Opportunities in the food & drinks sector in Spain for Irish companies

Your Global Partner

OPPORTUNITIES FOR NORTHERN IRISH FOOD
& DRINKS COMPANIES IN SPAIN.

1

PRESENTATION OVERVIEW
This presentation has two objectives:

A. Highlight the opportunities that the Spanish market offers to the Northern Irish
Food and Drink industry.

B. Provide a strategic and operational framework for the penetration of these
sectors.

Presentation Structure

 Defining the opportunity – Overview of the Spanish food and drinks industry.
 Sales channels – Analysis of the principal channels to market in Spain.
 Logistics – Cost comparison – UK versus Spain.
 Export Strategy – How to penetrate the Spanish market.
 Overview of McNeice Exports Service in Spain.

www.mcneice-export.com 2

OVERVIEW OF THE SPANISH ECONOMY

THE FACTS THE OPPORTUNITY

 State Structure: Constitutional  9th Largest economy in the world
Monarchy divided into 17 autonomous
regions  12th Largest importer in the
world
 Population: 46 Million

 GDP 2009: 1.2 Trillion Euros  5th largest supplier to the UK.

 Exports 2009: 158B Euros  Gateway to North Africa & Latin.

 Imports 2009: 208B Euros  16.5M British & Irish tourist visit
 Principal Imports: Spain each year.
 Machinery & Equipment
 Energy  Excellent road, rail , air and
 Chemicals maritime connections
 Semi finished goods
 Food  Second most favorable fiscal
 Consumer goods system for SME’s en Europe
 Measuring & control instruments
Source: www.spainbusiness.com


SPAIN – BASIC OVERVIEW

BASIC FACTS

Spain is comprised of:

 15 regions
 2 island regions
 2 African protectorates

Each region has a
devolved government
with varying degrees of
independence from the
central government in
Madrid.

www.mcneice-export.com

TOTAL FOOD & DRINK CONSUMPTION

Expenditure is expected to remain stable in 2010 Expenditure is expected to fall by 5% in 2010

Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs.


SPAIN – THE OPPORTUNITY

www.mcneice-export.com Source: www.spainbusiness.com 7

PERSONAL HOUSEHOLD SPEND: FOOD & DRINK

An average Spanish family spends 4400 Euros per year on food and drink consumed at home.

UK average yearly food and drink spend is: 3195 Euros

www.mcneice-export.com (Source: http://www.statistics.gov.uk/downloads/theme_social/Family-Spending-2008/FamilySpending2009.pdf 8

CHANGING CONSUMER PATTERNS
Emerging households

Couples Without Children Young & Single Single Parent Families
(Annual change 2008-09, + 10.8%) (Annual change 2008-09, + 10%) (Annual change 2008-09, + 3.6%)
• 7.3% of the population. • 4.9% of the population. • 5.3% of the population.
• High level of discretionary spending. • Innovate & impulsive. • Value precooked products.
• Diet includes a high proportion of • Hedonistic, prices are not important. • Little free time.
precooked foods. • Willing to pay for time saving
• Eat out regularly. solutions.
• Worried about their health.

Established households

Couples With Older Children
Pensioners Couples With Young Children
Living At Home
(Annual change 2008-09, + 2.4%) (Annual change 2008-09, + 0.0%)
(Annual change 2008-09, - 6.1%)

• 21.9% of the population. • 18.3% of the population. • 16.9% of the population.
• Price sensitive. • Children’s advice influences weekly • Spend more on food than any other
• Health conscious. shop. group.
• Traditional tastes. • Tight budgetary control. • High levels of spending on time
saving solutions.

Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs.


FOOD & DRINK CONSUMPTION BY PRODUCT

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www.mcneice-export.com Source: Spanish Ministry of Agriculture, Fishing and Rural Affairs. 10

FOOD & DRINK CONSUMPTION BY PRODUCTS

Page 2 / 2

VARIATIONS IN FOOD & DRINK CONSUMPTION

*2007 – 2008 Growth rates – 2009 data not available.


PRINCIPAL DISTRIBUTION CHANNELS


POINTS OF SALE BY SUPERMARKET


SALES GROWTH 2006 - 2008

Only 6 groups have consistently
grown sales since 2006:

 Mercadona  Euromadi
 IFA  Lidle
 El Corte Inglés  Consum

www.mcneice-export.com Source: http://www.fomenweb.com/ - Note: The results of Carrefour, Euromadi El Corte Inglés are estimations.
16

KEY REGIONAL SUPERMARKET PLAYERS

Source: Alimarket


SALES CONCENTRATION

74% OF ALL FOOD & DRINK SALES ARE CONTROLLED BY 10% OF SPAIN’S RETAILERS!


MARKET SHARE BY CHANNEL


OWN BRAND GROWTH


DISTRIBUTION CHANNELS

21

FOOD & DRINK DISTRIBUTION IN SPAIN
Bulk
Close To Producers

Co-ops Purchasing Exports
Centers
P
R Co-ops** – Superstores
Middlemen
O Level 2
D Household &
U Traditional Trade
Abattoir retailers
C
Close To Customers Consumption
E MERCAS*
Networks
R Wholesales Wholesalers
S
Distributors
Packaging & some Trade only
transformation. & *MERCAS: Centers that group together wholesalers in the following
Wholesalers sectors: fresh fruit & vegetables (50%) , meat (25%) and fish (41%)
sectors.

**Co-ops level 2: Distribute the products produced by their
members, in addition to purchasing products from 3rd parties.
Transformation ***Note: This model does not cover the distribution model of Fresh
& Frozen fish.


FOOD & DRINK DISTRIBUTION IN SPAIN
END CONSUMER: HOUSEHOLD & TRADE

POS MARKETING

Carrefour Auchan Mercadona IFA Eroski

El Corte
Euromadi Lidl Makro Consum
Inglés
PRINCIPAL PLAYERS IN THE SPANISH MARKET

CONVINCE THEM TO BUY

P R O D U C E R S


LOGISTICS IN SPAIN

Most Spanish supermarket chains do not
use centralized distribution. Preferring
instead to use a regional structure, as
can be seen in this map of Carrefour’s
logistic centers.


HOW TO SELL NORTHERN IRISH
FOOD & DRINK IN SPAIN

25

NORTHERN IRELAND AS A BRAND
Northern Ireland is not a well know brand in Spain, but the island of Ireland has a great deal
of brand equity, stemming principally from:

 The experiences of the hundreds of thousands of
Spanish children, students and adults who came to
Ireland on holiday or to learn English.

 St. Patrick Day celebrations in Spain’s numerous Irish
pubs.

 TV programs and Irish tourism campaigns on TV and
in magazines.

In summary, Ireland and by default Northern Ireland are both highly
regarded by the Spanish, especially for the warmth of it’s people and its
natural beauty. Creating an enormous amount of brand equity for our
products and services.

N. IRELAND BRAND POSITIONING

We believe that food & drink from Northern Ireland should have a
positioning strategy based on the following factors:

1) Taste & Quality - Our lush pastures produce food and drink of the highest
quality.

2) Product Range / Innovation – Northern Ireland produces a huge range of
quick and easy foods that complement a busy lifestyle. Spanish producers
have been slow to adapt to this market.

3) Reputation – The Spanish have a high regard for the quality of Irish and
British produce.

4) Novelty quality – Spanish consumers like to try new products.

THEREFORE THE OPPORTUNITY EXISTS, BUT HOW CAN IT BE CONVERTED
INTO SALES?


EXPORTING TO SPAIN – PRIOR CONSIDERATIONS
Even though we believe that a clear opportunity exists for Northern Ireland’s products in
Spain it is important to take into consideration the following:

Key Considerations

 Is there a market for my products?

 Is it logistically possible to sell in Spain?

 Is it economically viable to sell in Spain?

 Margin
 Payment terms

 Who will distribute and resell my
products?

 How do I convince them to buy?

 How do I keep them buying?


DISTRIBUTING TO SPAIN

EXPORTS FROM BELFAST TO THE PORT OF BILBAO IN NORTHERN SPAIN TAKES 5 – 7 DAYS.

Bilbao is a key 4M Consumers @ 200KM
distribution hub
for 2 key reasons:

1) 4 M people
live within
16M Consumers @ 400KM
200 KM
2) 16M people
within
400KM.


KEY DISTRIBUTION FACTORS
SHELF LIFE

If we consider that a minimal acceptable shelf life is 7 to 10 days and that
transportation from Belfast to the shelves of Spanish supermarkets can take
up to 10 days, then only products that have a minimum 17 - 20 day shelf life
can be exported to Spain.

REFRIGERATED FOODSTUFFS

The Port of Bilbao has over 23 000M2 of refrigerated storage in addition
to ample dry goods storage.

TRANSPORT COSTS

Costs can vary, but at the time of writing it costs £ 635 to ship a 20 FT
container and £ 885 to ship a 40 FT container to Bilbao. However it is
preferable to use 20 FT containers in order to reduce port costs. As 40
FT containers require repackaging for road transport.


HOW TO GET ON THE SHELVES OF A
SPANISH SUPERMARKET

31

OUR STRATEGY

Understand Create Present Manage

STAGE 1: In order to launch a STAGE 2: During this phase we STAGE 3: The key to this phase is STAGE 4: Perhaps the most difficult
product into the Spanish retail combine our understanding of gaining access to the targeted phase of the project due to the
sector it is imperative that we our customer with our market buyers and convincing them that constant internal changes in the
have a complete knowledge to create a value the product we are promoting is buying chain.
understanding of the product proposition that interests worth a try.
and our customer’s objectives supermarket buyers and Our role at this stage is to manage
and goals. smaller food and drinks Once we establish that a buyers distribution, increase shelf space and
distributors. is interested , we actively pursue sales points. As well as continuing to
a deal within the framework build the relationship with the
defined by our customer. supermarket.

UNDERSTAND THE MARKET
We believe that the only way to gain access to grocery retailers is by:

 Understanding the retail market in Spain i.e. the threat posed to traditional retailers by
discounters, the growth of private labeling and the need to generate brand loyalty by
improving the customer experience etc.

 Understanding the pressures that buyers are under i.e. reduce prices, increase margins,
reduce product lines, increase the range of own label products etc.

 Understanding the economic , cultural and regional factors behind consumer behavior
for example, the impact that more women in the workplace is having on the increasing
demand for ready made foods.

 Understanding the goals and objectives of our customers and assessing whether an
opportunity exists or not.

Once these factors are understood we can then begin to create market entry
strategy that will appeal to buyers and distributors on both a logical and emotional
level.


UNDERSTANDING THE BUYER
No matter what their Managing Director’s say, the principal objective of 99% of
buyers is to reduce prices and increasing margins. Demoting all but the
strongest of brands to the status of commodities.

However, the common strategy of Every Day Low Prices is not working the way it used to,
and supermarket retailers are looking for new ways to engage and delight their customers
which is forcing buyers to change their buying criteria.

Today Spanish buyers are looking for products that will not only help them to stay
competitive and profitable but will also help them to recapture the customers they have
lost to hard discounters and to grow their brand loyalty.

ANY SUPPLIER WHO HAS A PRODUCT THAT CREATES BRAND LOYALTY
WILL ALWAYS BE STOCKED.


BUILDING A VALUE PROPOSITION
During the value creation phase, we focus our efforts on putting together a presentation
that will:

A. Grab the buyers attention by making the pitch experience different.
B. Help resolves their fears.
C. Offer something different that they have not previously been offered.

By carefully combining these ingredients, we create presentations that get
noticed and which helps to get our customers products selected and
stocked.

Customer Customer
Data Insights Brand Value
Experience Engagement


MANAGING THE RELATIONSHIP

The most important service that we can provide, is to help your company build a strong
relationship with the distributor.

We achieve this by:

 Organizing regular meetings with the
distributor.

 Conducting independent market
research.

 Visiting stores.

 Offering ideas on how to improve Good news or bad: Buyers change department every 9 – 12
months in Spain.
sales.
We aim to add as much value as possible, as quickly as possible, in order to position the
brands that we represent as INDISPENSABLE.


MCNEICE EXPORT SERVICE OVERVIEW


THANK YOU!

For more information on how we can help your
company grow in Spain please contact:

www.mcneice-export.com

info@mcneice-export.com

www.miagentecomercial.es/eng

Or give us a call: 00 34 942 04 95 75


Opportunities in the food & drinks sector in Spain for Irish companies

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