Food Producers: UK Research Report

Market Strategy April 2008

Table of contents
1. 1.1. 1.2. 1.3. 2. 2.1. 2.2. 2.3. 2.4. 2.5. 3. 3.1. 3.2. 3.3. 3.4. 3.5. 3.6. 3.7. 3.8. 3.9. 3.10. 3.11. 3.12. 4. 4.1. 5. 5.1. 5.2. 5.3. 5.4. 6. 6.1. 6.2. 6.3. 6.4. 6.4.1. 6.4.2. 6.4.3. 6.4.4. 6.4.5. 6.4.6. 6.4.7. 6.4.8. 6.4.9. 6.4.10. 6.4.11. 6.5. Executive Summary ................................................................................... 3 Background and Objectives ......................................................................... 3 Research Findings ....................................................................................... 3 Project Plan .................................................................................................. 4 Introduction and Aims ............................................................................... 5 Background .................................................................................................. 5 Research Purpose........................................................................................ 5 Process......................................................................................................... 5 Agreed Outputs ............................................................................................ 6 Important Information ................................................................................... 7 Producer Backgrounds.............................................................................. 7 Annual Turnover ........................................................................................... 7 Number of Employees.................................................................................. 8 Years of Operation ....................................................................................... 8 Ownership .................................................................................................... 8 Quality and Technical Accreditations ........................................................... 8 Retail versus Foodservice Sales .................................................................. 8 Domestic versus Export Sales ..................................................................... 8 Domestic Sales Channels ............................................................................ 8 Key Export Markets / Priority Next Markets ................................................. 9 Factors influencing Current Business Growth.............................................. 9 Current Supply Chains Used........................................................................ 9 Target Customers......................................................................................... 9 UK Specific Research Findings ................................................................ 9 Barriers to Export to UK ............................................................................... 9 Scoping Potential Project Options for UK ............................................. 10 Introduction................................................................................................. 10 Individual Project Options........................................................................... 10 Project Activities ......................................................................................... 12 Commercially Successful Project............................................................... 13 Project Plan............................................................................................... 13 Project Objective ........................................................................................ 13 Project Scope ............................................................................................. 14 Description of Activities to Be Contained in Project ................................... 14 Project Plan Recommended Stages ....................................................... 17 Introduction................................................................................................. 17 Stage 1 Initial Market Research Complete........................................... 17 Stage 2 Initial Project Plan Current Work............................................. 18 Stage 3 Industry Group Session - UK Exporters Food Producers Network Meeting....................................................................................................... 18 Stage 4 Capability Building and UK Preparation Visit............................. 19 Stage 5 Project Prospectus..................................................................... 20 Stage 6 Recruitment of Participants........................................................ 20 Stage 7 UK Market Visit 1 ....................................................................... 21 Stage 8 UK Market Visit 2 ....................................................................... 21 Stage 9 - Marketing Campaign .................................................................. 22 Stage 10 Project Consolidation............................................................... 23 Candidate Companies Open to Participation ............................................. 23

Prepared for Regional Development Victoria April 2008 Market Strategy Website: www.marketstrategy.com.au Email: paul@marketstrategy.com.au Mobile: +61414 382 738 Prepared by Market Strategy Ltd.

1.

Executive Summary
Regional Development Victoria (RDV) has identified an opportunity to leverage work done by National Food Industry Strategy (NFIS), to gain advantage for Victorian companies in the UK market. This RDV UK Project was established to research and assess the current position of Victorian food exporters to the UK; and prepare a project plan for assisting the development of Victoria food trade with the UK retail market.

1.1. Background and Objectives

1.2. Research Findings

41 producers were approached to participate in the research, of which 16 declined. In summary the interviews with those that participated showed: 1. There are common challenges faced by Victorian producers wanting to export to the UK. These challenges can be split into general barriers to export and are defined as - finance (cash flow, marketing, supply chain); foreign exchange (variations and current strength of dollar): accessing and assessing appropriate distributors; developing customer relationships; and internal resources (time, expertise, capital). There are specific challenges that were identified for UK export - point of difference for products; premium pricing of Australian product versus competition; tariff and import regulations; marketing cost; and scale of doing business with a multiple food retailer in the UK. 2. A good portion of interviewed businesses are already undertaking trade with the UK (9), or are preparing to undertake trade (5), or are at advanced stages of market knowledge (3). 3. Victorian products do have points of difference in the UK. As in any market, there are various challenges they face by product and category. 4. A substantial portion of businesses are at an advanced state of commercial readiness, or can quickly be made ready, to make commercial presentations in the UK. 5. RDV can put together certain activities which will benefit different businesses, at different stages of preparedness for the UK. These activities should concentrate on providing capability building programs, accessing supply chain arrangements, providing access to retailers and providing cooperative marketing activity. 6. Producers interested in this project can be grouped by state of preparedness to enter the UK market product currently sold in UK market (8); no current sales but have appointed a distributor (2); negotiating with a distributor (3); no sales but interested in market (10). Of this last group 3 can be described as in a good position to quickly make ready to supply the UK, 4 are smaller producers who would need some work done in order to generate this capability and 2 are interested only in specific opportunities.

This state of preparedness can be analysed against the target customer for the producer. This analysis shows that multiple retailer, health/dietary, gifting and gourmet are popular channels for these producers to target. The producers most prepared to enter the market are targeting the multiple retailers.

1.3. Project Plan

The Project Plan suggests the following UK Retail Project for RDV: Creation of a strategic RDV UK Retail Food Project designed to assist the establishment and development of sustainable UK Retail Trade for existing or prospective Victorian food producers. Through investment in this project RDV could achieve an increase in sales, employment and capital investment in the Victorian food industry. As a pilot project, RDV seeks to demonstrate a new model for market development projects. Through participation in arguably the worlds most sophisticated retail market, RDV would like to build industry capability, knowledge and programs to benefit both UK and other export trade development. By participating in this project, Victorian producers aim to see a growth in sales to the UK market and benefits from reduced risk capital expenditure to establish UK trade; synergies created in marketing and distribution systems; and increased capability and knowledge generated through gearing up to supply UK market. RDV leadership is essential to creating a successful project. By creating capability and knowledge for Victorian producers, RDV is improving the capacity of Victorian producers to trade in the UK. In addition, by working strategically with industry, RDV is creating new retail and distribution opportunities for trade development. Participants in the project will be current or prospective Victorian food suppliers to the UK Retail market. The project is designed to work with suppliers across the entire demand chain. It aims to enhance commercial performance of Victorian suppliers already in market, with a distinct pathway to market for those at various stages of market entry development. The project aims to undertake the following activities, which deal with different parts of the demand chain. Many of these activities can be run concurrently to provide best return on investment: 1. Establishment of Victorian Food Producers UK Network 2. Development of Capability Building Activities a) Competitive Intelligence b) UK Business Plan Production c) Corporate Responsibility d) Technical Requirements 3. Establishment of Relationship with UK Retailer 4. Development of UK Distribution Arrangements For Victorian Producers 5. Establishment of Cooperative Marketing Campaign

6. Regulatory Assistance 7. Ad Hoc UK Assistance

2.

Introduction and Aims

Regional Development Victoria was a key project sponsor of the National Food Industry Strategy (NFIS) UK Retail Project which ran from 2005 2007. The NFIS project was designed to create an easier entry platform for Australian food companies into the sophisticated UK retail market. The project resulted in the listing of over 15 food companies in Sainsburys. Additional benefits included a rise in level of awareness of existing Australian food suppliers to Sainsburys; promotional activity generating over $4 million in sales; increased promotional opportunity for Australian wine suppliers in Sainsburys; and capability building for Australian companies looking to develop trade with UK market (a number of project participants actually got access alternative UK retailers after being involved in certain elements of NFIS project). The main activity areas in the NFIS project were: market research and education on consumer trends; business capability and feasibility advice; building presentation skills (template) to present to Sainsburys buyers; introduction and promotion to UK distributors; introduction, promotion and feedback from Sainsburys development personnel; product presentation and participation in Sainsburys-internal trade show; raising the UK as a real option for exporters; creating strong working relationships with Sainsburys key staff at various levels; and implementing a cooperative marketing campaign to promote Australian food products in UK.

2.1. Background

2.2. Research Purpose

RDV identified an opportunity to leverage the work done by NFIS, to gain advantage for Victorian companies in the UK market. The RDV, UK project was established to research and assess the current position of Victorian food exporters to the UK; and prepare a project plan for assisting the development of Victoria food trade with the UK retail market.

2.3. Process
Step 1 Project Set Up Activities Market Strategy Ltd worked with RDV to set up the Project Audit Structure, agree producer questionnaires and emails; and provide RDV with all information necessary for the proposal.

Step 2 Initial Contact to Companies A list of food producers interested in the UK market was agreed between RDV and Market Strategy. 41 producers were highlighted, based on the NFIS Retail Project and input from RDV food team. An email from Market Strategy to each producer was sent on RDVs behalf, informing the companies of the project and its aims. Step 3 Telephone Interviews Market Strategy undertook one-on-one discussions with 25 producers. 16 producers declined to participate in the interview or had no interest in the UK market. Step 4 Initial Verbal Report on findings to RDV Step 5 Face to Face Interviews 7 In depth interviews with held with targeted companies, in order to find out more detailed information and test project thinking. An informal project planning meeting was held with RDV. Step 6 Final Report Final written report including interview results and detailed plan for UK Retail Project.

2.4. Agreed Outputs

Market Strategy and RDV agreed that this work would establish: State of preparedness or capacity for individual companies to be ready to export or expand exports to the UK. Current or potential supply chain route to the UK. Current obstacles to trade with UK. How an RDV project may assist future UK export plans with individual workshopping to guide the project plan creation. Prioritise companies readiness or capacity to be ready. These results would result in a short list of first priorities and a further list of the next set of companies in the priority chain.

Specifically the research would result in: A grouped summary of the current state of export for each Victorian company to the UK, current supply chain route to market and common obstacles to trade. Grouping of companies into prospective project participants (short / medium / long term) based on company commitment and fit of products to market and capacity to be made prepared. Assessments for companies of product range fit to market (where required). Overview of suggested project options for RDV to progress within the UK market. A project plan that: o Summarises the project activities to be implemented o Describes the processes needed to set up the activities o Identifies candidate companies open to participation in the project o Proposes timings for activities o Proposes approximate costs for activities o Identifies potential project partners

2.5. Important Information

This project was undertaken as a qualitative survey in order to establish a detailed understanding of the targeted Victorian food producers state of export to the UK. By its nature, the data is not quantitative, definitive or absolute. Data includes the thoughts, perceptions, judgements and opinions of food producers. All producers have different methods of operating and views on the food industry. It should also be noted that Industry is not always able to accurately assess its own needs and the potential government programs that might be implemented to meet these needs. The key to success is the ability for RDV to bring companies and Government to a conclusion. Market Strategy Ltd does not take any responsibility for the accuracy and integrity of information provided by food producers.

3.

Producer Backgrounds
The interviews collected background information that is useful to help understand the producers interested in the UK market. A brief summary of this information is presented below. It is recommended to read the detailed information provided in the Appendix. Please note that specific information by individual businesses should be treated as confidential.

3.1. Annual Turnover

3 producers have turnovers of over $10 million. 4 producers are $5 - $10 million. 6 producers are $1- $5 million. 6 producers are under $1million. 4 producers declined to answer 2 of whom are estimated to be over $10 million and 1 over $5 million.

3.2. Number of Employees

8 producers employ less than 10 people. 10 producers employ 10 50 people. 4 producers employ over 50 people. 1 large producer declined to answer.

3.3. Years of Operation

2 producers have been operating for less than 5 years. 8 producers have been operating for 5 10 years. 10 producers have been operating for 10 25 years. 3 have been operating for over 25 years.

3.4. Ownership
Approximately 25% of businesses are owned by another business.

3.5. Quality and Technical Accreditations

Producers identified their quality and technical accreditations as: 6 producers have an organic accreditation 16 producers are HACCP certified 2 producers have ISO certification 1 producer is SQF certified 4 producers identified Woolworth Vendor Quality Management Standard 1 producer identified McDonalds standards adherence 2 producers are Kosher certified 5 producers are Halal certified 2 producers are USDA accredited 2 producers are EU accredited 4.6 Product Category Supplied 6 producers supply the Biscuits and Snacks category; 1 supplies Cereals; 2 supply Confectionary; 4 supply the Deli; 3 supply Fruit and Nuts; 1 supplies Herbs and Spices; 6 supply James, Honey and Preserves; 2 supply Meat and Fish; 1 supplies Noodles; and 5 Supply Olive Oils and Sauces.

3.6. Retail versus Foodservice Sales

Approximately 70% of respondents said that Retail accounted for greater than 50% of their product sales.

3.7. Domestic versus Export Sales

86% of respondents said that domestic sales were larger than export sales.

3.8. Domestic Sales Channels

35% of respondents said that more than 50% of their domestic sales were through Woolworths. 26% said that more than 50% of sales were through gourmet independents.

3.9. Key Export Markets / Priority Next Markets

A variety of different countries through Asia, Europe and America were identified. 63% mentioned the UK as a priority next market, or current export market.

3.10. Factors influencing Current Business Growth

A variety of factors influencing business growth were identified and are detailed in the Appendix.

3.11. Current Supply Chains Used

A mix of supply chains including Australian consolidators; use of distributors; and dealing direct into market were identified.

3.12. Target Customers

The interviewees had a mix of target customers. Multiple and independent food retailers were the most common.

4.

UK Specific Research Findings

This section details the challenges of exporting to the UK; the interviewees current state of export to the UK; the commercial evaluation of the producer in the UK market; their state of commercial preparedness to make retail presentations; critical next steps in developing their UK trade; and a grouped summary of market opportunities (by retail channel and supply chain). This section provides the data from which the Project Plan is built. In summary it shows: There are common challenges faced by Victorian producers wanting to export to the UK. A good portion of businesses are already undertaking trade with the UK, or are preparing. Victorian products do have points of difference in the UK. As in any market, there are various challenges by product and category which they face. Most businesses are at an advanced state of commercial readiness, or can quickly be made ready, to make commercial presentations in the UK. RDV can put together certain activities which will benefit different businesses, at different stages of preparedness for the UK. They are easily grouped into retail market opportunities for businesses looking to expand trade in the UK.

4.1. Barriers to Export to UK

The key trends are summarised below: General Barriers to Export: Finance (cash flow, marketing, supply chain)

Foreign Exchange (variations and current strength of dollar) Accessing and assessing appropriate distributors Developing customer relationships Internal resources (time, expertise, capital)

Specific Barriers to UK Export: Point of difference for products Premium pricing of Australian product versus competition Tariff and import regulations Marketing cost Scale of doing business with a UK food multiple

5.

Scoping Potential Project Options for UK

5.1. Introduction
The purpose of this section is to scope the types of projects that RDV might like to pursue in the UK market, and the types of activities that companies might find useful. This is a thinking section designed to show RDV the options considered when generating the final Project Plan. The project options and activities detailed in this section mainly concentrate on key components and sub segments of the demand chain. The projects are stand alone and do not involve the entirety of the demand chain. Each project deals with a distinct group of current exporters. Experience in the UK has shown that successful market development projects consider the entire demand chain therefore Section 6 recommends that the project options are brought together in order to provide an RDV UK Food Strategy. This will take the synergies of the individual projects and ensure maximum impact and benefit for the producers and RDVs contribution.

5.2. Individual Project Options

The purpose of this section is to outline summaries of distinct projects available for RDV to implement. These projects focus on specific sections of the demand chain and not the entirety of the chain. 1. Focus on building the sales of existing Victorian producers selling product into the UK. The purpose of this would be to enhance existing trade with the UK. The outcome would be increased sales and a good reputation for Victorian food suppliers. This can be capitalised by other Victorian companies. Approx candidate companies: 8. Potential activities include: Build a relationship(s) with a multiple food retailer for Victorian food producers. Backed by: Integrated food, wine and tourism promotion to drive consumer awareness.

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Dedicated trip to market by Victorian producers to make sales presentation.

NB. This project could also work with other retail channels health/dietary, gifting and gourmet are lead candidates. 2. Focus on assisting those Victorian producers who have put together a supply chain for the UK, but have yet to make any sales in the UK. The purpose would be to assist Victorian companies with their final sell-in to UK customers. The outcome would be increased sales into the UK. Approx candidate companies: 3. Potential activities include: Assist companies with accessing preferred retail channel using contacts already established through NFIS UK Retail project and contacts of existing Victorian UK suppliers. Integrated food wine and tourism promotion to drive awareness of products on launch. Focus on assisting those Victorian producers who have an understanding of the UK market and their opportunity within it, but have yet to put together a supply chain into the UK. The purpose would be to assist Victorian companies with putting distribution arrangements in place. The outcome would be distribution arrangements between Victorian companies and UK representatives. Approx candidate companies 2. Potential activities include: Preliminary distributor search by RDV. Outcome map of potential distributors with genuine interest in buying product from prospective Victorian customers. Market mission to UK to visit prospective distributors. Could include guided market tour and potential scoping meeting with retailers. Focus on assisting those Victorian producers who are in the UK market but are would like to change their distribution arrangements. The purpose would be to assist Victorian companies with new distribution arrangements. The outcome would be signed distribution arrangements between Victorian companies and UK representatives. Approx candidate companies 4. Potential activities include: Preliminary distributor search by RDV. Outcome map of potential distributors with genuine interest in buying product from prospective Victorian customers. Market mission to UK to visit prospective distributors. Could include guided market tour and potential scoping meeting with retailers. 5. Focus on assisting Victorian producers that are interested in selling in the UK market but do not currently have any understanding of the UK market. The purpose would be to build the Victorian producers understanding of the UK market and make a business case for entry to the UK. The outcome would be a business plan for entry into the UK market. Approx candidate companies 5. Potential activities include: Assistance in developing competitive positioning in UK for project participants. Central resource sent to UK to collect specific information requested.

3.

4.

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Translation of information into business plan for UK market with action plan for implementation.

6. Alternatively, RDV could run a project with bespoke activities to assist Victorian producers with ad hoc challenges they are currently facing in the market. The approach for this would be to provide individual consultants to assist individual businesses with challenges identified in previous sections. Producers would be required to apply for assistance.

5.3. Project Activities

The purpose of this section is to identify potential activities that would assist the development of trade for Victorian producers within the UK market. The activities can be grouped in the following areas (though there is some cross over): 1. Capability building: Set up a network for Victorian food producers currently supplying / or interested to supply the UK. Scoping corporate responsibility (including environmental) expectations of the UK market, assistance in implementing where necessary. Scoping technical accreditations (for competitive point of difference as well as regulatory) needed for entry to UK market, assistance in implementing where necessary. Map and evaluation of available distributors in UK. Map and evaluation of retail sales channels in the UK. Guided visit to understand market in more detail. Establishment of method and criteria for evaluating and qualifying potential distribution partners Assistance in generating business plan for UK market (competitive position, costs, forecasts, budgets etc). Establishment of template for future UK exporters. Assistance in understanding tariffs and regulatory demands of market and accessing accurate information. 2. Relationship Building: RDV to develop a relationship with a retailer a partnership that makes it easier for Victorian food producers to access the UK market. This could be multiples / gifting / gourmet / health / Asian etc. RDV to develop relationships with UK distributors in order to more easily introduce Victorian products to market. Trade mission to the UK to meet with retail buyers. Trade mission to UK to meet with prospective distributors. Buyer visit from a UK retailer to Australia. Buyer visit from a UK distributor to Australia. Journalist visit from UK to Australia to meet with food suppliers. 3. Marketing: Cooperative marketing campaign to raise profile of product, gain listings. Marketing Victoria to trade buyers as a destination for to buy product from. Targeted trade show assistance where appropriate.

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Shared UK based brand representative to drive market forward.

4. Supply chain: Incubator style supply chain plan that can provide a Victorian specific distributor. This would include consolidation in Australia; warehousing in UK; distribution in UK; sales agency representation in UK. Assistance with consolidation of smaller shipment with likeminded other producers. Joint merchandising agency to ensure store compliance. 5. Regulatory Lobbying of government to change tariff barriers. Lobbying of government to change quota barriers. Lobbying of government to assist regulation compliance (eg organic, source of origin etc).

5.4. Commercially Successful Project

The food producers interviewed have shown a willingness to participate in an RDV led project. There is emphatic support from Victorian food producers for a commercially orientated project, facilitated by government, to develop trade with the UK. To fully commit, producers have highlighted the need to see a detailed project prospectus which should include: Defined project objectives Defined market opportunity Defined project costs Defined project timings Defined project process Defined project partners Based on this information food producers will be able to make commercial business decisions to participate or not based on time, cost, resources, expected outcomes etc. A commercially successful project will require co-investment from industry and government. Both parties recognise that this is a fundamental necessity. Coinvestment from industry can include time, information, resource, and cash. There would also need to be an understanding that RDV and companies are partners within a commercially run project under a cost sharing agreement.

6.

Project Plan
Creation of a strategic RDV UK Retail Food Project designed to assist the establishment and development of sustainable UK Retail Trade for existing or prospective Victorian food producers.

6.1. Project Objective

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Through investment in this project RDV could achieve an increase in sales, employment and capital investment in the Victorian food industry. As a pilot project, RDV seeks to demonstrate a new model for market development projects. Through participation in arguably the worlds most sophisticated retail market, RDV would like to build industry capability, knowledge and programs to benefit both UK and other export trade development. By participating in this project, Victorian producers aim to see a growth in sales to the UK market and benefits from reduced risk capital expenditure to establish UK trade; synergies created in marketing and distribution systems; and increased capability and knowledge generated through gearing up to supply UK market. RDV leadership is essential to creating a successful project. By creating capability and knowledge for Victorian producers, RDV is improving the capacity of Victorian producers to trade in the UK. In addition, by working strategically with industry, RDV is creating new retail and distribution opportunities for trade development.

6.2. Project Scope

It is important to note that: 1. Participants in the project will be current or prospective Victorian food suppliers to the UK Retail market. 2. The project is designed to work with suppliers across the entire demand chain and aims to enhance commercial performance of Victorian suppliers already in market, with a distinct pathway to market for those at various stages of market entry development.

6.3. Description of Activities to Be Contained in Project

The project aims to undertake the following activities, which deal with different parts of the demand chain. Undertaking activities along the demand chain gives RDV a complete UK strategy, and Victorian producers a complete pathway to market without having to be involved in every component of the project. Many of these activities can be run concurrently which should provide best return on RDV investment and a co-ordinated approach for companies. A process for running the project activities in established in Section 6.4. 1. Establishment of Relationship with UK Retailer. This would look to include the following activities where possible: Formation of relationship with UK Multiple retailer. The project would hand to RDV a strong relationship with the retailer whereby RDV can act as an ongoing single entity representing (not commercially) multiple Victorian products. By acting as a trusted product conduit, RDV can more easily allow access to the retailer for Victorian food producers. RDV to provide category management to bring qualified, leading Victorian food companies to the attention of the retailer. The purpose is for the retailer to request commercial presentation of products from Victorian representatives.

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Trade mission to be conducted to buyers head office with Australian feature day and buyer presentations. Potential visit to Victoria by retailer buying or business development team (in the longer term). RDV to look to establish a longer term relationship with the retailer to expand the food categories. Mapping of retail sales channels available in UK (working document for continual update).

NB. It is important to note that this suggests a multiple UK food retailer. The grouped summary of prospective UK suppliers indicates this should be the priority. RDV needs to choose a retailer partner to work with on this project. After a visit to market the best option for this project may be with health / dietary needs retailers/ gifting or gourmet stores. 2. Establishment of Cooperative Marketing Campaign This would look to include the following activities where possible and would occur once the demand chains had been finalised: Retailer relationship to be enhanced by a cooperative marketing campaign for Victorian food and wine in store. Marketing campaign also to utilise Tourism. Marketing campaign to support new product listings of suppliers. The plan may include sales promotional activity; POS; leafleting; sampling; advertising; radio; PR Journalist visits to Victoria.

NB. A marketing campaign is a milestone in the project process, as a component of a complete demand chain process. It is not the main project purpose. 3. UK Distribution Arrangements This would look to include the following activities where possible: Assessment of potential distributor options in UK for Victorian producers.. This will result in a map of UK distributor options (intended as a working document / database that can be continually updated). Producers interested in supplying (or already supplying) the UK identified that having a knowledge of who the main distributors are (by sector and category) as critical information. This map would detail the distributors sizes, categories of focus, strategies, main customers, main brands they represented, any Australian representation etc. At present Australian industry (and government) knowledge of UK producers is poor and this would be critical information for both RDV and industry. Establishment of method and criteria for evaluating and qualifying potential distribution partners. Match qualified prospective Victorian Suppliers with UK distributors actively interested in buying product. Production of feasibility analysis for an RDV dedicated distribution centre in UK. This will be the evaluation an incubator style supply chain including consolidation in Victoria; warehousing in UK; distribution in UK; sales agency representation in the UK. Mission by prospective suppliers to meet with interested distributors. Potential mission to Victoria by a UK distributor.

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Match consolidation needs of Victorian producers active, or looking to be active in UK

4. Capability Building Activities Many of the project activities will specifically build capability (examples include the UK distributor map and assessment criteria). Additional to this, the following work should be undertaken: a) Competitive Intelligence Mapping of retail sales channels available in UK (working document for continual update). Producers expressed a huge interest in knowing the strategies for each retailer across different retail channels. The retail map would describe retailer size, positioning, strategies, technical accreditation requirements etc. In market confirmation of initial company assessment of UK competitive position. Guided trade mission to market for prospective suppliers. b) UK Business Plan Production Individual work with qualified prospective suppliers to produce business plans for entry into UK market. Establishment of template for future suppliers. c) Corporate Responsibility Corporate Responsibility is about working in a manner which respects the many stakeholders affected by business activity. Elements of corporate responsibility include food miles, carbon foot printing, ethical sourcing and social issues (health, labour etc). This is a critical UK (food) trend and Australian suppliers can expect this to become a mainstream (food) issue in the Australian industry in the next 5 years. An analysis of current state of corporate responsibility expectations for food suppliers in the UK market is needed. This analysis is to be used as a tool for Victorian food producers to assess their business against. This tool will be useful to assist producers in gearing up for UK supply, and preparing and positioning their business for the future. Corporate responsibility is set to be a major international food trend of the future. This analysis can be used by RDV to help generate a positioning response for Victorian food suppliers to UK (potentially with Federal bodies). This work may highlight a spin off project for RDV to undertake in order to grow capabilities of Victorian producers. d) Technical Requirements Clear and easy access to regulations governing access to UK market (tariffs, quotas etc). Access to UK retailer expectations of supplier technical accreditations. RDV should consider the establishment of a password protected website to store this information. 5. Victorian Food Producers UK Network

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Establishment by RDV of a central network for Victorian food producers supplying the UK. Facility is used to: Establish RDV as credible UK market point of contact. Bring together those interested in supplying or currently supplying UK market, in order to share learnings. Assist companies currently supplying the UK to develop further commercial activities (synergies in supply chain, marketing etc). Develop the capabilities and expectations of prospective suppliers to UK; assist them in putting together a UK market plan. 6. Regulatory The project should look to provide an information flow between industry and Federal Government activities specifically focused on regulatory barriers to UK market (tariffs, subsidies, labelling etc). This information should be communicated and discussed at network meetings or via mailing lists. This activity should also allow industry to have a coordinated voice on UK issues back to Federal government. 7. Ad Hoc UK Assistance Through detailed involvement in UK, RDV will be able to perform some tasks for Victorian suppliers that might not be part of the core project, but are identified as beneficial for trade development with UK market and provide great benefit and cost saving. Provision should be made to use synergies from UK activities to assist Victorian companies entering the UK market outside of the core project.

6.4. Project Plan Recommended Stages

6.4.1. Introduction
Section 6.3 details the activities that RDV might carry out in order to benefit industry. This section puts these activities into a recommended Project Plan, split into distinct stages. For maximum benefit the project plan runs the activities identified above concurrently. Each stage should be treated as a milestone within the Project. On completion of each milestone, the project plan needs to be reassessed to ensure project objectives are met (section 6.1). In term of the stages contained within this Project Plan. Stages 1 & 2 are completed. Stages 3, 4 and 5 should be treated by RDV as up front risk capital to provide the intelligence and planning to enlist companies. This is work that these companies would not otherwise be able to undertake. RDV should seek to gain in principle support from producers in order to progress with these stages. Stages 6 9 should be undertaken in partnership with industry.

6.4.2. Stage 1 Initial Market Research Complete

Market Research is undertaken to confirm that a market opportunity exists. This work has been completed previously. Key Findings:

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NFIS, Sainsburys and Tourism Australia UK consumer research showed consumer opportunity for Australian food in UK. Australian wine has successful track record of supply to UK market. NFIS Retail Project demonstrated commercial success for Australian food products in UK market. Over 15 food producers are now in the UK market as a result of the NFIS project.

It should be noted that the producers interviewed in the course of this discussion fully supported RDVs initiative to develop further trade with UK.

6.4.3. Stage 2 Initial Project Plan Current Work

This report gives an initial project plan for developing further trade with the UK retail market. The output of this report is: Grouped summary of the export business for Victorian producers into market (including current supply chain and obstacles to trade. Grouped summary of producers into project participants. Assessment of producers product range fit to market. Overview of suggested project options for RDV in UK market. A project plan that includes summary of project activities to be implemented; description of processes needed to set up activity; candidate producers for participation; potential timings, costs and partners. The output is a project plan and map of potential participants.

6.4.4. Stage 3 Industry Group Session - UK Exporters Food Producers Network Meeting
This stage brings industry together to gather in principle support for the project, and commence a UK Export Network. The objectives of this meeting are to: Inform industry of the results of the initial project plan work (and conclude that stage of the project). Galvanise in principle support from industry for an RDV UK Retail Project Plan. Gain commitment from industry to provide information necessary for Stage 4. Bring together current suppliers to UK and prospective suppliers to UK for inaugural Victorian Food Producers UK Network meeting. Key activities undertaken at the meeting are: Welcome address from senior a RDV manager Gary Gaffney recommended. Presentation on RDV project plan. Short presentations by various Victorian food producers who have been active in UK market with positive and negative successes. A wine producer should also present. Provision to each company of project plan document, including bespoke letter with RDV assessment of how this project might benefit each companys trade development with UK.

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Each producer to be asked to sign a letter of in principle support for RDV UK Retail Project. This letter would acknowledge a commitment to providing RDV with information necessary to conduct Stage 4 of the project. An undertaking of confidentiality by RDV to protect each companys information.

The outputs from the meeting are expected to be: Networking by Victorian food producers who are active, or would like to be active in the UK market. Shared learnings by experienced UK exporters with other Victorian producers. Feedback on RDV UK Retail Project Plan. This will be used to amend and update the Project Plan where necessary. Direct feedback from RDV to individual producers on how this project may benefit their plans in UK market. Determine the number of producers with in principle commitment to supporting an RDV UK Retail Project. Establish a need to set up a regular UK Exporters Network.

6.4.5. Stage 4 Capability Building and UK Preparation Visit

This stage is crucial in setting up the capability for RDV (and Victorian Producers) to participate fully in the project. It will bring tangible benefits to producers (and project), as well as establishing credibility for RDV and beginning to build relationships in the market. The objectives for this stage: Satisfy RDV that producers own assessment of UK market position is viable. RDV can add direct value to companies by conducting further base competitive analysis, or feeding back individual information as requested. Develop relationship with the London VGBO and in market representative. Scope potential relationships with retailers; complete UK part of retail mapping work. Scope potential relationships with distributors; assess how a specific Victorian incubator may occur if required; meet with identified distributors to assist mapping work. Scope corporate responsibility requirements of supplying to UK. Scope potential relationships with marketing service providers and partners. Produce business planning and distributor evaluation tool for companies looking at engaging in UK market. Key Activities to be undertaken in this phase will be: Two week market visit in order to meet with potential candidate retailers; meet with potential distributors; meet with London VGBO; meet with in market service providers; complete competitive intelligence check work needed Request to project participants for completion of business background template. Project participants will also be able to request certain competitive information to be confirmed. Mapping of UK Retailers (multiples, health, gourmet, regional, department store etc). This will include desk research; purchase of latest AC Nielsen report; personal contacts; UK meetings.

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Mapping of distributor options in UK. This will include desk research, personal contacts, potential trade shows; UK meetings; purchase of distributor report. Research (benchmarking) of corporate responsibility models in the UK. This will include desk research prior to UK meetings. Production of business planning and distributor evaluation tool.

The outputs expected at this stage are: Satisfaction from RDV that company analysis of market place positioning is correct. Map / Database of UK Retailers. Assessment of retailers with which RDV might form a partnership arrangement. Map / Database of potential UK Distributors. Building of relationships with candidate distributors. Corporate responsibility requirements of supplying UK market (this may spin off into separate major project). Business planning and distributor evaluation tool for UK market. Bespoke competitive intelligence by Producer where required. Commencement of relationship with London VGBO and any in market service provider.

6.4.6. Stage 5 Project Prospectus

This stage develops the tool to officially recruit producers into the project. The objectives for this stage are: Development of a detailed project prospectus. The project prospectus would set out definitive arrangements and costs for each individual project activity. This project prospectus is to be used to recruit producers to project. Specifically the project prospectus would detail for each activity: Defined objectives Defined opportunity Defined costs Defined timings Defined process Defined partners Production of project prospectus. Prospectus should be put into a format which can be easily distributed to potential participants. The activity required at this stage is the writing of the prospectus based on the information found to date. NB Should producers require specific assistance to make themselves ready for the UK, or to participate in the project, they will be expected to invest in getting themselves to that position.

6.4.7. Stage 6 Recruitment of Participants

The objective of this stage is to recruit participants to the project based on the project prospectus.

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The activities required will be: Meeting of Victorian Food Producers UK Network to present prospectus and other work completed to date. This network meeting will be a useful tool to raise any technical market issues that producer have, and further share their UK learning with each other. Individual follow up meetings with potential participants will be required. The outcome of this stage will be a core group of producers who are willing to co invest in various activities in order to develop trade with the UK.

6.4.8. Stage 7 UK Market Visit 1

This stage aims to confirm partnership arrangements with a retailer and providing quick win producers with a distribution chain that allows them able to start doing trade with UK immediately. The objectives of this stage are to: Confirm partnership arrangements with UK retailer. Take those producers at an advanced stage of readiness to UK in order to meet with prospective distributors identified in Stage 4. The activities required will be: Visit to UK to discuss partnership arrangements with UK retailer. This might need some samples from producers. Guided store visit day for producers to confirm competitive position. Individual meetings between producer and UK distributor (arranged by RDV). If possible, RDV to be present at meetings in viewing (and learning) capacity, but not to take a part in commercial negotiations. Potential to research any competitive positioning work required by companies researching UK business plan. The outcomes of this stage will be: Partnership agreement between RDV and the UK retailer. This is long term strategic relationship that will outlast the duration of this project and form a legacy for Victorian food and wine producers to benefit from over a an extend period of time. Distribution agreements signed by producers on visit to UK.

6.4.9. Stage 8 UK Market Visit 2

This stage is a larger trip to UK market and takes a number of producers all at varying stages of development. Now retailer relationships are signed off, this trip is the first opportunity for qualified, producers to present to a retailer. At this stage it might also be appropriate for a senior RDV representative to visit the market with this group. The objectives of this stage are to: Take a group of producers (potentially at various stages of development) to market to develop an additional retailer relationship; develop a distribution system in UK; and / or complete a fact finding assessment of their competitive position in UK market. Develop in market relationships for RDV with retailers and distributors.

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Begin to assess and recruit marketing service providers and partners for a UK marketing promotion.

The activities in this stage are: Presentation at UK retailers head office. This would include direct buyer presentations and a food show for producers not yet able to present to buyers, but seeking product feedback. This will require some set up work prior to market visit. Presentations by suppliers to preselected distributors interested in buying product. Various distributors may also take the opportunity meet those looking at the UK market, while not expecting a commercial outcome from that meeting. This will require some set up work prior to market visit. Guided store visit day to assess competitive position for products within market. Meeting between RDV and marketing service providers and potential partners. Its worth noting that producers will be able to benefit from different aspects of a market visit dependent on their stage of development in UK. Those producers with least market knowledge will be able to participate in all activities in order to scope their opportunity. Those producers integrally involved in the UK market may only have minimal involvement, but would service existing customers during visit also. The outcomes of this stage are expected to be: Establishment of listings for Victorian suppliers with a UK retailer Establishment of distributors for prospective Victorian suppliers to market. Generation of competitive intelligence and market information for prospective suppliers to market.

6.4.10.

Stage 9 - Marketing Campaign

The aim of the marketing campaign is to increase brand exposure and drive product sales. Marketing activity in the UK is expensive. Joint activity will make marketing more affordable for brands that are established in the market and brands that are launching in the market. It is highly likely that food, wine and tourism would need to be involved in the marketing campaign. The objective of this stage is to put together a cooperative marketing campaign for Victorian producers focused on one UK retailer. The potential activities required in this stage are: Development of a cooperative marketing campaign. Identification of marketing service providers. Identification and recruitment of Tourism and Wine partners. Identification and recruitment of interested producers. Sales process to retailer. Management and evaluation of the campaign. The outcome of this stage is expected to be a marketing campaign for a group of Victorian food producers in the UK market.

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6.4.11.

Stage 10 Project Consolidation

The objective for this stage is to consolidate the work achieved to date in the project. It is recommended that this stage would run in parallel to Stage 8. The activities contained within the review should be: Activities to date should be reviewed for effectiveness. Relationships developed should be reviewed for further opportunities (extend to other categories?). Participants should be reviewed for further actions. The outcome of this stage would be a revised plan for further UK market development activities.

6.5. Candidate Companies Open to Participation

Following the interview process it is possible to split candidate producers into 3 sections those who have specific interest in participating in an RDV led project into the UK; those whose involvement is highly contingent on the project plan and target channel; and a producer active in UK but not currently open to this project.

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