There is a time when expanding into new markets is a logical next step in the company’s growth. Is expansion in the cards for your company?
Read below to see exactly how we helped AMI’s beverage client to expand their European footprint, win new customers and, most importantly, increase sales.
A branded beverage company wanted to develop European distribution and grow sales in the region. The company had had some success through exhibiting at several trade shows in Europe, and had received a steady stream of sales leads from small retailers, hotels, and supermarkets in the region. In spite of this early market penetration, the company encountered a number of barriers to capturing significant market share from their European prospects:
- Some prospects did not want to import products from the U.S.
- Paying in U.S. Dollars was not desirable due to the possible exposure to currency exchange rate risk
- Meeting the minimum purchase order quantities required was difficult for prospects
- Long delivery periods of 6-8 weeks, which is the standard lead time when importing from the U.S. to Europe
We are all aware that strategy is a significant ingredient to profitable, sustained growth. However, the magic lies in a well-timed, knowledgeable and cost effective implementation. AMI developed an expansion plan based on: the beverage company, the product and the market.
5 Steps to European Expansion
Step 1 – Resource Talent Identification
AMI ensured that company management had access to top-notch talent who knew how to get the expansion established quickly and correctly. U.S. companies generally require local assistance from attorneys, tax accountants, bankers, and other local officials.
Step 2 – Logistics Search and Retain
The right third party logistics providers (3PLs) were identified along with pricing and service levels. A short list of 3PLs was developed, and AMI traveled to Europe to interview four 3PLs and narrowed the list to one. The beverage CEO personally traveled to Europe. The services and pricing were refined to suit the client resulting in a final agreement.
Step 3 – Forecasting: Volume and Timing
A long-term plan was developed to forecast volumes by country/customer as well as a product launch schedule. High volume SKUs were launched first, followed by important lower volume products. Based on volumes, the client determined that all packaging would have eight foreign languages.
Step 4 – Packaging: Customers and Compliance
Upon completion of the long-term plan, AMI then began working with the client on developing European language packaging. Packaging regulations were thoroughly reviewed to ensure compliance with local laws and regulations. Local importers were consulted and asked to review the packaging with respect to their country’s specific language and regulations. Packaging was approved by the client and produced by the printer.
Step 5 – Product Shipping and European Launch
Finally, prior to production and packing, a 40’ full container order was placed by the European subsidiary based on estimated volumes. Inventory was forward-deployed in anticipation of larger orders as a result of local warehousing capabilities. Once inventory was positioned in the 3PL’s European warehouse facility, the beverage company began shipping not only to European distributors but also smaller wholesalers, retailers, hotels, restaurants and coffee shops throughout the E.U.
5 Steps in Action – How important are Delivered Results to you?
It was important to our Client that all parties worked together. Ultimately AMI’s expansion strategy resulted in a 50% increase in sales.
In addition, European customers can now order small quantities, pay invoices in Euros, communicate within the same time zone with a native speaker, and take delivery of products within 2-3 days.
Finding the right expansion model is important. Establishing a European warehouse and logistics facility was the best strategy for our client. At AMI, we look at each client company carefully and develop the best model that intelligently takes your product expansion and revenues to the next level based on your company’s vision, goals and commitment level.
Finally, here is a useful self assessment tool to help gauge your international expansion readiness:
- Assess your current international distributors / importers (if any).
- Do they have the capabilities to meet your objectives and increase your sales?
- Conduct research to determine the market demand for your company’s products.
- Based on your research, review local packaging and ingredient regulations to ensure your products comply.
- If they do not comply with local regulations, then what changes need to be made to your products to enter the target markets?
- What is the “size of the prize,” that is, expected revenue and profits as a result of entering the new target markets?
- What are the resources required to achieve your revenue and profit objectives?
- What type of marketing will be required (trade shows, in-store demonstrations, media, etc)?
- Do you have the in-house expertise to launch a global business platform, or do you need to seek outside counsel?
If you are considering expanding or simply have a question about international business expansion, then please call AMI – we have a team of dedicated international marketing consultants who can help you.
Phone number: (206) 462-4886