Acbc2017 export triumphs and tribulations
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Keynote address and Expert Panel QandA Facilitation at Independent Brewers Association - Australian Craft Brewers Conference in Adelaide in July 2017. Topics covered included: 1) Stage 1 - Market Opportunity Index - Where to go? 1st, 2nd, 3rd... 2) Stage 2 - Route to Market? How to Enter? Market entry models from ex/import to contractual to investment modes of market entry 3) Stage 3 - When to Enter? Sustainable (Profitable) Investment of Scarce Resources $/people/time Followed by Expert Panel QandA with Australian Independent Brewers Callum Reeves @KaijuBeer Corinna Steeb @PrancingPony Mazen Hajjar @HawkersBeer Ben Giles @Austrade
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Acbc2017 export triumphs and tribulations
- 1. DERMOTT DOWLING @CREATOVATE @BEERCOAU EXPORT – TRIUMPHS AND TRIBULATIONS
- 2. Content EXPORT – TRIUMPHS AND TRIBULATIONS THINK STRATEGICALLY 1. STAGE 1 - WHERE TO GO? MARKET OPPORTUNITY INDEX© 2. STAGE 2 - HOW TO ENTER? ROUTE TO MARKET ENTRY MODE 3. STAGE 3 - WHEN TO ENTER? GO TO MARKET LAUNCH
- 3. Introducing Dermott @ Dermott Dowling is Managing Director @Creatovate Innovation & International Business Consultancy. Dermott has over 20+ years experience building brands and businesses in Asia Pacific, Australasia and UK, with time spent at global consumer goods companies including Fonterra, Foster’s and Lion Dairy & Drinks. Creatovate has worked with a diverse range of clients from startups & independent family owned businesses to fast growth multinationals. International Business Consultant
- 4. EXPORT IS ALL ABOUT MAKING STRATEGIC CHOICES
- 5. Stage 1 – Where to go? Which countries have our target socio- demographics? Urban Population FoodEx - Disposable Income Precursors to our products Which countries have market attractiveness? Size – volume & value Growth – cagr $/Kg – return on investment Which countries are open to trade? Im/export Parallel categories - Protein Which countries have strong deterrents? Product registration Behind the Border barriers to trade? Which countries are dispersed? Diverse growing modern retail & eTail Expansive HORECA/Foodservice You need to rank and prioritise markets to enter…1st , 2nd , 3rd ….
- 6. Route to Market Ex/Import – fast, flexible, low risk, low return, learn and earn JV – slower to start, requires trust & understanding both sides, med term Licensing – contracts and controls, low % royalty, needs high volume Contract Manufacturing – Source partners to make and sell, surplus capacity in region, manage MOQs Acquisition – easier said than done. Tightly held in most markets. Greenfield – highest investment and risk Market Entry Models – Which mode is right for each market(s)? Stage 2: How to enter?
- 7. Creatovate - 10 key criteria & create a scorecard 1. Efficiency & Scale 2. Leverage 3. Capability 4. Need 5. Open 6. Reputation 7. Conflict of Interest 8. Knowledge 9. Opportunities 10.References Finding your Perfect Trade Partner Source: https://creatovate.wordpress.com/2014/06/19/looking-for-love-partnering-for-growth-internationally/
- 8. When to enter? Go To Market Launch! 2018 2019 2020 Time Horizon Immediate Medium Long Term Market(s) Focus MA? SG? HK? TW? VN? TH? ID? PH? JP? CN? SK? Profit Impact Low, immediate sustainable Substantial 4-5 years’ time Secure long term Time phased market entry • Phase the entry over 3 years • “Earn & Learn” & Grow Sustainably • Build a new market launch model • Simultaneously work on Horizon 2/3 markets e.g. Product registrations, searching for partners in fortress markets • Utilise ‘lean’ entry models – revenue before cost before overheads • Higher challenge, reward, risk markets greater reliance on local market resources and expertise Stage 3: Go to Market
- 9. Federal Government: -Austrade - introductions, market research - EMDG support, TradeStart www.austrade.gov.au - EFIC - Financial support - Bonding support www.efic.gov.au - DFAT - Free Trade Agreement detail - Trade stats by country - Sanctions, bribery & corruption www.dfat.gov.au - AusIndustry - R&D Tax Concession - Enterprise Connect www.auindustry.gov.au - IP Australia - Advice on registering IP www.ipaustralia.gov.au Export Support
- 10. Other Support: - State Government -Trade programs -Overseas missions Business ACT: www.business.act.gov.au Department of Commerce WA: www.commerce.wa.gov.au Export South Australia: www.exporterssa.com.au Export Victoria: www.export.vic.gov.au NSW Dept of Trade and Investment: www.business.nsw.gov.au NSW Small Business: www.smallbiz.nsw.gov.au NT Dept of Business, Industry & Resource Development: www.nt.gov.au Queensland Government Export: www.export.qld.gov.au TAS Dept of Economic Development: www.development.tas.gov.au - Industry Associations -Agribusiness Association www.agribusiness.asn.au -ACCI www.acci.asn.au -AIG www.aigroup.com.au - ECA -Export Courses-face to face and on-line www.export.org.au -Australian Export Handbook www.aiex.com.au - Bi-lateral Chambers Chamber of Commerce and Industry Queensland: www.cciq.com.au Chamber of Commerce and Industry of WA: www.cciwa.com Chamber of Commerce Northern Territory: www.chambernt.com.au NSW Business Chamber: www.nswbusinesschamber.com.au VECCI: www.vecci.org.au
- 11. BIBLIOGRAPHY AND REFERENCES Australian Government (2017) DFAT https://ftaportal.dfat.gov.au/ Free Trade Portal viewed on 11/07/2017. Austrade (2017) What is EMDG? https://www.austrade.gov.au/Australian/Export/Export-Grants/About/what-is-emdg viewed on 02/07/2017 Australian Brews News (2016) Yeastie Boys announces Sydney venture http://www.brewsnews.com.au/2016/11/yeastie-boys-announces-sydney-venture/ November 14, viewed on 02/072017. Australian Bureau of Statistics (2017) International Trade http://www.abs.gov.au/International-Trade Beertown NZ (2016) Yeastie Boys’ future is in the UK http://beertown.nz/wellington/273-yeastie-boys-future-is-in-the-uk Mon, 12 Sep. Viewed on 02/07/2017 Brewers Association (2004) Export Development Program https://www.brewersassociation.org/business-tools/exporting-beer/join-the-edp/ viewed on 02/07/2017. Cost of Living in China https://www.numbeo.com/cost-of-living/country_result.jsp?country=China Creatovate (2014) Take your business off the Road to Nowhere into Lands of Opportunity https://creatovate.wordpress.com/2014/07/23/take-your-business-off-the-road-to-nowhere-into-lands-of-opportunity/ July 23. Creatovate (2014) How to enter new markets…Export https://creatovate.wordpress.com/2014/10/09/how-to-enter-new-marketsexport/ Oct 9. Creatovate (2014) Looking for Love? Partnering for growth internationally https://creatovate.wordpress.com/2014/06/19/looking-for-love-partnering-for-growth-internationally/ June, 19. Creatovate (2014) How to enter new markets…Contractual Modes of Entry https://creatovate.wordpress.com/2014/11/19/how-to-enter-new-markets-contractual-modes-of-entry/ November 19. Creatovate (2014) How to enter new markets…Investment modes of entry https://creatovate.wordpress.com/2014/12/04/how-to-enter-new-marketsinvestment-modes-of-entry/ December 4. Chloe Fraser (2017) First Margaret River wine store opens in China https://thewest.com.au/news/busselton-dunsborough-times/first-margaret-river-wine-store-opens-in-china-ng-b88460098z Fri 28 April. Viewed on 02/07/2017. Haje Jan Kamps (2016) BrewDog brewery raising $50M from the crowd to secure U.S. expansion https://techcrunch.com/2016/08/04/brewdog-equity-crowd/ August 4, viewed on 02/07/2017. Anthony Pancia (2017) Margaret River wine producers see big future in exports to China as demand grows http://www.abc.net.au/news/2017-05-12/margaret-river-wine-producers-see-big- future-in-exports-to-china/8519932, May 12, viewed on 02/07/2017. David Rohde (2012) THE SWELLING MIDDLE, Davos, http://www.reuters.com/middle-class-infographic retrieved on 2/07/2017. Efic (2017) About Efic https://www.efic.gov.au/about-efic/ Food Innovation Australia Ltd (FIAL, 2017) Export Development Program https://fial.com.au/export-market-activity viewed on 02/07/2047. The Drinks Association (2017) BrewDog announces plans to build Australian craft brewery http://www.drinkscentral.com.au/4751?Article=brewdog-to-open-australian-brewery April 12, viewed on 02/072017. UN Comtrade (2017) https://comtrade.un.org/ viewed on 02/07/2017
Editor's Notes
- Think about the questions you can ask under each Key Factor to solicit enough information to make a decision with your head as well as your heart and gut in terms of if the company and people sitting opposite you are the right partners to work with into the future and build a brand together overseas in their host market. Efficiency & Scale: (route to market / margin % request) Margin requested? What %, absolute, terms of trade, payment terms? Date and damage history & allowance? Stock controls? Forecasting? Systems? Processes? Trade spend %/GSV request A&P %/NSV request Listing fees with retailers - how much to list 6-8 SKUs? Business reporting - how frequent, what systems using? Leverage (Adjacent categories can leverage with customers (retailers/foodservice/ingredients/other)) Reach & Channel coverages - hyper/supermarket, convenience, traditional, Horeca, etc. Growth over past 5 years? Where from, what categories, brands, etc.? Other principals/partners work with? Customers: how many? Suppliers: How many? 3) Capability: Go to market Supply Chain Compliance port to shelf - Warehouse - Distribution system (retail + foodservice), direct to store or DC?, in house or outsource 3rd Pty, delivery frequency Sales representation # Promoter(s) # Trade marketing Communication skills People: key people who will be involved with your business? Customer call centre - in/out bound? Call frequency # per day, how segment market/stores a,b,c,d etc. Journey plan management & ordering - manual or electronic? 4) Need – how much do they want your business – need it to fill their rice bowl vs. it’s a kind of nice to have but not a need to have business account for them? Willingness to invest behind your brand/product? E.g. 50/50 A&P split, additional staff focus on your brand Passion for your business Expectation for marketing and capability support? What? How much? 5) Open – Honest & Transparent – Willingness to do a fully open and costed financial model from market shelf back to your factory with you? Mission, vision, values and purpose alignment with you and your Why? Your Business? Your Brand Values? Are you aligned or completely incompatible in your thinking and values? 6) Reputation – Customer Intimacy with the Trade – their Customers? How long have you been trading? Management stability: who, how long in roles? Financial stability & cash flow Relationship with local regulators e.g. FDAs Staff turnover in past 2 years? Why are they better and different in the eyes of the trade? 7) Conflicts of Interest – Any direct or indirect competitors of yours in their tent? Other suppliers of your category/products? # many? Where are they from? NZ, EU, US, LATAM, ASIA, Other? 8) Knowledge – access to local market data and intelligence? Access to market data (e.g. Nielsen, IRI, TNS, scan data, consumer panels, customer data etc) Knowledge about your own company? Brands? Products? Have they done their research on you? 9) Opportunities – Partnership opportunities to leverage? Customers, Supply, Local manufacturing in market, Marketing & Distribution e.g. JVs, Strategic Alliances, if export works short terms where could we take our business together long term? 10) References – reputation with customers and suppliers/principals and willingness to provide them to you? Customers Suppliers Credit checks, due diligence final steps before you sign on a contract to commit to a two-way exclusive distribution agreement.