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Table of contents
1. 1.1. 1.2. 1.3. 2. 2.1. 2.2. 2.3. 2.4. 2.5. 3. 3.1. 3.2. 3.3. 3.4. 3.5. 3.6. 3.7. 3.8. 3.9. 3.10. 3.11. 3.12. 4. 4.1. 5. 5.1. 5.2. 5.3. 5.4. 6. 6.1. 6.2. 6.3. 6.4. 6.4.1. 6.4.2. 6.4.3. 6.4.4. 6.4.5. 6.4.6. 6.4.7. 6.4.8. 6.4.9. 6.4.10. 6.4.11. 6.5. Executive Summary ................................................................................... 3 Background and Objectives ......................................................................... 3 Research Findings ....................................................................................... 3 Project Plan .................................................................................................. 4 Introduction and Aims ............................................................................... 5 Background .................................................................................................. 5 Research Purpose........................................................................................ 5 Process......................................................................................................... 5 Agreed Outputs ............................................................................................ 6 Important Information ................................................................................... 7 Producer Backgrounds.............................................................................. 7 Annual Turnover ........................................................................................... 7 Number of Employees.................................................................................. 8 Years of Operation ....................................................................................... 8 Ownership .................................................................................................... 8 Quality and Technical Accreditations ........................................................... 8 Retail versus Foodservice Sales .................................................................. 8 Domestic versus Export Sales ..................................................................... 8 Domestic Sales Channels ............................................................................ 8 Key Export Markets / Priority Next Markets ................................................. 9 Factors influencing Current Business Growth.............................................. 9 Current Supply Chains Used........................................................................ 9 Target Customers......................................................................................... 9 UK Specific Research Findings ................................................................ 9 Barriers to Export to UK ............................................................................... 9 Scoping Potential Project Options for UK ............................................. 10 Introduction................................................................................................. 10 Individual Project Options........................................................................... 10 Project Activities ......................................................................................... 12 Commercially Successful Project............................................................... 13 Project Plan............................................................................................... 13 Project Objective ........................................................................................ 13 Project Scope ............................................................................................. 14 Description of Activities to Be Contained in Project ................................... 14 Project Plan Recommended Stages ....................................................... 17 Introduction................................................................................................. 17 Stage 1 Initial Market Research Complete........................................... 17 Stage 2 Initial Project Plan Current Work............................................. 18 Stage 3 Industry Group Session - UK Exporters Food Producers Network Meeting....................................................................................................... 18 Stage 4 Capability Building and UK Preparation Visit............................. 19 Stage 5 Project Prospectus..................................................................... 20 Stage 6 Recruitment of Participants........................................................ 20 Stage 7 UK Market Visit 1 ....................................................................... 21 Stage 8 UK Market Visit 2 ....................................................................... 21 Stage 9 - Marketing Campaign .................................................................. 22 Stage 10 Project Consolidation............................................................... 23 Candidate Companies Open to Participation ............................................. 23
Prepared for Regional Development Victoria April 2008 Market Strategy Website: www.marketstrategy.com.au Email: paul@marketstrategy.com.au Mobile: +61414 382 738 Prepared by Market Strategy Ltd.
1.
Executive Summary
Regional Development Victoria (RDV) has identified an opportunity to leverage work done by National Food Industry Strategy (NFIS), to gain advantage for Victorian companies in the UK market. This RDV UK Project was established to research and assess the current position of Victorian food exporters to the UK; and prepare a project plan for assisting the development of Victoria food trade with the UK retail market.
This state of preparedness can be analysed against the target customer for the producer. This analysis shows that multiple retailer, health/dietary, gifting and gourmet are popular channels for these producers to target. The producers most prepared to enter the market are targeting the multiple retailers.
2.
2.1. Background
2.3. Process
Step 1 Project Set Up Activities Market Strategy Ltd worked with RDV to set up the Project Audit Structure, agree producer questionnaires and emails; and provide RDV with all information necessary for the proposal.
Step 2 Initial Contact to Companies A list of food producers interested in the UK market was agreed between RDV and Market Strategy. 41 producers were highlighted, based on the NFIS Retail Project and input from RDV food team. An email from Market Strategy to each producer was sent on RDVs behalf, informing the companies of the project and its aims. Step 3 Telephone Interviews Market Strategy undertook one-on-one discussions with 25 producers. 16 producers declined to participate in the interview or had no interest in the UK market. Step 4 Initial Verbal Report on findings to RDV Step 5 Face to Face Interviews 7 In depth interviews with held with targeted companies, in order to find out more detailed information and test project thinking. An informal project planning meeting was held with RDV. Step 6 Final Report Final written report including interview results and detailed plan for UK Retail Project.
Specifically the research would result in: A grouped summary of the current state of export for each Victorian company to the UK, current supply chain route to market and common obstacles to trade. Grouping of companies into prospective project participants (short / medium / long term) based on company commitment and fit of products to market and capacity to be made prepared. Assessments for companies of product range fit to market (where required). Overview of suggested project options for RDV to progress within the UK market. A project plan that: o Summarises the project activities to be implemented o Describes the processes needed to set up the activities o Identifies candidate companies open to participation in the project o Proposes timings for activities o Proposes approximate costs for activities o Identifies potential project partners
3.
Producer Backgrounds
The interviews collected background information that is useful to help understand the producers interested in the UK market. A brief summary of this information is presented below. It is recommended to read the detailed information provided in the Appendix. Please note that specific information by individual businesses should be treated as confidential.
3.4. Ownership
Approximately 25% of businesses are owned by another business.
4.
Foreign Exchange (variations and current strength of dollar) Accessing and assessing appropriate distributors Developing customer relationships Internal resources (time, expertise, capital)
Specific Barriers to UK Export: Point of difference for products Premium pricing of Australian product versus competition Tariff and import regulations Marketing cost Scale of doing business with a UK food multiple
5.
5.1. Introduction
The purpose of this section is to scope the types of projects that RDV might like to pursue in the UK market, and the types of activities that companies might find useful. This is a thinking section designed to show RDV the options considered when generating the final Project Plan. The project options and activities detailed in this section mainly concentrate on key components and sub segments of the demand chain. The projects are stand alone and do not involve the entirety of the demand chain. Each project deals with a distinct group of current exporters. Experience in the UK has shown that successful market development projects consider the entire demand chain therefore Section 6 recommends that the project options are brought together in order to provide an RDV UK Food Strategy. This will take the synergies of the individual projects and ensure maximum impact and benefit for the producers and RDVs contribution.
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NB. This project could also work with other retail channels health/dietary, gifting and gourmet are lead candidates. 2. Focus on assisting those Victorian producers who have put together a supply chain for the UK, but have yet to make any sales in the UK. The purpose would be to assist Victorian companies with their final sell-in to UK customers. The outcome would be increased sales into the UK. Approx candidate companies: 3. Potential activities include: Assist companies with accessing preferred retail channel using contacts already established through NFIS UK Retail project and contacts of existing Victorian UK suppliers. Integrated food wine and tourism promotion to drive awareness of products on launch. Focus on assisting those Victorian producers who have an understanding of the UK market and their opportunity within it, but have yet to put together a supply chain into the UK. The purpose would be to assist Victorian companies with putting distribution arrangements in place. The outcome would be distribution arrangements between Victorian companies and UK representatives. Approx candidate companies 2. Potential activities include: Preliminary distributor search by RDV. Outcome map of potential distributors with genuine interest in buying product from prospective Victorian customers. Market mission to UK to visit prospective distributors. Could include guided market tour and potential scoping meeting with retailers. Focus on assisting those Victorian producers who are in the UK market but are would like to change their distribution arrangements. The purpose would be to assist Victorian companies with new distribution arrangements. The outcome would be signed distribution arrangements between Victorian companies and UK representatives. Approx candidate companies 4. Potential activities include: Preliminary distributor search by RDV. Outcome map of potential distributors with genuine interest in buying product from prospective Victorian customers. Market mission to UK to visit prospective distributors. Could include guided market tour and potential scoping meeting with retailers. 5. Focus on assisting Victorian producers that are interested in selling in the UK market but do not currently have any understanding of the UK market. The purpose would be to build the Victorian producers understanding of the UK market and make a business case for entry to the UK. The outcome would be a business plan for entry into the UK market. Approx candidate companies 5. Potential activities include: Assistance in developing competitive positioning in UK for project participants. Central resource sent to UK to collect specific information requested.
3.
4.
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Translation of information into business plan for UK market with action plan for implementation.
6. Alternatively, RDV could run a project with bespoke activities to assist Victorian producers with ad hoc challenges they are currently facing in the market. The approach for this would be to provide individual consultants to assist individual businesses with challenges identified in previous sections. Producers would be required to apply for assistance.
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4. Supply chain: Incubator style supply chain plan that can provide a Victorian specific distributor. This would include consolidation in Australia; warehousing in UK; distribution in UK; sales agency representation in UK. Assistance with consolidation of smaller shipment with likeminded other producers. Joint merchandising agency to ensure store compliance. 5. Regulatory Lobbying of government to change tariff barriers. Lobbying of government to change quota barriers. Lobbying of government to assist regulation compliance (eg organic, source of origin etc).
6.
Project Plan
Creation of a strategic RDV UK Retail Food Project designed to assist the establishment and development of sustainable UK Retail Trade for existing or prospective Victorian food producers.
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Through investment in this project RDV could achieve an increase in sales, employment and capital investment in the Victorian food industry. As a pilot project, RDV seeks to demonstrate a new model for market development projects. Through participation in arguably the worlds most sophisticated retail market, RDV would like to build industry capability, knowledge and programs to benefit both UK and other export trade development. By participating in this project, Victorian producers aim to see a growth in sales to the UK market and benefits from reduced risk capital expenditure to establish UK trade; synergies created in marketing and distribution systems; and increased capability and knowledge generated through gearing up to supply UK market. RDV leadership is essential to creating a successful project. By creating capability and knowledge for Victorian producers, RDV is improving the capacity of Victorian producers to trade in the UK. In addition, by working strategically with industry, RDV is creating new retail and distribution opportunities for trade development.
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Trade mission to be conducted to buyers head office with Australian feature day and buyer presentations. Potential visit to Victoria by retailer buying or business development team (in the longer term). RDV to look to establish a longer term relationship with the retailer to expand the food categories. Mapping of retail sales channels available in UK (working document for continual update).
NB. It is important to note that this suggests a multiple UK food retailer. The grouped summary of prospective UK suppliers indicates this should be the priority. RDV needs to choose a retailer partner to work with on this project. After a visit to market the best option for this project may be with health / dietary needs retailers/ gifting or gourmet stores. 2. Establishment of Cooperative Marketing Campaign This would look to include the following activities where possible and would occur once the demand chains had been finalised: Retailer relationship to be enhanced by a cooperative marketing campaign for Victorian food and wine in store. Marketing campaign also to utilise Tourism. Marketing campaign to support new product listings of suppliers. The plan may include sales promotional activity; POS; leafleting; sampling; advertising; radio; PR Journalist visits to Victoria.
NB. A marketing campaign is a milestone in the project process, as a component of a complete demand chain process. It is not the main project purpose. 3. UK Distribution Arrangements This would look to include the following activities where possible: Assessment of potential distributor options in UK for Victorian producers.. This will result in a map of UK distributor options (intended as a working document / database that can be continually updated). Producers interested in supplying (or already supplying) the UK identified that having a knowledge of who the main distributors are (by sector and category) as critical information. This map would detail the distributors sizes, categories of focus, strategies, main customers, main brands they represented, any Australian representation etc. At present Australian industry (and government) knowledge of UK producers is poor and this would be critical information for both RDV and industry. Establishment of method and criteria for evaluating and qualifying potential distribution partners. Match qualified prospective Victorian Suppliers with UK distributors actively interested in buying product. Production of feasibility analysis for an RDV dedicated distribution centre in UK. This will be the evaluation an incubator style supply chain including consolidation in Victoria; warehousing in UK; distribution in UK; sales agency representation in the UK. Mission by prospective suppliers to meet with interested distributors. Potential mission to Victoria by a UK distributor.
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4. Capability Building Activities Many of the project activities will specifically build capability (examples include the UK distributor map and assessment criteria). Additional to this, the following work should be undertaken: a) Competitive Intelligence Mapping of retail sales channels available in UK (working document for continual update). Producers expressed a huge interest in knowing the strategies for each retailer across different retail channels. The retail map would describe retailer size, positioning, strategies, technical accreditation requirements etc. In market confirmation of initial company assessment of UK competitive position. Guided trade mission to market for prospective suppliers. b) UK Business Plan Production Individual work with qualified prospective suppliers to produce business plans for entry into UK market. Establishment of template for future suppliers. c) Corporate Responsibility Corporate Responsibility is about working in a manner which respects the many stakeholders affected by business activity. Elements of corporate responsibility include food miles, carbon foot printing, ethical sourcing and social issues (health, labour etc). This is a critical UK (food) trend and Australian suppliers can expect this to become a mainstream (food) issue in the Australian industry in the next 5 years. An analysis of current state of corporate responsibility expectations for food suppliers in the UK market is needed. This analysis is to be used as a tool for Victorian food producers to assess their business against. This tool will be useful to assist producers in gearing up for UK supply, and preparing and positioning their business for the future. Corporate responsibility is set to be a major international food trend of the future. This analysis can be used by RDV to help generate a positioning response for Victorian food suppliers to UK (potentially with Federal bodies). This work may highlight a spin off project for RDV to undertake in order to grow capabilities of Victorian producers. d) Technical Requirements Clear and easy access to regulations governing access to UK market (tariffs, quotas etc). Access to UK retailer expectations of supplier technical accreditations. RDV should consider the establishment of a password protected website to store this information. 5. Victorian Food Producers UK Network
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Establishment by RDV of a central network for Victorian food producers supplying the UK. Facility is used to: Establish RDV as credible UK market point of contact. Bring together those interested in supplying or currently supplying UK market, in order to share learnings. Assist companies currently supplying the UK to develop further commercial activities (synergies in supply chain, marketing etc). Develop the capabilities and expectations of prospective suppliers to UK; assist them in putting together a UK market plan. 6. Regulatory The project should look to provide an information flow between industry and Federal Government activities specifically focused on regulatory barriers to UK market (tariffs, subsidies, labelling etc). This information should be communicated and discussed at network meetings or via mailing lists. This activity should also allow industry to have a coordinated voice on UK issues back to Federal government. 7. Ad Hoc UK Assistance Through detailed involvement in UK, RDV will be able to perform some tasks for Victorian suppliers that might not be part of the core project, but are identified as beneficial for trade development with UK market and provide great benefit and cost saving. Provision should be made to use synergies from UK activities to assist Victorian companies entering the UK market outside of the core project.
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NFIS, Sainsburys and Tourism Australia UK consumer research showed consumer opportunity for Australian food in UK. Australian wine has successful track record of supply to UK market. NFIS Retail Project demonstrated commercial success for Australian food products in UK market. Over 15 food producers are now in the UK market as a result of the NFIS project.
It should be noted that the producers interviewed in the course of this discussion fully supported RDVs initiative to develop further trade with UK.
6.4.4. Stage 3 Industry Group Session - UK Exporters Food Producers Network Meeting
This stage brings industry together to gather in principle support for the project, and commence a UK Export Network. The objectives of this meeting are to: Inform industry of the results of the initial project plan work (and conclude that stage of the project). Galvanise in principle support from industry for an RDV UK Retail Project Plan. Gain commitment from industry to provide information necessary for Stage 4. Bring together current suppliers to UK and prospective suppliers to UK for inaugural Victorian Food Producers UK Network meeting. Key activities undertaken at the meeting are: Welcome address from senior a RDV manager Gary Gaffney recommended. Presentation on RDV project plan. Short presentations by various Victorian food producers who have been active in UK market with positive and negative successes. A wine producer should also present. Provision to each company of project plan document, including bespoke letter with RDV assessment of how this project might benefit each companys trade development with UK.
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Each producer to be asked to sign a letter of in principle support for RDV UK Retail Project. This letter would acknowledge a commitment to providing RDV with information necessary to conduct Stage 4 of the project. An undertaking of confidentiality by RDV to protect each companys information.
The outputs from the meeting are expected to be: Networking by Victorian food producers who are active, or would like to be active in the UK market. Shared learnings by experienced UK exporters with other Victorian producers. Feedback on RDV UK Retail Project Plan. This will be used to amend and update the Project Plan where necessary. Direct feedback from RDV to individual producers on how this project may benefit their plans in UK market. Determine the number of producers with in principle commitment to supporting an RDV UK Retail Project. Establish a need to set up a regular UK Exporters Network.
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Mapping of distributor options in UK. This will include desk research, personal contacts, potential trade shows; UK meetings; purchase of distributor report. Research (benchmarking) of corporate responsibility models in the UK. This will include desk research prior to UK meetings. Production of business planning and distributor evaluation tool.
The outputs expected at this stage are: Satisfaction from RDV that company analysis of market place positioning is correct. Map / Database of UK Retailers. Assessment of retailers with which RDV might form a partnership arrangement. Map / Database of potential UK Distributors. Building of relationships with candidate distributors. Corporate responsibility requirements of supplying UK market (this may spin off into separate major project). Business planning and distributor evaluation tool for UK market. Bespoke competitive intelligence by Producer where required. Commencement of relationship with London VGBO and any in market service provider.
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The activities required will be: Meeting of Victorian Food Producers UK Network to present prospectus and other work completed to date. This network meeting will be a useful tool to raise any technical market issues that producer have, and further share their UK learning with each other. Individual follow up meetings with potential participants will be required. The outcome of this stage will be a core group of producers who are willing to co invest in various activities in order to develop trade with the UK.
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Begin to assess and recruit marketing service providers and partners for a UK marketing promotion.
The activities in this stage are: Presentation at UK retailers head office. This would include direct buyer presentations and a food show for producers not yet able to present to buyers, but seeking product feedback. This will require some set up work prior to market visit. Presentations by suppliers to preselected distributors interested in buying product. Various distributors may also take the opportunity meet those looking at the UK market, while not expecting a commercial outcome from that meeting. This will require some set up work prior to market visit. Guided store visit day to assess competitive position for products within market. Meeting between RDV and marketing service providers and potential partners. Its worth noting that producers will be able to benefit from different aspects of a market visit dependent on their stage of development in UK. Those producers with least market knowledge will be able to participate in all activities in order to scope their opportunity. Those producers integrally involved in the UK market may only have minimal involvement, but would service existing customers during visit also. The outcomes of this stage are expected to be: Establishment of listings for Victorian suppliers with a UK retailer Establishment of distributors for prospective Victorian suppliers to market. Generation of competitive intelligence and market information for prospective suppliers to market.
6.4.10.
The aim of the marketing campaign is to increase brand exposure and drive product sales. Marketing activity in the UK is expensive. Joint activity will make marketing more affordable for brands that are established in the market and brands that are launching in the market. It is highly likely that food, wine and tourism would need to be involved in the marketing campaign. The objective of this stage is to put together a cooperative marketing campaign for Victorian producers focused on one UK retailer. The potential activities required in this stage are: Development of a cooperative marketing campaign. Identification of marketing service providers. Identification and recruitment of Tourism and Wine partners. Identification and recruitment of interested producers. Sales process to retailer. Management and evaluation of the campaign. The outcome of this stage is expected to be a marketing campaign for a group of Victorian food producers in the UK market.
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6.4.11.
The objective for this stage is to consolidate the work achieved to date in the project. It is recommended that this stage would run in parallel to Stage 8. The activities contained within the review should be: Activities to date should be reviewed for effectiveness. Relationships developed should be reviewed for further opportunities (extend to other categories?). Participants should be reviewed for further actions. The outcome of this stage would be a revised plan for further UK market development activities.
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