What We Covered In This Article
What is Food Exportation?
Food exportation is the transportation of food products for commercial purposes. Countries like the United States, the UK, China, and many others are actively involved in the food export business. The importing and exporting countries have laws guiding them, and both countries have to abide by them.
How Profitable is The Food Export Business?
Food exportation is highly profitable as it fosters international relationships, gives room for food variety, and advances economic growth. As over 95% of the world is involved with food exportation, it is a highly profitable business. Food exportation is most profitable in the United States, Germany, Canada, The United Kingdoms, Brazil, Spain, the Netherlands, and in Africa generally.
How Much Does It Cost To Start My Own Food Export Business?
The cost of setting up is highly dependent on several factors. Some of these factors include location, target market demand, the type of food you have chosen to select, and many others. However, the set-up cost would be between $5,000 – $35,000.
How To Start a Food Export Business
1. Conduct market research
You must study the market before making any major business decisions as making the wrong move will cost you greatly. The first step is identifying your target market. Once you have identified your target market, you will need to find out more about it. Start with the market’s taste. Rice, corn (maize), palm oil, beans, yams, and many more are examples of food products that can be exported. You need to find out what your target market prefers. Find out who your competitors are after identify the food products that are in demand. The next step is to understand the laws guiding the importation of food into your target location.
2. Draft a business plan
After ascertaining the business conditions of your target market, you need a business plan. You know what the people want, who your competition is, and the laws you need to abide by, it’s time for a strategy. A business plan is a written description of what you want for your business and how you intend to achieve these goals. It should contain an executive summary, a brief description of the company, the products you want to market, a breakdown of the target market, and a financial narrative.
3. Determine your export strategy
There are two types of export – direct exportation and indirect exportation. Direct exportation, as the name implies, is the direct shipping of products to international consumers without the involvement of a middleman. This might be your best option if you already own a large farm. However, if you don’t practice farming on a large scale, indirect exportation is your best choice. Serving as the middleman, you would receive products from the supplier and ship them out to international consumers.
4. Get required licensing
The licensing laws are dependent on the country, as well as, the licensing period. Because there are a series of licenses to acquire, the licensing period could last up to 2 months, but it’s worth the wait. Some of the licenses needed to establish a food export company include a food safety license, an international trade license, and of course, a business license. There are several other licenses, permits, and certifications that are imperative, but these are the basic ones.
5. Search out product suppliers and business partners
If you have chosen to export indirectly, then, you need a good farmer in your corner. However, a farmer isn’t the only one you need on your team. You need to establish the right relationships with the right people, regardless of the export strategy you have selected. For example, Nestle, a widely known food export company, is partnered up with a research institute known as the Centre for Microbiome Innovation (CMI). This institution helps to improve the nutritional value of Nestle products, thus improving the quality of their products.
Another example is Chobani’s partnership with Swipe Out Hunger. Chobani is a Greek yoghurt brand in America, and Swipe Out Hunger is a non-profit organisation whose goal is to end student hunger. The partnership is a great one because Swipe Out Hunger needs food, and Chobani makes food. It’s a win-win situation. This partnership is also guaranteed to increase Chobani’s sales.
6. Set up an institution
You have completed the planning phase, now it’s time to move to the execution phase. The first thing to do is to establish a space for business operations. You could choose to either build from scratch or rent a space, depending on your preferences. However, there are a few factors to consider when setting up your food export company. You should consider the location’s business-friendliness, as well as the climate of the area.
After setting up an establishment for operations, production can start officially, and how you package your products is important. Your product’s package should not only catch the eye of a potential buyer, but it should also hold all the information the consumer needs to know. A good package should contain the company name and address, the product name, ingredients used in its production, information on the presence or absence of additives or preservatives, manufacture and manufacturer details, and an expiry date. Good packaging ought to be as informative as it is attractive.
To increase the chances of the product’s success, you must sample your products before officially launching them. Product sampling is like a test run of the market, and consequently, it tests the receptiveness of your target market. Here’s how product sampling works:
- A few batches of the products are set aside strictly for sampling.
- These samples are handed out to prospective customers. For best results, you should hand out free samples.
- The customers try the products and give their feedback.
This process would give you a preview of how the product will fair in the market. Rather, than seeing it as handing out free products, you should see it as giving out your products, in return for a review.
You can stop handing out free samples now lol. After ascertaining your product’s success, you should start pricing them based on the feedback you have received. There are many other determinants of the price of your product such as; the cost of production, the cost of transportation, consumer purchasing power, the value of your product, as well as your competitors’ prices.
10. Product launch and promotion
The stage has been set, let the action begin! You have taken all the necessary actions, now it’s time to release your product to the world. Your product launch should have enough PR to help the product soar even higher than it did in the sampling phase. However, the sampling phase helps this stage too because the product has already caught people’s attention. Established partnerships also help with your product’s promotion, especially if you are partnered with a well-known brand. Influencers could help your brand soar too.
Some Helpful Tips
1. Establish the right relationships
As important as partnerships are, not every partnership will benefit you. Some partnerships could turn into liabilities. In every business relationship you get into, what you gain should either outweigh or be equivalent to what you give. Weigh out the pros and cons before establishing a business relationship with any company.
2. Be thorough with your research
Although business is all about taking risks, assumptions would cost you greatly. Do not confuse taking risks with self-sabotage. Leave absolutely no stone unturned when conducting your research, consider all factors, and try to predict possible outcomes when possible.
3. Do not compromise on quality
When dealing with food, producing high-quality food substances is not an option. You are dealing with people’s nutrition so a slight overlook could cost a person their life, and you certainly don’t want your product to be the cause of a person’s death. The smallest error could put you out of business in a heartbeat so tread carefully.
4. Set realistic company goals
It is advisable not to put too much pressure on yourself. Give your business time to grow by setting achievable goals. Don’t rush things.
5. Invest in promotion and marketing
There’s no such thing as too much PR. Along with marketing your products with every chance you get, pay for even more promotion. Sponsor shows, organize contests, build relationships with influencers, and do whatever you can to put your business out there.
There are three major things to consider when starting your own business and they are; market, their desires, and the best answer to those desires. Three other factors would put you ahead in any business field and they include the right business strategy, the right partnerships, and of course, high-quality standards. With the right business plan, you are sure to succeed in the food exportation business, and by reading this article, you are already on the right foot.
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