Finding niche markets overseas isn’t the solution for Prairie agriculture as a whole, but the can make a big difference to the producers who find them.
“All of the products we sell can’t fundamentally change agriculture in this province, but they can fundamentally change how one, five or 10 farmers do business,” Art Froehlich told the AgChoices conference here in early February.
Froehlich is currently a senior partner at AdFarm, one of North America’s largest agricultural communications firms and is involved with Agriview, a company that specializes in imports and exports. Its exports include beer, honey, fruit leather and malt.
Froehlich says the biggest impediment for those involved in food production is access to markets. “Access to market is absolutely critical, and food safety is going to trump absolutely everything in terms of the international market. The number one issue in terms of the European and Japanese consumer right now is food safety.”
Froehlich says the face of the consumer is also changing worldwide. Consumers are now urbanites, looking for smaller portion sizes and healthier foods. Populations worldwide are aging and are seeking different products. In addition, the market is changing and is moving towards concentrated areas or what Froehlich calls “city-states.” By 2020, 50 of the world’s largest cities will contain one billion people, he said.
Customers all over the world recognize value and want good value for their money, said Froehlich. “We can’t implant our definition of what is valuable on our customers. It’s only their definition of value that really matters,” he said.
His group originally started exporting commodities, but has moved towards branded products, which costs more, but has proven higher returns.
Froehlich said a major pitfall to international marketing is that Canada has no brand identity in global supermarkets. “We have no reputation out there, good or bad, and we’ve got to deal with that. We have to take a leadership role – this must be done by private industry,” he said.
Go local first
One of the first steps to take when dealing with the international marketplace is establishing a competitive advantage, said Froehlich. To determine the competitive advantage, producers should create a simple marketing plan which encompasses their objectives, their offer, the implementation, how to measure success and whether the actions can be replicated.
“If you’re in the food business, spend time at the retail level. Spend time in grocery stores. Talk to customers, managers and the people behind the counter. Look at packaging and try to figure out why people have done the things they’ve done,” he said.
Froehlich says he believes in the value of developing local demand and selling local before tackling the global marketplace.
“If you can market locally, your chances of success on the international market are way greater,” he said. “If you can’t market locally, there’s something wrong with your marketing plan, or your pricing or your product.”
Small producers or companies may be able to get their products into markets in ways that larger companies cannot, said Froehlich. Once someone finds their competitive advantage, the second step involves researching the marketplace.
He urges sellers to learn about the cultures they intend to sell to, as understanding can mean the difference between success and failure. Understanding the international market, the exchange rate, freight rates and managing export insurance are important areas for reducing risk in international business. Selecting good overseas allies and good local advisors are also keys to success.
“Surround yourself with the best group of advisors you can find to help you look at international business. I can’t emphasize that enough,” he said.