Taking your beverage company into international markets: 10 tips from experts

By Hal Conick

- Last updated on GMT

The world is getting smaller; should your beverage company get bigger? Pic: istock.
The world is getting smaller; should your beverage company get bigger? Pic: istock.

Related tags Coffee

The growth of eCommerce, the Internet and easier-than-ever international travel means the world is getting smaller. But does that mean it’s time to take your beverage company into a new market?

Speaking during a session on “Going for International Growth” at Zenith International's WorldWideBev conference in New York City this week, industry professionals and experts discussed the dos and don’ts of taking a beverage company into new market.

Here are 10 points that any beverage company even considering international expansion must read.

Be ready to sell in urban areas

More than two-thirds of the world will be living in urban areas by 2050, according to Ross Colbert, managing director and global strategy for beverages at Rabobank International.

“Urbanization will have a profound effect on beverages,”​ Colbert said.

Less bulky packaging and single serve beverages will need to be made available in urban areas, as most of the population will likely be walking or taking transit instead of driving, he said.

Look for tea markets; sell coffee

In markets that historically sell tea, Colbert said companies should look to push coffee. He believes there’s a business opportunity in “recognizing disparity”.​ He cited the UK as an example of coffee’s potential to rise in popularity in a predominant tea culture.

“We see coffee becoming a huge opportunity in very traditional tea markets​,” he said, adding China as an obvious example of a country that could see big coffee growth in the near future.

Have experts and partners

Making way in a new market is difficult, as there is new information, laws, cultural norms and more to learn. With this in mind, Colbert said it is absolutely imperative to pick the right partner and seek expert advice when making way into a new market.

Picking the right partner can “make all the difference,”​ while getting it wrong can be “fatal,”​ he said.

In addition, he suggests having an experienced management team who can be “feet on the street”​ in the local market and manage cash flow on a daily basis.

Beware the ‘leaky bucket’ outside the US

Beverage companies often get used to the customer loyalty of the US market, but Colbert said this is not the same in every market. Products are constantly “on trial” ​in many markets, so beverage companies have to continually be recruiting or risk losing consumers if they give up. He called this the “leaky bucket”.

Know the rules of engagement

Different countries will mean different levels of legwork, research and effort, according to Stephan Claus, export director of Germany’s MBG International Brands GmbH.

For example, each region will have different levels of transparency. Europe will be almost completely open, while businesses may have a hard time finding any information they need in Africa.

Legal minutia can also be tricky depending on the country, he added.

“You can have one of the dictators [in a country] and he wakes up in the morning and he changes a law … or bans a product,”​ Claus said.

Learn to manage relationships based on culture

Claus said relationship management will also need to be studied closely. In Europe, this may not be seen as extremely important, but in the United Arab Emirates, there needs to be “a pretty big amount of my time that goes into relationship management,”​ he said.

“These conversations cannot be had by phone,”​ he said, adding that on many occasions, he has spoken with someone in a new market for six hours, merely taking last half hour before flying out to discuss pricing and other important issues.   

Invest money and time

Expanding your business internationally will take time and patience, Claus said. At MBG International, he said management has learned by visiting markets and investing heavily in markets.

Often, it takes years to get feet on the ground in a market. However, companies cannot give up if there are setbacks, especially after heavy investment, according to Claus.

Be active

Claus reminded attendees at WorldWideBev that no one was waiting for them or their products to take their market by storm. It takes effort to move into a new market and create space for a new beverage.

“You have to be very active, very creative to sell your product,”​ he said.  

Don’t move too quickly

Colbert said beverage companies should, even if they are extremely confident, be methodical when moving into a new market.

“Too often, it's compelling to get an international order, but you can also stretch your cash flow to the breaking point very quickly​,” he said. “I’d be very cautious.”

Colbert said companies should aim for more of a “10-year overnight success story” ​when working on a plan to spread internationally.

Don’t put up with corruption

Moving into new markets may also mean dealing with new forms of corruption. Claus specifically cited Nigeria, a country poised for a population explosion.

Colbert cautioned companies about the dangers of doing business in countries with corruption, saying that businesses must act “by the law and be governed by that”.

“It’s unfortunate, but in many markets around the world it’s just the cost of doing business​,” he said. “You have to be very disciplined and be willing to walk away at any moment … It’s not a question you want to consider.”

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