Export Tips

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 !

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.

Who created the distributor lists?
Our proprietary lists were compiled by consumer products professionals with 26 years working with distributors, importers, and brokers in Europe, Latin America, Middle East, Asia and the USA/Canada. The Distributor lists were designed to provide the fundamental information that International Export Managers would need to quickly identify and screen distributor candidates.

How do you obtain the distributor contact information?
Our initial lists covering 1,400 distributors, importers, and brokers in 59 countries were compiled from years of distributor identification projects for more than 100 leading food/non-food companies. Today, we are grateful that leading distributors submit their company data to be included free of charge in our industry leading directory. Our current coverage is approximately 3,900 distributors in 90 countries.

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

How Frequently are the Lists Updated?
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 India and China lists change frequently reflecting the emerging market nature of these dynamic countries.

What added value is available through an annual database subscription?
Subscribers enjoy unlimited access to 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 25 unique distributors. Many of the larger country lists feature 35 distributors or more. The USA Distributor/Importer list contains 233 distributors and importers, organized by State.

How do distributors qualify for inclusion in the database?
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. We are open to including most reputable distributors that offer sales, merchandising, and/or distribution services for third party brands.

How do I determine if the Distributors are reliable?
Export Solutions strongly recommends that each company using our lists conduct extensive due diligence on potential distributor candidates. This includes reference checks with existing clients and Dunn & Bradstreet financial analysis. We are available to help qualify distributors through our strategic services division.

How do I use the lists to identify the right candidates for my brands?
The comments section of each distributor listing supplies important clues on each distributor’s specialization or brands represented. Visit the Distributors web sites for more company information. Export Solutions can share our perspective on the best distributors for your product via our Talk to An Expert service.

What is the difference between distributors, importers, brokers, and wholesalers?
Importers source brands from outside their home country and provide customs clearance, key account selling, logistics, and financial services for a limited number of brands that they represent. The majority of distributors are also importers, although some distributors do not handle brands from outside their home country. Brokers focus on selling and merchandising and do not normally handle logistics or accept financial risk for the brands that they represent. Wholesalers sell directly to retail customers, and handle a complete assortment of category brands versus distributors, importers, and brokers which focus on only a limited number of brands. Wholesalers usually do not perform brand marketing and rarely provide in-store merchandising services.

Do the lists only include large, powerful 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.

What are Export Solutions Future plans?
In 2009, we plan to offer expanded distributor information, new opportunities to connect with distributors and reach 5,000 distributors. In 2009, we will also offer category/sector specific lists such as Total Europe, Confectionery Distributors, Beauty Care distributors etc.

* Dates subject to change

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.

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.

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.

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 3900 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.

Stretching thin marketing budgets is a job requirement for most Export Managers. Listed below are "Ten Tips" for brand building on a "Shoestring 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. Germany’s CMA, UBIFrance, Food From Britain, 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 is sponsoring G’Day USA in January 2008 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.

Talk to an Expert at Export Solutions for help in Distributor Identification and marketplace entry strategy.

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

Identify a Pool of Preliminary Candidates
Create a large group of potential candidates. This should include distributors, brokers, non-compete local companies, and local producers of related products. Highlight companies that are specialists in the country or market sector that you are aiming at. Of course, Export Solution streamlines this process with our directory of more than 3,900 distributors and brokers.

Determine Candidates Preliminary Interest Level
Send a brief summary of your product proposition and company credentials to top 5- 10 candidates. This may require a personal phone call to your top candidates. Request that they complete a brief company overview recapping their corporate capabilities.

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 is an important preference.

Schedule a Meeting in the Candidates Office
Normally, we recommend interviewing at least three candidates depending on the size and scope of the 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. Send candidates product samples in advance of interview. Their 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. It is also helpful to develop a standard grid to evaluate and compare all candidates. Attached are samples of interview questions and distributor assessment grids.

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 clients have a strong presence at retail? 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.

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.

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 233 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 90 billion dollar Goliath
Wal*Mart’s international sales should reach 90 billion in their fiscal year ending January 2008. On a stand alone basis, Wal*Mart international is the world’s fourth largest retailer, outsold only by Tesco, Carrefour, and Wal*Mart’s USA division. The international division employs over 600,000 associates and serves more than 49 million consumers per week overseas. Compound annual growth rate of 27.4 percent since 2000 reflects a dramatic growth trajectory that started in 1991 when a Wal*Mart/CIFRA joint venture opened a Sam’s Club in Mexico City.

3,000 stores in 13 countries across 50 banners
Wal*Mart international reflects a diverse portfolio of countries from Canada to China to Costa Rica. Retail banners include the familiar Wal*Mart 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), 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 Wal*Mart’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 Wal*Mart’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 in 2008.

Local Procurement for Most Brands
Estimates suggest that 90% of all international "branded" procurement decisions are made in country by the local Wal*Mart 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. Wal*Mart deploys a form of EDLP ( Every Day Low Price) in most countries. Suppliers need to recognize that "International EDLP" still may involve the payment of periodic allowances beyond a "dead net" price. Wal*Mart 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
Wal*Mart’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, Wal*Mart’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 Wal*Mart’s overall strategies. Global Sourcing will play an increasing role as Wal*Mart strives for a balance between process uniformity and local execution.

Getting Started
Overlay your brands international category development with Wal*Mart 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. 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 Wal*Mart as well as other market retailers. It may be possible to make an initial direct shipment to Wal*Mart 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 Wal*Mart to cover this added cost. Export Solutions database contains over 3,900 distributors including companies servicing all Wal*Mart international markets ( except Japan). For more information on selling to Wal*Mart international, complete a contact form from Export Solutions.

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 !

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 !

A great Clorox sales theologian named Tom Palmer introduced me to MITS. 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.

MITS 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.

MITS 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.

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 3,900 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".

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.

Today represents the best time in a generation to sell "Made in the USA" brands to Europe. Europeans now enjoy unprecedented access to USA food products due to the depressed exchange rate of the USA dollar relative to the Euro( & pound). The USA maintains a strong reputation for high quality brands and innovation across all categories. Does this mean bad news for European producers looking to sell to the attractive USA market? Not necessarily so!

Euro: Currency for 300 million + Consumers
On January 1, 2002, the Euro became legal tender in 12 of the largest European countries (ex. UK), accounting for over 300 million consumers. The USA dollar- Euro exchange rate is trading near historic lows. Thus, USA brands are suddenly priced more competitively for European retailers, even with freight factored into the equation.

Why is Europe Attractive for USA Exporters?
Europe is the world’s largest consumer market, with per capita income levels comparable to the USA in Western Europe. Eating habits in practices in Europe maintain more commonality with the USA versus other export markets in Asia & Africa. Large retailers such as Wal*Mart, Ahold, Tesco, Costco, and Delhaize operate on both sides of the Atlantic. This creates a platform to extend your relationship with existing customers. Most European countries feature multiple distributors capable of commercializing your brand locally. Visit our Distributor Directory page to obtain European Distributor lists.

Are European brands still attractive to USA retailers and consumers?
Absolutely. Lets face it……..the USA consumer purchasing Italian extra virgin olive oil, Spanish olives, British jam, Swiss chocolate, or French wine is less price sensitive. These shoppers search for authentic European brands and are willing to pay a premium for the quality. A level playing field exists for all brands imported from Europe as they all face the same issue with the Euro/Pound.

High Value Euro Translates to More Dollars to Invest in USA Brand Support
Now is a great time for European brands to invest in brand awareness and trade development activities in the USA. The Euro- dollar conversion will create larger marketing budgets at constant rates. This translates to more days of in-store sampling, consumer advertising, and participation in USA retailers best promotional vehicles.

What about Canada?
The same currency dynamics apply to Canada. Canada is the USA’s largest agricultural trading partner. The Canadian dollar is trading at close to parity versus the USA dollar. This is creating similar opportunities on both sides of our common Northern border. Brokers and Distributors are powerful players in the Canadian supermarket industry. Visit our Distributor Directory page to obtain lists of Canadian Brokers and Distributors.

Our USA Distributor/Importer List contains contacts for 163 Importers and distributors

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.

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”.

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.

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 2008.

Review Your Original Objectives- Take your personal 2008 goals out of the filing cabinet and review your results. Everyone tracks progress versus their shipment and profit targets. 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 2008 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- 2008 is an unusual year with currency fluctuations and price increases. 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 2008 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.

New Item Status- Many companies launch new products in the first half of the year. How is your new product performing in the market? Is a renewed push required? What