organic industries of australia · the skill sets, knowledge, experience and culture of emerging...

Organic Industries of Australia

Export Strategy Survey2

2019 Export Strategy WorkshopOrganic Industries of Australia

https://s.surveyplanet.com/r-i_GC3-J

Q1 - Export Strategy Survey3


Workshop Structure4

Activation Strategy

Market Access & Logistics

Pricing Strategy

Market Entry Strategy

Markets/Categories of OpportunityWhy Export?1

Business Barriers To

Export2 3

56

7 Finance & Legal8 Support Programs9

4

Why Export?5

Why Export?

The world needs your food!Estimated population of 9.8

billion by 2050

Australian producers have the capability and capacity to meet specific food demands (Halal,

Gluten-Free, Organic etc.)

Being in Australia, we have counter seasonal opportunities

6

Improved economies of scale in production

Reduced exposure to a single market

Australia has a strong reputation for high quality, safe foods


Barriers to Export (Global Trade Level)8

❖ Tariffs

❖ Subsidies

❖ Quotas

❖ Non-Tariff Barriers

❖ Export / Import Licence Requirements

❖ Local Content Requirements


Barriers to Export (Organic Industry)9


Fragmentation of resources and lack of coordinated messaging from

Governments and industry bodies

Communicating consistent brand messaging about Australian products at

both the company and industrial level

Technical market access

Lack of market research to better understand product and packaging

needs and opportunities

The skill sets, knowledge, experience and culture of emerging and existing

exporters

Lack of scale and continuity of supply

Barriers to Export (Business Level)10


Cash flow sustainability

Weak domestic market presence

Short-term commitment

Low export capability

Inability to commit resources(staff, time, money)

No established export plan



Note: This question is skipped if you selected ‘No’ in Q4

Markets of Opportunity14


Market Snapshot – USA15


Population: 325 Million

GDP: USD $20.51 Trillion

GDP Per Capita: USD $62,517.5Largest organic market | Competitive but fragmented Australia’s 4th largest merchandise trading partner

Organic Beverages

(Retail Value)-

USD $1.6B (2018)

Organic Packaged Food (Retail Value)

-USD $16.94B

(2018)

Market Snapshot – China16


Organic Beverages

(Retail Value)-

USD $53.10M (2018)


-USD $3.68B

(2018)Population: 1.39 Billion


GDP Per Capita: USD $9,633.10Rapidly emerging middle class (400 Million +)Second largest organic market in the world

Market Snapshot – Japan17


Organic Beverages

(Retail Value)-

USD $220.9M (2018)


-USD $387.9M

(2018)

Population: 126.7 Million


GDP Per Capita: USD $40,205.80

High purchasing power | Leader in R&D Third largest economy in the world

Market Snapshot – South Korea18


Organic Beverages

(Retail Value)-

USD $5.5M (2018)


-USD $235.5M

(2018)




Booming economy – 4.2% Annual Growth until 2018 Australia’s 3rd largest merchandise trading partner

Market Snapshot – Hong Kong19


Organic Beverages

(Retail Value)-

USD $3.7M (2018)


-USD $198.7M

(2018)


GDP: USD $360.30 Billion


Free Port Status | Re-export hub to Asia & ChinaHigh Expatriate Population

Organic Fresh Food20


US $billion



Note: This question is skipped if you selected ‘None’ in Q6

Market Entry Strategies24


Entry Strategy Advantage Disadvantage

Australian Based Consolidators● Sell in AUD● Consolidate to save freight cost

● Lose sight & control of value chain● Indirect communication with customer● Unlikely to visit market

Australian Based Agency● Transact direct● Save on overhead

● Paying commission to agency● Indirect communication with customer● Unlikely to visit market

In-Market Based Agency

● Transact direct● Save on overhead● In-market contact● Less margin cost c.f. importer

● Paying commission to agency● Indirect communication with customer

In-Market Importer/Distributor

● Local knowledge● In-market logistics● In-market contact● Importer can manage multiple

channels/customers/accounts

● Need to allow another margin in the value chain● Indirect communication with end customer/buyer

Market Entry Strategies25


Entry Strategy Advantage Disadvantage

Direct-To-Retail/Foodservice Buyers

● Margin advantage● Lower RRP on shelf● Direct feedback from customer

● Multiple export accounts● Overhead to support account management● Direct requests for A&P support● No one in market is managing your brand c.f.

importer/distributor

Overseas Branch Office / Subsidiary

● Feet on the street● Own entire value chain● Claim local deductions e.g. VAT

● High investment cost to establish● Overhead to support and talent to

recruit/train/retrain

E-Commerce

● Increasing middle class in Asia and the Middle East; greater propensity to purchase online

● Higher retail prices● Lower Australian Dollar● Expansion of online shopfronts● Increase of refrigeration & logistics● Lower individual business outlay

● Protection of IP/counterfeit risk● Online promotion strategy● Profit & cost analysis● Product recall● Warehouse (stock & expiry)● Price competition● Government regulation - CIQ

Channel Choice26


• Hypermarket• Supermarket• Convenience Stores• Mom & Pop Shop /

Traditional Trade

• Hotels, Restaurants & Catering

• QSR• Café’s• Institutions

• Direct• Via portal

(Tmall, JD.com, Redmart etc.)

Pricing Strategies29


Key Considerations1. What does the value chain look like for you?2. Work up from cogs ex factory to retail price3. Work back from in market RRP to your factory

Market Access Considerations31


Labelling Requirements

Certificates Required

Quoting and Payments

Bill of Lading Requirements

Invoice Requirements

Tariff & Non-Tariff Barriers

Packaging Requirements

Logistics

Industry-Specific Regulation

Market Access & Logistics32


Free Trade Agreements

Australia has entered into Free Trade Agreements (FTA’s) with 11 countries or groups of countries:● Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA)● Singapore-Australia FTA (SAFTA)● Australia-United States FTA (AUSFTA)● Thailand-Australia FTA (TAFTA)● Australia-Chile FTA (ACLFTA)● ASEAN-Australia-New Zealand FTA (AANZFTA)● Malaysia-Australia FTA (MAFTA)● Korea-Australia FTA (KAFTA)● Japan-Australia FTA (JAEPA)● China-Australia FTA (ChAFTA)● Comprehensive and Progressive Trade Agreement for Trans-Pacific Partnership (TPP)

● Free Trade & Investment

● Preferential Tariff Rates

● Enhanced Regional Integration

● IP Protection



Understanding HS Codes

Used by more than 200 countries, Harmonized Code is a common term in global trade language, and it’s one of the mostimportant elements to bring standardization to international trade.

Source: TradeGecko.com

Note: Using the WRONG HS code on product documentation may result in the shipment

being classified as misleading, non-compliant, and/or a misdeclaration - all of

which carry penalties.

Hint: Leverage DFAT’s Free Trade Agreement Portal to identify tariffs impacting

your product line.



Understanding Incoterms

11 terms of sale accepted worldwide in

the assignment of costs and responsibilities between buyers and

seller.

Brand Activation37


The art of driving consumer action through brand interactions

Consumer Promotions

Experiential Marketing

Digital Campaigns

Sampling Campaigns

Sponsorships & Partnerships

Brand Engagement

Strong Promotional Merchandise

Engagement Strategy

Amplification Strategy

Brand Activation38


Leveraging ‘The Country of Origin Effect’

According to Nielsen’s Global Brand-Origin Survey (Q3 2015), over40% of global respondents say brand origin is as important as otherpurchasing factors (incl. price, function, and quality).

● Over 28% of global respondents say brand origin is moreimportant than other purchasing factors.

● Respondents in the Asia-Pacific and Africa/Middle East arelikelier to say origin is more important (33% & 32%).

● The majority of global respondents who have purchased freshfood say they prefer local brands to global ones for vegetables(68% vs. 11%), meat (66% vs. 13%), fruit (64% vs. 12%), andseafood (57% vs. 18%).

Activation Strategies39


Methods Sample Questions

SamplingHow much does it cost to put a promoter in your store? Store Charges?How much does labour cost for a promoter per day?How much product is normally given away in a day of sampling?How many stores do you have available for sampling?

Trade PromotionWhat methods of promotion are available for new line introductions?What is the cost of a gondola end aisle display?Is in store POS allowed? If so how much does it cost?Do you have act media or other forms of instore media? Cost to buy?

Online PromotionDo you have a member club? How many members?What does it cost to send an eDM to all your members?What products to people normally buy with ours?Are we able to cross promote our products with others in a bundle?

Listing FeesHow much does it cost to list an sku/line item in your store? How many stores?Can we switch that funding into other forms of new product introduction? Sampling? Giveaway outside store with coupon to purchase? Competitions?

FoodserviceWho are the influencers and how can we reach and engage with them?Do you have access to chef’s studios, kitchens, restaurants, hotels, trade exhibitions where we can demonstrate our products?

Funding Options - E.g. EDMG

Tangible Benefits of FTA's

Commitment of Funds to Export Project

Pricing Strategy

Financial Considerations48


Legal Considerations51


Documenting IP Ownership

Patents & Trademarks

Export Compliance

Dispute Resolution & Contract Interpretation

Support Programs54


Capability Building Insights

Connections Applicable Grants

Support Programs55


Capability Building

Support Programs56


Insights

Support Programs57


Connections

Support Programs58


Applicable Grants

Potential Activities59


Workshops

Webinars

Market Visit Programs

Inbound Buyer Missions

Trade Show Preparation

Export ReadinessAssessments

Thank You - Export Strategy Survey63


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