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MAHA 2008 Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Europe 15 August 2008 Prof Dr Jinap Selamat Dr Roselina.

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Presentation on theme: "MAHA 2008 Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Europe 15 August 2008 Prof Dr Jinap Selamat Dr Roselina."— Presentation transcript:

1 MAHA 2008 Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Europe 15 August 2008 Prof Dr Jinap Selamat Dr Roselina Karim Pr Dr Mad Nasir Shamsuddin Prof Madya Dr Jamil Bojei Dr Rosli Saleh Dr Tan Chin Ping UPM-FAMA Program 4: Project 1 1

2 FAMA-UPM Program 4: Project 22

3 3 World GDP (PPP)

4 GDP (PPP)Definition 4 Gross Domestic Product (GDP) GDP of a country is one of the ways to measure the size of its economy the value of all final goods and services produced within a nation in a given year Purchasing Powder Parity (PPP) PPP theory uses the long-term equilibrium exchange rate of two currencies to equalize their purchasing powder

5 5 GDP (PPP) 19.7% Agriculture Imports USD 14.4 Trillion

6 FAMA-UPM Program 4: Project 26 EC No 178/ Jan, 2005 Article 5 of Regulation EC No 852/2004 All food businesses with the exception of primary producers & associated operations 1 January, 2005 HACCP Traceability EU Requirement

7 EU Labeling Requirement  The ingredient list, must specify  the percentage the ingredients  nutritional facts  serving size  customer service information FAMA-UPM Program 4: Project 27

8 EU Entry Requirements 1. Legislation Regulations: direct applicability in all EU Member States Directives: binding objective for all Member States, but national authorities decide how to implement Decisions: measures binding on particular individual, firm or Member State National laws

9 2. Market Requirements Set of requirements producers or exporters adhere to on a voluntary basis in response to consumer demands pertaining to quality, and environmental and social accountability. 3. Standards Documented, voluntary agreements, which establish important criteria for products, services, and processes and help assuring that products are fit for their purpose and are comparable and compatible. Sources of EU Entry Requirements

10 EU Food Regulations European Regulation (EC) No 178/2002 – The EU Food Law – General principles and requirements of EU food and feed safety – Creation of EU Food Safety Authority – Procedures in relation to food and feed safety – Based on traceability during production, processing and distribution

11 – Effective 2006 – Complements 178/2002 – Defines how official controls of EU produced and imported food and feed will be performed – Describes enforcement systems; their application by Competent Authorities. EU Food Regulations: no. 882/2004

12 Food Hygiene Regulations 852/2004 – pertaining to hygiene of foodstuffs- HACCP requirement Food Hygiene Regulation 853/ 2004 – pertaining to food of animal origin EU Regulation No 2092/91 – requirements for agricultural products and foodstuffs including organic production methods EU Food Regulations:

13 B. EU Food Directives Directive 91/493/EEC and Directive 91/492/EEC pertain to requirements for production and export of fishery products. HACCP requirement. Directive 2000/29/EC deals with legislation regarding maximum levels of pesticide residues, heavy metals, microbiological and radiological contamination and phyto sanitary inspections

14 Market Requirements Voluntary by nature Specific to participating countries and firms Source of national and EU legislation Not compulsory for trade with the EU

15 Market Requirements Organically Produced Food products – covered by EU inspection scheme [Krav (Sweden); NATURLAND (Germany); EKO (Netherlands)] Good Agricultural Practices (GAP) – Euro-Retailer Producer Group (Eurep-Gap) – British Retail Consortium (BRC) Social Accountability – Fair Trade

16 Working with Export Partners in the EU Europeans spend more time building rapport and trust prior to entering partnerships. Agents and distributors are viewed as partners to a manufacturer

17 Agent vs Distributor Despite greater entitlement to termination payments, an agent isn't necessarily better than a distributor for the US exporter in Europe. A distributor has control of pricing, whereas using an agent provides a manufacturer with: 1) Control over pricing, and 2) More say in how the product is presented.

18 Agent vs Distributor Distributors - recommended for companies who are new in a market or seeking to grow Agents - for a manufacturer's more mature /developed markets. PS: In Germany - a company to set up a direct sales office, due to that market's large size and the competition from European-made products.

19 EU Tariff and Tax Basics Value Added Tax: Imports into the EU will also be subject to a value added tax (VAT) Vat is calculated on the CIF + duty. Go to for EU country specific VAT (Value Added Tax) rates.EU country specific VAT

20 Sources for Duty/Tariff EU Tariff Rates - based on the CIF value (Cost of goods, Insurance, Freight Tariff rates can be found in PDF format by BITD company or by using the EU Customs Union Online Database (http://europa.eu.int/comm/taxation_customs/dds/en/tar home.htm)PDF formatEU Customs Union Online Database

21 21 Market Size and Growth of The Malaysian Processed Food Exports to European Union, 2001 – 2005

22 22 Strength Good Packaging – at par with mainstream supermarkets (e.g. TESCO) Weakness Packaging color and design not attractive Packaging does not guarantee long shelf-life High production cost - Thailand below the Malaysian. In general, the Malaysian products about 20% more expensive. SWOT ANALYSIS

23 SWOT Analysis - Weakness (cont..) Too many brands. Lack of unique brand for the Malaysian food products. No strategic alliances (importers, distributors). No private agents to market the products. SMI entrepreneurs lack legal/social/cultural environment in the importing countries Entrepreneurs do not have enough capital to effectively export their products 23

24 24  Need to identify consumer’s taste and preferences.  Some product branding not accepted globally  Weak in PR networking  Service Centre (distributor) not available  Weak R&D that match SME requirements SWOT Analysis - Weakness (cont..)

25 Strong government supports for SME development in food processing Known for halal products Strong government support in halal products and halal-hub centre Demand for oriental products (Thailand and Indonesia have a large market share). Positive growth rate in exports ( ): Snacks (6.5%); Beverages (36.2%); Sauce (6%); Cookies (30.5%); Spices (-5%) FAMA-UPM Program 4: Project 225 SWOT Analysis - Opportunities

26 FAMA-UPM Program 4: Project 226 Products at Mainstream Supermarkets categorized into: mainstream, ethnic, halal food products. Malaysia can take the opportunity to market under halal branding EU consumers are responsive to new product branding such as health food Main stream supermarket, like Tesco, can have potential to market Malaysian products in the area where there are many Asian ethnic (e.g. in Slough) SWOT Analysis - Opportunities (cont..)

27 Competitor production cost - mainly products from Thailand and Indonesia, are low in price. For certain products, the prices, converted to MR, are below Malaysian production costs FAMA-UPM Program 4: Project 227 SWOT Analysis - Threats

28 Product Selection 28

29 29 EU Bumi Hijau Black Pepper Jalen Chilli Muslim Salsa Black Pepper Spicy FAMA Nani Fried Sesame Kart Food Steamed Bun Snacks Sauces

30 FAMA-UPM Program 4: Project 230 Perda Guava Juice Hobary Pink Guava Beverages DMG Butter Cookies Cookies Noraini’s Ginger and Almond

31 Ranking based on overall acceptability of products by respondents in the EU NoProduct NameCategoryOverall Acceptability Willingness to Buy 1Frozen Sesame BallSnack Ginger and Almond CookiesCookies Chilli SauceSauce Frozen Steamed BunSnack Black Pepper ChipsSnack Salsa Papaya SauceSauce Black Pepper SauceSauce White Guava JuiceBeverage Butter CookiesCookies Pink Guava JuiceBeverage Spicy ChipsSnack

32 32 Ranking based on overall acceptability of products by respondents in the EU

33 Analysis of Acceptance 33

34 Demographic Profile

35

36

37

38 OVERALL ACCEPTABILITY - APPEARANCE - AROMA – SMELL - FLAVOR – SWEETNESS - TEXTURE – BODY OR VISCOSITY - AFTERTASTE OVERALL PACKAGING - PACKAGING DESIGN - COLOR - SIZE OF PACK - OVERALL Characteristic FAMA-UPM Program 4: Project 238

39 Consumer Acceptance - Snacks

40

41 Consumer Acceptance - Frozen Snacks * Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

42 Consumer Acceptance -Snacks

43 Consumer Acceptance - Beverages * Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

44 Consumer Acceptance -Beverages

45 Consumer Acceptance -Sauces *Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

46 Consumer Acceptance - Sauces

47

48 Consumer Acceptance - Cookies *Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

49 Consumer Acceptance -Cookies

50 FAMA-UPM Program 4: Project 250 Techno-Quality-Economic Matrix for Export Ready and Product Potential by product category

51 51 Techno-Quality-Economic Matrix for Export Ready and Product Potential by product

52 Way Forward (General)

53 FAMA-UPM Program 4: Project 253 Identify relevant market segments  Immediate: Target SMEs food products at Oriental/ Asian consumers at oriental outlets  Medium term: Expand into mainstream market Identify critical success  SME visit to successful exporting companies to identify and study their success factors, or  Invite successful exporting companies to a workshop to have them present their success factors to the SMEs  Provide incentives for lead / anchor companies to market other products of the same category Way Forward

54 54 Develop structured human resource - functionality  Restructure to have competent staff e.g. export manager- for export activities, quality control personnel - ensure consistent product quality Develop a systematic raw materials procurement system  Establish contract farming for raw materials supply  Train SMEs entrepreneurs in price forecasting awareness  Engage consultant to develop accounting module for SMEs  Offshore investment of food products (lead by GLC) to acquire cheap labour cost, raw materials and transportations in the importing countries. Example, Indonesian Indomee manufactured in Abu Dhabi Way Forward

55 FAMA-UPM Program 4: Project 255 Improve the quality and taste of the products  Food to be tested by foreigners of the destination country  Use suitable packaging materials according to the country  Training of quality, safety and improvement of the product to SMEs (processing, development of quality system such as HACCP, GMP and products safety. Way Forward

56 56 Intensify R&D that are relevant to SMEs  Conduct R&D in packaging that ensure adequate shelf-life  Enhance cooperation between SMEs and IPTA in R&D and technology transfer/ extension.  Provide financial source for research Promote incentives in food exports  Training in business plan and marketing strategy for SMEs to be able to formulate viable business proposals for acquiring loans from relevant institutions Way Forward

57 57 Develop entrepreneurship development program for SMEs food industry  Conduct training in business communication & ethics, labeling requirement, legal-social-cultural environment in EU  Coordinate training module of various agencies/ departments  Develop database relevant for food products export that can be utilized by SME’s Intensifying technology transfer and adoption  Conduct training in food processing technology and packaging that is coordinated by MECD  Provide incentive package for technology adoption for new enterprises in a short term basis. Way Forward

58 58 Formulate strategic alliance with the supply chain intermediaries  SMEs as a consortium to identify and collaborate with a partner/agent to market their products to ensure active promotion being done in destination countries  Visit to relevant supply chain intermediaries to seek for possible cooperation with them  MATRADE to establish database on the potential partners/agents in food products  MATRADE to develop criteria for reliable partners/agents Way Forward

59 59 Develop branding for SMEs food products  Identify a global brand for SMEs food products (e.g. Ole Malaysia’s Best ) with strict quality control Position SMEs food products as premium products  Enhanced joint promotional effort by manufacturers and distributors to support product positioning  Government intervention for promotion and advertising as in tourism industry Way Forward

60 60 Establishment international logistics and marketing network  Establish a private PR agency to promote Malaysian products and develop distribution channel in the targeted country - Examples of private agent are Teega Consortium, New Trade International and CYMAD in Singapore. Way Forward

61 (Product based) FAMA-UPM Program 4: Project 261

62 FAMA-UPM Program 4: Project 262 Situational Analysis – Black pepper Sauce Strength (S)  Sensory attributes highly accepted.  Can be used for various dishes (eg. seasoning for stir-fried dishes, marinates and dip)  Raw materials readily available  Processing and packaging technology readily available Weakness (W)  Shelf life  Limited product variant in terms of level of spiciness  Limited variety of product Opportunities  Product is highly accepted (in term overall acceptability and sensory attributes).  Needs to have different levels of spiciness. Threats  Compete with almost similar product in the market (eg BBQ steak sauce)  Low product awareness due to unfamiliar with product usage and preparation method

63 63 Product Improvement: various spiciness level (low, moderate, high) different purpose (ready-to-use sauce for stir fried, marinate, dip cooking) create product differentiation (new formulation containing ingredients such as garlic, onion, etc) Conduct shelf life study Educate consumers on the product usage, e.g: In-store promotion infomercial promotion professional chef cooking TV series or website Action plan – Black Pepper Sauce

64 2) Chili Sauce (Jalen) Strength (S)  Overall acceptability of product is high  High sensory parameters, just right: color (96.4%), Sweetness (73.3%),  Processing and packaging technology is readily available Weakness (W)  Unknown shelf life  Poor pourability  Limited product variant in terms of level of spiciness Opportunities  Growing market size due to increasing Asian/Oriental population in EU  The product is highly accepted Threats  Compete with similar product from SEA and Asia 64 Situational Analysis – Chili Sauce

65 FAMA-UPM Program 4: Project 265  Promote as a premium product - develop marketing plan to promote, include product attributes and packaging design  Product improvement - various level of spiciness (low, moderate, high)  Development of new product to create product differentiation (new formulation containing higher percentage of chilies)  Conduct shelf life study  Product improvement in terms of pourability - develop product with optimum viscosity Action plan – Chili Sauce

66 3) Salsa papaya sauce Strength (S)  Unique-exotic taste acceptable by consumers (6.5 of 9)  Processing & packaging technology readily available Weakness (W)  Unknown shelf life  Unsuitable brand name  Unsuitable picture on package Opportunities  Consumers perceive the product as unique Threats  Other types of sauce are available in the market  Not yet considered as a mainstream product 66 Situational Analysis – Salsa Papaya Sauce

67 FAMA-UPM Program 4: Project 267  Development of new product to create product differentiation (new formulation containing ingredients such as garlic, onion, etc.)  Conduct shelf life study  Educate consumers on the product usage – a) in store promotion, b) infomercial promotion, c) professional chef cooking tv series or website  Packaging improvement - package picture - provide information on how to use the product Action plan – Salsa papaya sauce

68 Strength (S)  A type of new product  Sensory - highly accepted  Processing & packaging technology readily available  Product can be expanded to contain variety of filling such as peanuts, red beans, etc Opportunities  Product is highly accepted (in term overall acceptability and sensory attributes)  Frozen snack have good potential in the market as shown by the high score on willingness to buy 68 Situational Analysis – Frozen Sesame Ball

69 Weakness (W)  Some sesame seeds separated from the ball during frying and the dough burst during frying  Some indicated texture too chewy Threats  Low product awareness due to unfamiliar with product usage and preparation method  Compete with other existing frozen snacks such as samosa, steamed bun from other Asian countries  Cold chain during storage and transportation – change sensory qualities; safety issue 69 Situational Analysis – Frozen Sesame Ball

70 70 Action plan – Frozen Sesame Ball  Product Improvement  develop new dough formulation to overcome textural problem  Widen selection for the frozen snack in terms of filling  Educate consumers on the product usage  Upgrade product safety (GMP, HACCP)  Upgrade knowledge among staff on cold chain management - training

71 Strength (S)  Sensory attribute of product is highly accepted  Processing & packaging technology readily available Opportunities  Product is highly accepted (in term overall acceptability and sensory attributes)  Frozen snack have good potential due to lack of similar Halal products in their market  Availability of other existing variety of savoury and sweet fillings 71 Situational Analysis – Frozen Steamed Bun

72 Weakness (W)  Ambiguous labeling design (picture on the label does not reflect colour of final product, preparation instruction include frying does not reflect the name of the product (steamed)\ Threats  Changes of sensory qualities due to improper cold chain management during storage and transportation  Compete with many similar products available in the market (SEA and Asia)  Safety issue due to fluctuation of temperature during storage and transportation  Need HACCP Certification for meat-based fillings 72 Situational Analysis – Frozen Steamed Bun

73 73 Action plan – Frozen Steamed Bun  Dough Improvement - develop new dough formulation to overcome textural problem  Widen the selection for the frozen snack in terms of filling (product variety)  Educate consumers on the product  Product safety (GMP, ISO 2200, HACCP)  Upgrade knowledge among staff dealing with cold chain management - training

74 Strength (S)  Sensory attributes of black pepper flavoured tapioca chips is quite acceptable  Products with varieties of flavors Opportunities  High market potential  Willingness to buy moderate Situational Analysis – Tapioca Chip

75 Weakness (W)  Poor physical quality (eg. broken into pieces)  Lack of uniformity and consistency - colour and shape.  Shorter shelf life – rancidity, loss of crispiness  Lack of processing and packaging technology  Low quality of the lid opener (opener easily broken and metal lid easily torn apart).  Colour on package inappropriate & not appealing to the EU consumers (bright red, yellow and green). Threats  Compete with established snacks: potato chips; extruded products  Can be obtained at cheaper prices (bulk in plastic packages Situational Analysis – Tapioca Chip

76 76 Action plan – Tapioca Chip  Develop promotional program to introduce product  Product improvement - reconstituted technology - adopt and adapt ala Pringles technology, in terms of product design)  Upgrade packaging technology - Adopt nitrogen-filled packaging technology (e.g. flexible packaging) - Upgrade packaging materials of lid  Upgrade processing technology - Promote automated processing machinery among SMEs

77 Terima Kasih 77


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