Tag Archives: Growth

Build your Beer Brand and Business Internationally


Before you send your beer outside your home country and build your brand and business internationally there are a few critical decisions you need to plan.  We will share those key decisions and discuss in more depth with 3 Australian craft breweries – Kaiju Beer, Prancing Pony and Hawkers Beer exporting around the world at the upcoming Australian Craft Brewers Conference in Adelaide on Thursday 27 July 2017 from 2pm – 2.45pm in the Kegstar Room.

Come and join us for Export – Triumphs and Tribulations and gather some usual insights and learning shared by Callum Reeves – Chief Boss @KaijuBeer; Corrina Steeb – CEO and Co-Founder @Prancing Pony; Mazen Hajjar – CEO and Co-Founder @Hawkers Beer and Ben Giles – Senior Trade Advisor at Austrade as you seek to export your beer, brand and business internationally.

  • Where to go? Before you venture off-shore and start shipping or brewing your beer in overseas lands you need to decide Where to go? Which market(s) are best suited to your product(s) in which order of priority? There are a myriad of factors and indicators you can use to help you come to this conclusion.  Unfortunately, in export and in small business too often we see “reactionary undirected spray and pray” approaches to export as opposed to “deliberate, considered, choice based strategic decision making” when it comes to the first fundamental question to answer: Where to go?  Working with many food and beverage clients and delivering capability courses on behalf of the Australian Government to food businesses across Australia we have narrowed the key factors to consider to 5 underneath which you can come up with some lead indicators to make a measured and objective decision on where to go? 1st, 2nd, 3rd… etc in terms of international business development:
  1. Socio-demographics – it is easy to get blinded by the newspaper headlines – like 3 billion middle class drinkers in Asia by 2030 (Rohde, 2012) but you need to dig past the headlines to see that middle class is defined as annual per capita expenditure between US$3,650 and US$36,500. Our work with premium quality food clients suggests you look past the simple population to define your target in terms of age, income and urbanisation and other socio-demographic indicators including penetration of high disposable income luxury chain retailers and/or disposable income for food and entertainment.
  2. Market Attractiveness – the obvious one – what do the numbers say? How much volume, value, cumulative annual growth and more importantly $/L are drinkers willing to spend on beer and other parallel world beverages (alcoholic or non-alcoholic). Some markets may appear huge on the surface in terms of consumption and volume e.g. China but you need to dig again below the surface to see that the average price of a domestically brewed draught beer of 500mL in China is 6.00 ¥ or A$1.15 per pint vs the average Imported Beer 33cl bottle 15.00 ¥ or A$2.88 per 330mL bottle or 250% more for 33% less beer and that is mainstream beer before we even get into craft beer pricing differentials compared to domestic and/or other imported craft beer brands.
  3. Open to Trade – Which markets are open? Importing and exporting a lot of beer around the world? You can dig for data in this space as well to use you head as well as your heart when you consider where you can relatively easily ship your beer in terms of foreign markets.  Common data sources available to mine in this space include ABS statistics for outbound Australian exports (follow the leader) or UN Comtrade for import / export data.  You need to be across your HS Codes and where possible use multiple data sources to triangulate the information.  Knowledge of Free Trade Agreements and where the tariffs are and where they are falling fast is also an important indicator of opportunity.
  4. Market Deterrents – You need to be aware of behind the border trade barriers or markets that have product registrations or stringent labeling guidelines like local language labeling and/or religious certification before port of entry. Some Asian markets have their own local equivalent of a Food & Drug Administration and require product registration before entry including: Thailand, the Philippines and Indonesia to name but a few.
  5. Dispersion – highly concentrated markets either in terms of supply side power of suppliers or retail side in terms of power of buyers are more difficult to penetrate for obvious reasons. Where you see a concentration of market share in a few strong local players or a concentration of market share on the retail side of the value chain you will need to factor in a higher % share of the value chain to the retailers.  Markets with retail duopolies or oligopolies that extract high retail margins not only include Australia but New Zealand, Singapore and Hong Kong as well.

  • How to enter? Once you have narrowed your choice of market(s) to enter to your top 1 or 2 or 3 in terms of order of priority and opportunity you are now able to head to the market and test your hypotheses and validate your assumptions on the right mode of market entry to successfully set up your brand and business in that host country. Depending on how deep your pockets are or the pockets of your investors and shareholders there are three key modes of market entry:
    1. Export the most common and lowest risk first entry mode of many small businesses you need to also take note of the different modes within export and the pros and cons of each entry mode from selling locally to an Australian Based Consolidator or using a local agent to using an in-market agency or selling to a local importer and distributor or direct to an end retail customer. Fundamental to your success in export will be partnering up with the perfect partner to help you implement you go to market launch plan and activate your brand in the host country. Some tips and guidance on how to objectively measure and evaluate a perfect partner for distribution are outlined in our Creatoblog – Looking for Love .  You would not marry someone sight unseen over the internet without meeting them, first would you? So, why would you ship your precious beer sight unseen to an inbound inquiry when you have not checked out the warehouse, distribution, sales and marketing capability of a potential importer in a foreign country?
    2. Contractual modes of market entry include two very common to the brewing industry – licensing and contract manufacturing. Brewing under licence is common for “large multinational brewers” and we might see more of this in craft in the future if craft beer drinkers start to base purchase decisions on factors like freshness and brewed locally for sustainability reasons.  While uncommon to date in craft beer there are some businesses already experimenting with this entry mode the most notable close to home example being Yeastie Boys brewed under licence in UK by Brew Dog and in Australia by Nomad.
    3. Investment is the preferred mode of market entry of the well-resourced large multinational enterprises in search of fast growth. Investment modes of entry include Joint Ventures, Strategic Alliances, Greenfield Investment and Merger & Acquisition.  Some recently publicised equity raisings in craft beer have indicated this mode of entry is under serious consideration for notable northern hemisphere craft brewers looking to more aggressively expand their businesses into the US, Australian and Asian Markets (Kamps, 2016 and The Drinks Association, 2017).

  • When to enter? Finally you need to allocate sufficient $/people/time to resource a go to market launch and activate and generate trial and repeat purchase for your beer in the new host country. You need to be strong at home before you head overseas as your Homebase will fund the early years of investment in your off-shore markets.  There are many ways to get your beer in the hands of drinkers and it is vital you resource your business with sufficient funds and people to support your brand during the vital Go to Market launch phase as the saying goes you only get one chance to make a first impression and there are many great craft beers out there!  Some innovative collaborative ways to activate and share the cost of activating your brand in foreign lands are evident in both craft beer and independent wine and worthy of a closer look:
    1. Brewers Association – Export Development Program (EDP) – set up by the Brewers Association in 2004 the EDP objectives include educating international trade and media about US craft beer diversity and informing BA EDP members about international opportunities based around a host of support activity from participation in trade shows, competitions, seminars, inbound buyer missions, export market research and promotion through international media.
    2. New Zealand Beer Collective – friends abroad the NZ Beer Collective is the collective pooling of resources of 5 Kiwi Craft Brewers to enter the UK market and make a bigger dent together than they can make individually pooling their resources to assist with trade activation and distribution. The members include 8 wired, Renaissance Brewery, Three Boys Brewery, Tuatara, and Yeastie Boys and the Collective was established in was formed in 2016 to act as exclusive importer, national distributor, brand management and sales of the New Zealand Beer Collective in the UK market.
    3. The Craft Beer Clan of Scotland – a collection of 35 Scottish Craft Breweries collectively marketed by J W Filshill Ltd, a wholesale business based in Glasgow and run by very experienced international liquor executives they market collectively their craft beers into fast growth craft beer markets like North East and South-East Asia.
    4. Margaret River Wines – 14 winemakers, ranging from some of the region’s smallest to biggest, are stocking their product in four stores branded “Margaret River Wines” in China. And there are plans afoot to open another six by year’s end, and up to 300 within three years (Pancia, 2017). Teaming up they can directly distribute and educate the Chinese wine drinkers on the premium value and position of “Margaret River Wines”.

Exporting can be a great way to diversify your business, reduce risk and increase scale and economies of production in your brewery at home, not to mention the brand equity and business value you can create abroad if you do it well. Come along to the Australian Craft Brewers Conference in Adelaide on Thursday 27th July 2017, and join us in the Kegstar Room for Export – Triumphs and Tribulations with shared experiences from three Australian craft brewers who are already exporting and be informed of the Government support and assistance available to you from Austrade.

Bibliography and References:

Australian Government (2017) DFAT https://ftaportal.dfat.gov.au/ Free Trade Portal viewed on 11/07/2017.

Austrade (2017) What is EMDG? https://www.austrade.gov.au/Australian/Export/Export-Grants/About/what-is-emdg viewed on 02/07/2017

Australian Brews News (2016) Yeastie Boys announces Sydney venture http://www.brewsnews.com.au/2016/11/yeastie-boys-announces-sydney-venture/ November 14, viewed on 02/072017.

Australian Bureau of Statistics (2017) International Trade http://www.abs.gov.au/International-Trade

Beertown NZ (2016) Yeastie Boys’ future is in the UK http://beertown.nz/wellington/273-yeastie-boys-future-is-in-the-uk Mon, 12 Sep. Viewed on 02/07/2017

Brewers Association (2004) Export Development Program https://www.brewersassociation.org/business-tools/exporting-beer/join-the-edp/ viewed on 02/07/2017.

Cost of Living in China  https://www.numbeo.com/cost-of-living/country_result.jsp?country=China

Creatovate (2014) Take your business off the Road to Nowhere into Lands of Opportunity https://creatovate.wordpress.com/2014/07/23/take-your-business-off-the-road-to-nowhere-into-lands-of-opportunity/ July 23.

Creatovate (2014) How to enter new markets…Export https://creatovate.wordpress.com/2014/10/09/how-to-enter-new-marketsexport/ Oct 9.

Creatovate (2014) Looking for Love? Partnering for growth internationally https://creatovate.wordpress.com/2014/06/19/looking-for-love-partnering-for-growth-internationally/ June, 19.

Creatovate (2014) How to enter new markets…Contractual Modes of Entry https://creatovate.wordpress.com/2014/11/19/how-to-enter-new-markets-contractual-modes-of-entry/ November 19.

Creatovate (2014) How to enter new markets…Investment modes of entry https://creatovate.wordpress.com/2014/12/04/how-to-enter-new-marketsinvestment-modes-of-entry/ December 4.

Chloe Fraser (2017) First Margaret River wine store opens in China https://thewest.com.au/news/busselton-dunsborough-times/first-margaret-river-wine-store-opens-in-china-ng-b88460098z Fri 28 April. Viewed on 02/07/2017.

Haje Jan Kamps (2016) BrewDog brewery raising $50M from the crowd to secure U.S. expansion https://techcrunch.com/2016/08/04/brewdog-equity-crowd/ August 4, viewed on 02/07/2017.

Anthony Pancia (2017) Margaret River wine producers see big future in exports to China as demand grows http://www.abc.net.au/news/2017-05-12/margaret-river-wine-producers-see-big-future-in-exports-to-china/8519932, May 12, viewed on 02/07/2017.

David Rohde (2012) THE SWELLING MIDDLE, Davos, http://www.reuters.com/middle-class-infographic retrieved on 2/07/2017.

Efic (2017) About Efic https://www.efic.gov.au/about-efic/

Food Innovation Australia Ltd (FIAL, 2017) Export Development Program https://fial.com.au/export-market-activity viewed on 02/07/2047.

The Drinks Association (2017) BrewDog announces plans to build Australian craft brewery http://www.drinkscentral.com.au/4751?Article=brewdog-to-open-australian-brewery April 12, viewed on 02/072017.

UN Comtrade (2017) https://comtrade.un.org/ viewed on 02/07/2017


When to enter new markets?

First and foremost we stood back and used our head as well as our heart to determine Where to go? 1st, 2nd, 3rd, etc.  Secondly, we looked at each market on our Market Opportunity Index© and worked through the appropriate market entry model: Export, Contractual or Investment?  Last, but not least we need to time phase our market entry over the coming horizons of growth so that we can competently and capably execute on our international business strategy.

One of the most enduring and misunderstood growth strategies used in business today is the McKinsey ‘Three Horizons of Growth’.  Having worked in large corporations for well over a decade and consulted to both large and small businesses for several years now I often hear comments from busy executives in corporates and business owners alike “we will do core (Horizon 1) activities this year, then get to international markets (Horizon 2) next year and then start creating new products for those markets (Horizon 3) in 3 years’ time”.  The reality is you need to be working on all 3 horizons of your business growth simultaneously to build a sustainable business growth platform for your business.  Of course you cannot spend equal $/people/time on all 3 horizons but you need to be clear in your choices, communicate them widely across the business and allocate some of your precious scarce resources to all 3 horizons to realise the growth that comes from effort exerted in the ‘now’ that will payback ‘years’ into the future.

McKinsey Model: Three Horizons of Growth (Coley, 2009)

McKinsey 3 horizons of growth

Creatovate has been privileged to work with clients who clearly get the need to plan the “When to enter?” in their international business strategy and work simultaneously on all 3 Horizons of Growth – defending and extending their current home base(s), building momentum by entering new international markets and allocating some of their scarce resources (the most scarce being their time) to creating options for future new market entry which may also entail new market entry models.

Let me share an example.  One of our clients knew they needed to grow fast in their existing ‘hub’ or core home market(s).  They did not want to distract unnecessarily their executive team in their home market(s) with international business opportunity in the immediate term.  They engaged Creatovate as consulting partners and together we set a clear choice based strategy for international growth that had a clear structure with hub or home markets to focus 100% on their patch whilst simultaneously supporting the international business development unit (a dedicated small team).  The leader(s) in the International Business Development unit worked with Creatovate to identify, rank and prioritise new markets for entry and systematically we phased those markets for entry over 3 time horizons, knowing some would be easier to enter than others for example using perfect partners and easier modes of entry like export.  However, our client did not stop there allocating some precious resource: $/people/time and strategic foresight to simultaneously explore and create future options for business growth in difficult but very large new markets that would require more complex entry models like contractual and/or investment.

Speed bumps and unexpected surprises hit them hard in one core home or hub market.  However, the work for international business growth has been done and they are in the very fortunate position of having a queue of difficult to enter highly attractive growth markets sitting in their new business development pipeline ready to activate.  Contrast that story with the vast majority of businesses who are spending almost 100% of their $/people and time defending and extending in their saturated core home market(s) and quite simply can never get out of the daily grind to contemplate growth outside their home base.  I know which business I want to be working with and a part of especially at their budgeting and strategic planning cycles when the topic of ‘new horizons of growth’ comes up for discussion.

The need to focus and split your scarce resource allocation wisely over your core Horizon 1 business – say 60%, and emerging new business – say 25% and finally creating options for future new businesses – say 15% is not simply the domain of big business.  Creatovate has also been privileged to partner with a family owned client business who has very successfully extended and defended their core home market, entered a new market adjacent to their home country and built significant momentum from a standing start in less than 18 months and created a viable new business venture into another new and highly competitive and complex country all in the space of 2 years and all with a team of less than 10 full time employees.  The When to enter? question is vital to your business planning and differentiates the true growth businesses from those that are simply ‘doing the business’.

The lifespan of a company today is getting shorter and we do not have to look far for evidence of this fact.  The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years. A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983-acquired, merged, or broken to pieces (Business Week).  To increase your business chance of survival we believe you need to work on more than 1 Horizon of Growth and we believe you need to work on all 3 Horizons of Growth simultaneously.  Reach out, give us a call, send us and email, share your thoughts and comments and experience with us.

Without a clear strategy of Where to Go? How to Enter? Export? Contractual? Or Investment? And lastly but not leastly When to enter? You risk making mistakes and damaging your growth plans.

Dermott Dowling is Managing Director @Creatovate, International Business consultancy. Creatovate help businesses grow outside their home base from market entry strategy to route to market to go to market launch. Contact Dermott if your business needs help expanding your business internationally.


Steve Coley (2009) Enduring Ideas: The three horizons of growth  http://www.mckinsey.com/insights/strategy/enduring_ideas_the_three_horizons_of_growth     retrieved on 12/02/2015

http://www.businessweek.com/chapter/degeus.htm  viewed on 12/02/2015

Looking for Love? Partnering for growth internationally

10 KeyInternational Partnerships Eyes to unlock a Perfect Match and grow your Business Internationally

In business just as in personal life finding a partner is very important to reaching your full potential and growing.  Different cultures, geographies, tyrannies of distance and cross-culture misunderstanding all lean towards partnering as a fast efficient and effective mode of new market entry.  Finding the right partner is something you should not rush and likewise something you’re your business should drive rather than be driven towards by direct approaches from potential overseas partners.  In this post we talk through how Creatovate works with our clients to help them find the perfect match and create what we hope will be long lasting profitable relationships for our clients and their partners in market.


 food-industry-scale-efficiency1.     Efficiency & Scale

When looking for a partner to help you market, sell, distribute and store your goods in market you will inevitably have to give up some margin in the value chain between you the producer and the end customer and consumer of your products.  One of the most important factors in the equation will be the gross margin or ‘cost of doing’ business requested by your partner in market.  We do not recommend you start talking about this immediately but leave it till last or second last but it is an important piece of the puzzle you need to take away from any potential partner conversation.  What margin do you and they need to make a living? What trading terms are they requesting? Allowances for date and damage stock? How much do you need to allocate for customer trade spend? Advertising and Promotion support? What forms of business reporting do they use and how frequently will you see sales numbers, forecasts, stock reports?



2.     Leverage

The mere fact you are considering entering into a partnership or distribution agreement in an overseas territory is demonstration you are seeking to leverage the skills, capabilities, networks and trading relationships and infrastructure of another party.  Leverage is a key means to grow your business and just as in financial leverage can help grow your business leveraging partnerships can increase your scale and size very quickly if done well.  The types of questions and leverage opportunities you are looking for could include partner reach and channel coverage – do they reach all or most of your potential sales channels? How have they grown in the past with other principals and what other principals/brands/products do they have in their stable that you can leverage in co-promotion opportunities e.g. If they are importing wine and you are cheese brand can you partner up for promotions?  What is the extent of their customer and supplier relationships and are they complementary to your own brands/products/services?


3.     Capability

One of the pillars of any successful market entry strategy will be a mode of entry that demonstrates capability to succeed.  Recognise you are in a foreign territory.  Rules, regulations, customs, consumer and customer behaviours and attitudes are different to your home country.  Capability of your local partner will be multi-faceted including the vital first priority – People. What are the competencies of their trade marketing, sales, management?  Systems and Processes – what means do they have to manage order to delivery, accounts receivable, warehousing and distribution, sales and marketing?  Infrastructure – what level of competency and capability do they have to adequately warehouse and distribute your goods to customers?  Do they have their own facilities or is it outsourced to reliable and reputable third parties?  If they are outsourced to third parties are those facilities professional, efficient and well kept.  Make sure you visit the infrastructure facilities where your goods will be warehouse.  If you can afford the time and cost attempt to follow the first shipments from your factory through the entire supply chain to make sure your goods arrive in the customers and consumers hands in the same condition they left your factory floor.


4.     Need

One of my earliest leaders and mentors, Dr Ong used to say there is only one good trading partner ‘one where you fill their rice bowl’ or in other words one where ‘if they don’t sell your products, they don’t eat that night’.  This is the defining characteristic in terms of partner choice.  Do you go for ‘lean and hungry’ or ‘small and nimble’ or ‘large and well established’?  There are potential costs and risks for picking either / or option.  How willing is your trading partner to invest in building your brand with you.  Will they share promotion costs and expenses below the line to drive sales?  What split is fair and reasonable to you and them 50/50, 60/40, 70/30?  How passionate is your potential partner for your business?  Did they approach you or vice versa?  Do they have a passion for your products and category?  What is their expectation from you in terms of marketing and promotion and price support to drive their sales and your brand equity in their market?

Open & Honest

5.     Open

Image courtesy of Far Reach
Transparency builds trust and open and honest dialogue and exchange of each other’s interests, operating margins, business models and a general willingness to do a full work-back and/or up on costs and margins in the value chain is important.  Does your potential partner have a mission, vision and values that align with your own?  Are they equally interested and keen in doing the business with you and will the relationship be win-win and generally equal in nature or win-lose or disproportionate in the value created and shared you and your partner?  Your initial face to face meetings and ways of sharing information will be an important indicator of your future working relationship.  We all seek to build solid long lasting partnerships so open and honest feedback and dialogue is most welcome.


6.     Reputation

What is your potential partner’s reputation and intimacy with the local trade like?  Has their business just started or has it been trading for years with credibility in the trade in the market you are seeking to enter?  How long has the ownership structure and senior management been in place.  What are the staff turnover like and their relationship with local government, customs, officials, etc.  What are the differentiating factors for this partner compared to the rest of the options available to you to choose from in this market?  You partner will be the face and arms and legs of your brand on the ground so it is vitally important they act with integrity.



7.     Conflicts of Interest

Conflicts of interest can occur frequently when you are seeking a trading partner who has experience with the types of goods or services you sell.  Trade partners can only get that practical experience by selling competing brands or their own and that is a conflict with your interest to see them focus solely on selling your brands.  Alternatively do they have business with common end customers selling adjacent category products or are the products they sell in the same category as your own from distinctly different geographies with distinctly different prices and positions in the market?  These factors are very important to consider as ideally you want a partner solely focused on selling your products and not in a dilemma as to which principal in your category to devote their time and attention and focus.


8.     Knowledge

Anyone can have a go at selling something and anyone can try and drop prices relative to the incumbents or competing brands in your category.  Knowledge brings wisdom in terms of a context that your trade partners can use to help educate customers why they need to pay more for your products or how your products or services can improve their own business performance.  Knowledge about your own business and a genuine interest in your plans, research before you meet and some care and diligence in forming a possible partnership are all indicators of a passionate partner who values long term over short term opportunity.  To truly lead a category on the ground in the market overseas the potential partner will also need in depth customer, category and consumer knowledge and show some willingness to invest some of their own resources behind gaining that wisdom.


9.     Opportunities

Does your potential trade partner have capability or partnership opportunities you can leverage to create value 1+1=3!  Do they have customer partnerships that can create new products, services and development down the line, do they have access to local manufacturing facilities should you decide after a successful export market entry strategy that you would like to manufacture your brand locally?  Are they open to partner more intimately down the line in terms of marketing and distribution – Joint Ventures or introduce you to other principals with whom you can partner up in multiple markets?  This is the longer term horizon 2 or 3 opportunities that you are thinking about should this trading relationship go well in the early years and your business get off to a good start.  How can we form a more connected deeper engagement with or through our partner in market to grow further in that country or other countries internationally?

References10. References:

Rather like a job interview meeting face to face with potential partners, reviewing their office, staff, logistics, systems and capability you are assessing if they have the skills, experience, competencies and passion to partner and do your business.  If key indicators 1-9 are all positive and you are feeling this partner has the potential to be “the one” for your business the next logical step is to ask and then do some reference checks.  You should ideally reference check your trade partner from both sides.  What other principals can you talk to who can speak positively of their trading relationship with your potential trade partner.  Likewise, what customers of theirs can you talk to assess their service levels, reliability, and ability to deliver on their promises and supply products consistently?



10 x 10 = 100% perfect match!  You are unlikely to find the perfect match in life and reflecting on your personal and professional relationships to date will highlight that fact.  However, you can see that one possible way to independently evaluate multiple potential trade partners might be to use a scorecard rating each potential partner on these 10 factors with a highest possible score of 10 for excellent or 1 for no/low score.  This can help you objectively as well as subjectively evaluate your perfect match!  Creatovate developed the above tool for trade partner screening and matching in partnership with one of our first clients when looking for “the perfect match” for them and we have successfully used this tool with multiple clients since, receiving positive feedback and builds on the tool.  You can create your own ‘perfect match’ scorecard and series of key factors and indictors that works for your business, product or service.  We wish you well in your search for love and a long lasting business partnership.

Dermott Dowling is founding Director @Creatovate, Innovation & International Business consultancy.  Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.

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