This success story comes from providing the following services: Finding Distributors and Business Partners in Korea
Large German owned company, a manufacturer of European style food products such as jams, fruit preserves and sauces wished to examine the entrance to the Korean food market by distribution of its food products.
TARGET - SELLING IN THE KOREAN FOOD RETAIL MARKET
The company products are distributed mainly in food chains in Europe, Israel and USA. The company has neither been present nor distributed its products in East Asia, yet, due to an increase in the purchasing power of the East, South Korea has been chosen as a primary target for the products penetration through a local distributor.
CHALLENGE – SATURATED MARKET AND DIFFERENT LOCAL MARKET TASTE
The food market in South Korea is a highly developed market structurally and it includes big actors such as discount stores in a national layout, prestigious department stores, local supermarkets, convenience stores which are located on every street corner, hotels, restaurants and coffee shops. Each of the potential distribution channel is saturated in terms of Western food products, especially of the kind the client wishes to promote. Furthermore, and like any other food products, it should be examined whether the product will be accepted by the local market taste, as well as will pass the strict tests of the Ministry of Food and Drug Safety (MFDS).
WORK PROCEDURE – CUSTOMER RESEARCH AND PRODUCT SURVEY
In order to overcome the difficulties while saving time, KOISRA's team has acted in several levels. First, an internal characterization of the client's products has been made, as well as a comparative survey regarding similar products (including prices) which already exist in the market. At the same time, a customer research has been made in order to learn and understand the 'food chain' in each of the possible distribution channels. In this framework, the different profit margins set by each of the player, and the resulting final product pricing for the client, have also been examined.
After the data regarding the market and the product, has been received and examined, KOISRA's team began to develop several strategies for entering the Korean market and recommended to focus on the premium food product market. Accordingly, an optimal distributor's profile was created, which included mainly a prior experience with western products, sale points in leading retail chains, import experience and working in accordance with the MFDS. On the basis of this profile, a list of potential distributors has been prepared. After the first contact has been formed, and screening of the most appropriate distributors has been made, a meeting schedule has been set in the distributors offices.
The meetings with the potential distributors are required in the familiarity stage, since, as is customary in the local business practice, the seller has to get to the buyer's premises in order to present himself and his merchandise. KOISRA has arrived to the meetings equipped with a localized presentation and explanations regarding the client and his products and has left some product samples for the client internal evaluation. More meetings took place with the distributors who showed interest, in their offices as well as in ours, in order to discuss the distribution terms, all in the Korean language and in accordance with the local culture practice.
RESULT – LOCAL DISTRIBUTOR HAS BEEN APPOINTED AND THE PRODUCTS BEGAN TO BE SOLD IN KOREA
After few months of meetings with potential distributors, information exchange, taste tests, discussions regarding the distribution agreement terms, a distributor who fulfills the distribution terms of the client, has been found – a Korean distributor who has multiple relationships and sale points within prestigious department stores and hotels, as well as experience in penetration and distribution of leading western food brands. In accordance with the strategy which has been built earlier, it has been decided that the client's food products shall not be sold at the preliminary stage in discount stores, but rather in prestigious stores and hotels, which will allow a proper profitability for the client.