Why not give up when 73 calls were unsuccessful, what are the typical mistakes when entering a German market and what it can give to Ukrainian manufacturers, said Agritrade Ukraine (ATU) project manager Andre Pilling.

Total trade between Ukraine and Germany amounted to $ 6.4 billion in 2017, with a share of agricultural exports accounting for about 13%. In addition, Germany is subsidizing the EU Export Policy Support Center for the Ministry of Agrarian Policy, which explains to agrarians what, when and how, to work with the EU market. The first project manager was Olga Trofimtseva, Deputy Minister of Agrarian Policy for European Integration, now headed by Andre Pilling, with whom Agravery.com decided to talk about the German market.

- It is Europe's largest market. According to 2016 figures, it was € 200 million. The competition is very fierce. However, Ukrainians have every chance of success first and foremost at a lower cost, since some product groups (including oil, fruit) are 40% cheaper than in Germany. However, there are many manufacturers who do not know how to export. But the German partners are a little afraid of the image of Ukraine. Of course, the quota is a certain obstacle. But not all of them are used: for example, the quota for garlic (5 thousand tons) in 2016 was exhausted by only 10%. Also, some of the Ukrainian products are shipped either via Poland or the Baltic States. This means that Ukraine is losing money, because the margin remains with the intermediaries, and the German side buys products at a higher price.

- What are the typical mistakes when entering the German market?

- Manufacturers pay a lot of attention to their product and practically do not analyze the market. Many people ask me: what are German partners looking for? There are no such products - we have the entire product line. You need to focus on the question of why my products should be better represented and prove it. Therefore, I advise to analyze the market first. For example, if you have cookies, then look at the average price and quality of such products. Knowledge of a foreign language is not a plus, but rather a requirement. By the way, to produce advertising products is best in German. Buyers are very concerned about their reputation. For example, if a consumer purchased low-quality vegetables or fruits from Edeka, he would conclude that the seller was to blame. And the responsibility for the defective product will be the responsibility of the supplier. The importer must follow various regulations - it is his duty. The packaging is very clearly regulated. Yes, there are a number of label requirements under German and EU law: for example, you cannot write that your product is treating a disease.

It is important to work with laboratories to help you provide product information in the correct way. If an error is found on it, the retailer will remove all products from the shelves. You will also need to pay a fine. Imagine how much you would have to pay if your products were available in 5,000 stores. It is also a very painful blow to the reputation of the supplier. In Germany, the use of logos is very popular, especially when it comes to organic products or made from natural materials. However, there is a separate organization behind each logo in Germany. Packaged products can be checked by an inspection: a fine is detected for the difference between the actual and the specified weight.

- What else should be prepared for?

- 60-80% of success depends on your training. Buyers typically want to see detailed price estimates at all stages: initial cost, distributor price, and final shelf price. It is important to think through logistical issues, as this is a rather painful item for Ukraine, given the difficulty of grain removal. It is necessary for the products to be delivered in European pallets.

The first stage is market research. If you do not have reliable distributors, take 1-2 days to visit the supermarkets you want to partner with. Look at the price of the similar product that is packing it, calculate how you need to sell the product so that it appears on the shelf at a specific price. The next step is to find partners. There is a European Business Guide where you can find the company you are interested in. A similar publication is available on the ATU website.

Participation in exhibitions is very important. However, the main thing is to be patient. On average, first products can appear on store shelves 9-12 months after the start of negotiations. Many companies "give up" after the first failed attempt. Keep in mind that buyers spend only 5% of their time communicating with suppliers. Therefore, they need to come with ready-made offers and cases.

In Germany, a very complex system of calculations. And it is not necessary to wait for an advance payment - no one will pay you money before the goods arrive. If you're lucky, payments will arrive in 60 days, but sometimes it will take 90 days to make payments. It is important to demonstrate the uniqueness of your product, why you need to buy it, and come up with a good name, given the linguistic features.

- According to domestic exporters, getting to German supermarkets is very difficult.

- The image of Ukraine is not positive in the eyes of German business. It can be said that a large number of decisions are made emotionally, not rationally. There is no need to be afraid of this, you just need to make personal contact first. If you make 73 calls and receive a negative answer, 74 calls may be successful. Therefore, my advice is to be open, positive and persistent.

- How would you describe German retail?

- Largest network - Edeka-Group holds 21.5% of the market share. As well as around the world popular discounters: Aldi-Group, Lidl. If you are looking to supply products in large volumes, it is better to contact larger supermarket chains. The number of points of sale decreases, but their area becomes larger. Sales are growing rapidly, with older and lonelier consumers prevailing. It is important for them to know the origin of the products. Another important point is the price. More than 60% of Germans want to buy cheap products.

- Can Private Label ease the way to German supermarket shelves?

- The minimum list of certificates to supply products under its own trademark on the network - IFC, ISO, Global GAP. However, each retailer has its own requirements. Large networks have their Private Label sub-manufacturers, every 1-2 years they look at suppliers, they send them offers, and they review them. So, if you want to ship products under Private Label, go to these departments. Some of them have separate offices.

- The lion's share of Ukrainian organic products is shipped to Germany. Who are our competitors in this field?

- The organic market is valued at € 10 million. Ukraine's competitors are primarily suppliers from Germany, followed by Italy, France, especially when it comes to vegetables. Organic products are also shipped from China. Organic dried fruits are shipped from North and South America. From Africa - nuts.

In general, there are still no strong Ukrainian brands in the German market, both in the traditional and organic sectors. Instead, there are quite powerful suppliers of grain, honey and other raw materials. German buyers are quite conservative and not ready to buy something new. Therefore, one of the tasks of exporters is to show a new Ukraine, a positive one. This process has already begun. And I think the situation will improve in the next 2-3 years.

Source: Agravery

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