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More and more food and drink businesses are waking up to the benefits of export and, in spite of increased competition in the international marketplace, demand for British products remains high.
Before starting down the path to export food and drink businesses must understand that exporting is for the long haul and carefully consider what it is that they want to achieve. Exporting should not be treated as a quick way to boost sales figures.
The most successful exporters are both patient and proactive, they are prepared to foster relationships with overseas buyers and consumers over the long-term and are always actively looking for opportunities and seeking new partnerships.
There is no better time to get started in export, here are the top ten tips to help get you on your way.
If you do plan to export, you will need to develop an export plan covering:
A Written Export Plan will provide a clear understanding of your long-term product exporting objectives and ensures that all the management are committed to achieving these goals and objectives.
Careful preparation of an Export Plan is critical when entering a new export market and can significantly reduce risks and costs that are often associated with exporting for the first time!
Drop us an email and we will help you with writing the best export plan for food and drink products.
Consider those factors when you prepare an export plan,
Identifying the markets and regions offering the best opportunities for your company will enable you to target your resources to achieve the best return. Undertaking market research will help you to:
Ask following questions when doing a market research
Which markets import and/or consume the largest quantities of your product-type, and which markets have experienced the most recent growth?
Which markets are predicted to grow the most in terms of the income per capita and population?
How large is the packaged food and drink market in the regions considered?
How will cultural or religious practises in your target markets affect consumption and/or demand?
What is the demographic of the market e.g. is it a young or old population?
What is the population density of those consumers you will be targeting, e.g. high income for speciality, or ethnic market?
Who are your key competitors? Can your product/s compete with your competitors’?
What is the geographical structure of the market? Are there any regions/cities that you should be focusing on? It is unlikely that you will initially be able to export to all regions of a large country.
What are the barriers to export and how difficult is it to export to a particular market?
Once you have identified your target markets it is a good idea to conduct background research on whether your product/s need to be adapted in order to be sold in the countries you are targeting.
Product labelling, packaging design and materials may need to be modified to account for regional differences. Does any additional information need to be included in your product labelling?
Do you need to translate information on-pack into different languages?
If your product/s make any claims based on standards that are accredited in the UK (such as organic certification awarded by the UK Soil Association), will these be accepted by foreign regulators?
Are the size of your packaging and the materials used-acceptable to the relevant authorities in the market you are targeting? Is the packaging robust enough to withstand transportation and temperature differences?
Before you start to approach buyers you will need to have a good understanding of how your product will be priced to make sure margin requirements are met. You can do this by creating a price chain worksheet taking account of the following factors:
You must consider how you want your product(s) to enter the market/s that you have identified and where you want them to be sold.
If you are exporting for the first time it is likely that you will need help in marketing and selling your products overseas.
Importers/distributors purchase directly from your business and normally market/sell products exclusively to retailers and foodservice operators in a particular market or region.
Choose distributors carefully, making sure that they are able to sell your product effectively and have a proven track record in the food and drink sector
Keep in regular contact with your distributor and carry out regular reviews.
Export houses/companies are companies based in the UK that purchase your products outright and sell these overseas on their own behalf. Taking this approach will allow you to export with minimal effort, however, your business will have no control over how your products are marketed and sold.
Agents can be appointed to find buyers on your behalf and normally work on a commission basis.
If you choose to work with an agent, make sure that they have experience of working with businesses selling the same or similar products and the outlets you are targeting.
It is important to research the retail and foodservice environment in the market/s that you are planning to export to so you are aware of which will be most effective in maximising sales. This will help when selecting local partners.
Is there any potential for your product in the food service or hospitality sectors, such as in coffee shops or hotels?
In order to promote your products effectively and create new business opportunities, you must consider all of the promotional channels available to you and best suited to your target market and audience.
We don't need to mention the importance of them, update your website to inform potential customers that you are willing to export in their geographical and language settings. Provide the right contact details of the company to cover export sales.
Trade fairs, in the UK and abroad, are one of the best ways to meet buyers and generate new business leads. Grants are available to subsidise the cost of exhibiting for SMEs.
Pro Tip - in the world of food and drink ecosystem, you should visit those exhibitions in Europe, ANUGA, SIAL and ISM
Department for International Trade organises structured trade missions to specific markets which allow businesses to meet with buyers and attend relevant events.
Products that have strong Unique Selling Points enjoy a competitive advantage and better reception in foreign markets.
For example, in the food sector, such unique selling points include superior quality, taste, organic certificates, health benefits, convenience, eco-friendliness, recycled packaging, etc.
Do you have a unique competitive advantage Unique Selling Point? (USP’s?)
Is your export product NEW and different from what is there already? If you are having problems to identify your unique selling points for export at this point, return to your market research and look for insights to ensure your USP's.
If you are solving a solid consumer problem in the export market, you are doing good. This is the most important thing to consider. You should demonstrate that you have benchmarked your value proposition against other products in the export market.
Once you begin to receive enquiries from potential customers the practical elements of exporting come into play. Taking the following steps will lead you to agree to the terms of sale.
Understand ‘Incoterms’. Incoterms are internationally agreed rules which set out the delivery terms for goods being traded internationally. They allow the buyer and seller to agree on details on the terms of sale and prevent any future misunderstandings or disputes.
Further explanation of Incoterms can be found here.
Export documentation. You will need to establish early on what types of documentation you will need to provide to enter the market and how long it will take to gauge how quickly you can deliver your products to the customer.
Provide a written export quotation detailing. The particulars of your product including pack sizes, packaging formats and whether there is an additional cost for export labelling and packaging that you are charging.
Also lead for orders is important information to share with your customers.
Payment terms and conditions. It is important to be clear about terms of repayment and make sure that they fit in with your business plan:
Within the EU most buyers are likely to pay on an ‘open account’ basis similar to that in the UK.
You may be required to set up a Euro business banking account and expect repayment terms of 30, 60 or 90 days. Some buyers will pay up-front, especially for initial orders.
Make sure that the right contractual paperwork is in place to ensure that you are paid on time so no conflicts arise with a new or existing customer.
If you choose to have a written agreement with your overseas partners we recommend that this is approved by an experienced international lawyer and covers the following:
It is important that you cover any risks when exporting to ensure that you receive payment as per the stated terms of your contract. Most of the risk in the export process sits with you the seller, so protection against non-payment and loss or damage of goods is extremely important. Insurance will help mitigate these risks.
Freight forwarders or transportation companies only assume limited liability for the loss or damage of goods when shipping by air or sea. Transportation insurance is therefore essential and can be arranged through an insurance broker or freight forwarder.
Overseas customers should be subjected to checks from your bank or by a credit agency. The British Chamber of Commerce also provides these services. You can also ask other UK companies already dealing with the customer for references.
There are a number of services offered by banks that allow exporters to set-up a secure financial arrangement between the buyer and seller to mitigate the risk of non-payment.
The services available to food and drink manufacturers vary. Contact your bank to discuss what is available for the markets you are exporting to.
Once the first shipment has left the UK there are several steps to take to increase your chances of repeat business and help you to build a good reputation internationally as a reliable exporter.
Make sure your shipments are not delayed. Make sure that your goods are being delivered on time as set out in the sales contract.
Contact your shipping company regularly making sure the products are set to be delivered without delay or act quickly to prevent any long delays.
Maintain promotional activity. To keep the momentum building, maintain promotional activity through trade fairs and advertising.
Agree on a market development plan with an importer/distributor. The success of your products overseas should be almost as important to your export partners as it is to you. Put in place a jointly agreed development plan to help drive up sales and maintain the on-going relationship.
Got any more questions? Get in contact with our team today and see how we can help you!
For nearly as long as there’s been people, there’s been trade. Imports and exports are how the potato came to Ireland, and in a more modern sense, it's how we’re able to buy food, drinks, furniture, clothes, and nearly everything else, from all around the world today.
Imports are any good or service brought in from one country to another, while exports are goods and services produced in the home country for sale to other markets. Thus, whether you’re importing or exporting a product (or both) depends on your orientation to the transaction.
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The modern system of international trade is a complex web of import/export businesses that handle the sale, distribution, and delivery of goods from one nation to another. If you're interested in starting a business in this industry, know that there is more than one type of import/export business. You could focus just on importing or just on exporting. You could be a manufacturer’s representative, specializing in a certain industry, or you could be an import/export merchant or agent, which is more of a freelance broker.
Starting an import/export business
If you’re interested in starting an import/export business, there are a ton of considerations you need to make — just as you would for any business. For an import/export business, specifically, it’s helpful to have a background in business, international relations, or global finance. This should give you an understanding of the myriad hoops one must jump through to sell or buy a product from an overseas supplier.
“The compliances make it so complex that even if you did know how to do it, you’re still going to have to keep in mind a lot of random considerations,” says Selena Cuffe, co-founder of Heritage Link Brands, a company that imports, exports, and produces wine, and other high-end products like tea and honey.
Cuffe worked for years in brand management for Procter & Gamble, among other trade-related positions, before starting her company in 2005. She was inspired after going to South Africa, where she attended the first Soweto Wine Festival.
Heritage Link Brands now operates within the wine industry in different ways: It imports wine from South Africa into the U.S. wine market, and it exports grapes from its own South African vineyard to the U.S. as well as the Philippines and Hong Kong. It also exports wine to airlines for use on international flights.
Keep reading for the steps you need to take to start an import/export business, as well as tips from Cuffe.
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Once we uncover your personalized matches, our team will consult you on the process moving forward.
1. Get your business basics in order
Anyone starting a business in the 21st century needs to cover certain bases, like creating a website as well as social media channels like Facebook, Twitter, and a host of others.
So here's your first step: Get the basics in order. This means registering your business with the state in which your headquarters will be located, registering a domain name, getting any business licenses you need to legally operate, and so on.
You'll need a business plan, too. Part of that business plan needs to cover how to handle the rules and regulations of the markets you want to work in. For example, to bring alcohol and tobacco products into the U.S., you need an Alcohol and Tobacco Trade and Tax Bureau permit, which is free but can take months to acquire. Similar research needs to be done when doing business with other countries, taking into account everything from various legal back label requirements in each nation to insurance.
Perhaps most importantly, you need access to capital. Startup costs can vary greatly depending on the type of imports/exports business you start.
“The first thing I recommend for anyone is to have your capital upfront,” says Cuffe. “That’s so you can protect your business from not only a legal standpoint but also the equity of the brand that you create and to make sure you invest in the quality of whatever you launch. Test a market, or test a city, then a state, then a region. Then I think that there are greater chances for success and sustainability long term.”
The ratio that Cuffe cited for success in the wine industry — "In order to make $1 million, you need to invest $7 million” — demonstrates the kind of capital needed to start a business comfortably (if one can ever be “comfortable” as an entrepreneur) and be prepared for whatever occurs, from issues with sourcing to changes in trade regulations.
2. Pick a product to import or export
The next step in starting an import/export business is to find a product or industry you are passionate about and that you think could sell in international markets.
For Cuffe, that product turned out to be wine. She felt a connection to the product not just from a quality and taste standpoint but from a social justice standpoint as well.
“When I first entered the industry in 2005, there was just one Black winemaker and five Black-owned brands," she says. "Today there are 17 Black winemakers and 31 Black-owned brands.”
Though the South African wine industry still deals with injustices like poor working conditions and unequal access to capital, Cuffe says things have improved since the previous decade thanks to the increased sales and notoriety of South African wines worldwide.
“The biggest thing that we’ve enabled is the financing of Black businesses. When we first got started, in order for even these brands to create their own wine, they had to source it from existing white wineries, because they didn’t own any land,” Cuffe says.
Once you find your product, you also need to identify the right market for it. After all, you need someone to sell it to. This is where your trend-spotting skills come into play. The best products for an import/export business are products that are just starting to become popular, or show some promise to being so in the future.
You can conduct research with resources like GlobalEDGE’s Market Potential Index or by checking with local government officials and websites, such as the Department of Commerce International Trade Administration’s Data and Analysis. You can also find reports on the state of the imports/exports industry with the Census Bureau Foreign Trade.
From there, it’s best to start “slow and steady.”
“Test your ideas,” says Cuffe. “Don’t assume that what you think will sell because you love it will catch fire in the market. What catches fire in the market is more than just the way it tastes — it’s who you know, and the packaging and serendipity of timing, and all of the indirect soft stuff that makes the difference.”
3. Source your suppliers
Once you have a product you’d like to trade internationally, you need to find a local manufacturer or other producer that makes your product and can lead to a strong partnership. A good relationship with a supplier is crucial to long-running success in an imports/exports business.
Generally, you can find suppliers through companies like Alibaba, Global Sources, and Thomas Register. You will need to convince the supplier of the benefits of entering the U.S. market (or another market you wish to sell to), and figure out the logistics of taking their product from their local warehouse or production facility to another one, potentially on the other side of the globe.
You might also be your own supplier — in some cases, as Cuffe occasionally is for herself.
“We own an interest in a vineyard in South Africa called Silkbush," she says. "My orientation when I do business to them is, 80% of the grapes that we pick we send off to domestic wineries who use our grapes to produce their own proprietary high-end wine. The remaining 20% is used to create our proprietary label Silkbush, which we export to foreign markets.”
4. Price your product
You know what product you want to work with and you've identified your target market. Next up, figuring out how much to charge.
Typically, the business model on an imports/exports business includes two key understandings: the volume of units sold, and the commission made on that volume.
Be sure to price your product such that your markup on the product (what ends up being your commission) doesn't exceed what a customer is willing to pay. But you don't want to make it too low such that you aren't ever going to make a profit.
In the imports/exports industry, importers and exporters typically take 10% to 15% markup above what the manufacturer charges you when you buy the raw product.
5. Find your customers
Next up on how to start an imports/exports business? Finding customers to sell to.
Deciding on a market is not the same as finding your customers. You can’t just send your products to the Port of New York and start selling your wares on the docks to whoever walks by. You usually need to find distributors and clients who will take on your product and sell to others.
If you have a quality website that includes digital marketing campaigns, your customers may end up finding you. But to get started, Cuffe suggests doing things the old-fashioned way — by cold-calling. Check with any local contacts you have in the area, contact the area's Chamber of Commerce, trade consulates, embassies, and so on. These entities might be able to give you a local contact list that could be a vital help in starting a imports/exports business.
“I cold-called the local Cambridge, Massachusetts, Whole Foods store, and they gave me a chance. And now we do display programs and regional programs with Whole Foods,” says Cuffe. “A lot of what I did in the beginning and even today involves cold calls.”
6. Get the logistics down
Perhaps the most complex aspect of importing and exporting is the logistics of taking a product created somewhere and selling it somewhere else. How does the product make the trip from the vineyard of South Africa to the wine glasses of drinkers in California, for example?
“When you are operating within a supply chain where your customer is different than your client, which is different than your consumer, it requires an extraordinary amount of coordination,” says Cuffe. “I use a freight forwarder that on my behalf reaches out to shipping lines, like Maersk.”
Hiring a global freight forwarder is generally a good idea for all imports/exports businesses, as they'll serve as a transport agent for moving cargo — saving you a lot of time and worry about getting your products from the factory to a warehouse. Essentially, you'll give them information about your business and your intentions for the product, and they'll arrange the shipping agreements, insurance, and oftentimes the licenses, permits, tariffs, and quotas of working within another country. This can remove a lot of the headache associated with starting an imports/exports business in an international trade market.
Frequently asked questions
Is an import/export business profitable?
Many import/export businesses are very profitable. To improve your company's chances of profitability, it's important to conduct the required research on your industry and have a well-documented business plan. Understanding all of the costs associated with an imports/exports business and determining your profit margins when pricing your products is also essential.
How do import/export companies make money?
As an import/export company, you'll make a profit by selling products at a higher rate than you paid for them from the vendor or source.
What is an export license?
An export license is a government-issued document authorizing your company to complete certain export transactions. An export license is issued by the appropriate agency once the export transaction has been reviewed.
What documents do I need to import goods?
The types of documents you'll need to import goods will vary depending on the country you're importing the product into. In the United States, import licenses and permits may be required, but a Customs and Border Protection entry form is always required.
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The bottom line
The world of importing and exporting is a dazzling, complex system that balances both emotional and economic needs. If we want something that is grown or produced in another part of the world, how can we get our hands on it? How can we give others the opportunity to enjoy it, while still creating a sustainable lifestyle for those producing it and for those who transport it from point A to B?
If you’re interested in answering these questions, don’t let the enormity of the task overwhelm you. With the proper research, planning, and documentation, you can launch a successful imports/exports business of your own.
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