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Opportunities in the food & drinks sector in Spain for Irish companies
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Opportunities in the food & drinks sector in Spain for Irish companies

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  • 1. Your Global PartnerOPPORTUNITIES FOR NORTHERN IRISH FOOD & DRINKS COMPANIES IN SPAIN. 1
  • 2. PRESENTATION OVERVIEWThis presentation has two objectives:A. Highlight the opportunities that the Spanish market offers to the Northern Irish Food and Drink industry.B. Provide a strategic and operational framework for the penetration of these sectors.Presentation Structure Defining the opportunity – Overview of the Spanish food and drinks industry. Sales channels – Analysis of the principal channels to market in Spain. Logistics – Cost comparison – UK versus Spain. Export Strategy – How to penetrate the Spanish market. Overview of McNeice Exports Service in Spain.www.mcneice-export.com 2
  • 3. THE OPPORTUNITY 3
  • 4. OVERVIEW OF THE SPANISH ECONOMY THE FACTS THE OPPORTUNITY  State Structure: Constitutional  9th Largest economy in the world Monarchy divided into 17 autonomous regions  12th Largest importer in the world  Population: 46 Million  GDP 2009: 1.2 Trillion Euros  5th largest supplier to the UK.  Exports 2009: 158B Euros  Gateway to North Africa & Latin.  Imports 2009: 208B Euros  16.5M British & Irish tourist visit  Principal Imports: Spain each year.  Machinery & Equipment  Energy  Excellent road, rail , air and  Chemicals maritime connections  Semi finished goods  Food  Second most favorable fiscal  Consumer goods system for SME’s en Europe  Measuring & control instruments Source: www.spainbusiness.comwww.mcneice-export.com 4
  • 5. SPAIN – BASIC OVERVIEW BASIC FACTS Spain is comprised of:  15 regions  2 island regions  2 African protectorates Each region has a devolved government with varying degrees of independence from the central government in Madrid.www.mcneice-export.com
  • 6. TOTAL FOOD & DRINK CONSUMPTIONExpenditure is expected to remain stable in 2010 Expenditure is expected to fall by 5% in 2010 Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs.www.mcneice-export.com 6
  • 7. SPAIN – THE OPPORTUNITYwww.mcneice-export.com Source: www.spainbusiness.com 7
  • 8. PERSONAL HOUSEHOLD SPEND: FOOD & DRINKAn average Spanish family spends 4400 Euros per year on food and drink consumed at home.UK average yearly food and drink spend is: 3195 Euroswww.mcneice-export.com (Source: http://www.statistics.gov.uk/downloads/theme_social/Family-Spending-2008/FamilySpending2009.pdf 8
  • 9. CHANGING CONSUMER PATTERNSEmerging households Couples Without Children Young & Single Single Parent Families (Annual change 2008-09, + 10.8%) (Annual change 2008-09, + 10%) (Annual change 2008-09, + 3.6%) • 7.3% of the population. • 4.9% of the population. • 5.3% of the population. • High level of discretionary spending. • Innovate & impulsive. • Value precooked products. • Diet includes a high proportion of • Hedonistic, prices are not important. • Little free time. precooked foods. • Willing to pay for time saving • Eat out regularly. solutions. • Worried about their health.Established households Couples With Older Children Pensioners Couples With Young Children Living At Home (Annual change 2008-09, + 2.4%) (Annual change 2008-09, + 0.0%) (Annual change 2008-09, - 6.1%) • 21.9% of the population. • 18.3% of the population. • 16.9% of the population. • Price sensitive. • Children’s advice influences weekly • Spend more on food than any other • Health conscious. shop. group. • Traditional tastes. • Tight budgetary control. • High levels of spending on time saving solutions. Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs. www.mcneice-export.com 9
  • 10. FOOD & DRINK CONSUMPTION BY PRODUCT Page1 / 2www.mcneice-export.com Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs. 10
  • 11. FOOD & DRINK CONSUMPTION BY PRODUCTS Page 2 / 2www.mcneice-export.com Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs. 11
  • 12. VARIATIONS IN FOOD & DRINK CONSUMPTION *2007 – 2008 Growth rates – 2009 data not available.www.mcneice-export.com Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs. 12
  • 13. SALES CHANNELS 13
  • 14. PRINCIPAL DISTRIBUTION CHANNELSwww.mcneice-export.com 14
  • 15. POINTS OF SALE BY SUPERMARKETwww.mcneice-export.com 15
  • 16. SALES GROWTH 2006 - 2008Only 6 groups have consistentlygrown sales since 2006: Mercadona  Euromadi IFA  Lidle El Corte Inglés  Consumwww.mcneice-export.com Source: http://www.fomenweb.com/ - Note: The results of Carrefour, Euromadi El Corte Inglés are estimations. 16
  • 17. KEY REGIONAL SUPERMARKET PLAYERS Source: Alimarketwww.mcneice-export.com 17
  • 18. SALES CONCENTRATION 74% OF ALL FOOD & DRINK SALES ARE CONTROLLED BY 10% OF SPAIN’S RETAILERS!www.mcneice-export.com 18
  • 19. MARKET SHARE BY CHANNELwww.mcneice-export.com 19
  • 20. OWN BRAND GROWTHwww.mcneice-export.com 20
  • 21. DISTRIBUTION CHANNELS 21
  • 22. FOOD & DRINK DISTRIBUTION IN SPAIN Bulk Close To Producers Co-ops Purchasing Exports CentersPR Co-ops** – Superstores MiddlemenO Level 2D Household &U Traditional Trade Abattoir retailersC Close To Customers ConsumptionE MERCAS* NetworksR Wholesales WholesalersS Distributors Packaging & some Trade only transformation. & *MERCAS: Centers that group together wholesalers in the following Wholesalers sectors: fresh fruit & vegetables (50%) , meat (25%) and fish (41%) sectors. **Co-ops level 2: Distribute the products produced by their members, in addition to purchasing products from 3rd parties. Transformation ***Note: This model does not cover the distribution model of Fresh & Frozen fish.www.mcneice-export.com 22
  • 23. FOOD & DRINK DISTRIBUTION IN SPAIN END CONSUMER: HOUSEHOLD & TRADE POS MARKETING Carrefour Auchan Mercadona IFA Eroski El Corte Euromadi Lidl Makro Consum Inglés PRINCIPAL PLAYERS IN THE SPANISH MARKET CONVINCE THEM TO BUY P R O D U C E R Swww.mcneice-export.com 23
  • 24. LOGISTICS IN SPAIN Most Spanish supermarket chains do not use centralized distribution. Preferring instead to use a regional structure, as can be seen in this map of Carrefour’s logistic centers.www.mcneice-export.com 24
  • 25. HOW TO SELL NORTHERN IRISH FOOD & DRINK IN SPAIN 25
  • 26. NORTHERN IRELAND AS A BRANDNorthern Ireland is not a well know brand in Spain, but the island of Ireland has a great dealof brand equity, stemming principally from: The experiences of the hundreds of thousands of Spanish children, students and adults who came to Ireland on holiday or to learn English. St. Patrick Day celebrations in Spain’s numerous Irish pubs. TV programs and Irish tourism campaigns on TV and in magazines. In summary, Ireland and by default Northern Ireland are both highly regarded by the Spanish, especially for the warmth of it’s people and its natural beauty. Creating an enormous amount of brand equity for our products and services. www.mcneice-export.com 26
  • 27. N. IRELAND BRAND POSITIONING We believe that food & drink from Northern Ireland should have a positioning strategy based on the following factors: 1) Taste & Quality - Our lush pastures produce food and drink of the highest quality. 2) Product Range / Innovation – Northern Ireland produces a huge range of quick and easy foods that complement a busy lifestyle. Spanish producers have been slow to adapt to this market. 3) Reputation – The Spanish have a high regard for the quality of Irish and British produce. 4) Novelty quality – Spanish consumers like to try new products. THEREFORE THE OPPORTUNITY EXISTS, BUT HOW CAN IT BE CONVERTED INTO SALES?www.mcneice-export.com 27
  • 28. EXPORTING TO SPAIN – PRIOR CONSIDERATIONS Even though we believe that a clear opportunity exists for Northern Ireland’s products in Spain it is important to take into consideration the following: Key Considerations  Is there a market for my products?  Is it logistically possible to sell in Spain?  Is it economically viable to sell in Spain?  Margin  Payment terms  Who will distribute and resell my products?  How do I convince them to buy?  How do I keep them buying? www.mcneice-export.com 28
  • 29. DISTRIBUTING TO SPAINEXPORTS FROM BELFAST TO THE PORT OF BILBAO IN NORTHERN SPAIN TAKES 5 – 7 DAYS. Bilbao is a key 4M Consumers @ 200KM distribution hub for 2 key reasons: 1) 4 M people live within 16M Consumers @ 400KM 200 KM 2) 16M people within 400KM.www.mcneice-export.com 29
  • 30. KEY DISTRIBUTION FACTORS SHELF LIFE If we consider that a minimal acceptable shelf life is 7 to 10 days and that transportation from Belfast to the shelves of Spanish supermarkets can take up to 10 days, then only products that have a minimum 17 - 20 day shelf life can be exported to Spain. REFRIGERATED FOODSTUFFS The Port of Bilbao has over 23 000M2 of refrigerated storage in addition to ample dry goods storage. TRANSPORT COSTS Costs can vary, but at the time of writing it costs £ 635 to ship a 20 FT container and £ 885 to ship a 40 FT container to Bilbao. However it is preferable to use 20 FT containers in order to reduce port costs. As 40 FT containers require repackaging for road transport.www.mcneice-export.com 30
  • 31. HOW TO GET ON THE SHELVES OF A SPANISH SUPERMARKET 31
  • 32. OUR STRATEGY Understand Create Present Manage STAGE 1: In order to launch a STAGE 2: During this phase we STAGE 3: The key to this phase is STAGE 4: Perhaps the most difficult product into the Spanish retail combine our understanding of gaining access to the targeted phase of the project due to the sector it is imperative that we our customer with our market buyers and convincing them that constant internal changes in the have a complete knowledge to create a value the product we are promoting is buying chain. understanding of the product proposition that interests worth a try. and our customer’s objectives supermarket buyers and Our role at this stage is to manage and goals. smaller food and drinks Once we establish that a buyers distribution, increase shelf space and distributors. is interested , we actively pursue sales points. As well as continuing to a deal within the framework build the relationship with the defined by our customer. supermarket.www.mcneice-export.com 32
  • 33. UNDERSTAND THE MARKET We believe that the only way to gain access to grocery retailers is by:  Understanding the retail market in Spain i.e. the threat posed to traditional retailers by discounters, the growth of private labeling and the need to generate brand loyalty by improving the customer experience etc.  Understanding the pressures that buyers are under i.e. reduce prices, increase margins, reduce product lines, increase the range of own label products etc.  Understanding the economic , cultural and regional factors behind consumer behavior for example, the impact that more women in the workplace is having on the increasing demand for ready made foods.  Understanding the goals and objectives of our customers and assessing whether an opportunity exists or not. Once these factors are understood we can then begin to create market entry strategy that will appeal to buyers and distributors on both a logical and emotional level.www.mcneice-export.com 33
  • 34. UNDERSTANDING THE BUYER No matter what their Managing Director’s say, the principal objective of 99% of buyers is to reduce prices and increasing margins. Demoting all but the strongest of brands to the status of commodities. However, the common strategy of Every Day Low Prices is not working the way it used to, and supermarket retailers are looking for new ways to engage and delight their customers which is forcing buyers to change their buying criteria. Today Spanish buyers are looking for products that will not only help them to stay competitive and profitable but will also help them to recapture the customers they have lost to hard discounters and to grow their brand loyalty. ANY SUPPLIER WHO HAS A PRODUCT THAT CREATES BRAND LOYALTY WILL ALWAYS BE STOCKED.www.mcneice-export.com 34
  • 35. BUILDING A VALUE PROPOSITION During the value creation phase, we focus our efforts on putting together a presentation that will: A. Grab the buyers attention by making the pitch experience different. B. Help resolves their fears. C. Offer something different that they have not previously been offered. By carefully combining these ingredients, we create presentations that get noticed and which helps to get our customers products selected and stocked. Customer Customer Data Insights Brand Value Experience Engagementwww.mcneice-export.com 35
  • 36. MANAGING THE RELATIONSHIPThe most important service that we can provide, is to help your company build a strongrelationship with the distributor.We achieve this by: Organizing regular meetings with the distributor. Conducting independent market research. Visiting stores. Offering ideas on how to improve Good news or bad: Buyers change department every 9 – 12 months in Spain. sales. We aim to add as much value as possible, as quickly as possible, in order to position the brands that we represent as INDISPENSABLE.www.mcneice-export.com 36
  • 37. MCNEICE EXPORT SERVICE OVERVIEWwww.mcneice-export.com 37
  • 38. THANK YOU! For more information on how we can help your company grow in Spain please contact: www.mcneice-export.com info@mcneice-export.com www.miagentecomercial.es/eng Or give us a call: 00 34 942 04 95 75www.mcneice-export.com 38