Costco sales outside the USA eclipsed
$57 billion in the last year. International
accounts for 28% of sales through 256
clubs in 11 countries. Outlets in Canada,
Japan, and South Korea enjoy sales per
store levels similar to (or better) than
the USA. Costco revenues surged
16% last year, with high expectations for
continued acceleration as consumers seek
value in this inflationary environment.
International Formula
Americans will recognize a familiar
layout navigating a Costco in Seoul
or Mexico City. The international
assortment reflects a mix of America’s
favorite brands and local category
leaders. Retail pricing is competitive,
with gross margins averaging 12 percent.
Costco expands methodically, typically
opening only one new store per year
in each country (ex. Canada). Global
Club penetration is low outside the
USA. This supplies Costco with
a dynamic opportunity for future
growth, particularly in Asia, home
to 60% of the world’s consumers.
Watch-Outs
The practice of charging for
membership to shop is not common in
many countries. In emerging markets,
consumers live in smaller dwellings
and are reliant on public transportation.
Handling and storing “Costco size”
packs is not practical. Costco strictly
adheres to local labeling requirements,
difficult to navigate for USA vendors.
Low Costco retail pricing may disrupt
your ability to serve all customers
competing in a country. Will your
brand sell without marketing? Selling
to Costco International is attractive,
but should be evaluated as part of
a total country strategy.
Insights to Accelerate International Expansion
Spring 2022
Volume 14 Issue 2
Our Mission: Help Manufacturers “Spend time Selling to Distributors versus Searching for Distributors”
In This Issue
Looking for New
Distributors?
How about 9,200? Export Solutions’
distributor database has helped 3,000
brand owners in 14 years speed up the
process of finding qualified distributors.
Our database covers more than 9,200
distributors of supermarket and drug
store type products in 96 countries.
Search by country, category, brand name,
or country of origin. Experts for Europe,
Middle East, Latin America, and Asia
with complete regional coverage. “Spend
time
selling
to distributors versus
searching
for distributors.”
Costco Global Success Recipe
Page 2
Oil Change
Page 4
Managing 4 Margins
Page 5
Retail Pricing Pyramid
Page 6
7 Scenarios – Country Segmentation
Page 8
Export Solutions’
New Distributor Checklist
Page 11
Are Distributors Interested
in Your Brand?
continued on page 7
2
Oil makes the world go round, fueling
our cars, planes, and the trucks that
transport our brands. Prices hover
around record highs, overflowing the
purses of oil-producing nations. Russia
faces sanctions and a likely generations-
long chill from the west. This creates a
commercial challenge for Europe, which
purchases 49% of Russian oil and 74% of
their natural gas. Oil revenues fund the Russian war machine.
Which countries could replace Russia as oil and gas suppliers?
1. Howdy Saudi
Saudi Arabia is already booming, through record oil prices and a diversification of their
economy. A key question is whether Saudi will develop a closer relationship with China,
their biggest customer, or stick with the west that has provided commercial and military
support since 1945? Saudi’s behavior also influences their Gulf neighbors and OPEC
partners such as Kuwait, Bahrain and UAE.
2. Guyana = Future Qatar of South America
Tiny Guyana includes a population of 800,000. Their economy grew 43% in 2021 and
is projected to grow 500% by 2030. Guyana emerged as a hotspot after Exxon Mobil
discovered more than 10 billion barrels of oil and gas, transforming an impoverished
Guyana economy that had been dependent on agriculture and mining. Neighboring
Suriname also looks promising, with new wells estimated to generate 3-4 billion barrels.
3. Venezuela: End of Isolation?
Venezuela possesses the world’s largest oil reserves. However, it has been a small player
in oil exports since the Hugo Chavez revolution of 1999. This deterioration was driven
by the exit of oil multinationals and lack of investment in equipment and training on oil
extraction best practices. Today, a window of opportunity appears where Venezuela and
the west could commence the journey to resume normalization of relations. Venezuela
would benefit from a boost to their economy and the world has a viable source to replace
Russian oil. This is a mid- to long-term process, as decades of distrust and decline will
not be reversed overnight.
4. Iraq Comeback?
Iraq boasts the Middle East’s third largest oil reserves and a population of 42 million.
Iraq’s post-war recovery has been slow due to safety concerns and limited investment
by multinationals. Middle East oil politics is complicated, but ultimately Iraq could
grasp a stronger position on the world stage.
5. USA #1
We may forget that the USA is the largest producer of petroleum products, accounting
for 20 percent of global totals. Most USA oil stays in the USA, but export customers
include Canada, Mexico, India, and China. Texas GDP of $1.8 trillion is comparable
to the GDP of Italy or Brasil.
Oil is a major driver of economic growth. The oil business creates employment and in
good periods spurs infrastructure investment and social benefits to citizens. A spike in
oil revenues can transform societies to include more expatriates across all industries.
United Arab Emirates and Qatar serve as prime examples.
Strategic Services
Contact Us for
Export Solutions
1. Identify Best in Class
Distributors: 96 Countries
2. Best Practices
Export Strategy
3. Distributor Management
Workshops
4. Export 101:
Let’s Get Started
5. New Market
Prioritization
and Launch Plan
6. Personal Distributor
Introductions:
96 Countries
7. Walmart International
8. Distributor Contracts,
Margins, and Fees
9. Meeting Speaker
10. International
Strategy Expert
Strategic Services
Contact Us for
Export Solutions
1. Identify Best in Class
Distributors: 96 Countries
2. Best Practices
Export Strategy
3. Distributor Management
Workshops
4. Export 101:
Let’s Get Started
5. New Market
Prioritization
and Launch Plan
6. Personal Distributor
Introductions:
96 Countries
7. Walmart International
8. Distributor Contracts,
Margins, and Fees
9. Meeting Speaker
10. International
Strategy Expert
www.exportsolutions.com
Greg Seminara
“Spend Time Selling to Distributors versus Searching for Distributors”
Oil Change
3
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Call the Export Accelerator!
Contact Greg Seminara at greg@exportsolutions.com
to discuss your business development project.
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Managing 4 Margins
4
What will your retail shelf price be
on July 1? October 1? The industry faces
a global realignment of our pricing
framework. Price increase execution
is the number one issue for 2022.
Our business faces unprecedented
pressure. Raw materials, international
freight, delivery (fuel), and labor have
skyrocketed. Manufacturers attempt
to protect margins by passing on cost-
justified price increases.
All industry partners must work together
in a pro-active, transparent process to
ensure that our mutual business is
protected. Manufacturers do not seek
to control pricing. The goal is to keep
the shelves full and help all participants
manage through the most challenging
period in recent history.
Pricing Target
A new price model will impact sales if
the action places your brand in a higher
pricing tier relative to competition.
Normally, export brands aim to fall in
the premium to super-premium range
relative to locally produced products. For
example, a brand shipped from the USA
may retail at 30% higher everyday versus
a local competitor. Under a price increase
scenario, this gap may extend to 50%
or more if other brands do not pass
on a price increase, or a distributor
or retailer grabs too much margin
in the pricing realignment.
Manufacturer Margin – #1
Companies raise prices to recoup higher
costs and achieve their business goals.
The hope is that consumers will continue
to purchase the brand at a higher price,
with no decline in unit sales volume.
Is this a dream or reality?
Distributor Margin – #2
Distributors pay themselves, capturing
the difference between price paid from
the manufacturer and amount collected
from the retailer. With a price increase,
distributors supply themselves with
a raise. This year, distributors also
experienced severe inflation, particularly
with higher fuel costs. What is the
distributor margin before your price
increase versus afterwards?
Retailer Margin – #3
Retailers fiercely guard and track their
category profit margin. Most buyers will
not miss an opportunity to expand their
margins and income. To be fair, retailers
also face increased transportation, labor,
and e-commerce costs that must be
considered. As with distributors, a key
metric is retailer margin before and after
your price increase.
Trade Promotion Margin – #4
Promotional discounts are critical drivers
of incremental business. Some incentives
and “back margins” are case rated at a
percent of sales. Other activities require a
fixed price tag. For example, a chain-wide
display program costs $10,000 per week.
With a price increase, this may translate
to a lower percentage of sales.
Currency, Duties, VAT
In this period of global disruption,
there are other line items in your
pricing calculation that may experience
fluctuations, frequently in a negative
direction. These include currency
exchange rates, duties, and sales taxes.
All may impact your shelf price.
Getting Greedy
The export price model must incorporate
four potential margin rates before the
new shelf price is established. A risk
appears when one participant in the value
chain captures a higher margin than the
original equation. Everyone would love
to increase sales, but ultimately bills are
paid with cash, not margin percentages.
Contingency Plans
Inflation appears out of control at
this point. Prices only appear to go up.
A worthwhile discussion to conduct is
“what if” costs retreat? Are price rollbacks
possible? What are reasonable
expectations from all sides?
Online Price Monitoring
Today, overseas prices can be checked
instantly from your home office. This
appears possible by monitoring e-commerce
websites for leading retailers. This tactic is
more accurate and effective than waiting
for old fashioned monthly price reports
supplied by the distributor.
Act Now
Managers are navigating through a crisis
and the stakes are high. All participants in
the value chain maintain a vested interest in
managing the “four margins” in a balanced
way. Fortunately, consumer goods remains
an essential industry that will survive and
thrive. Winners will act now to minimize
the impact and disruption of the global
retail pricing realignment.
5
Talk to an Expert
• Find Distributors in 96 Countries
• International Strategy Road Map
• Fix Problem Markets
• Entry Plans
• Online Export Workshops
• Motivational Meeting Speaker
Contact Greg Seminara at (001)-404-255-8387 to discuss your business development project.
www.exportsolutions.com
Retail Pricing Pyramid
Where will your brand land on the shelf in overseas markets?
Pricing maintains a direct influence on consumer purchases.
Has your new pricing framework changed your positioning?
Private Label = 75-85
Category Base = 100
Premium = 115-130
Super Premium
130-200
Luxury
200+
6
7 Scenarios – Country Segmentation
All companies maintain a mix of countries with different route-to-market models and business aspiration. The
key is to align investment with aspiration and select the right type of distributor depending on your scenario.
Type Description Aspiration
Local
Subsidiary. Factory + direct sales team.
Large investment: 360 marketing.
Market share leader.
Player
Invest in marketing. Mass distributor. #1 or #2 brand.
Participant
Investment proportional to sales.
Mid size distributor.
Top 5 brand.
Adjacent
Small countries near your HQ.
Mid to large size distributor.
#1 or #2 brand.
Pioneer
New product: unique/relevant.
Invest to gain traction.
Specialist or mid-size distributor.
Niche to start.
First one in benefits.
Homesick
Core brands sold to homesick expats.
Limited complexity and investment.
Homesick distributor – your country.
Incremental volume.
Trading
Sell to anyone: all are customers.
Dead net price. No investment.
Incremental volume.
Create Your Own Export Library
Export Strategy Guide
Distributor Search Guide
Export Handbook
Selling to USA Handbook
Distributor Management Guide
Finance & Logistics
All guides available free at www.exportsolutions.com in the Export Tips section.
300 Tips for
Export Managers
Idea Guide:
New World – New Business
Export Treasure Chest
My Favorite Templates & Forms
People Power
Strong Teams Build Great Brands
New Distributor
Cooperation Model
Canada
Canada is a top performer, with
sales exceeding $30 billion. Market
penetration and productivity per club
surpasses Costco USA. Costco operates
two Canadian divisions: East (Ottawa)
and West (Vancouver). Sam’s Club exited
in 2009 with six stores after five years
of futility.
Asia
Clubs in South Korea, Japan, and
Taiwan have become destinations for
upscale Asian consumers enjoying a
treasure hunt as well as showrooms
for Made in USA brands. Australia is
doing well, after a modest start. Costco’s
Shanghai opening attracted crowds and
set records. A second China store was
christened last December with significant
upside through future expansion plans.
The first New Zealand store should open
in August.
Europe
Costco has a measurable presence in
the UK and a handful of stores in Spain,
France, and Iceland. Progress has been
limited, as Europeans prefer small
packs and frequent visits to convenient
neighborhood or discount stores. Costco
has faced difficulties in site identification
and securing building permits. Europe is
not a priority growth engine for Costco.
Mexico
Costco was late to scale in Mexico,
dwarfed by Sam’s Club’s 165 outlets and
burdened by a troubled 20 year jv that
was dissolved. Fortunately, sales have
accelerated in the last five years with
increased traction and positive outlook.
Costco is a destination for upscale
Mexican families.
Distributor or Direct?
Most local distributors supply Costco
outlets in their country. Frequently
distributors add value through product
stickering, creation of local packs, and
24-hour delivery. Distributors can also
maintain market pricing equilibrium and
help Costco grow through countrywide
marketing efforts.
Selling to Costco International direct
through their USA headquarters is
possible and straight forward. However,
this approach usually creates severe
challenges when the brand attempts to
sell to other market customers due to
broad price gaps. In some cases, the USA
brand suffers slow sales, as the brand is
unknown in the new country.
Export Solutions Can Help
Export Solutions has executed more than
30 projects across Costco’s 11 countries.
This includes strong distributor contacts
across Asia, a key growth area for
Costco. Export Solutions’ expertise helps
companies execute a balanced market
entry model. This allows brand owners
to sell to local supermarket operators
as well as Costco.
Costco Global Success Recipe
continued from page 1
7
Sales*
($ billions)
Stores Sales/Store
(millions)
USA 148 572 258
Canada 30 105 286
Japan 7 30 233
South Korea 6 16 375
UK 4 29 138
Mexico 3 40 75
Taiwan 3 14 214
Australia 2 13 154
Other 2 9 222
Total 205
828 248
*estimated: 52 weeks ending February 13, 2022
Export Solutions Can Help!
• Distributor Search helper in 96 countries
Contact Greg Seminara at
greg@exportsolutions.com
or (001)-404-255-8387
www.exportsolutions.com
8
Export Solutions’ New Distributor Checklist
____ Contract/Agreement
____ Price Calculation Model
____ Business Plan: objectives, marketing,
spending, key dates
____ Category Review: Pricing, Shelf,
Assortment, Merchandising
____ Label Compliance
____ Shelf Life
____ Order Lead Time
____ Minimum Order
____ Pick up Point
____ Payment Terms
____ Payment Currency
____ Damage Policy
____ Product Registration
____ Forecast: Year 1
____ Pipeline Order & Inventory
____ Brand Facts
____ Product Samples
____ Appointment Letter
____ Brand Specifications in System:
Distributor & Customers
____ Training: Key Account Managers,
Retail, Administrative Staff, Warehouse
____ In Store Standards: Pricing, Shelf
Management, Merchandising
____ FAQ’s/Handling Common Objections
____ Key Account Presentation
____ Customer Appointment Dates
____ Category/Business Review:
Tailored to Each Key Account
____ Retail Sales Contest
____ Checkpoint Calls
____ Market Audit Date
____ Reporting: Track Distribution, Pricing,
Shelf Positioning, Merchandising, etc.
5 Critical Questions to Thrive in 2025
1. Are we willing to pursue international acquisitions?
2. Would your company consider overseas contract packing (versus export)?
3. Can we test a high spend investment plan (“The Right Way”) in a strategic country?
4. Would your company invest aggressively in offshore head count in advance of sales?
5. Europeans: can we develop the USA market implementing the USA playbook? USA factory,
broker network, competitive pricing, USA team, channel strategy, 30-50% trade promotions?
9
Searching for New Distributors?
Export Solutions makes life a little easier for more than 3,000 export managers.
Our time saving distributor database serves as a “helper” for identifying more
than 9,200 qualified, local brand builders in 96 countries.
“Select Your Distributors,
Do Not Let Your Distributors Select You”
www.exportsolutions.com
Local Experts
Distributor Coverage
Asia: 2,030
Europe: 3,139
Latin America: 1,574
Middle East: 937
USA/Canada: 1,464
Category Experts
Distributor Coverage
Beverage: 1,691
Candy/Snack: 2,713
International Food: 3,276
Health & Beauty: 1,800
Natural Food: 837
Country Experts
Distributor Coverage
German Brands: 648
Italian Brands: 1,397
UK Brands: 682
USA Brands: 1,189
Search by Country, Category, or Country of Origin
10101010
Export Solutions recommends creating your own one page Export Distributor fact sheet template. Insist that all candidates
complete the template 100 percent prior to a phone interview or trade show meeting. Pay particular attention to the annual
sales number, brands represented and manufacturer references. Qualified candidates will enthusiastically complete these
sections. “Pretenders” or time wasters will leave these sections blank or disappear saving you time and money!
Export Distributor Data Sheet:___________________________________
Key Contact: Telephone:
Web Site: Email:
Annual Sales: Total Employees:
Employees, by Function:
Key Account Sales Logistics Marketing Merchandising
Company Owned Warehouse: Yes No
If Yes Warehouse Size: Location:
Channel Coverage (percent sales by channel):
Supermarket Convenience Foodservice Other
Top Five Manufacturer Clients:
Company Name Brands Represented Years Service
1
2
3
4
5
Manufacturer references:
Company Name Contact Name Contact Telephone Contact Email
1
2
3
Why are you interested in distributing our brand?
Why is your company the best candidate to represent our brand in the market?
Feel free to attach your company credentials presentation.
(Distributor Name)
11
Are Distributors Interested in Your Brand?
High Interest Low Interest
Email Response
Immediate reply Delayed or no reply
CEO Engagement
Active participation Delegated to middle management
Scheduling Meeting
Flexible and easy Difficult. Conflicts.
Airport/Hotel Pick-Up
Offers to pick you up Take a taxi!
Meeting Presentation
Tailored. Prepared for you. Standard presentation
Category Research
Obtains data None
Competitive Review
Shares photos: store sets Informal comments
Store Visits
Organized/led by CEO Office meeting only
Samples
Obtains and tries samples Waits for you
Team Participation
3-6 people at meeting One person
Cell Phone
Shares private number Email address only
Questions
Addresses key issues No questions
Timeline
Meets due dates Delays
Post Meeting Follow-up
Immediate and frequent None
Proposed Plan
Detailed and fact based Brief topline
Results Winner Second place?
I have conducted hundreds of distributor interviews for multinational companies: P&G, Nestle, General Mills,
Duracell, Lindt, Tabasco, Barilla, J&J, etc. Distributor candidates all claim enthusiasm and high interest in your
brand. See Export Solutions’ checklist of clues to measure true distributor interest level.
12
Australia – 274 Distributors
China – 160 Distributors
Hong Kong – 177 Distributors
India – 109 Distributors
Indonesia – 78 Distributors
Japan – 176 Distributors
Korea – 146 Distributors
Malaysia
– 128 Distributors
Philippines – 109 Distributors
Singapore – 163 Distributors
Thailand – 94 Distributors
Vietnam – 49 Distributors
Israel – 61 Distributors
Saudi Arabia – 115 Distributors
U.A.E. – 195 Distributors
South Africa – 106 Distributors
Plus 14 more countries
Austria – 68 Distributors
Belgium – 85 Distributors
Croatia –
78 Distributors
France – 125 Distributors
Germany – 188 Distributors
Greece – 90 Distributors
Hungary – 68 Distributors
Italy – 105 Distributors
Netherlands – 155 Distributors
Poland – 90 Distributors
Russia – 108 Distributors
Spain – 157 Distributors
Sweden – 103 Distributors
Switzerland – 100 Distributors
Turkey – 82 Distributors
U.K. – 274 Distributors
Plus 19 more countries
Argentina – 61 Distributors
Bolivia – 52 Distributors
Brazil – 135 Distributors
Canada – 205 Distributors
Chile – 92 Distributors
Colombia – 82 Distributors
Costa Rica – 73 Distributors
Ecuador – 55 Distributors
Guatemala – 61 Distributors
Mexico – 193 Distributors
Panama – 63 Distributors
Paraguay – 57 Distributors
Peru – 82 Distributors
Uruguay – 52 Distributors
USA – 598 Distributors
Venezuela – 38 Distributors
Plus 14 more countries
Where Do You Want to Grow?
Asia/Africa/Middle East
Europe
Americas
Use Export Solutions Database
to fill in the Gaps in your
Export Coverage Map
