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Centre for the Promotion of Imports from developing countries
Trade segments, channels and structuresfor Natural Ingredients for Health Products
Session 7
2 May 2015
Centre for the Promotion of Imports from developing countries2
Segments and channels for Natural Ingredients for Health products
1. Trade segments• Different ways of segmenting• Segments in the European market
2. Trade structures and sectors• Different players along the chain• Differences• Supplier - Buyer
3. Trade channels• Diversity• Requirements• Trends
2 May 2015
Centre for the Promotion of Imports from developing countries3 2 May 2015
Saps and extracts Essential
oils & oleoresins
Vegetable oilsFruit, seeds
Medicinal and
Aromatic Plants
Producer
Buyer requirements
Legislative requirements
Quality assurance
Certification
Cosmetic
Health productsFood
Segmenting according to industry sector (1/3)
Market
Centre for the Promotion of Imports from developing countries4 2 May 2015
Segmenting according to industry sector (2/3)
Health Food
• Food supplements• Medicinal food
Pharmaceuticals
• Herbal medicine• Veterinary medicine• Medical devices
Health products
Centre for the Promotion of Imports from developing countries5 2 May 2015
Segmenting according to industry sector (3/3)
Centre for the Promotion of Imports from developing countries6 2 May 2015
Different health systems in Europe• Western Herbal Medicine (dominant across Europe)• Homeopathy (Germany, France, Switzerland, Spain)• Traditional Chinese Medicine (TCM) (UK, Germany)• Ayurvedic Medicine (UK, Germany)• Less common systems
• Unani Medicine (UK, Spain)• Jamu (NL)
What about African Medicine traditions ?
Segmenting according to health system
Centre for the Promotion of Imports from developing countries7 2 May 2015
Temperate species • Also produced in the EU• Competition from EU
producers (quality, close links to buyers, inside the EU, wild-collection)
• Competition from other temperate zones (Eastern Europe, Central Asia, Mediterranean DC’s, China, Kenya).
Segmenting between (Sub)- Tropical and Temperate
(Sub) tropical species • Cannot be grown in Europe.
EU buyers purchase large quantities
• Competition from other DCs.• Opportunities for
established MAPs and less-known MAPs.
Centre for the Promotion of Imports from developing countries8 2 May 2015
Bringing segments together
Tropical ingredients
Sub-tropical ingredients
Temperate species
Health industry
Food industry
Focus on Herbal medicine industry
Focus on Food supplements
Centre for the Promotion of Imports from developing countries9
Western medicine
2 May 2015
Interest in new products => (sub-) tropical species
Domestic ingredients => Mediterranean herbs
Production of temperate speciesWild collection
Segments in the EU market (Generalization)
Centre for the Promotion of Imports from developing countries10
• Increasing market sophistication in Eastern Europe appearance of new segments (non-western, (sub)- tropical species)
• Segmentation of the sector in terms of age groups and life cycle stages
2 May 2015
Trends in segmentation
Centre for the Promotion of Imports from developing countries11 2 May 2015
Pro
du
cer
Trader
Processor
Man
ufa
ctu
rer
Trade structure and sectors – A large variety of players
Centre for the Promotion of Imports from developing countries12 2 May 2015
Natural ingredients are traded through specialised and general channels
Specialised channels exist in different forms:• Sector focus: on one, multiple or all sectors
• product offering: producing extracts OR active principles, or focus on a wide variety of natural and synthetic materials
• Regional focus: in terms of sourcing or sales
• Certification focus: organic, FairWild and various fair trade labels
Trade channels - Diversity
Centre for the Promotion of Imports from developing countries13 2 May 2015
Quality responsibility and Traceability are key
• Requirement of a stable (high) quality starting material• Documentation• Supply security• Cooperation with research institutions for product identification and
new product application
Traceability and Quality
Centre for the Promotion of Imports from developing countries14 2 May 2015
• Extract production shifts to country of origin Bigger role for DC processors
• Direct sourcing of manufacturers in country of production• Consolidation at all levels of trade channels: Specialization is becoming
less common• Vertical integration• Need for more sustainable costing and sourcing strategies by European
buyers • Redefinition of role of middlemen as service provider• Organic principles applied throughout the value chain (organic as
traceability system)
What does it mean for SME exporters?
Trade channels - Trends
Centre for the Promotion of Imports from developing countries15
DC SME exporter European buyers
High diversity• Certification?• Product portfolio?• Segment focus• Size and sophistication
Different types• Trader/Processor/Manufacturer• Size• Segment/regional focus• Certification
Trade structure – Selecting your buyer
2 May 2015
Centre for the Promotion of Imports from developing countries16
What is the right segment for you?
What is the right buyer for you?
2 May 2015