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Why International ? - Rationale for International Expansion

By: Greg Seminara,Export Solutions

Food & Consumer Products Business is a "People Game"
World population exceeds 7.2 billion people. All people possess the fundamental requirement for food products and most use household cleaning products and personal care brands. Supermarkets are becoming a shopping option for consumers everywhere including emerging markets. China with 1.3 billion people represents about 19 % of the world's population. The USA represents the largest consumer market measured by spending, but only accounts for 4.5 % of total population. Nestle, the world's largest food company derives about 29 % of its global sales from the USA. A key driver for international development is to gain visibility for your product in new countries with "more mouths to feed".

Growth Engine for New Sales and Profits
Many home markets are mature, with flat category growth and limited opportunities for market share expansion without heavy levels of investment. International provides new markets where sales may be 100 % incremental. Investment will be required so profit enhancement may lag sales growth. All companies depend on multiple strategies for growth. International development is usually a core growth engine for expansion oriented leaders.

Follow the Global Retailers
Walmart, Carrefour, Metro, & Tesco figure to be a core part of our business planning for many years to come. International now represents over $180 billion in sales for Walmart, almost 30 % of total sales. Walmart now operates in 18 countries and international is growing at 15 % per year. Carrefour business outside of France totals 60 % of sales. This including 22% of sales derived from Asia & Latin America where the Carrefour business is growing at a healthy 10 % per year. All Global retailers maintain well established programs to facilitate exports from their home country. Warning: expansion through a global retailer should be a part of your country based international strategy. An international launch program based only on one efficient global retailer may serve as a barrier to sell to other retailers in a country. i.e. Selling to Walmart direct in Argentina or Japan may prevent you from selling to other local retailers with larger market shares where you will need a distributor to service your business.

Innovation Achieves Global Rewards
Innovation sweeps the globe at a rapid pace in the era of the internet and global retailers. If your product is truly innovative or "Breakthrough", chances are good for interest in other countries. On the other hand, there is little room on the shelf for "me too" products.

Preempt Competition
"First one in" benefits may be accorded to the category player dedicated to international success. Examples could include Barilla Pasta,SunMaid Raisins,Tabasco, and Kellogg's cereals. These pioneers have created global brand icons in highly competitive categories. Competitors are now forced to differentiate from the leaders or compete on a "price based" platform. This is a challenge in countries and categories that may only support one international brand.

Source Scale Benefits for your Home Market
International sales create a larger and hopeful healthier company. The added sales revenue often supplies a scale dividend that applies system wide, including your home market. This translates to efficiencies in procurement of raw materials, packaging materials, transportation, advertising agencies, and negotiations with your global retailers.

Category Development may be Higher Outside your Home Country
Category usage Habits and Practices may vary widely, even among adjacent countries. Chances are great that there are countries where your category may be several times larger than in your home country. Additionally, a small market share in a big country like the USA may represent more profits than a large market share in a small country.

Share Best Practices from Other Countries
Brands that operate in multiple countries create a process for sharing best practices from around the globe. My experience is that our business shares many common practices across borders. After all, we are all trying to gain access to supermarket shelves and deploying strategies for consumer trial of our products. Each market maintains its subtleties on how the business operates locally. Many of these best practices have global potential for implementation , aiding your business in your home market as well.

Dynamic Career Path to Retain Top Performing Employee's
International expansion represents a great avenue to develop and retain your top employees. This attractive career path is stimulating and provides a way for a trusted employee from the "home office" to share some of your companies tribal knowledge. Concurrently, your manager becomes a conduit to facilitate the transfer of best practices as discussed above.

Contact Us
Export Solutions helps small to mid size companies develop an international strategy, road map, and connect them with local distributors/partners to implement the plan. Contact us for more details.