incumbent UPA political alliance was re-elected, suggesting continued support for pro-business initiatives.

Retail Background:
12 million “Kirwana” small shops dominate the retail landscape. Neighborhood Kirwana’s occupy around 500 square feet and are managed by owner operators who often feature home delivery, credit, and ability to break down packages into smaller selling units . Kirwana’s offer convenience, but present a challenging channel for most global brand owners to penetrate. Today, modern trade represents 3-4 % of total sales through approximately 3,400 local supermarket outlets such as Reliance Group, Food Bazaar, and Spencer’s. Most international brands source 70 % of their sales from the modern trade sector.

Walmart, Metro, Carrefour, & Tesco Break Ground
May 2009 signals a turning point in the evolution of the “modern trade” sector of India. Walmart, Carrefour, and Tesco will join Germany’s Metro Group in establishing a footprint in India. The entry of global players is expected to accelerate modern trade development to 25 -30 % within 10 years. Currently, global retailers are limited to joint ventures to open wholesale “cash and carry” outlets. Many view this law as a critical first step in opening India’s market to international chains hungry to tap into India’s potential.

Germany’s Metro Group led the invasion with their first cash & carry in 2003 in the boom town of Bangalore. Today, Metro operates 5 locations and is frequently cited as the top Indian customer for international brands. Much noise in the press accompanied the May 30 opening of Bharti-Walmart’s first “Best Price Modern Wholesale” unit in Punjab. This 50,000 square foot unit offers 6,000 items, of which 90 % are sourced locally. The Bharti- Walmart joint venture (Bhart- Mart ?) plans 15 more outlets in the next 3 years. In reality, Bharti Retail has been active for more than one year through the operation of 27 Easy Day convenience store outlets. Officially, the Easy Day stores are 100% owned by Bharti and operate outside the joint venture. Local insiders suggest that Easy Day stores share the same warehouse as Best Price Modern Wholesale as well as same buyers, systems etc. Tesco partnered with the India conglomerate Tata and plans to open their first Cash & Carry in Mumbai within the next nine months. Reportedly, Carrefour is in advanced discussions with the Future Group (Pantaloon), operators of market leaders Food Bazaar & Big Bazaar. Expectations suggest that Carrefour plans to open their first Cash & Carry in New Delhi in late 2009 or early 2010.

New Routes to Market for Brand Owners
The Indian market opportunity was modest for most suppliers as volume potential reflected a small number of stores that could accommodate international brands. The retail “gold rush” of 2009 will change this as Walmart, Carrefour, & Tesco rush to open their doors in the major cities. These large format operators have ample space to stock international brands and can leverage their international product assortment to attract a dynamic segment of upwardly mobile Indian consumers.

Export Solutions India distributor list tracks 48 importer/distributors many of which represent well known international brands. Fortunately, most brands produced in the USA and European Union require only an importers sticker with the importers contacts and a ‘maximum selling price” to be eligible for resale. Another plus is the low cost of entry relative to the size of the market potential. India’s retailers request entry fees and marketing investments but at much lower absolute levels versus other more established markets. On a positive note, retailers and importers appear patient to allow an international brand time to gain awareness and presence in the market. The biggest issue is that India’s logistics complexities and tax policies often result in a retail price 3-4 times your landed price in the market. These factors translate to price points within reach of only middle class consumers.

Next Steps
India’s retail market will not be ignored much longer. The presence of powerful global retailers will drive India towards the top of leading brand owners priority lists. Export Solutions advocates our traditional “crawl, walk, run approach” of market entry. Ready to begin your “Passage to India” ? Contact Greg Seminara at gseminara@exportsolutions.com to get started.

Stretching thin marketing budgets is a job requirement for most Export Managers. Listed below are “Ten Tips” for brand building on a “ Budget”.

1. Tap into Government Export Programs
Many countries sponsor strong trade organizations that can aid your export development program. Exports translate to jobs and most countries have well established programs to facilitate the sale of locally produced products. For example, the USA Foreign Agricultural Service will co-fund marketing investments for small-mid size USA food producers through their MAP programs. UBI (France), ICE ( Italy),ICEX (Spain), Austrade( Australia), and AG Canada serve as valuable resources for local exporters. These organizations often sponsor local “Food Events” at leading supermarkets in international countries. For example, Austrade sponsors G’Day USA to showcase Australian food producers to USA consumers. These events are highly publicized and normally feature a relatively modest participation fee.

2. Leverage Relationships with Global Retailers
Wal*Mart, Carrefour, Tesco & Whole Foods all maintain programs to ease the export process for their current suppliers. This usually involves direct consolidated shipments with other local producers, labeling assistance, and placement in a special section in the international aisle of their stores i.e. USA Foods, France Foods, UK Foods etc. The immediate benefit is the streamlined route to market without payment of upfront local marketing fees. This allows you to “Test the Market” prior to a traditional market entry with a local distributor and heavy marketing support.

3. Joint Venture with Local Manufacturer
Another idea is to locate a local player in your category in a country targeted for expansion. You may be able to offer a potential partner innovation in taste/flavor or packaging to complement his local expertise. A joint venture or Co-Branding agreement can produce revenues without significant start-up funds.

4. Build Marketing Costs into Distributor Margin
Many manufacturers build an accrual fund into their distributor margin calculation. Normally the funding level is around 10 % of sales, but can range from 5 -20 % depending on the category. This creates a fund for the local distributor to manage. The accrual fund is created on a “pay as you go” basis, with fund levels proportionate to shipments. In this scenario, the manufacturer usually provides a small fixed sum to create a launch budget prior to initial shipments

5. Free Goods May Fund Trade Marketing
Free goods may be used to offset the cost of trade marketing programs, particularly for established brands. This can be in form of a 1 free with 10 purchase or similar type of promotional events. The benefit is that your budget can be stretched as your cost of goods produced is less than the wholesale cost.

6. Private Label
Retailers source quality products for their private label at the lowest possible price. This eliminates the need for marketing investments. However, private label is difficult if freight expenses are too high.

7. Foodservice Channel
Foodservice/Catering offers a “low investment” route to market versus the supermarket channel. Foodservice usually requires less traditional brand marketing support. Foodservice operators look for tailored solutions with rebates based upon purchase levels. A small budget for SPIF’s ( SPIF- special incentive fund) can generate purchases from independent restaurants.

8. Specialty Retailers
Each country has specialty retailers that serve as alternate channels for your brands. This could include diverse customers such as Cost Plus World Market, Trader Joes, Big Lots or Dollar Tree in the USA. These retailers maintain different approaches not dependent on heavy manufacturer spending. Their strategy is to offer different brands ( or sizes) versus traditional supermarkets or mass merchandisers.

9. Co-promotion with other Brands
Retailers generate excitement through Theme events around a group of complimentary items or common cause. This could involve participating in Barbecue event with other Barbecue related products : Charcoal, Meat, Picnic Supplies, Drinks, Pickles etc. Another example is a retailer promotion celebrating their anniversary or support of their favorite Charity ( Juvenile Diabetes etc.). In many countries, leading distributors sponsor an annual event for all the brands they represent. Don’t forget the country specific promotions (G’Day USA) mentioned earlier. In each case, manufacturers pay for a portion of the event as costs are spread out among all brand participants.

10. “In & Out” Packs/Gift Baskets
These special packs can generate incremental business without investment in listing fees or shelf space. Examples could include modular displays, trail size shippers, or bonus packs with free product or gift. Gift Baskets are very popular during the Christmas Holidays. This is a good vehicle for “Fine Foods” brands to gain exposure with gourmet consumers.

Most suppliers maintain modest expectations for 2010. Early indicators suggest a slight uptick in consumer purchases. 2010 will see Asian and Middle East markets roar ahead with Europe and the USA edging slightly forward from uninspiring 2009 results. December represents a perfect time to establish your personal “Fast Start” game plan. Read our Ten Tips below to secure a good beginning to 2010.

1. Move late December 2009 deliveries into January- Many companies have written off 2009 and are anxious to look ahead to the new year. Shifting one week’s worth of orders to January could provide a 2 % head start to 2010. The only caution is to watch retailer safety stock levels as holiday warehouse schedules and weather can impact deliveries.

2. Front Load Brand Promotional Programs- Retailers are looking for exciting events to build store traffic during the slower period between New Year and Easter. Why not start the year with a blockbuster promotional event ? This will be easier to execute early in the year versus later when spending is tighter.

3. Establish First Quarter Bonus Program or Sales Contest- Sales people and retailers respond to incentive programs. Fast Start bonus programs represent a good way to align and motivate the organization for the new year. A key issue is to ensure that aggressive shipments January – March do not compromise April-June. One tactic is to design programs with shipment objectives plus objectives for new item distribution, retail presence, or incremental merchandising.

4. Ten Percent Solution- Challenge each country manager and key account handler to design a plan to deliver 10 % sales growth for his market or account. Then, allocate funds to the most promising new opportunities. This tactic may require incremental funding, but could payout if they deliver.

5. Launch Breakthrough- Game-changing results require your sales team to creatively stretch their thinking. Breakthrough ( see separate article) requires each sales person to set one specific goal that would change their business performance by an order of magnitude.

6. Fix Problem Markets Now- All companies have markets that underperform. Consistent under-achievers impact our own ability to achieve our personal objectives. New Year represents an ideal time to make organizational changes. A new distributor or sales team will be enthusiastic and motivated to make a difference.

7. Fill White Spaces in your Export Coverage Map- There are 195 countries in the world, leaving most suppliers with gaps in their coverage. Aggressive focus on establishing new businesses early in the year allows the new countries to contribute to 2010 sales. Export Solutions facilitates the process with our Distributor Directory featuring more than 4,400 distributors in 90 countries.

8. Schedule January Planning Conferences- All retailers and distributors will be thinking creatively on how to grow their business in 2010. The key is to synchronize your plans with those of your trading partners. Personal ( or phone) meetings should be scheduled with key stakeholders to review the following input:
What are the retailers/distributors internal growth expectations ?
What will your retailers/distributors be doing differently this year ?
What are their core initiatives ?
What will be their best promotional vehicles ?
How can we get involved and aligned ?

9. Retail Store Conditions Drive- The New Year is an excellent time to focus your sales team on enhancing your presence at the point of purchase. Improved execution at store level can deliver incremental growth that lasts the entire year. Focus on the Fundamentals of retail distribution, reduced out of stocks, shelf management, correct pricing, and schematic compliance can yield immediate benefits at a relatively low cost.

10. Follow the Money- Proactive attention to “money” issues will prevent costly surprises later in 2010. The economic climate continues to pressure retailers and distributors to default . Make it your New Years resolution to pay closer attention to “Days Outstanding”, promotional spending versus budget, and credit authorizations. Many suppliers are requesting revised credit information from retailers and distributors to reflect their current financial situation.

10 companies deserve recognition as “Global Food Retailers”. The list is easy to compile, including the familiar banners of Carrefour ( 38 countries), Metro ( 21 countries), and Walmart (16 countries) plus a few others. Global retailers wield tremendous clout over their suppliers for more than their critical mass. Their uniformity of format, information technology, company culture, and communication vehicles create enormous advantages versus the out-manned brand owners. The supplier community typically operates in country based silos with matrix organizations that may include direct sales teams, distributors, and brokers depending on the country. This results in a mosaic of different company cultures and business models jammed together to service the powerful retailers.

Normally, global retailers trust their country based buyers to make most routine product assortment, shelving, pricing, and merchandising decisions. The buyer seller relationship is rarely optimized, as local key account mangers lack the lateral connectivity with their counterparts servicing the same retailer in different countries and continents. In many cases, the key account handler is a distributor employee with little exposure to the global retailers business outside his home country.

How do we “bridge the gap” to include Distributors in the global account management process? Listed below are practical next steps:

Select Global Retailers Critical to your Business There are about ten retailers warranting “Global Retailer” focus. However, suppliers may elect to establish teams and invest resources in one or a handful of global retailers. For example, a manufacturer selling primarily to Asia and the Americas may not need to create a team for Metro or Auchan.

Establish your Team: The team should include each account manager handling the global retailer at a local level whether he is a direct employee or a member of your distributor. Executive level country managers or distributor management can be included, but should not replace the direct sales person responsible for daily account management.

Roles and Responsibilities Team leader should communicate the charter of the group and include areas of responsibility and control as agreed to by stakeholders. The team leader should serve to educate the team on the global retailer’s corporate operating philosophies and initiatives, facilitate the exchange of best practices, and offer the ability to provide guidance on problem solving. Distributor personnel should be viewed as full members of the team. Leaders need to be sensitive that distributors are a “shared service” model and may not be able to devote 100 % of their energy to your brand priorities.

Scorecard The team objective is to build business. The scorecard allows the team to rollup results on a global basis, measure progress on shipment objectives, and track product authorizations by country. Distributors can share information on local status against key deliverables.

Information Access One of the major tools is to establish a web portal or intranet for the global account team. This allows all international team members, including distributors, access to core information, tools, presentations, contacts, and success stories.

Distributors are viewed as valued members of the supply chain by both retailers and suppliers. Their greater integration in the business process at key global retailers will allow the manufacturer better linkage and results at the point of sale. Global retailers are growing at twice the rate of other competitors. Investment in resources against these customers makes sense.

International Brand Export Managers frequently evaluate tempting offers from retailers desiring to purchase “direct”, eliminating the local distributor/importer middleman. While this can be an attractive strategy in a few scenarios, it often sets a dangerous pricing precedent which becomes difficult to “unwind” when you seek to optimize sales to the entire market.

Rationale: Direct to Retailer
Direct sales from manufacturers straight to retailers eliminates your distributor margin. This can translate to a lower price to the consumer, typically in the range of 20-30 %. This strategy reduces “touch points” in the supply chain, as the inventory does not need to be stored in a distributor’s warehouse prior to being reshipped to the customer. Global retailers are often more credit worthy than local distributors. An added benefit is the ability for the manufacturer to enjoy direct dialogue with the customer, without the filtering of an intermediary. This strategy works well for large manufacturers which maintain local production facilities in the market.

Key Issue # 1: Pricing to other Market Customers?
Most markets feature several important chain retailers plus a large assortment of small shops. Ultimately, an exporter will seek to sell all major retailers in a market and then “down the trade” to convenience oriented stores. This requires a manufacturer to invest in local infrastructure/systems or hire a distributor. These incremental costs usually must be passed on in form of a higher price to the market. This presents a challenge: New customers balk at a price dramatically higher than a competing retailer and “Direct” customers are typically not interested in a 20-30 % price increase to cover the cost of a distributor.

Key Issue # 2: In-Store Merchandising
Brand owners maintain sales merchandising teams to service a retailer at store level. These sales oriented teams guarantee that Chain headquarter plans are executed at retail point of purchase. Exporters that sell direct to retailers may rely on the retailer to execute at store level for them. Unfortunately, this strategy is rarely successful. The retailers store level personnel are focused on their own priorities, not those of your brand. Manufacturers are forced to invest in retail coverage or face a significant disadvantage

Key Issue # 3: Inventory Levels at Direct Retailers
Manufacturers typically demand container/truck load orders for direct purchase. This may require a retailer to purchase several months of inventory versus their target of 1-2 weeks safety stock of local brands. This irregular order cycle frequently causes a retailer to wait until stock is close to depleted prior to reacting to placement of a new order. This causes periodic out of stocks and the need to reestablish the brand at store level when inventory is replenished.

Big Brands-Big Markets: Direct to Retailer Works
This route to market obviously works when a manufacturer maintains a production facility and local business team in a country. This strategy functions for exporters in some markets when one customer commands 50 % or more market share and independents/small shops account for a small portion of the business. It may be possible to deploy a hybrid model where direct sales are supplemented by an outsourced squad of merchandisers.

Distributor: Preferred Option for International Brands
Distributors/Importers (USA:Brokers) provide an integrated basket of sales, logistics, and financial services for the manufacturers they represent. They serve as a cost effective business model for exporters desiring to expand in international markets. Distributors are a variable cost option, with compensation proportional to your brand sales, eliminating the need to invest in fixed cost infrastructure. Distributors represent an excellent alternative for mid/small exporters. Distributors serve as a worthwhile option for big brands in small countries, fragmented markets, or markets with high “cost to serve”.

A 100 billion dollar Goliath
Walmart’s 2008 international sales totaled 97.8 billion dollars, representing 24.5% of total revenues. On a stand alone basis, Walmart international is the world’s fourth largest retailer, outsold only by Tesco, Carrefour, and Walmart’s USA division. The international division employs over 700,000 associates and serves more than 55 million consumers per week overseas. Compound annual growth rate exceeds 25 % percent since 2000. This signals a dramatic growth trajectory that started in 1991 when a Walmart/CIFRA joint venture opened a Sam’s Club in Mexico City.

3,600 stores in 16 countries across 55 banners
Walmart international reflects a diverse portfolio of countries from Canada to China to Chile. Retail banners include the familiar Walmart and Sam’s Club as well as ASDA ( nicknamed AS-Mart) in the UK and Bodega Aurrera in Mexico. Formats include supermarkets, membership clubs, discount stores, supercenters (hypermarkets), convenience stores, hard discount stores (Brazil) and even department stores and fast casual restaurants in Mexico. Success stories include Mexico, Canada, & Puerto Rico, three markets adjacent to the USA. The UK is Walmart’s largest international market where they have fared reasonably well in this competitive battlefield. Wal*Mart exited Germany, Indonesia, South Korea, and Hong Kong after failing to achieve desired critical mass. Reports from Asia are mixed with reports that the Japanese unit (Seiyu) is struggling, but that China is thriving and projected as Walmart’s #2 market in the future after the USA. India holds promise through an announcement of a joint venture with Bharti to open wholesale membership clubs later in 2009.

Local Procurement for Most Brands
Estimates suggest that 90% of all international “branded” procurement decisions are made in country by the local Walmart buyers. This reflects the requirement to be sensitive to local eating customs and product usage patterns. This facilitates relationships with easily accessible suppliers and “just in time” inventory availability. Walmart deploys a form of EDLP ( Every Day Low Price) in most countries. Suppliers need to recognize that “International EDLP” still may involve periodic financial investment with Walmart beyond a “dead net” price. Walmart international units are open to importation of global brands. This provides them with a meaningful point of difference versus their competition and allows them to attract upscale consumers able to afford global brands.

Role of Global Sourcing
Walmart’s Global Sourcing division based in Bentonville concentrates on interaction with the top fifty global suppliers. The aim is to facilitate the exchange of best practices, and tactical procurement of private label and “non-food” items. This office can assist in connecting you with local buyers who are ultimately responsible for purchasing and merchandising your brands. Retail Link, Walmart’s proprietary POS system, is available in most countries. This allows international buyers to view the sales trends of your brands in your home market. Global Sourcing can also serve as valuable allies if local buyers are behaving in a manner inconsistent with Walmart’s overall strategies. Global Sourcing will play an increasing role as Walmart strives for a balance between process uniformity and local execution.

Getting Started
Overlay your brands international category development with Walmart international locations. Identify countries with the best prospects. Normally, starting close to home is a good first step. For USA manufacturers, this means Canada, Puerto Rico, and then Mexico. Chile is a great market which is highly receptive to international brands. China & Japan represent the future, but initial volume requirements and complexity make these markets accessible only to the most experienced international manufacturers.

Organizational Models
Normally, the best solution is to appoint a local distributor to represent your company. This will allow you to sell to Walmart as well as other market retailers. It may be possible to make an initial direct shipment to Walmart international, but this can set a challenging price precedent. At some point, you will need a local organization and it may be difficult to rationalize a price increase to Walmart to cover this added cost. Export Solutions database contains over 4,600 distributors including companies servicing all Walmart international markets .For more information on selling to Walmart international, contact us at www.exportsolutions.com

The consumer judges our brands every day with their purchase decisions. Companies are justifiably proud of the brands they sell. Supermarket buyers are confronted with thousands of options for stocking their shelves. What are the key attributes for a product to excel in to gain buyer attention and acceptance ? Grade your product portfolio and how your products compare to your category.

Taste/Functionality: Simple. How does your brand taste compared to other similar products in a “blind test” ? How well does a household product or healthcare brand work at solving a problem ? Does your beauty care product enhance the consumers appearance or image? Brand owners must conduct independent trials to measure consumer preferences.

Innovation: What news does your product bring to a category ? There is little interest in “me- too” today. Innovation must be created based upon tangible consumer needs and trends. Your innovation must be viewed as an important advance to your category.

Value: The recession has heightened the demand for an improved “value” equation in all products. Value does not translate to simply the lowest price. Value represents the satisfaction level relative to the price paid. In the early 2000’s, manufacturer’s built profit margins with a consistent stream of premium products, finding unique differences to trade shoppers “up”. The winners today are those brands that can deliver new benefits for the same price as current brands.

Package: Everyone smiles at a pretty girl ! How does your package look in terms of modern graphics, text, and size relative to the category? In Beauty Care, the category rewards unique packaging. Manufacturers must resist the temptation to provide too many marketing messages on a small package.

Sensory: Is your product visually appealing ? What does the product smell like ? How does the food product feel in your mouth or a beauty product on your skin ? These factors all play a role in the “seduction” of the buyer.

Health/Sustainability: There is an unprecedented level of scrutiny on our industry regarding the healthiness of our products. Transparency of information via the web will find consumers more engaged in evaluating the ingredients of our products, the process under which they were manufactured, and their impact on the environment. Leading retailers around the world view Food Safety and Sustainability as two of the industries highest priorities.

By Helen Armstrong

(This article is based on the Deloitte Global Powers of Retailing 2009 and a presentation made of Dr. Ira Kalish,Deloitte’s Director Global Economics during the NRF Big Show.)

Intro
Globalisation may have slowed but it will continue. As the economic fall-out ripples around the world even the emerging countries have been hurt. It has caused a shake-out of retailers but when the dust settles the emerging markets will once again prove worthy for investors, both foreign and domestic.

Summary
Food and other fast-moving consumer goods represent just over half of the retailers in Deloitte's annual Global Powers of Retailing report. These huge companies, with average retail sales of $19.1 billion in 2007, have made a strong push to globalise. Over time we can also expect more consolidation of non-food retailers and in Europe they may enter the Top 10 list. In the future for companies to be successful they will need to be clearly differentiated, have clear brand identity, be good innovators, and offer a superior consumer experience.

International expansion has been an important aspect of many large retailers’ growth strategies. Indeed, the larger the company, the more likely it is to operate beyond its domestic borders and to generate a higher percentage of its sales from foreign operations. On average, the Top 250 retailers listed in Deloitte's annual Global Powers of Retailing report operated in 6.8 countries in 2007, up from 6.2 countries in 2006 and 5.9 in 2005. In total, 21.3 per cent of sales came from outside retailers’ home countries.

However, in recent years, the sales boost from international expansion activities has become less clear and there is very little difference in the five-year composite growth rates between those retailers with a presence in ten or more countries and single-country operators (7.5 per cent vs. 7.4 per cent). Retailers that stayed close to home actually outpaced their international peers by nearly two percentage points in 2007. Their stronger sales growth, however, did not translate as well into corresponding profitability. Companies operating exclusively in their home country had a composite net profit margin of 2.7 per cent in 2007, while the more globally minded retailers enjoyed a four per cent return. These findings are consistent with 2006 results.

In part, these findings can be explained by the fact that many Top 250 retailers expanded their international operations significantly over the last decade. Room for continued expansion has become more limited, and global markets have become more competitive. For many, profitability rather than growth has become the priority in foreign investment.

Until now most of the retail globalisation has been made by grocer retailers, led by European food retailers who faced market saturation and regulatory constraints at home. Today things are changing. Non-food retailers such as home improvement, electronics and fashion are starting to spread their wings. Also companies from emerging markets are rising through the ranks of global players.

2006 saw the entry of two Russian and four Chinese retailers in the Deloitte listing. The 2008 ranking revealed that all six of these retailers have climbed significantly. Indeed two Chinese retailers now feature in the Top 100: Gome Home Appliance Group is ranked 63rd and is the 8th highest ranked retailers in Asia-Pacific.

Looking at the level of globalisation by broad geographic regions, European and Africa/Middle East retailers dominate in terms of the degree to which they operate internationally. French and German retailers are the most international. The 13 French retailers in the Top 250 list operated in an average 18.9 countries in 2007 and generated 35.3 per cent of their sales from outside their domestic borders. The 21 German retailers did business in an average 13.8 countries and generated the highest share of sales from foreign operations, 41.8 per cent.

The majority of U.S. retailers tend to do most business at home. The vast majority of sales (88.3 per cent) of retailers in the Top 250 still come from domestic operations and just 38 of the 87 U.S.-based companies listed in the Top 250 have international operations.

Asia/Pacific (Japan, in particular) and Latin American retailers lag even further behind. The 24 Japanese retailers in the Top 250 list operated in an average of just 2.8 countries in 2007. Only ten per cent of their retail sales took place outside Japan. Latin American retailers operated in the fewest number of countries, just 1.6. Their international operations comprised 9.9% of sales.

Retailers in emerging markets
However, strong domestic retailers in the emerging markets of Latin America, Asia/Pacific and Africa are expanding rapidly in an effort to impede foreign competition. The high composite growth rate for retailers in the Asia/Pacific region reflects rapid growth of Chinese, Korean and Taiwanese companies. In Australia, Wesfarmers’ sales soared with the acquisition of Coles in November 2007. Particularly robust growth was enjoyed by five of the six retailers that comprise the Africa/Middle East region, resulting in the highest composite growth rate among all regions. In addition to rapid sales growth, Latin American retailers were the most profitable, led by department store retailers Falabella and Liverpool.

In the meantime, the global recession has had a dramatic effect on international retail. We have already seen a tremendous shift towards discount formats especially in the US and western Europe and we are seeing consumers shift from well know brands to private label. In this economic environment we see a very value orientated price conscious consumer and this will continue while the economy remain in poor shape.

The market is also experiencing an unusual shake-out of retailers. Investors have liquidated their assets in emerging markets in order to cover their losses at home. This has put pressure on equity markets and currencies in those countries creating economic problems: the emerging world has found it is not immune from the developed world.

On the positive side, the main emerging countries tend to have fairly substantial financial resources, reasonable reserves of foreign currency and transparent financial institutions.

Therefore, although many emerging countries are slowing down, they are unlikely to go into recession and will instead continue to grow.

China
Take China. The country is experiencing a fairly surprising sharp slowdown in its economic activity. After many years of rapid economic growth, thousands of factories have shut down and an estimated 10 million workers have been let go from factory jobs last year as demand for exports slowed. Many of these people came from rural areas and migrated to big cities to take advantage of job opportunities. It is estimated of this 10 million, five million have already returned to their home towns as part of a backward migration.

However, the other five million young men and women remain in the big cities unemployed, potentially a recipe for social unrest.

To try and keep people in work, the government is engineering a massive fiscal stimulus, similar to that in US, which should help stimulate the Chinese economy in the long run. A positive effect of the slowdown in demand has been a reduction in inflation. Looking at China’s history, China’s social unrest has usually coincided with excessive inflation so the fact it has come down should mean more stability and more latitude for the government.

Although retail sales in China are likely to slow down this year in the long term China is very well positioned because it undergoing a shift in the structure of its growth with a move away from exports towards domestic demand. All in all, a higher value currency, higher wages, less manufacturing and more services will see more poor people moving into the middle class which means from a retailer and manufacturer perspective, China is a very attractive market.

India
India is also undergoing an economic slowdown and is unlikely that it will experience the double digit growth it has seen over the last few years. However, this was already leading to rising inflation due to the bottle-necks in India: poor infrastructure and excessive regulation especially in the labour market which impedes efficiency on the part of business.

Instead, economic growth is likely to continue at around six to seven per cent over the next decade.

Like China, retail will undergo strong growth in India– stronger than the overall economy -because as the economy grows it allows more poor people to join the middle classes. Their needs for shopping facilities will increase bringing about a strong growth of modern retail, taking market share away from more traditional forms of retail. It is expected that modernisation will mostly come from indigenous companies - the big Indian conglomerates which have chosen to invest in retail. They are also getting ahead-start on foreign retailers who are still largely restricted from investing in the Indian retail market.

Russia
Russia has experienced very strong economic growth over the last decade thanks to the high price of oil and gas but as the price has dropped again growth is clearly slowing down.

In addition, Russia has been particularly had hit by the credit crunch. During the good years many Russian companies borrowed heavily on global capital markets to take advantage of the low cost of capital. Now that this capital has dried up and companies can no longer roll over their debts, they can’t service their debts to Russian banks. They themselves have experienced large capital losses, and the government has been forced to assist. The next stop could be a devaluation of the currency as capital exits the country.

Over the last decade retail sales have grow very rapidly and foreign retailers operating in Russia have done very well. It is surprising therefore that not more foreign retailers have entered Russia. However, many global retailers were wary of the political risks: Now they will be wary of the economic risk and a slow-down in consumer spending.

Brazil
Brazil has done many of the right things and has enjoyed good economic growth over the last few years. Now it is being affected by issues out of its control: the weaker commodity prices have led to a slow-down in demand particularly in China which has hurt export growth putting pressure on the currency.

In addition, many foreign investors have withdrawn their capital from Brazil in order to cover their losses at home. This has led to a weakening in investment spending and, subsequently, economic growth.

As a result Brazil will see a slow down and its GDP growth is likely to reduce of a half compared with 2008. However, the country is unlikely to enter a recession and it will bounce back because it has many positive aspects.

The retail industry is already surprisingly modern and sophisticated relative to the country’s economic situation. It will continue to modernise but also consolidate. The country has a relatively stable political and economic situation relative to other emerging markets so it can expect more investment by foreign retailers again in the future.

Middle East
The Middle East is also beginning to see a slowing of the economy as oil prices have come down. Therefore the investment, which has accounted for about half of the growth of Persian Gulf countries over last few years, is likely to decrease. On a positive note this is leading to a fall in inflation.

On the other hand, many people employed in the Gulf are guest workers and as the economy declines people will return to their (poor) countries.

For the long term, retail still looks very promising. The Middle East is an area which will see continued growth in its population, income, tourism and there is still a lot of opportunity to bring modern sophisticated retail to this region.

Top trends over the next decade

Cut costs: Cash will be king. Companies will want to hoard cash which is converse to a couple of years ago when companies were encouraged to leverage it. Capital expenditure will be cut. Retailers will renegotiate with suppliers to remain competitive.

Risk mitigation: Increasingly retailers will focus on risk mitigation which takes into account many aspects including terrorist attacks; surges in commodities, economic downturns, pandemics, etc.

Customer experience: Companies will offer a superior shopping experience to encourage customers to stay longer in a shore and return again. Also customers will pay a premium price for commodity products if they have a better experience.

Human resource management: This will become a critical issue especially as the workforce becomes older and birth rates decrease. Traditionally employees on the shop floor are not well paid, are not well trained and show little loyalty. Nevertheless these people represent the company. For retailers to be successful they will have do more to train people and engender loyalty.

Multi-channel: Successful companies will make a seamless connection between shopping in a store and on-line.

Smaller stores: Small, convenience stores will accelerate, especially in emerging markets. This will happen as building restrictions impede large-scale store but also as consumers shop more often for fresh products and to top-up.

Market segmentation: Successful retailers will have a portfolio of stores to suit the growing range of different customers and market segments.

Globalisation will continue: Many food retailers are already global but non-food retailers will globalise as well due to market saturation at home.

Re-think supply chains: When the global economy recovers, oil price will increase as well. The assumption that wages in China will stay low and that transportation is cheap is no longer valid.

Brand management: The most successful retailers will be the best brand managers, creating their own strong brands. This will be very important as retailers face the risk of commoditisation: as products all start to look alike the only difference will be price so the successful retailers will derive more sales from non-tangible aspects.

For more Elsevier Food International visit www.foodinternational.net/articles/efi-special

For the full report Global Powers of Retailing visit: www.deloitte.com/consumerbusiness

This is a good time of year to conduct your annual business review with key customers. 2008 shipment records and market share data are now available. Annual negotiations have been concluded for most and retailers have launched their own plans to grow sales in a challenging 2009. The annual Business Review represents a unique opportunity to discuss your business at a senior level, reinforce your reputation as a category expert, and sell the 2-3 ideas that can make a “game changing” difference for your business for 2009.

Senior Management Participation elevates meeting importance. The meeting purpose is to consider strategic issues not normally covered in daily buyer-seller interaction. Participation can include anyone at the retailer who touches your business: buyer, senior buyer, merchandising manager, purchasing director all the way up to the CEO. Suppliers should invite members of their senior management team, depending on the size of the country and retailer. This may translate to a senior level Top to Top at a large retailer or a more informal meeting including the export manager, local distributor, and the head buyer in a smaller country.

Scorecard discussion is the First Step
Discussion of data and trends should reflect key retailer priorities. Frequently, you can source hints from your category buyer simply by asking: What are the key metrics that you are evaluated on ? Most suppliers discover that the buyer is more concerned with service level, inventory turns, incremental promotional dollars than your brands sales trends. Some basic scorecard topics are recapped below What is the retailer’s share of your business versus their overall market share? What factors caused them to gain or lose market share with your brands/categories? What are the gross margin contributions ( percent/value) from your company? Discuss your service level from a logistics standpoint. Critical to remember is that a successful business meeting will focus on forward action versus a rehash of past results.

Establish your Company as the Category Expert- What’s New ?
A major disconnect in the supplier- buyer relationship is that most suppliers focus only on their brands while buyers concentrate on building total category sales and profits. Certain retailers adopt rigorous category management processes with detailed templates for category analysis. Tell the retailer something new ! Suppliers add value by sharing new category insights and trends, not just developments on their brands. Retailers may be receptive to learning about category innovation from other markets, consumer research, new product development work, and environmental/sustainability programs.

Sync with Retailers 2009 Plans
The Annual Business Review is a good forum to learn valuable clues on retailer plans for the year. It is likely that retailers have already announced their 2009 programs with catchy names such as “Great Value 2009” or “Absolute Minimum Pricing”. The meeting represents a chance to ask senior retailer executives their insights on program execution, requisites for participation, program measures, early results, and other new initiatives for 2009. Retailers dedicate significant time to designing their marketing strategy and usually love any opportunity to discuss key elements.

Ask for the Order !
Come prepared with 2-3 Big Ideas that could change the dynamics of your business with the retailer. This could involve retailer participation in a major blockbuster promotion, acceptance of a new line of products, or redesign of the shelf fixture. The annual business review forum helps create senior retailer awareness of the critical issues driving your business.

Beware: Retailer will have an agenda too !
Savvy Retailers will also present 1-2 initiatives where they will request your financial support. Be prepared for the retailer to pressure your company for participation in retailers marketing activities ( magazines/fliers) and concessions in price. In some instances, the retailer CEO/Head Buyer will use the meeting as a “training exercise” to show the buyer how to extract concessions from their suppliers. It is ok to say “no”, but be prepared to share your fact based rationale. Best bet is to create a positive environment for the meeting. This could include an “off site” location or a meeting discussion over a private lunch or dinner. Normally, distributors/brokers have excellent local relationships and can create the appropriate setting for productive, non-confrontational, business discussions.

Summary: Next Steps
The annual business review represents a perfect time to address business opportunities with sufficient time in the calendar year to implement the ideas and achieve your shipment objectives. Key to a positive meeting is a short discussion of the causal factors (scorecard) paired with a sharing of “New Information” to your retail customer. Be prepared with questions of a strategic nature for the executive members of the retailer’s team. Senior members of the retailers buying and merchandising departments spend their days with suppliers whose opinions they value. Join the group with unique category insights and a demonstrated passion for your category and the retailers overall business.

1. Conduct Extensive Due Diligence on all new customers/distributors particularly in high risk countries.
This includes reference checks from existing manufacturer clients as well as from leading retailers in his home country. Visit each new distributor’s office and warehouse to calibrate the size of his business with other principals.

2. Ship Directly to Distributor in his home country.
Do not allow for distributor sponsored consolidation at a USA port such as Jersey City, Miami, or Los Angeles during the initial launch phase. Allow distributor pick-up at your factory only after your relationship and brand have been established for a year or more.

3. Label your product in the local language.
Stickering is acceptable only if it is done in the destination country or at your own in-house contractor.

4. Sell only to distributors based in your target country.
Product shipped to USA based international distributors has little incentive to leave USA ports. Export Solutions Distributor Directory contains more than 4,600 local distributors in 90 countries.

5. Create an "International package".
This could be multilingual label or a different size. One tactic is to label packs "Export Only". This reduces the risk of it being diverted back to the domestic market.

6. Design your International Price structure with a principal of one base list price plus freight charges.
This prevents one country from enjoying a price advantage.

7. Reward Export Department performance on achievement of retail distribution, profitability, as well as sales volume objectives.
Volume based objectives alone may encourage questionable shipments that could be diverted.

8. Organizational Alignment between Export and Corporate Headquarters.
Diverting tends be minimal when the Export Department reports to the VP of Domestic Sales ( minimum:dotted line) versus solely to a separate "International" organizational silo.

9. Leverage technology to alert you to unusual order patterns outside of historical trends.
Analyze Nielsen consumption data versus shipments to the market.

10. Unannounced international market visits to check retail outlets and distributors warehouses can confirm a diverting problem.
Visit stores independently, without a distributor "tour guide" to reduce the risk of a "milk run".

The typical Hot Markets list focuses on emerging markets or BRIC ( Brazil, Russia, India, & China) countries. Export Solutions "Hot Market" list focuses on those countries who derive the greatest benefit from oil priced around $140 per barrel as of July 8. In many cases, the governments source the windfall of increased oil revenues. Governments turn around and invest the money in local projects such as infrastructure, tax relief etc. Virtually all the citizens of oil rich states benefit from a "trickle down" effect.

What does this mean for manufacturers of premium consumer goods products ? More citizens of oil countries can afford our brands. Items that once might have been positioned as "luxury" are now in reach for more consumers. Retailer’s tills are brimming due to the increased affluence and are more likely to try upscale new products. Recapped below are Export Solutions "Hot Markets" for consideration.

1. Saudi Arabia- Saudi Arabia maintains the worlds largest oil reserves. It is also boasts a population of more than 28 million, one of the largest in the Arab world. The retail environment is evolving rapidly, transitioning from hard to penetrate small shops to modern retail formats such as Hypermarkets and Supermarkets. Saudi Arabia ranks #1 on our list. I lived and worked in Saudi, so it is always top of mind for me .

2. Canada- It may surprise you but Canada’s oil reserves rank #2 in the world exceeding those of Venezuela & Russia combined. Canada is close to the USA and a straightforward place to conduct business. Familiar retailers such as Wal*Mart and Safeway and dozens of strong Distributor, Importer, and Broker alternatives make this a natural market for expansion.

3. Russia- 140 million people and the world’s 8th largest oil reserves plus significant natural gas reserves place Russia high on the list. Global retailers such as Auchan and Metro are making strong progress, with Wal*Mart itching to get in the game. It’s still a challenge to manage the local customs, but its getting better.

4. Mexico- 108 million people living just "South of the USA border" vaults Mexico to the top half of our list. Mexico has 33 billion barrels of oil in reserves, but their supply is dwindling a fast pace. Still, Mexico represents a strategic imperative for many reasons including an early opportunity to connect with many Mexicans who may spend part of their careers in the USA.

5. Iraq- Yes, there is still a conflict raging in Iraq, but you can not ignore a country with the world’s 5th largest oil reserves. Brave and bold CPG suppliers will act now to begin the process of getting established in Iraq. This is a priority for the long term.

6. Venezuela- Hugo Chavez casts a long shadow over the 26 million citizens of oil rich Venezuela. Their financial influence has extended throughout Latin America. Venezuela is a good consumer market, but brings challenges in handling the financial aspects of your distributor relationship.

7. United Arab Emirates- Dubai and Abu Dhabi are absolutely booming. The Foodservice sector represents a particularly vibrant opportunity. The potential in UAE is limited by a population of around 5 million. Most export professionals understand that some shipments to UAE are often forwarded to India, Pakistan, Iran, or other countries.

8. Brazil- A mainstay on most "Hot Markets" lists due to its 190 million population. Brazil can claim membership on the "oil list" due to recently discovered oil. Brazil may require 5-10 years before this oil translates to an economic windfall. However, the other macro factors earn Brazil a place on our list.

9. Kuwait- Kuwait’s strategic location adjacent to Iraq plus the world’s 6th largest oil reserves warrant our consideration. Kuwait is serving as a supply depot for many in Iraq, so the sales potential outstrips its 2.7 million population.

10. Norway- This friendly country of almost 5 million people boasts 10 billion barrels of oil reserves. Buying power is strong, with many Norwegians maintaining awareness of global brands. A good place to conduct business.

Export Solutions Distributor database offers hundreds of distributor alternatives in the "Oil Windfall" countries. Our coverage includes all the top 10 countries, with the exception of Iraq (Russia available Fall 2008). Our Saudi Arabia list features 78 distributors and we offer extensive lists of brokers and distributors in Canada. Visit www.exportsolutions.com for more information.

Short Answer-Prevailing Rates*

* Distributor/Importer Margins and Broker Commissions can vary based upon local factors such as retail requirements, logistics costs, financing fees, and complexity of servicing a manufacturers business. Contact Export Solutions to discuss typical margins/commissions for a specific country or brand.

Step 1: Translate Margins/Commissions into Actual Revenue
The margin or commission represents your partner’s fee for service. Your first step is to project what income your company will represent for the distributor (broker). For example, a brand that generates one million dollars in wholesale sales with a 20 % distributor’s margin generates $200,000 in revenue for the distributor. Manufacturers need to consider revenues generated with services required when considering the proposed margin/commission structure.

Cost to Serve: 5 Factors to Consider
Manufacturers must perform self analysis to understand the costs required to service their business:
1. How complex is your product line? One category with 3-5 items is relatively simple to manage. Or is your company in many categories with 50- 100 items to sell, inventory, deliver, and merchandise in- store ?
2. Logistics: Single largest cost for a distributor. Freight and warehouse handling complexity can vary widely by manufacturer. Are your brands of normal weight, cube, and sales turnover ? Or are your brands light with high cube/high turnover ( paper) or low cube, low turnover (HBC items).
3. Retail Intensiveness Certain brands compete in large categories ( confectionery/drinks) with fierce competition for shelf space. This demands constant attention by the distributors/brokers sales force on every store visit. Other brands require little ongoing retail attention. In these cases, distributor personnel must simply verify that authorized brand sizes are available at each store.
4. Seasonal Brand versus Year Round Sales? Naturally, it is easier for a distributor to service a brand that has a narrow selling season ( Christmas Holiday) than a brand requiring year round focus.
5. Manufacturer Involvement and Visibility Does the brand require a dedicated brand manager in the distributor to handle day to day activities ? How involved is the Brand Owner ? Do you speak to him daily or several times per year ? What is the frequency of Brand Owners request for information/reports and market visits ?

Marketing Investment: How Much and Who Pays?
Brands with a strong financial commitment to marketing should generate higher sales for the distributor. Marketing investments include spending for Consumer Awareness activities such as advertising and sampling as well as Trade development events such as listing fees, special displays, and in store campaigns. Brands with strong marketing budgets typically enjoy lower margin structures. In some cases, the distributors agree to share the marketing costs as part of their margin calculation. This practice may apply to large brands or new products. Distributor sharing of marketing expense may result in a slightly higher margin, but increased accountability, efficiency and a unique sense of partnership.

A Brand with Existing Business is Attractive
Distributors and Brokers place a high value on securing brands with existing local business. Distributors can accurately gauge what revenues these brands will bring. Usually, there are minimal "start-up" costs and these brands can deliver immediate sales and revenues. Most distributors’ costs are fixed: sales force, warehouse, management, administration etc. Brands with current sales deliver incremental profits for the distributor by leveraging the distributors existing infrastructure. The distributor must offer a competitive margin to attract these brands to deliver a cost savings versus the brands current organizational strategy. Manufacturers with significant existing business are in a strong negotiating position.

Pioneering New Brands is Expensive
Start-up’s normally pay a premium for distributor services during the first two years of launch. This surcharge is driven by the fact it may take up to a year from start until the distributor derives a meaningful sales level and is paid for his shipments of your new product. Market Entry Planning can take 3 months, followed by another 3-4 months to sell in to retail availability. Marketing activities begin and may take 2-3 months to generate meaningful sales levels followed by retailer payment 30-90 days later. Thus, a distributor may be investing his organizations resources for one year before he gets paid ! New brands also require a disproportionate share of the time of a distributor/broker organization. In some cases, a manufacturer will offer the distributor a small, monthly fixed fee to compensate him for resources invested during the launch window.

Bonus Incentives versus Scale Discounts
Supplemental compensation schemes may be used to incent distributors/brokers or to obtain cost savings once certain volume thresholds are reached. One approach is to pay a bonus based upon reaching critical annual sales targets. Normally, these are paid for volume attainment, but this may be risky as it could lead to "loading" which can cripple your shipments the following year. An alternate strategy is to provide a bonus based upon tangible, measurable achievements, i.e. new item listing at Carrefour/Kroger/Wal*Mart or reaching 80 % retail availability as measured by Nielsen. In other situations, manufacturers may structure margin calculations to receive rebates/margin reductions once business reaches a certain sales level. For example, reduction of margin from 25 % to 23 % once 3 million in sales are reached, 20 % once 5 million in sales are reached. Other plans call for a reduced margin only on levels exceeding the thresholds. For example 25 % margin on first 1 million in sales, 22 % margin on sales above one million.

What’s Fair?
A manufacturer and distributor/broker must enjoy a healthy financial arrangement or brand sales may suffer. Export Solutions has aided manufacturers in Europe, Latin America, Canada, and the USA develop appropriate compensation models. Our insights usually generate immediate cost savings for the manufacturer or validation of their current approach. Visit our Talk to an Expert page or contact us for more information.

Many manufacturers are salivating over the prospect of sales to China. Middle class Chinese consumers are hungry for branded consumer goods. Middle Class population is estimated at 110 million people, with projections of 270 million by 2015. Wal*Mart, Carrefour, Tesco, & Metro, the four largest global retailers, are expanding at a rapid pace.

Listed below are practical steps for creating your China market entry strategy .

Does Consumer Demand Exist For My Brand ?
Non-Food product usage parallels USA and European habits and practices albeit at a lower per capita consumption level. Personal care products, Health Care products, Cleaning products, and Batteries all enjoy wide consumer acceptance in the cities. The story is different for food brands. Eating habits are very different in China, with traditional meal choices incorporating a unique mix of fresh food, rice, noodles, and local spices. Pioneers in Carbonated beverages, breakfast cereals, and cookies are making inroads with perseverance, education, and investment. The emerging middle class , particularly in Shanghai, is open to trying western brands. A logical first step is to evaluate your categories existing presence in China.

Crawl, Walk, Run
Start with a market test in one or more of the three large cities: Shanghai, Beijing, or Guangzhou. Future expansion priorities can include Eastern Seaboard cities such as Shenzhen, before gradually expanding to the top 100 cities.

Leverage Relationships with Global Retailers
Our market visits indicate that Wal*Mart and Carrefour are receptive to aiding global manufacturers in their quest to enter China. Global brands help position these retailers as trendy and reinforce their broad product assortment relative to local Chinese retailers.

Many Distributors: Tough Choices
The good news is that there are many distributors who can introduce and represent your brand in China. The Export Solutions China Distributor list includes 85 companies. There is a wide range in sophistication and capabilities among distributors. Employee turnover is a significant issue. You need to decide between a national distributor or a regional distributor network. There are strong candidates, but you must calibrate your expectations to sync with an emerging market dynamic.

Don’t Forget Hong Kong
Hong Kong’s seven million people are affluent with many expatriates from Europe and the USA. There is strong acceptance and distribution of consumer goods from the USA and Europe. Many of these products are sourced directly from USA or UK wholesalers and lack traditional marketing or sales efforts. There are many excellent distributors in Hong Kong anxious to commercialize your brand. One warning is that slotting fees can be steep to help compensate for the high cost of Hong Kong Real Estate

China: Don’t Let the Size of the Prize Discourage you !
Realistically, the value of your sales in China will be modest for the first three years of availability. Your investment in brand development activities must reflect a long term view to establish a leadership position for your brand in an important, high growth, market.

Export Solutions Can Help !
Contact us to get your China development project started. We maintain good contacts with the leading distributors of imported USA & European brands.

My 2009 mantra is “Flat is the new up”! 2009 challenges signal that some will be content with shipments equal to 2008 as a preferred alternative versus the negative growth numbers experienced in other sectors. Still, our industry is not immune to the crisis with savvy exporters sorting out problems in Iceland, Hungary, and the Ukraine with new issues percolating related to drop in tourism (Caribbean) and appreciation of the USA Dollar. Listed below are our ten tips to take a proactive stance in today’s tough credit environment.

1. Assume every market will be affected. Naturally, certain emerging markets carry a higher degree of risk versus others. However, even large markets such as the USA and the United Kingdom have been burned through the bankruptcies of Bruno’s and Woolworth’s. Total risk should be measured by the amount of credit outstanding as well as each countries risk factor.

2. CFO to CFO discussions make sense. Bring in the financial experts. Let your company CFO or financial manager speak with your Distributors ( or Key Retailers) financial manager. These financial experts speak the same language and will allow your financial team to accurately gauge the situation. It also spreads out the responsibility beyond the sales and marketing department for potential problems.

3. Request New Distributor/Retailer Credit Information- Most of this information was submitted years ago in advance of the credit crisis. It is timely to request new, up to date, information, particularly since many companies will filing their 2008 Year End reports soon.

4. Watch Distributor/Retailer Inventories- Shipments to retailers may not correlate to consumer demand. Inventory levels measured in terms of weeks supply on hand should be monitored at both distributors and retailers. Higher inventory levels signal slowing consumer demand. Reduced inventory levels may indicate a cash flow/potential credit problem.

5. Track Leading Indicators- Most of us are not economists, but it is still easy to develop a straight forward tracking form of leading metrics/trends for distributors in key countries. Shipments, Days Outstanding, Accounts Receivable, Country Level GDP, Unemployment, and Currency Exchange Rates

6. Connect with Peer Non-Compete Suppliers- Every retailer and distributor trades with a myriad of suppliers. I recommend setting up formal or informal groups of peer, non compete, suppliers . These supplier groups can serve as a valuable forum to share trends and insights about common distributors and retailers.

7. Payment Terms- Some suppliers are implementing additional safeguards to protect themselves. This includes moving towards “brokerage style” arrangements where the manufacturer still maintains ownership of the goods. Other strategies include offering discounts for early payment or requesting Cash on Delivery.

8. Run a Dun & Bradstreet Report on Partners- On the surface, business may appear normal. A Dun & Bradstreet Report ( or similar) creates a rating based upon a thorough examination of financial records, statements and dealings of the business with its customers, clients, investors and shareholders.

9. Beware of Unusual Shipments or Billback’s- Unfortunately, there are too few examples of unusual, “best ever” success stories. Look carefully at order patterns or promotional allowance reimbursement ( billback) requests that appear out of sequence or abnormal.

10. Commit to Open Dialogue with Long Term Partners- Many exporters enjoy relationships with their international distributors that extend 20, 30, 40 years or more. Current financial issues likely reflect overall country level financial status versus poor decisions taken by a long term distributor. Distributors need to understand that manufacturers hate “surprises”. Best bet is to create an environment that facilitates open communication supported by data to solve any credit issues.

Congratulations ! You've survived the first half of 2009. Sales remain flat for most, but our industry has out performed most other sectors. The paradox for consumer goods is that senior management believes that a crisis has been averted and expects a slight increase in 2009 shipments. However, a cautious outlook has curtailed brand spending, creating a challenge to stimulate sales. July marks the midway point in the year and the right time to review first half results. Attack this task with some urgency, as more sophisticated retailers are already planning their Holiday Marketing Campaigns. Listed below are some practical tips on a successful conclusion to 2009.

Review Your Original Objectives- Take your personal 2009 goals out of the filing cabinet and review your results. This is a good time to evaluate your performance versus your personal development goals.

Complete a Business Analysis- What countries/brands are leaders? Laggards? Where is remedial attention urgently required? What is working? Surprises (both positive and negative). Share key findings with your management, along with your second half 2009 action plan.

Distributor Mid- Year Review- Request that each distributor complete a similar mid year review. Track progress on key metrics and initiatives. What’s working? Key issues? Where do they need help? Will they achieve their budget?

Follow the Money- 2009 has been defined by financial turbulence. Mid year is an appropriate time to conduct a market wide retail pricing review to see where your brand stands relative to the competition. It is also a good time to review promotional spending versus budget. You need to avoid a “December” surprise of an overspent or under spent marketing budget.

Remedial Action Plan- It is obvious that July is a good time to execute a remedial action plan. There is still time to salvage 2009 without a year end “panic”. Allocate time, money, and resources where required.

Probation for Habitual Under-Performers- Every manufacturer has markets that are under delivering versus expectations. Consistent laggards impact your own ability to achieve your own, personal, assigned objectives. July is a good time to send a strong message demanding improvement if your partner wants to avoid losing your business.

Plan Travel Accordingly- Create a provisional calendar for the second half of the year. Your calendar fills up quickly with priority market visits and trade shows.

Start Thinking about 2010- Create your wish list. 2010 is around the corner!

Brace yourself for a tough year in 2009. Consumer goods/food producers face a better outlook than our peers in other industries. Tight spending consumers will focus on replenishment of staples and home cooked meals versus premium products and restaurant dining. Listed below are Export Solutions “Ten Tips for Turbulent Times”.

1. Track consumption as well as shipments - Consumer purchases reflect the true health of your business. Look at syndicated data consumption figures or warehouse withdrawals from major customers. Measure sell- through behind promotional campaigns versus previous events.

2. Watch Distributor/Retailer Inventories - Shipments to retailers may not correlate to consumer demand. Inventory levels measured in terms of weeks supply on hand should be monitored at both distributors and retailers. Higher inventory levels signal slowing consumer demand. Reduced inventory levels may indicate a cash flow/potential credit problem.

3. Retail Pricing:Value - Many brand owners took pricing action in 2008 to compensate for increases in transportation costs and raw materials. November represents a good time to conduct retail pricing surveys to calibrate current pricing. Special attention should be placed to pricing versus competitors and confirming that retailers did not raise prices in excess of the actual price increase. 2009 emphasis will be on “Value”.

4. Monitor Accounts Receivable - The global financial crisis sparked credit issues at distributors in several countries. A rapid surge in the value of the dollar has also made an impact. It may make sense to request updated credit information from distributors and retailers in certain countries. Suppliers finance departments routinely search for shifts in “Days Outstanding” trends. Scrutinize unusual bill-backs or trade deductions. “Follow the money”.

5. Review Preliminary 2009 Trade Spending Plans - Reduced consumer purchases could leave trade spending budgets under funded on a case rate basis. Look at early 2009 marketing plans to confirm that you are not overly optimistic on projected sales versus spend rate. Normally, retailers shift promotional emphasis to basic items versus premium goods. Competitive activity tracking may reveal that your competition has decreased spending levels. These factors suggest that a close eye on trade spending is warranted.

6. Distributor CEO Contact - Year end is an appropriate time for a lunch with the distributor CEO or a quick phone call. Key topics are status of the business in these “turbulent times”, cash flow, shifts in local retailer practices, status of capital expenditure projects, and an overall view of the Distributors operational plan for 2009.

7. Organizational Changes - Financial turbulence often leads to organizational downsizing at Distributors. Proactive dialogue with distributor senior management should reveal any potential reductions on your business team. Particular attention should be given to the brand manager handling your business at the distributor. Will they be changed or given a larger workload? Retail coverage is usually one of the first areas for headcount reduction. This could create issues for brands that are retail intensive or heavily dependent on in –store promotion.

8. Establish a Turbulent Times Task Force - Senior management hates surprises. It’s too early to sound the alarm bells. However, it is wise to identify potential negative scenarios and develop contingency plans with corrective action. A pro-active task force or informal group meeting provides group awareness and ownership of the issue versus a shift of blame to sales/marketing when shipment shortfalls are experienced.

9. Leverage your Strengths - Some brands will benefit from the slowdown. Find a way to participate in the sales shift to meals at home. Other brands may be positioned as “affordable luxury”. Retailers often use category leaders to reinforce their low price image. Find out what retailers plans are for turbulent times and adjust your own strategy appropriately.

10. Fast Start 2009 - Many companies enjoyed good financial results in 2008. Are there orders in the system that can be moved to January 2009 ? This may be a time to shift emphasis to a quick start program for January and February 2009. Many retailers are looking for innovative ideas to attract customers in the slow, post holiday period.

Lastly, it is important to remember that a recovery is inevitable. We are fortunate to be participants in an industry where consumers still need to eat, clean their houses, and brush their teeth using the fine products we produce. Hang in there !

Per Capita Chocolate Consumption