With an increasing number of emerging markets providing opportunities for fresh produce growers globally, the development of robust market prioritisation strategies will be key to export success, through the strategic allocation of resources.
Historically many businesses have fallen into exports by chance, developing markets over time with little strategy behind them. This often results in businesses exporting small volumes to a large portfolio of different countries.
Although this helps to spread risk, allocated resources such as promotional budgets and human resources are likely to have less of an impact. For this reason, it’s often more commercially viable to supply the same level of produce to one larger market rather than five smaller ones.
With increasing levels of competition within the industry, and new markets providing exciting opportunities, the use of data and insight will help ensure that business decisions are being made for long-term security in an ever-changing market.
There is no ‘one-size-fits-all’ solution when it comes to exports, as every market has different entry requirements. However, market prioritisation allows businesses to take a strategic approach to servicing global markets.
Market prioritisation considers market growth rate, the likely potential market share and the investment required to achieve successful market entry. In addition to these factors, exporters shouldn’t overlook consumer preferences. A market may look financially lucrative, but if consumers demand a specific size or variety that is not currently offered, then it quickly becomes a problem if not managed correctly
Market prioritisation encou-rages businesses to look further into the future, focusing on what the potential market value could be as opposed to what it currently is, using data and insight from a number of sources. Unlike many other food industries, seasonality and the time it takes to bring a new product to market have a big effect on how reactive the fresh produce industry can be. Therefore, businesses should be looking five to ten years ahead, to allow their producers time to adapt to future consumer demand, to make the most of prospective export opportunities.
For example, consumers in Asia demand extremely sweet fruit, so careful consideration will need to be given to the varieties that are planted, and when they are harvested to facilitate supply. If targeting this market, producers may have to make a significant investment in these new varieties, so there may be other markets that are more appropriate.
Businesses also need to strike the right balance between servicing traditional markets and exploring new opportunities. Established markets shouldn’t require a large amount of investment, but are highly lucrative. These are the ‘bread and butter’ markets that are providing exporters with a steady income to reinvest. Although some would consider these as saturated markets, the reduced level of investment means that they shouldn’t be overlooked.
After identifying the key opportunities, creating a market entry strategy is the next step. For some, this may be a case of speaking to importers and distributors within the target country to establish new trading relationships, for others it may be focusing on creating a complete marketing campaign.
Politics will always play a part in this, with one of the biggest barriers for export often being market access. The prioritisation model helps provide direction with this process by providing a good case for governments to extend trading relationships. Understanding the potential of a market through prioritisation will allow strategic allocation of resources and the continued success of business.
Case Study: Hortgro
South African deciduous fruit producers’ association Hortgro is responsible for the development of markets for its 1,208 members, which represent 320,000 tonnes of stonefruit and 1.3mt of topfruit each year.
Having worked with Promar for many years to understand the success of their export strategy, Hortgro’s general manager of trade and markets, Jacques du Preez, explains how prioritisation has helped allocate their resources efficiently.
“As a grower organisation it’s important that we get a good return on investment for our members, and the market prioritisation work has allowed us to ensure that we are making strategic decisions as an industry,” he says. “Europe has been our biggest export market for many decades with successful market development campaigns in the UK and Germany specifically.
“However, with the growth of the European market beginning to slow and production in South Africa increasing, we needed to look at new markets that would enable the industry to continue to thrive.”
Promar identified five key markets for Hortgro and they have already launched a successful campaign in one area. “The insight provided didn’t just include recommendations on where to export, but also how to go about it. Barriers to entry were identified before we began the market entry strategy, which has ensured that we were prepared to tackle these challenges,” says du Preez.
“This has recently allowed us to successfully establish a promotional campaign in one of the prioritised markets which has shown gradual year-on-year increases. One of the biggest advantages for us is the insight provided on consumer trends which will hugely affect the varieties that we plan to grow and export. It’s very important that we have an understanding of this before proceeding to ensure we can meet consumer demand.”
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