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The Ultimate UK business guide to selling FMCG goods overseas
Selling Products Overseas: what you need to know
In this ultimate guide to selling FMCG goods overseas, we’ll take you through everything you need to know about growing your business and gaining market share internationally. The most innovative and profitable businesses are those with an international footprint and need to consider international expansion. In 2020 we exported over 400 billion dollars worth of products, clearly showing just how important export trade is to our economy. Want to go global but don’t know where to start? Get inspired below. Even if you’re:
- Just beginning to think about selling your FMCG goods abroad
- Already established in your business internationally and want advice on a new agent
- Exporting to multinational companies and want to expand your horizons
Our guide has everything you need from expert advice to practical supply chain information to help inspire you and give you the confidence you need to expand your business beyond the UK market.
As the world becomes ever more connected by digital services, the opportunity for your company to find new customers and high-worth markets abroad has never been so good. No matter which sector you are in, there are people around the world who want your products and services.
A demand exists that you can choose to fulfil
It’s a fact that businesses and people are looking for your goods, skills and services, so think about it this way. If your service or product is performing well here in the UK, there’s good reason to expect that it will do just as well abroad. Even if your company has fewer than 10 staff, please don’t dismiss this opportunity. Two out of five such companies are already trading in high-growth foreign markets and exporting FMCG goods from the UK to Europe is very lucrative, even after Brexit. This can be a great way to grow your business and can also help you develop innovation, production techniques and help you gain resilience in hard times.
What foreign trade will mean for your company
No matter the size of your business, the benefits and rewards from trading abroad can be very worthwhile. What follows is all the useful information you need to grow your FMCG business internationally.
Trading abroad can:
- increase profits, make you more competitive and innovative
- improve economies of scale that you cannot currently achieve
- improve your company profile in markets home and abroad mean that your FMCG products have an extended life through new customers
- give you the chance to grow because you’ll have new customers and increased revenue
- allow you to spread business risks, therefore protecting you through economic down-turns
- Build new brands to widen your portfolio
How to get ready to export - In advance of starting to export, think about:
- protecting your FMCG IP properly and doing enough research and your due diligence
- the need for an overseas partner to enable the best chance of success
- how to evaluate possible risks
- what legal issues you may face in new markets when launching a new FMCG product abroad
- how to get products to customers promptly and how you’ll be paid making a member of your team the Export Manager who will become responsible for this activity
- the suitability of resources including expenses, time, finance and necessary skills
- the market you feel most confident to tackle first. You may, for example, choose to export FMCG goods to France if you have visited there regularly on holidays
- marketing, including branding, packaging, design, name, logos, colours etc. If any other FMCG product is too similar image-wise, a rebrand will be needed with its attendant costs and delays
The first four steps of export
To make an export plan, here are four tried and tested steps:
1. do research; it’s vital
2. source finance
3. create a detailed plan
4. explore potential customers
Research
Customer research and the market they are in is vital, plus knowledge on protecting your rights. To do this:
- create a profile of new customers in detail and define their qualities
- understand the possible demand for your FMCG offering
- understand your competitors and how you stand compared to them in terms of product, financial backing etc.
- contrast key differences, including the legal, financial, and cultural differences of the chosen country with Great Britain, to be ready for the challenge
- read the Intellectual Property Office’s guidance on protection
- read the HMRC export guide to identify the classification of your goods, VAT, tax, the duty relief and exchange rates in your new market
- read the DIT’s ‘Tradeshow Access Programme’ to see if you can get funding to visit your identified market
Financial Planning
Gather all the information you can regarding the finance you’ll want to expand your business overseas. This should also include monies needed to fund research and advertising
To get started:
1. speak to your bank, meet with your accountant or approach a finance provider here in Great Britain to understand how to progress
2. consider the additional money you’ll want to finance overseas trade while remembering that working capital requirements could be necessary to cover longer freighting times or slow payment terms
3. remember that you must consider this a long- term project. Remain realistic about how long it will take to become established and return a profit so that you have the finance to see it through
4. Don’t forget to allow for tax and duty on your products. They could erode your profit margin and make the whole process less attractive.
UK Export Finance (UKEF)
This is Britain’s export credit agency, being part of the Department for International Trade (DIT). It can help finance export trade as well as provide insurances that cover you if you are not paid by your new customers.
Its mission is to ensure that no viable export fails through insufficient finance or a lack of proper insurance. Further, they support any size of export and any sector.
Using their help, you will:
achieve better export sales through the offer of attractive finance to new buyers
deliver on time, as promised, because you are properly financed
always be paid because the right insurance is in place
The organisation works with both private and government sources of finance, alongside seventy private credit insurers to get you the best deals possible.
Prepare to plan
With your research completed and finance understood, it’s time to make your export plan that will guide your way into new markets. This is much like a business plan, just with an international direction.
To begin you should:
1. talk to an e-commerce adviser at your DIT office if you’re selling online and find out about their E- Exporting Programme.
2. decide how you’ll launch your brand when selling products overseas
3. consider if it’s best to sell direct to customers, perhaps online, or rather to use an agent or distributor
4. research the most efficient transport method both in terms of speed and costs
5. establish insurance for the goods
work through finance and other resources including logistics, distribution and also how to support your new customers
6. calculate your price. It must allow for shipping, customs costs, duties and taxes, exchange rates, commissions to agents and yet remain competitive
An effective export plan will include:
- a strategy for marketing. Always remember that British products are viewed by many around the world to be ‘high quality’ so can command a premium price
- a budget for translation of all marketing materials and website, plus any trade shows you might want to attend or exhibit at
- the question, ‘will we need to modify our product or service for the new market?’
- details of your preferred market route
- the decision of selling via an agent, distributor or directly to consumers or business
- the decision on having your own office in the export country or creating an alliance with existing business there
- the finance readiness and payment terms
- a list of contacts and allies who will help deliver the plan
- detailed information regarding this new market
- costs for retraining staff who will handle all export communication, possibly adding language skills
Potential customers
A key factor here will be the shelf life of your product or products and this may well affect the decision about how you will sell. For example, if you choose to sell directly, you’d be well advised to use the DIT’s E-Exporting Programme that contains their Selling Online Overseas tool. It's free and can be a great help if you choose to use international e-marketplaces such as Amazon and eBay. There you can also access discounts including special marketing packages and waived commissions.
Choosing to work with a partner
For some companies it’s more comfortable to work with a partner organisation in the export country. When considering foreign markets, basic entry choices include distributors or agents. They will be familiar with their home market, bringing expertise and knowledge with them and they come in two types.
The first option is a distributor who buys your products at trade price and resells them with a margin to make their profit. They accept responsibility for profits and losses in their own territory.
Alternatively, you could choose an agent who sells on your behalf and receives a commission on the sales. Each way has its own merits and both can offer great value in terms of market understanding and feedback.
Success! Scotch Whiskey
It’s a great inspiration to see the success of British products being exported and even in these tough, pandemic times, huge amounts of our products are selling well to foreign customers. Again, it’s noted that our goods are strongly associated with high quality, with our alcohol and salmon being prime examples.
One incredible statistic is that around 40 bottles of Scotch Whisky are exported every second, to some 180 countries around the globe, delivering £4.7 billion in revenue. It seems that the customers not only enjoy the finely crafted spirit, but they’re keen to associate it with the indisputable reputation for quality, history and provenance Scotch Whisky delivers.
This industry brings jobs and prosperity to remote, rural communities throughout Scotland and the chance for companies to thrive and grow where other industries might not be able to survive.
International Export
Other countries showing a huge increase in demand for these drinks are perhaps a little more surprising, such as India and Japan, with exports increasing by 49.2% to £179m and 23.7% to £188m respectively. This just goes to show that there are many markets well deserving of your attention when considering your export planning options.
Perhaps it might appear that the freight costs of the very longest distances might prevent a profit being made, but that clearly is not the case. Consider that the Australians spent £55m in the same period, showing that the world really is your oyster when you’re considering new countries to export your goods to.
Success! Salmon
Another product with a global reputation for being of the highest quality is salmon. UK producers sold more to the EU in the first half of 2021 than they ever have before, despite the terribly difficult trading conditions. Government statistics showed that 33,638 tonnes of fresh fish were exported to Europe, at a value of £183.4m, up 18% on the previous year. This is a fantastic result and clear proof that there is a huge hunger for British products in Europe even after Brexit and all its complications.
Export - Next Steps
Of course, these are the highest-profile products, but thousands of companies offering myriad products and services benefit hugely from exporting and you could too. You don’t need to be big or well known to succeed in the world of exporting FMCG, and there’s never been a better time to try.
Useful Links
Experts in Export
Atlante specialise in distribution of food and non-food in Italy and internationally, with expertise in developing tailor-made products from start to finish, from brief to shelf.”
We have traditionally focussed on exporting from Italy to other countries
In 2022 we will begin exporting Peanut Butter from Manchester, England into Italy and sold to Italian Retailers via one of our specialist Business Units.
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Sold to the rest of the world with the help of Atlante Exports.
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