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The presentation suggests how a Canned food brand can enter in UAE market
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Entry Strategy into UAE for Sonnamera
Applied Research Project (ARP)
Presenters –Sarthy Vadnerkar & Shriti Chhajed
Internal Mentors - Dr.Balakrishna Grandhi & Ms. Jyothsna Singh
Corporate Mentor – Mr. Abhay Sharma
Executive SummaryAsian food factory, a leading trading and distribution hub based out of Singapore is
looking to expand their flagship brand , Sonnamera by entering the UAE market.
Some of the factors that go into building a good entry strategy would be selecting
the best Emirate to start with, choice of distributors and retailers, Market
positioning and the product portfolio to start with.
Recommendations The best emirate to start operations would be Dubai. Target two major hypermarkets like Lulu, Carrefour and one supermarket Spinneys. A big distributor with a large product portfolio and catering to the above
mentioned retailers. Product portfolio to have pineapples, corn , mushrooms and green peas. Market positioning as a premium brand.
Based in Singapore
A major trading and distribution hub
The Asian Food Factory is within easy access to the food processing and production facilities in Asia
Leading supplier of canned fruits and vegetables, under the Brand Sonnamera
Private label solutions company to both Retail and wholesale trade
Product Portfolio -Tomatoes and Gherkins from India, Pineapples and Sweet corn from Thailand, mushrooms from France and Olives from Spain.
To perform an analysis of all the emirates with the end goal of suggesting the best emirate to start operations, with respect to setting up a marketing facility
To identify entry barriers for the canned food segment in the UAE market
To analyze market research findings in order to develop entry strategy
To find approximate cost involved across the supply chain to help estimating the total cost of the product
UAE as a market
for Canned
Food
Estimated annual value of the canned food market is $2.5
billion.
Estimated average annual growth in canned food market is 5-10
percent.
Percent of imported consumer-ready products is 75-80
Percent of locally processed foods is 20-25
In UAE - Abu Dhabi, Dubai and Sharjah are home for nearly 75
percent of the population and retail development
All major chains except Carrefour import most
products stocked.
Porter’s 5 Forces
Top 3 Entry Barriers
Factors important For A New brand
Evaluation of Options
Take a license from a smaller emirate and operate from Dubai
Setting up a facility in Dubai
Pros: Biggest consumer market for
canned food Majority of the corporate offices of
distributors and retailers are based out of Dubai
Reduces the replenishment time Avoids inter emirate tax
Cons: High cost of renting High cost of living for employees License cost would be high
Pros:• License fee of smaller emirate is
less• Cost of operating also reduces
Cons:• Transportation cost increases• More coordination needed
between the 2 emirates
Emirate to Start With
Small DistributorBig Distributor
Distributor
Pros: Higher bargaining power with
retailers Faster penetration into the
market Get better visibility in shelves Strong Distribution network
Cons: High Cost Demand its terms and
conditions in the contract
Pros: Smaller distribution network Less Cost May have a good hold in the
market for canned food products
Cons: Slower penetration in the
market Buying power to retailers
Convenience StoresBig Retailer
Retailer
Pros: Large Customer base Better market penetration
Cons: High listing fee Upfront marketing cost Buying power of retailers
Pros: Lower listing fee No upfront marketing and
advertising cost
Cons: Small customer base Too many to enter together
All products existing in UAEProducts having the highest
market share
Pros: Top 20% of the products
would be responsible for 80 % of the sales
Less cost of listingCons: Unavailability of brand for
certain products
Pros: Availability for all products Build brand loyalty
Cons: High initial cost Large inventory
Product Portfolio
Super Premium Segment
Pros: Continue with previous brand
image Higher margins
Cons: Difficult to get innovators for the
product Narrows the customer base
Premium Segment
Pros: Wide customer base More sales Faster penetration in market
Cons: Difficult to move to super
premium later Lower margins
Market Positioning
Distributor or Retailer Big Small
Distributor margin (includes
warehouse cost and transportation) 13-15% 10-13%
Listing Fee (AED/month) 1500 600
Wholesaler margin NA 5-10%
Retailer margin 15-20% 15-20%
Shelf Space Cost (AED/ month) 200-700 Nil
Upfront Marketing and Advertising
Cost 2000-3000 Nil
Costs Involved
Best
Recommendations
The Way
Ahead
Sarthy VadnerkarShriti Chhajed