Foreign markets – it’s a gut feeling

by | Aug 2, 2017 | Business and Marketing

When it comes to a new market, nothing beats walking the streets, says Boyce Lloyd, KWV CEO.

A recent Exporters Club Western Cape meeting at the KWV Sensorium in the Paarl gave attendees the opportunity to reflect on success factors needed to grow FMCG business into the exports market. Aptly titled ‘To build and to buy’, Boyce’s talk highlighted challenges faced and successes achieved while working in Nigeria under the aegis of SABMiller.

Lloyd is no stranger to the beverage business. More specifically, he is well-acquainted with the beverage business in foreign markets. He’s literally walked the walk and talked the talk. Joining KWV in late 2016, he brought with him a wealth of experience gained in markets such as Africa and Latin America.

“When it comes to a new market, nothing beats walking the streets,” says Boyce. “Talking to the locals, meeting potential partners and key role players, and generally being present in the market you want to penetrate will help you gain trust, familiarise yourself with the environment and formulate a business plan.” On top of this simple advice, Boyce also identified to some key strategies that helped foster success in Nigeria and that are also applied in KWV’s current export market strategy.

Understanding Forex and market volatility

Two thirds of KWV’s business lies in export markets, which means there is a considerable element of risk and uncertainty. One’s chances of success can be improved by planning ahead and by being bold and brave. Says Boyce, “South Africa is used to dealing with volatility. This is what we have learned to do. The same can be said for KWV. Wild fluctuations in exchange rates make sustainability and the value chain difficult to manage, yet the bottom line for the customer is predictability. What we [KWV] do, is to lock in a rate in order to bring that certainty – in other words, we take a view and hold on to it regardless of any fluctuations. This takes guts and is only achieved by shutting out the noise and looking ahead. We never second-guess ourselves.”

Trust your gut feeling when it comes to credit

The risk of non-payment is unfortunately a universal occurrence. While insurance is an option, it is not available in all countries. “It comes back to trusting your gut feeling,” Boyce says. “If you’ve had your feet on the ground and met the people, chances are you’re going to make the right credit decision. Follow your instincts.”

Invest in a capable local partner

KWV currently enjoys a sizeable share of the Russian wine market and more growth is predicted. Russia’s affinity for South African products bodes well for KWV’s sustainable long-term growth in this country, but without a capable and influential Russian business partner this would not have been possible. “This aspect is an absolute no-brainer,” says Boyce. “Invest in the right partner and build a solid, win-win relationship with them.”

Be ahead of the rest

Another no-brainer: Ask yourself what your competitive advantage is. If you do not have one, get one. “During my work in Nigeria, we studied our competitors”, explains Boyce. “We asked people what our competitors were doing right or wrong. By doing this, we often saw that there was no innovation, poor engagement, and that unpopular trade conditions were being imposed. We did a thorough SWOT analysis and planned accordingly. But, once again, you have to walk the streets to develop your intuition.”

Manage complexity

Decide on a couple of things (eg brands) that will make a difference and then stick to your guns. By adopting the ‘less is more’ philosophy, you’ll be able to focus on what you want to achieve and get it right.

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