Brand-Building Basics

Branded U.S. Foods Not Only Help Differentiate The Importer, But They Also Help Build Demand

When looking at procurement opportunities in the U.S. food industry, it is only natural to think of the many commodities that the United States produces to worldwide acclaim. From California navel oranges and table grapes to Texas and Florida grapefruit to American beef, poultry, eggs and pork, all these commodities and more are sought out due to reputation, quality, and price.

Yet importers who only buy commodities without any regard to value-added branding face a dilemma. Their procurement policies limit their sales efforts, as one who only buys commodities can only sell commodities. Inevitably this puts an importer into competition with other importers based on price. Obviously, even a strict-commodity importer can differentiate himself to some extent with good service and a reputation for dependability, but with others selling the exact same product, it is a tough way to make a living.

In some cases, importers can secure unique products or packaging, perhaps something under patent. Yet this is not easy to do and often involves specialized or niche products.

The logical alternative is to use branding as a way of continuing to sell high volume products but under conditions where competitors cannot offer the exact same product. Thus, competition will swing a different way. Instead of the conversation being solely about price, it becomes about quality and trade and consumer perception.

The options available for utilizing branding as a marketing tool vary substantially based on the country one is in, the status on brand distribution and, of course, the competencies and reputation of one’s own firm. Large and well known consumer-goods brands are clearly valuable to have an opportunity to market. The ubiquitous nature of American film, television, and music assure that popular American brands are known and coveted throughout the world.

The large-scale nature of the opportunity to market well-known consumer brands also makes it difficult for importers to secure the rights to do this — especially in larger markets. The manufacturers may have brought production overseas or set up their own sales and marketing organization or appointed an exclusive importer.

Smaller countries, though, often offer opportunities even for very well known consumer brands. It is not uncommon, for example, to find a U.S. juice manufacturer who has made arrangements to produce juice at bottling companies in Germany and Japan, but the same organizations will gladly export to Central America and the Caribbean to anyone who will pay the bill.

Building Brand Equity As An Importer

One doesn’t have to be the exclusive importer of a major national brand to use branding as part of one’s marketing approach.

An often profitable approach is to build brand equity in a particular label. This can happen with commodities and can also apply to building a stronger trade brand, which doesn’t require direct marketing to consumers.

Sometimes it happens serendipitously. A receiver in a particular region or country starts working with a particular exporter. Together they refine the product and packaging, often over many years, to meet the particular needs of the market. Both exporter and importer work together under all kinds of economic conditions to have product available and gradually the trade come to recognize the brand being sold as having unique value and being worthy of a premium price or, at least, buyer preference.

The problem for importers with this model is that it depends on an exporter giving the importer an actual or de-facto exclusive in the market. This exclusive arrangement thus prevents other importers from free-riding on the brand reputation that was so carefully built up via the cooperation between exporter and importer.

Many times, this works because the exporter values the nurturing of its brand by the importer and so does work on an exclusive basis. However, this modality leaves the importer vulnerable to the whims, personnel changes and strategic shifts of the exporter.

It is very hard to sustain a parallel set of interests between two companies in different countries over long periods of time. An importer may grow uncertain about the creditworthiness of its domestic customers and think it a wise time to cut back, just as a new plant or facility is coming online and an exporter wants to ramp up sales. Or an importer may think of nearby cities or countries as part of its marketing territory, but the exporter may feel the importer can’t maximize sales in those regions.

As such, if a brand does not have equity among the trade or the consuming public in a particular country, it may make more sense to arrange for a separate brand to be used exclusively in the arrangement between that importer and exporter.

This can get very “micro.” It is very common in the produce industry, for example, for vendors on a terminal market to receive brands that are exclusive to themselves. This is a way of addressing the importer’s need to differentiate itself and avoid direct competition with the exporter’s need to maximize sales and make sure that its produce is represented on every “row” or “building” in the market.

Taking this approach is not without its downside. One loses the flexibility to buy from existing inventory, and one loses the flexibility to “play the market” and buy from other vendors that may sometimes be less expensive. It often requires extra expenses for packaging. It tends to work best either with products that can be planned for well in advance and are not subject to dramatic swings in price or availability – say packaged snacks – or commodities that are packed each week anyway – say Florida grapefruit.

Even so, if one wants one’s grapefruit packed in a specific box, one has to either have boxes sitting in a lot of places or restrict where one will procure. Both have costs.

Importers, though, often find a separate label far preferable to being in direct competition with another importer selling the exact same brand.

If they are going to go the route of importing a brand they know will only be sold to them, many importers decide to go the next step and make it their own brand.

This also has pros and cons. The great advantage here is that the importer owns the brand. This means he can use it for line extensions to other products. It also means that if the importer has a fallout with a particular exporter or producer, he can have someone else produce the product.

If it is a seasonal product, he can use the brand on the same commodity from different hemispheres, different countries, etc., to maintain year-round availability. Having one’s own brand also frees one to set the quality, food safety and sustainability specifications at a level appropriate for one’s market — as opposed to piggybacking on a given producer’s pre-existing standards, which may or may not be optimal for an importer’s particular market.

Other Branding Options

Of course, managing a private label program is a different occupation than simply buying a product and importing it. It also means that producers lose much of their incentive to “chip in” on brand-building efforts, leaving this burden completely on the importer. As a result, many importers look for another way to differentiate themselves.

One common path is to purchase private label brands that are already being produced for specific supermarket chains in the United States. These chains are typically highly motivated to increase volume on their private label runs. Sometimes, in fact, they will work on very small margins because the big upside for the supermarket chain is to save money on its existing order by either better utilizing its own production facilities or using a higher volume that includes export business to leverage a lower price from a manufacturer.

Supermarket chains like to work directly with other supermarkets, but they will also work with wholesalers and importers. These middlemen are used to giving exclusives in particular markets.

Another option is to pick up on the interest in local and regional production and identify brands that are popular regionally but are not nationally known in the United States.

These products often have deep heritage and sometimes offer unique flavor profiles. For the most part, the producers welcome the chance to increase volume but, in many cases, identifying these vendors requires more research and outreach from the overseas importers. These regional companies may not have export departments, don’t attend trade shows out of their region and, in general, are not thinking export. They may not even know how to export.

Of course, these very obstacles create opportunities as they leave open the possibility for close and exclusive cooperation not easy to obtain with suppliers who are already focused on export and thus have many pre-existing relationships and have internal goals for sales and profit increases in each market.

Leveraging A Brand

Those who deal in commodities sometimes question whether branding is even a relevant factor in their considerations. These importers benefit in many cases from promotional efforts that make “America” or a particular state or region of the USA a kind of brand.

Organizations such as the USA Poultry & Egg Export Council, the US Meat Export Federation, the National Pork Board and a range of state and regional groups, from the California Table Grape Commission, Pear Bureau Northwest, New York Apple Association, Idaho Potato Commission, to name just a few, are valuable marketing partners and, in some countries, U.S. product is not the mainstream but is, instead, a kind of premium line. In these situations, a firm may be able to differentiate itself solely by being an American “specialist” and may cooperate with these promotional boards and organizations to bring USA product to market.

Final Analysis – Build The Demand

As markets grow — and a given importer is not the only one bringing in American products — most importers look for differentiation. Branding is a way to achieve that.

In fact, even when dealing with commodity products, consumers consistently show a preference for brand identification. It seems as if the very existence of a brand sends a message to the consumer that somebody stands behind that product. The brand is a way of telling the consumer, “You can trust me. If you buy this brand, it will contain quality product consistent with what you have purchased before.” Though the classic branding message applies to products where consumers can’t see the product inside the package – say canned goods or boxed grocery items – consumer concerns have shifted in a way that increases the importance of branding on items that are fully visible.

Visual inspection of produce, meat, poultry, baked goods, seafood, etc., may give a knowledgeable consumer clues as to the quality of the product. In the past, such clues led consumers to override brand preferences. So even if consumers particularly valued a particular brand of bananas, for example, they would visit a supermarket, note the store was carrying another brand instead of their favorite that day and, if inspection of the bananas made the alternative brand look satisfactory, they would go ahead and buy them.

This, of course, is a very different dynamic than what one finds with other items where consumers simply won’t buy if their favorite brand of mayonnaise or ketchup is not available. If it happens often, they will switch stores to get the brands they want.

Yet, perishable branding is becoming more like branding in other parts of the stores. Partly this is because there are more proprietary products, particularly blends of lettuce, for example, that consumers prefer in much the same way they prefer a particular flavor profile on a mustard. The other big switch, though, is that consumer concerns have been migrating to issues that are invisible to the naked eye  — food safety, for example — and thus not amenable to inspection.

If a consumer is concerned only with the appearance of an item and it is not packaged or is packaged in such a way as to allow visual inspection – the consumer can assess the product based on its appearance. If, however, consumers are concerned with what food safety protocols were followed, how the growing practices impact the environment, how labor is treated, etc., only a brand can provide assurance on these matters. So as consumer concerns broaden, branding becomes more important.

Even the growth of private label reinforces this. Private label is not the same as “no brand”; it is a replacement of the manufacturer’s promise of wholesomeness, safety, quality, sustainability, etc., with the retailer’s promise for the same attributes.

Of course, the long-term problem with private label, whether created by a U.S. firm or by an overseas importer, is that the great importance of brands in the development of demand for a product.

Sunkist, for example, hasn’t just sat passively and hoped someone would buy its citrus. It reaches out to markets to develop demand. So when Japan, though an important market for Sunkist fruit, would not buy small oranges, Sunkist worked with KFC to do a kids meal that included a small orange. When Hong King, though an important market for sweet citrus, would not buy lemons, Sunkist decided to partner with foodservice operators to promote lemonade – basically a mixture of lemons, water, and sugar.

Advertising and marketing are all part of this effort to build demand. Putting a label on something is a kind of branding. Consistently delivering on a promise can build a strong trade brand – say always delivering product a little above grade or always having a heavy pack on an item sold by the pound at retail. But if these branding efforts don’t include substantial consumer outreach, the category itself may have challenges in the future. After all, how will consumer demand grow if nobody is out there promoting?

New media technologies, however, create opportunities for smaller players to reach out to consumers directly: A website can tell the story of the product and the people behind it… a Facebook page can provide consumers with postings on the product… a Twitter account can keep the product top of mind with a steady stream of announcements. Of course, the right new media and social media approach will vary by market. The point, though, remains the same: Consumer branding is no longer just for companies and products that can be backed with massive television campaigns.

In the new world, everyone can reach out to consumers and start to build brand equity. In fact, because these new tools allow for consumers to speak back, the brands that develop will probably more perfectly mirror what consumers really want. That is an opportunity to take America’s bounty and make it relevant to people all around the world.