HORECA – Critical Mass in International Markets

http://www.exportincite.com/news/2015/05/horeca-critical-mass/

Let’s be honest. Volume is the major driver in the food service industry. We all want it and for good reason.

By Cameron Gordon, Asia Market Director, Incite

Volume gives us critical mass. Economies of scale that allow for reduced costs and leaner margins. The net result is increased competitiveness, more frequent orders, and happy customers.

But, unless you’re in the commodity trade, most export sales will not start out as FCL (full container load) and you’ll probably be using a distribution partner to supply end customers.

Building volume takes a concerted effort. Even if you have managed to secure a partnership with one of the leading distributors in your export market, it can be a painfully slow process. The reasons for this can include:

• - The distributor is overloaded with brands.
• - The distributor’s sales force do not understand your products USP, or there are other products in the catalog they find easier to sell.
• - The distributor does not yet have the right customer base.
• - HORECA (hotels, restaurants, cafes) accounts are not interested in your product because purchasing it would require a menu or process change
• - The margins applied mean your just too expensive.

Slow sales are a major problem that should be addressed in the very early stages of business with your distribution partner. If your product doesn’t move, it sits in their warehouse gathering dust and expiring. A large quantity of expired stock is not a great incentive for your distributor to reorder.

For best results, it’s crucial that exporters play an active role in supporting sales, from training, to the product launch, to on going assistance. In my experience, this show of commitment will do much to earn the goodwill of your distribution partner and this usually has a direct impact on performance.

Below are three simple strategies I have found effective in launching new food service products into Asia:

1) Provide FOC Stock

Simple, but effective, providing FOC (free of charge) stock makes your partner much more comfortable with giving away samples to seed new accounts. Without FOC stock, any samples provided are coming off your distributors bottom line.

2) Good Marketing Collateral

Getting new HORECA customers on board requires a strong sales pitch that clearly articulates the USP. Without effective marketing collateral, you are sending a sales person out to sell a product they more than likely do not understand, from a place they have never seen before…

3) Product demonstrations

One of the most effective ways to sell to food service accounts is to demonstrate how your product can be incorporated into their menu. Better yet, get a renowned chef on board to do a cooking demonstration for your distributors key accounts, showing them the most widely used applications of your product and providing useful information, including cost per serve. We use this tool widely throughout the Asian markets and it works extremely well.

If you have questions or comments please email camerongordon@exportincite.com