Against a continuing backdrop of rising costs, and economic and political uncertainty, it’s no wonder that so many UK food & drink companies see exports as a way to boost their customer base and mitigate risk. With F&D exports topping £16bn last year, this is clearly big business - but just how many companies get it right and really get the most out of the time and money they invest in growing international sales? To answer that question and many more, we are delighted to share this edited article from Nicola Thomas, F&D veteran, export guru and director of the Food & Drink Exporters Association (“FDEA”), as first published in the FMCG CEO magazine.
Nicola Thomas, industry adviser and Director of the UK Food & Drink Exporters Association highlights 6 key questions designed to help you maximise your international sales growth this year.
For many companies that I work with - regardless of size - exports are often treated very much as the poor relation to domestic sales. They tend to develop in response to inbound enquiries or leads from trade shows rather than be driven by corporate aspirations and capabilities; focus is more on ‘flag planting’ in as many territories as possible rather than on long-term growth with best-fit partners in strategically selected countries. Little wonder then that exports can end up being unsustainable, unprofitable and deemed an unwelcome distraction by functions such as Finance and Ops, rather than a company-wide initiative spearheaded by committed senior management.
As you plan for the months ahead against the backdrop of an ever-changing global food and drink landscape, here are six questions to address with your Board/senior management team to help make 2025 the year you take charge of your exports, rather than them being in charge of you:
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What is driving your export ambition?
Start by confirming - or reconfirming - your export goal. What are the underlying reasons you want to either start expanding overseas or put more emphasis on international sales? Maybe it’s to extend your product lifecycles if your category is stagnating or maturing in the UK; you might be looking to fill excess production capacity or offset seasonality in the domestic market; are you keen to de-risk your business if sales are currently too UK-centric or find bigger pools of target consumers given that the UK represents less than one percent of the total global consumer market? Make sure everyone in the business is aware of the goal and invested in it. Answers to the subsequent questions will flow much more easily if you get this one nailed!
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What are your internal capabilities and boundaries?
As a result of a reactive approach to international sales, you might have drifted into producing small, unprofitable runs of unique products for overseas customers which will not endear you to your Production or Finance colleagues. Consider your current products, pack sizes, labelling, ingredients and production processes and whether you are prepared to alter any or all of them for overseas markets. You might need to move to foreign language packs, reformulate recipes for different taste preferences, extend shelf life to open up more far-flung destinations, develop smaller packs for countries with lower disposable incomes to meet affordable price points or larger packs to service foodservice channels. If you aren’t prepared to make many modifications, and only want to sell to countries prepared to take your current range in English packs, this will make identifying potential target markets more straightforward, though may limit long-term prospects.
3. What resources (financial and human) can you unlock to boost your export drive?
If export is a bolt-on to someone’s day job and will only get attention on a Friday afternoon, it will be impossible to get much traction or the same results as if you had a full-time resource or export team. Consider the costs of frequent overseas travel - which will be necessary to enter markets and build long-term sales - to appoint partners, attend or exhibit at trade shows and manage and motivate your distributor’s sales teams; you will also need some sort of marketing and promotional budget to support your brand in-market, maybe funds for listing fees if you go down the multiple retail route…and don’t forget the hidden costs of certification, documentation and sending samples which may not be incurred servicing your UK business.
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Are you in the right countries?
Country selection starts with knowing the drivers for your sales and will be dependent on your own specific products and target consumers. Spending power can be one criteria; ageing, urbanisation, infrastructure are other factors which can start to help you assess a ‘long-list’ of potential markets and pick out some initial countries to investigate further.
A subsequent deeper dive into category data, how global trends are playing out, availability of sales channels, trade barriers and enablers, regulations, cultural, social and religious factors will help you obtain more meaningful indicators around opportunities or conversely, pick up clues that a market you thought had promise is not so attractive. Try to ensure you have a geographically diverse portfolio of countries to mitigate over-reliance on one market or region. Also remember, if you spend just a fraction of the time, money and resources you are investing in the UK, into overseas territories, you can’t be in many of the 200 on offer at once and doing them justice.
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Do you have the best-fit distributors?
Even for experienced exporters, the most common route-to-market in overseas countries is via a local distributor. They represent your company, your brand and, apart from physical distribution, they offer vital access to contacts, knowledge and provide customer service in areas you can’t. However, poor-fit distributors with misaligned objectives can derail relationships and sales. And, if they mess up, it’s your reputation at stake - which is why I’m always horrified when organisations start working with the first company who approaches them without any due diligence whatsoever.
Now is the time to review all distributors in your network to identify:
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the Stars: celebrate success, set them new challenges and share best practice
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the Plodders: challenge them to become Stars and provide more support to see if they can make it, and
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the Problem Children: put them on probation, evaluate alternatives and prepare to say goodbye if you want to optimise sales in their market going forward.
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Are you managing your risk?
In export, if it can go wrong, it will go wrong at some point! What will you do if, for example:
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Your products are refused entry into a country because they aren’t compliant - the labelling might be wrong or the ingredients might be prohibited?
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Shipments are delayed because the paperwork is incorrect or goods are damaged?
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Despite your due diligence you might end up with an underperforming distributor or one who doesn’t pay you?
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You run into an intellectual property issue, finding that someone else has already registered/is using a conflicting trade mark in an important new export market?
These types of issues are a whole lot trickier to resolve if they are happening in Delhi rather than Dundee! Map all the potential risks in your export supply chain and put a plan in place to mitigate them. The good news is, you don’t have to be - and shouldn’t aspire to be - an expert in all these areas. Seek advice from, and outsource to, eg international trade specialists who are checking labelling and ingredients, filling in paperwork correctly and chasing bad debts every day, as well as other specialists like trade mark attorneys. This will ultimately free up time to focus on your core strengths, which is manufacturing and selling your products.
Please reach out to Nicola for further advice on growing your exports, or to Rowena (or your usual Kilburn & Strode advisor) for advice on protecting your intellectual property.