Coriolis Chart Watch Q2 2002

Chart Watch is an online publication featuring a brief view into our latest thinking on the evolving food and fast moving consumer good industry. It is sent to subscribers four times per year.

Top Line: While the *nesian islands of Oceania represent 26% of the regions population, they represent only 6% of regional GDP.  Australia and New Zealand are clearly the regions economic powerhouses, but on a population basis the islands of Melanesia, Micronesia and Polynesia together represent over a quarter of the region's consumers.

So what? There's a story, possibly apocryphal, about the owner of a small pie company in New Zealand. One day he had an idea. "Kiwi's eat a lot of meat pies, American's don't eat any. Therefore there must be a huge market for them in the United States." So he put one of his pies in a hot bag, got on a plane, flew to Los Angeles, and took a taxi to the buying offices of Vons Supermarket. No, he didn't have an appointment, but he'd come all the way from New Zealand just to see the buyer, he told the receptionist. Well, the buyer let him in, just to have a laugh, which turned to tears running down his face when he pulled out the now cold pie from his bag.

The problem with the big markets of the world is that they are hard and highly competitive, because every other country that makes what you make wants to be there as well.  The list of FMCG companies from Australasia that have gone off to the United Kingdom or the United States or Asia with a big dream and come back with their head on a plate would fill a book.

While tastes vary around the world, supermarket groups are surprisingly similar. They all want and expect the same things: professional local salespeople versed in local market conditions, the right product delivered on time to the store or warehouse, a regular planned promotional program, and accurate paperwork. These all take time and commitment - you can't do them by email or telephone. And no matter what he says, your broker really doesn't give a damn about your products.  You have to do all the things you do at home to make your business a success.  You have to have your own salespeople on the ground.  There are no shortcuts in international success.

The first key question we ask a client when we're discussing opportunities for growth is: "What is your market share at home?" Because if you're not the market leader in your home country, what makes you believe you will succeed elsewhere? What core competencies are you leveraging?

The second key question we ask is: "What is your market share in New Zealand/Australia?" Because if you're not number one or two in the closest market don't even think about further expansion. Because it only gets harder from there.  The buyer at Coles gave you a hard time?  Wait until you try and sell to Wal-Mart.

Which brings me to the other islands of the Pacific.  Sometimes we underestimate the world next door. Whether its through ignorance or familiarity, bad past experience or bad stereotypes.  When we talk to clients about their growth plans, the conversation quickly moves to North America, Europe or Asia.  A client has yet to say: "We're making a big push into the Fijian market our strategic goal for this year."

But there's 8.1 million people in Melanesia, Micronesia and Polynesia and they eat three meals a day and brush their teeth every night. Maybe your product is closer to caviar than corned beef, does this mean you should ignore these markets? Try this simple benchmark on your business: calculate your *nesian sales as a percent of your total Oceania sales. This should be somewhere between 6% and 26% depending where you fall on the corned beef to caviar spectrum.

Because you may just find its easier to target the 8.1 million people on your other doorstep than to enter one of the big markets.

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