FSMA: The Meaning of Adulterated Foods

Here is what the US Congress defined as “adulterated” food in the context of the Food Safety Modernization Act. US manufacturers or US importers of foreign manufactured foods can be criminally liable to knowingly introduce adulterated food into interstate commerce. This includes food and beverages that:

  1. …contain poisonous or insanitary ingredients or substance that lead to injurious health, including undeclared allergens, pesticides, bacteria, chemicals, additives, animal drugs, filthy, putrid or decomposed substances, meat from diseased animals, packed in containers that is made from poisonous or deleterious substances (for example Bisphenol A), or radiation
  2. … lack valuable constituents, includes substitutes of ingredients not labeled correctly, comes in damaged containers, is “bulked up” by added substances that would increase weight or reduces the food’s quality or nutrient content, or may it appear to be of better value than it is (for example counterfeited olive oils, truffles, or rare fish.)
  3. … contain unsafe color additives not permitted in the United States
  4. … are confectioneries containing alcohol in excess of ½ % of volume (only alcohol derived from flavor extracts). However, national law does not supersede state law. Many states allow the sales of alcohol-filled chocolates, and these laws count in the respective state
  5. … are confectioneries containing non-nutritive substances or have embedded an non-nutritive object (for example Kinder Surprise Eggs so popular in Europe and Canada).
  6. … are dietary supplements containing dangerous ingredients that are harmful to human health or that are manufactured without Good Manufacturing Practice Standards
  7. … have previously been denied admission into a country anywhere in the world
  8. are transported under unsanitary conditions

See FDA website with more information

More facts to know:

FSMA: The Meaning of Misbranded Foods
California Proposition 65
Vermont Non-GMO law
FSMA: Letter of Guarantee

 

 

 

 

Five Ways to Get Your New Products on the Shelf

Selling food and beverages in the United States or Canada is an expensive endeavor. Here is a comprehensive list of your “costs of doing business” to consider before you make the first appointments with importers, brokers, wholesalers or retailers:

  1. Competitive analyis. Don’t waste your retail buyer’s time. Before you send your standard sales brochure, pause and think.  You better know what products are needed, how much they will cost the retailers once delivered, how they will be delivered, how they fit into the shelves and category, why the shoppers of the respective chain might be interested in trying your products and what your competitors offer.
  2. Well connected Broker or Sales Manager. Just picking up the phone and dialing a retail buyer will get you nowhere. You need someone to get appointments and prepare customized sales presentations for your brand and products.
  3. Listing fees. New products are risky for all parties involved and the costs of failure are completely on the shoulders of manufacturers.
  4. Listing Fee Alternatives: Retailers love cold cash to limit their risk of putting new products on the shelves. Mit many smaller companies or specialty food producers from abroad don’t have or want to spend the cash. Here are some alternatives to persuade the buyer to add your product to his category assortment:
    • Exclusivity
    • Pay Fee Over Time
    • Free Gods
    • Non-Slotting Retailers
    • Promotions (Displays, Feature Ads, Price Reductions)
    • Reduced listing fees for multiple items
    • Store Manager Contest
    • Higher Every Day Margins
    • Distributor Contribution
    • Small Brand Bonus
    • Extended Payment Terms

From Field to Fork – New Ways to Feed The World

If you think that foods comes from a supermarket, don’t bother to read on. If you are interested in why we need to – and how we can – change our ways to plant, grow, harvest, process, deliver and sell food, this post is for you. Click on the links to get additional information on the topics…

Co2 Increases Plant Sugar Content

Here is another sad fact of human induced climate change: the more CO2 is pumped into the atmosphere, the fatter we may become. These are the latest findings of crop science. Over the next decades, the sugar content of any kind of grain will dramatically increase, while healthy protein, mineral and vitamin content will decrease. Why? Carbon dioxide in the air fuels sugar production in plants (remember photosynthesis) and even whole or healthy grains will become less nutritious and more caloric over time.
The consequences: More CO2 in the atmosphere = more sugar in crops =  more calories in your average diet = higher obesity = more health problems = higher health care costs.
That’s one reason to cut greenhouse gases now and to implement the latest Paris Climate Change Treaty.

Looking for Affordable Fruits & Vegetables? Try In-Door Farming

As more people flock into cities and live in high rises, while farm land around cities decreases by the minute, housing developers, builders and tenants seek to put a field on the roof. What’s needed are green attitudes, a re-modeled home and weekend farmers with a green thumb.

Don’t Shy Away from Eating That Bug

One day, even you may bit into a roasted cricket. The protein-laden hoppers, especially their larvae, are increasingly used to create nutritious protein powder for supplements and food.  Yes, Cricket Farming is in.

Eat well, sleep well, eat better

Sleep is not just vital for mental fitness but also to keep a healthy waistline.

Getting enough sleep is the next frontier to a healthy lifestyle. In Germany alone, close to 50% of survey respondents complained about sleeping problems, while one out of seven takes sleeping pills at times. Consumption of sleeping pills increased five-fold over the past two decades. The worldwide trends are even more alarming.

Good sleep is as important as good food, drink and exercise. It influences creativity, performance, quality of life, and relationships. As Jürgen Zulley, Professor at the University of Regensburg puts it:” Too little sleep makes you fat, dumb and sick.”

Even worse: a recent study conducted by universities in Chicago and Brussels revealed that sleep deprivation alters brain chemicals in such way that the non-sleeper are unable to resist midnight snacking, which in turn leads to weigh gain, less sleep and more snacking, a vicious cycle.

It starts in middle school, continues at college and stretches across most of the adult working life: our modern day schedules are too full, consume content of too many media, engage online in too many social networking, and are stressed by ever increasing demands by employers, family and friends.

Due to stress, clutter and distractions we can’t fall asleep, wake up too often, and don’t sleep the hours we need. The result in many people: crankiness, sadness, overeating, depression, burn-out.

The solution does not require sleeping pills, drugs or alcohol: sleep awareness and mental training are an inexpensive, first start. Here are some interesting facts and factoids:

  • Sleep happens in four phases: a) falling asleep, light sleep, deep sleep, and dream sleep (also called REM or rapid eye movement sleep).
  • According to research of the University of Regensburg, the normal sleeper wakes up on average 28 times a night, most times immediately forgetting the incident.
  • What you think after waking up makes all the difference between good and bad sleep. Imagine some pleasant moments or simply tell yourself that you don’t have to get up and still have time for a good sleep. These auto-suggestive methods likely make you fall right back to deep or dream sleep.
  • Why do we and most other animal have to sleep? – a question that occupies the minds of researchers worldwide these days. What is known so far: sleep de-clutters the brain, reduces synaptic connections and strengthen those that are important, makes you able to learn and absorb more information. Thoughts, feelings and memories are re-ordered to make sense the next day.
  • Another vital role of sleep: to regulate the “metabolic brain” which influences the immune system and metabolism. Chronic sleeping disorder is one of the reasons for obesity, frequent sickness, and depression
  • Sleep builds memory and enables creativity (most associations and insights from what you learned during the days are made while you sleep). Thus you can adapt to changing environmental changes and impacts

In other words: sleep dopes your brain, builds consciousness and mental performance. That why we recommend to take sleep serious in 2012. Here are some essential preconditions:

  1. Your bedroom needs to be quiet and dark. If you have to choose: silence is better than fresh air from an open window;
  2. Set your thermostat so that you don’t freeze or sweat;
  3. Silence is better than open windows.
  4. Choose a mattress that is not too hard, just right for your weight;
  5. If your bed partner snores and disturbs your sleep, choose separate bedrooms over lack of sleep, anger and frustration;
  6. Don’t go to bed straight from working on your computer. Give it at least a 20 -minute intermission;
  7. If you can’t sleep, do something relaxing, like reading, ironing, putting stuff away;
  8. Overcome your fear of not being able to fall back to sleep, like any other fear can be overcome;
  9. Take sleeping pills like headache pills: only occasionally.

This blog summarizes an article in Der Spiegel (Issue 44/2011) and

Food Safety Modernization Act – Update

fda_buildingIt took five years from the president’s signature to the publication of the final rule.

Now it’s here: as of September 2015, the first final rule of the Food Safety Modernization Act (FSMA) comes into force.

In the following, we’ve summarized the most significant aspects of the FSMA rules and how they may impact producers, exporters and the import community (click on links to read more):

Significance:

  • The Food Safety Modernization Act of 2011 ist the largest overhaul of the US food safety system and Food & Drug Administration’s mandate since the presidency of Franklin Delaneor Roosevelt (the 1930s)
  • Prior to FSMA, the FDA’s food safety policies were primarily geared towards preventing the spread of food poisoning outbreaks. FSMA gives FDA the authority to prevent food outbreaks before they happen and puts the responsibility to prevent food-borne illnesses and outbreaks squarely onto the shoulders of food manufacturers and suppliers.
  • This increases the liabilities to own, operate and manage a food business. Shipping mis-branded or adulterated foods can be very costly, even if no consumer is harmed. The risk for manufacturers and importers residing in the US is financial, reputational and personal: owners and managers may go to jail, if their products caused severe harm to the health of consumers due to negligence or bad intent.

Scope:

  • FSMA and related laws literally affect anyone in the food industry: Retailers, Manufacturers, Distributors, Warehouse Operators, Transport Agencies, Importers, Exporters, Consultants, Audit Firms (Certification Bodies), and even Foreign Governments.
  • FSMA rules affect all segments of the food and beverage industries, with the exception of seafood, produce, and fruit juices. These three categories are subject to very similar, but separate rules, established in previous decades.   A separate law also regulates low acid canned foods; however, only in regards to microbiological hazards. FSMA also aligns with US Department of Agriculture (USDA) safety protocols guiding the meat industry.

The Eight Segments of FSMA

FSMA rulemaking is structured and implemented in four phases (final rule dates)

  1. Preventive Controls for Human Food (September 2015)
  2. Preventive Controls for Animal Food (September 2015)
  3. Standards for Produce Safety (November 2015)
  4. Foreign Supplier Verification Programs (FSVP) for Importers (November 2015)
  5. Voluntary Qualified Importer Program (November 2015)
  6. Accreditation of Third Party Auditors/Certification Bodies (November 2015)
  7. Transportation of Human and Animal Foods (April 2016)
  8. Strategies to Protect Food Against Intentional Adulteration/Food Defense (June 2016)

Implementation Schedule

The rules for Preventive Controls for Human and Animal Foods are final and must be implemented as follows:

  • Manufacturer
    • Medium to Large Size Businesses by September 2016
    • Small Businesses with fewer than 500 employees by September 2017
    • Very Small Businesses with less that $1 million in sales and assets, with FDA approved records that support their status by September 2018
    • Dairy Businesses subject to the Pasteurized Milk Ordinance by September 2018
  • Distributor/Warehouses/Receiving Facilities:
    • Medium and Large Businesses by March 2017
    • Small Business with less than 500 employees by September 2017

The 5 steps for Preventive Controls:

FSMA Preventive Control rules are essentially about risk based Current Good Manufacturing Practices (CGMP) Most established and experienced food manufacturers around the world will already employ CGMP in some form or another, especially if they are certified by standards under the Global Food Safety Initiative. Risk-based preventive controls include:

  1. hazard analysis and risk assessment
  2. preventive controls
    1. the process
    2. food allergens
    3. sanitation
    4. supply-chain program
  3. verification of these controls and corrective actions as necessary
    1. monitoring
    2. corrective actions
    3. verification
  4. recall plan
  5. record keeping requirements (all of the above)

Hazards? What Hazards?

  • Allergens: The failure or accidental mistake to declare all allergens present in a food is by far the Number One reason for recalls in the US
  • Microbiological contaminants: Interestingly, spices imported from around the world are most frequently identified as sources of contaminated food. Herbs, sprouts and produce follow suits as frequent carriers of dangerous bacteria, such as salmonella, listeria and E coli. FSMA mandates the verification of the entire supply chain!
  • Chemical contaminants, such as pesticide and herbicide residues or residues of chemical solvents or detergents, may be detected in food.
  • Physical hazards in food, such as glass, metal, plastic
  • Sanitation: The FDA has now the power to revoke the registration and order the shutdown of food facilities with unsanitary conditions or lack of proper cleaning procedures. This happens more frequently now.
  • Environmental contamination: This is especially important for processors of produce, but also applies to areas with a lot of wildlife, water pollution or animal diseases
  • Intentional contamination. Do you have procedures in place that prevent disgruntled employees or outsiders to enter your food production areas and contaminate your food intentionally?

Investment in People and Procedures (Preventive Controls)

  1. Employee Qualification: FSMA mandates that you have to employ a “qualified individual(s)” to conduct preventive controls and write a food safety plan. A random employee assigned to the task, including a senior manager, do not qualify, if he or she has not undergone extensive training. Similarly, all employees directly involved in “manufacturing, processing, packing or holding food” need to be qualified to perform their assigned duties.
  2. Education and Training: Qualified Individuals must receive training in the principles of food hygiene and food safety, including the importance of employee health and hygiene.
  3. Product testing & Environmental Monitoring FSMA specifically mandates product testing and environmental monitoring for all manufacturers, on a risk based frequency. The results of the tests have to properly recorded and kept on file.

Written Food Safety Plans and Record Keeping

  • All steps of the hazard analysis and preventive controls, monitoring and verification, corrective action, and recall plans have to be documented and updated every three years.This is part of the FSMA’s record keeping mandate.
  • The Written Food Safety Plan must or should be shared with you importer of record. FSMA obliges importers to verify the safety of the products they bring into commerce in the US under the Foreign Supplier Verification Program
  • Also share the results of all food safety and quality audits with your importer. The audit schemes benchmarked under the Global Food Safety Initiative, such as IFS, BRC, SQF or FSSC 22000, are likely to be FSMA compliant (see below).

Foreign Supplier Verification and, if applicable, Voluntary Qualified Importer Program

Importers will be obliged to verify the food safety of their export partners on an annual basis and keep records of their verification. Specifically, importers have to

– Determine known or reasonably foreseeable hazards with each food

– Evaluate the risk posed by a food, based on the hazard analysis, and the foreign supplier’s performance

– Use that evaluation of the risk posed by an imported food and the supplier’s performance to approve suppliers and determine appropriate supplier verification activities

– Conduct supplier verification activities

– Conduct corrective actions

More specifically:

  1. Importers must establish and follow written procedures to ensure that they import foods only from foreign suppliers approved based on an evaluation of the risk posed by the imported food and the supplier’s performance or, when necessary on a temporary basis, from unapproved suppliers whose foods are subjected to adequate verification activities before being imported.
  2. Importers are required to develop, maintain and follow an FSVP for each food brought into the United States and the foreign supplier of that food. If the importer obtains a certain food from a few different suppliers, a separate FSVP would be required for each of those suppliers.
  3. Importers will be obliged to inspect foreign manufacturers facilities at least once a year if the food they import is deemed to be high risk, i.e. could cause “serious adverse health consequences or death to humans or animals.”
  4. Like domestic and foreign manufacturers, importers will also be subject to controls by FDA inspectors.
  5. Importers or the designated manufacturer agent will be liable for all costs related to FDA mandated recalls and re-inspection of facilities, if these failed the first inspection.
  6. Importer investment into verification, record keeping and qualified food safety personnel will likely increase the costs of doing business for many small importers (and may limit the number of available importers for exporters in the long run)
  7. Manufacturers samples and food imported for research purposes is not subject to Foreign Supplier Verification, but need to be produced according to FSMA standards.
  8. FDA will more vigorously target and pursue smugglers of food who illegally introduce imported food into commerce that could have a potential public health risk.

Third Party Accreditation and the Global Food Safety Initiative

This (not yet final) rule is all about enlisting non-governmental organizations, foreign governments, accreditation agencies and audit/certification bodies to control food safety in lieu of the FDA. The agency already has to few inspectors and limited budgets. The question is: who will be an accredited third party and what will that cost the accredited organization.

For example, most consumer packaged food and beverage companies are subject to retailer audits according to four major standards or schemes:

The accreditation of the private standards holders and their audit/certification bodies may fulfill the FSMA requirements for the audited firm and importer, which will greatly lower the risk for the imported or distributed foods.

However, the current draft rules suggest that a third party may have to pay in $16,000 per year for the accreditation and have to submit the audits to the FDA based on request. Many foreign governments and private organizations view these requirements as potential trade barriers and sticking points for compliance – issues that will likely be resolved before the final rules come out.

 

Die Kosten des Markteintritts

Dollar EuroIdealerweise würde der Export in die USA so beginnen:

Sie buchen für Ende Juni einen Flug und Hotel in New York , besuchen die Summer Fancy Food Show, treffen dort eine Auswahl von Importeuren für Lebensmittel, die sich für Ihre Produkte interessieren.

Sie wählen dann den richtigen Partner aus, der auch Deutsch spricht, senden Produktinformationen und Preise, der Importeur bestellt dann ein paar Paletten oder vielleicht sogar einen Container und lagert diesen auf eigene Kosten ein und übernimmt den Vertrieb an Groß-und Einzelhändler.

Bei den ersten Bestellungen senden Sie Ihre Exportware mit “internationalen” Etiketten, die sich in vielen Ländern verkaufen. Oder sogar deutsche Ware, die der Importeur dann auf eigene Kosten mit US Labels überklebt.

Es kommen dann bald Neubestellungen in so großem Umfang, das sich die Investition einer US exklusiven Verpackung lohnt und mindestens ein Produktiondurchlauf für US Ware eingeplant werden kann. So kostet der Export in die USA wenig und ist von Anfang an gewinnbringend.

Tja, so war das vielleicht mal vor fünfzig Jahren, als die Heimweh von Millionen deutscher Auswanderer die Nachfrage nach deutschen Lebensmitteln steuerte.

Investment Needed

Heutzutage ist der Markteintritt mit einem erheblichen Investment seitens des Exporteurs verbunden. daß laut unserer Erfahrung bei € 30,000 pro Jahr anfängt und bis zu € 300,000 Euro  in den ersten drei vier Jahren kosten kann. Je mehr investiert wird, desto höher sind die Umsatzchancen, oder aber auch mögliche Verluste.

Dollars Euro bills_140 copyWas sind die Kostenfaktoren:

  1. Reisekosten in die USA – für die Suche nach potentiellen Handelspartnern oder Broker-Repräsentanten
  2. Einstellung einer Exportfachkraft für die Exportabwicklung
  3. Anstellung eines US Repräsentanten
  4. Beauftragung eines FDA US Agenten
  5. Design und Produktion von US Verpackung
  6. Design und Produktion von Verkaufspräsentationen
  7. Versand von Produktmustern
  8. Freie Ware für Erstlistungen
  9. Ausstellung bei Fachmessen
  10. Listungsgebühren oder Marketingunterstützung für Großhändler
  11. Listungsgebühren oder  Promotionunterstützung für den Einzelhandel
  12. Manufacturer Charge Back (MCB), mit oder ohne Genehmigung  seitens Großhändler oder Einzelhändler
  13. Verbraucherkommunikation / Schaffung von Nachfrage
  14. Vernichtung oder Schleuderverkauf von unverkäuflichem Inventar (kurz vor Ablauf oder nach Ablauf des MHD)
  15. Währungskursverluste

Return on Investment

Erfahrungsgemäß erreichen Hersteller zwei Jahre nach dem Markteintritt den Break Even Point und nach drei Jahren den ersten Gewinn, je nachdem sich die Produkte im Wettbewerb behaupten.  Nach fünf  Jahren ist die Geschäftsentwicklung dann entweder so stabil, dass die Umsätze langfristig und gewinnbringend wachsen können. Oder es ist Zeit, sich vom Markt zu verabschieden und die Verluste als “Lehrstück” abzuschreiben.

The Importance of the Marketing Mix Dollar Euro Chessboard_140

Interessanterweise gelingt es auch kleinen und mittelständischen Exporteuren immer wieder,  die finanziellen Mittel aufzubringen und einen US Markteintritt profitabel zu gestalten. Die Erfolgsfaktoren sind kein Geheimnis: es kommt immer auf die richtigen Partner und den Marketing Mix (product, packaging, price, promotion, channel, costs, competition, consumers) an.

Wir helfen unseren Kunden mit umfassender Marketing und Handelsexpertise, strategischer und taktischer Planung, einem weiten Kontaktnetzwerk, effektiver Kommunikation und gut kontrolliertem Finanzmanagement das Risiko eines Markteintritts und der Einführung neuer Produkte so gering wie möglich zu halten.

Continue reading “Die Kosten des Markteintritts”

When the soil disappears

Ever heard of the “Global Soil Week,” which took place during the first week of April? Do you care?

After watching these videos, you likely will.

Good, fertile, unpolluted, and available top soil, which is essential to grow food for humans and animals, disappears at such alarming rate, that all of humanity needs to listen and change ingrained attitudes and behaviors.

The disappearance of fertile soil around the world costs everyone of us $40,000 per year.

Watch the English version here

Screen Shot 2015-04-11 at 4.48.55 PM

 

Watch the German version here:

Screen Shot 2015-04-11 at 4.50.52 PM

 

 

 

 

 

 

 

 

 

For more information visit www.globalsoilweek.org

The Right Retail Channel

Retail Channel Costs Which retail channel is right for your brand?

It depends on whether you’ve done your homework

Grocery stores, gourmet/specialty food stores, coffee chains, natural/health stores, club stores, mass merchandisers, discounters, airport kiosks, hotels, gas stations, vending machines,

 

What do buyers in each channel want? # 1 complaint: sellers do not take tome to [research and] understand the retailers’ and buyers’ needs

 

Many new market entrants fail to appreciate that they have to speculate to accumulate in this industry. You need to “open your wallets” and “pay to play.” And not too little. The food industry is not blackjack where you can pay a little and earn a liitle. It’s more like you put a bunch of money on the table and then it’s gone and you have to claw it back little by little

 

Natural Channel:

You cab get right to the consumer. Few wholesaler. But very restrictive in regards to products and a lot of work for little or no profitability and category review once a year, but if something cool comes along they will make room. Expensive to get in and keep shelf space

Specialty gourmet

Planogram not a big issue, constant change and in-out. Great place for trial and error. But: limited audience/sales per store and frequent market spend. Graduate to grocery if sakes and awareness goes up.

 

Grocery: well planogrammed center store, perimeter is open, but highly competitive. Hard to get appointment or stay on shelf for more than 6 months Store surveillance for OOS necessary, Expect to see finished products, not mock up and immediate delivery, not waiting two three months for imported products. Expectation of slotting, free fills or marketing support is huge. Category review and planogram changes once a year.

 

Club store:

Big potential top scale up, can go direct, but investment of special packs necessary and demo support

 

Convenience channel

Can be very profitable, very cost effective, but need strong sales pitch based on data and turns, your track record in other channels. Timing for category reviews 2 years

 

Foodservice channel

More and more packaged foods, but very fragmented broad distribution and planograms too mutable

 

Need broker support to get in,and get merchandising assistance, local market knowledge, knowledge of what marketing and trade dollars need to be spent where, how, and how much to pull brand levers

Selling to large supermarket chains

It can take up to 2 years to get listed at national accounts . This will depend on:

  • Access to the buyer
  • timing on category review
  • broker and wholesaler involvement
  • convincing sales presentation
  • payment of listing fees and promotional allowances
  • delivery terms and timing
  • terms of import

For specialty food products, it usually takes 2-5 years of consumer trial and building a credible sales record at specialty food stores before you have a chance to make it to the “big league.” You need an experienced local broker representative to coordinate all activities and gain access to buyers.

 

Ian Kellerher, Peeled Snacks in Food Navigator.com

A Guide to Exporting to the United States

Virginia Beach Harbor_rect

The US is the world’s largest food market with seemingly endless possibilities. On average, 20% of all foods and beverages are imported, in some categories, imports account for over 50% of the market. But exporting a new product or brand and building a sustainable business can be a challenge. Here are five of the most important issues to consider before you start your search for an importer.

Consider that:

  • The USA alone offers a total of 115 million households with over 320 million consumers eager to try innovative, new products.
  • Over 800,000 places that sell food, relatively low import tariffs, diverse trade channels and always hot emerging culinary trends.
  • Over 700,000 domestic and imported food products currently on the shelves
  • On average 47,000 products sold at an average grocery store

Welcome to the US marketplace! There’s a realistic chance that you can successfully build a sizable business here over the long term.

Or that you will fail. Because in this hyper-competitive marketplace,  your product will have to kick another out the shelves, if you want to succeed, and defend the space against all other competitors.

Our advice before you make your first sales call to importers, wholesaler or retailers: do your homework first on the following five topics:

  1. Investigating the category dynamics and business practices
    1. Three layers of distribution
    2. Finding your real estate
    3. Price it right
  2. Finding and Keeping Your Import Partner
    1. Exclusivity
    2. Value contribution
    3. Just in Time Supply
  3. Determining The Right Investment
    1. The Art of Pricing
    2. The Start-Up Squeeze
    3. Local Management
  4. Complying with a changing regulatory framework
    1. FSMA
    2. Labeling
    3. Claims
  5. Preparing for Success
    1. Selling to large supermarket chains
    2. Forecasting
    3. Promotional Support

 

Finding the Right Importer

What Do Importers Want? Here’s a list This is an important question Here you find a guide to what Your importer or distributor in North America expects to make a profit and get your support to build and grow your business. Here are the 10 most common  demands and worries of your trade partners:

  1. A Right to Make a Reasonable Profit
    • How much profit and profit opportunity does a supplier provide, how much work is associated with building a suppliers business, how much value do you expect an importer to provide in relation to the contribution margin?
  2. Investment to build the business and brand
    • Necessary investments below the line: Slotting, Free Fill, Market Research, Brand USP,
    • Necessary investments above the line: advertising and communication in TV, print, radio, social media, sampling (demos)
    • More marketing dollars are proportional to importer profits
    • In the early stage, suppliers cannot expect importers to foot the marketing bill
    • Accept and appreciate ideas to build the business locally (city by city, retailer by retailer) and don’t delay the request for funds or support.
  3. Appreciation
    • Invitation to visit headquarters, joint store checks, quota incentives for sales staff, lunch for support staff, letter of thanks or awards (distributor of the year)
  4. Unrealistic Expectations
    • Category growth is 1-2%, how can you expect to grow 10% year on year, unless you spend an extraordinary amount of money, which is risky. Normal business growth reflects market conditions
  5. Direct Sales and Contact with Retailers
    • The biggest asset of Distributors, Brokers and Importers is their contact and relationship to retail buyers and they guard these assets well. It is a natural inclination and too often standard practice among suppliers and retailers to “cut out the middle man” when sales and profits don’t meet their expectations. Retailers often try to persuade suppliers to provide more marketing dollars or buy directly from suppliers. Suppliers need to politely refer inquiries to the import partner or schedule a joint meeting.
  6. Last minute changes or last minute requests
    • Package or graphic redesigns, price increases marketing budgets, trade spend, or sales incentives are often changed at the last minute, without prior notice or in violation of the carefully crafted joint business plan.
    • The effect on importers, they have to cut their margins until price increases are accepted at their retail customers. Price increases have to be communicated at least a year in advance and very carefully so not to loose distribution.
    • Frequent last minute reports, frequent or unannounced last minute market visits,
  7. Short Shipments
    • Importers can be assessed penalties, store level space may be lost or need to be recaptures. Keep pipeline filled and treat foreign markets like your best customers t home
  8.  Faulty Shipments and Border Detentions
    • Increasingly, containers are being detained because the FDA or Customs inspectors find a faulting in labeling or in the documentation. The detention can last weeks or even months, because the FDA or CBP don’t have enough staff to resolve shipment disputes quickly. The re-inspection is expensive and at worst, the container content has to be destroyed. Reliability of labeling food correctly is the exporters first duty.
  9. Margin reduction
    • Importers take a gross margin of about 30%, but they have to pay for warehouseing, shipments to retailers or wholesalers, payments for brokers (5-10%), payments for office space and support staff, marketing, trade fair booth and travel costs. The net profit margin is in the less than 3%.
    • In order to stay in business and make a decent living, importers either need a lot of suppliers and thus have little time for each suppler, or have only a few suppliers, with more time dedicated to each supplier.
  10. Customer and Consumer Service

Adapted in part from Greg Seminara, Export Solutions