The Value of Learning In-Market, Collaboratively

Posted on November 12, 2018

In August, Export Connect toured 6 organic food and beverage companies to Hong Kong and Singapore to engage in supermarket visits and buyer meetings. From PARKnSHOP to Fairprice, 3hreeSixty to Marketplace, insights from on-the-ground research proved fruitful. Here, they share some of their thoughts.

Opportunities for Australian organics require education and collaboration

Anni Brownjohn, Founder and Managing Director of OZGANICS, has been in certified organic manufacturing since the beginning. Her observations, consequently, take a broad and long-term approach. As she explains it, the opportunities inmarket can be best utilised with Australian organic industry assistance.

The opportunity, she says, is that retailers are on the whole not catering properly to the growing consumer needs.  “I think particularly in Singapore, the stores still need help. The shops still look the same, they’re really not embracing what the buyers have been saying to them. They’re not embracing what their customers want – which is for health and wellness products to really pop out on the shelf. Products aren’t lifting off the shelf.” She adds that there are some independent retailers who are doing well in this regard, but “that’s not where the volume is”.

This, together with changing foreign exchange rates, presents an opening for all Australian organic manufacturers. “I think we’ve got an opportunity to get back on those shelves,” she says. “When I look at the competitors, they’re the same ones that have always been there, so I think there’s a window for us all. It’s about working smarter and more collaboratively within that market, to ensure we capture market share.”

Locating product in-store: organic destinations required for a point of difference

Adelyn Chee, Sales and Marketing Manager of Murray River Organics and Phil Gair, National Sales and Marketing Manager of Trumps both agreed that organics should be a destination of their own in-store. “Although the major retailers such as NTUC, Cold Storage, Wellcome and PARKnSHOP do each have a wall of wellness,” said Adelyn, “you will also find organic product on the standard shelf next to your mainstream competitors.” This is even more important when the retailer stocks a wide variety of similar products. “For the categories we’re in (nuts and dried fruits),” said Phil, “there are so many competitors in Singapore and Hong Kong, it’s just amazing the amount and variety (from products to packs and pack sizes), and they get them in from everywhere in the world.” Presenting product together in this way can create a false comparison, leading shoppers to be price-driven when they are actually comparing entirely different propositions. “When this happens,” said Phil, “your product is lost even when it’s on the shelf.”

With organic products, which are often two to three times higher than their conventional equivalents, we know that customers tend toward the cheapest option. Unless they are 100% wholeheartedly going to buy only organic that is, according to Phil. Those who are, said Adelyn, “are destination shoppers.” How can we help the organic trend grow in these markets? Help to make changes in-store. “Consumers do want it,” said Phil. “They just don’t know where to find it in the shop.”

Quality control needed in fresh produce handling; big opportunities await

Nature’s Haven’s Co-Founder Don Murray, discussed other trends he had noticed, from a fresh produce perspective. Maintaining the quality and shelf life of fresh produce is a much bigger concern, and requires special care. Reflecting on his Singapore and Hong Kong supermarket visits, he said the produce onshelf was “badly looked after.”

“There’s no quality control through the whole system,” said Don. “Either in what they buy, and how they look after it, or how they care for it on the shelf.”

“Of course rent is very high on these premises and their margins have to be enormous for them to make any money, so you understand the markups on the products – but it means that the quality must be maintained even more strictly,” he said.

While most stores still have a way to go in managing end-to-end transportation and refrigeration of produce in such humid climates; according to Don there was one store that stood out as doing a reasonable job. In their tour of supermarkets, they found a produce specialist from Australia focused on stocking Australian products, who also managed to maintain their freshness. “From my point of view,” said Don, “he was by far the best person in either of those two cities.”

Don also noted that the considerable demand for organics in Hong Kong marks it with big potential despite the current growing pains.

Purchasing drivers: health vs food safety

While organics are on the rise in both Singapore and Hong Kong, the underlying reasons for each market may be divergent. Janine Adams, Co-Founder of Undivided Food Co. noticed  differing influences at play. “In Singapore, she said, “it’s a top-down decision. The government has mandated that people get healthier because there’s a health crisis in Singapore, and the government is trying to address it. People are incentivized to source good, healthy produce for their shops.” Hong Kong, however has a different story. “People are looking at organics from a food safety perspective in Hong Kong, more than from a health perspective,” she said.

These influences have led to different likely rates of maturation, according to Janine. “In the shops that we visited,” she said, “it was clear that Singapore has a lot more potential in the organic space at the moment.”

“I do suspect that Hong Kong will catch up – and there’s huge potential there, too – but they have a lot of work to do.” What kind of work? “It’s a process of education primarily,” she said, “And this takes time.”

The demand is there; how can I make the most of it now?

The best way to educate is to start with solid in-market connections. These are your access point to everything else that goes on in-market, from negotiations to your brand’s reputation. One way to forge these relationships is to go in-market yourself. Another way is to band together with likeminded brands; making your business growth not just more likely but more powerful. We will be delivering a series of market visits from February – June 2019 to markets including: Indonesia, Singapore, Vietnam, Thailand, South Korea, Taiwan, UAE, and Saudi Arabia. Let us know if you’re interested, here! If you’d like to undertake some market selection and entry strategy homework before going on a market visit, or would like to travel to markets other than those listed above; reach out.