Research, research, research is key to US success
While President Obama was meeting the Queen, East of England companies were discovering how to succeed in business in the US at an event at Newmarket Racecourse to round off Exporting is Great Week.
Organised by UK Trade & Investment East, the conference aimed to answer key questions companies regularly ask when looking to develop new business and expand operations in the US.
The East of England already conducts £3 billion of business each year with the US, with the country vying with Germany as the region’s biggest export market.
UKTI’s Simon Crosland told the conference: “There is still significant potential for greater volumes of export in the US and we’ve identified 89 specific opportunities available now through www.exportingisgreat.gov.uk ” He said that to take advantage of these opportunities businesses needed to build knowledge, understanding and contacts – something this event aimed to help them with.
As the largest consumer market in the world, the opportunities were clearly out there according to keynote speaker Alvaro Alamillo, head of international partnerships for Santander UK.
“They like to consume so they are good from an exporting perspective,” he said. The US also had the highest internet penetration in the world, spending $340bn online.
Another great opportunity was via the 7,500 US businesses already established in the UK. It wasn’t an easy market though, Alamillo cautioned. “It’s the third most challenging behind China and Russia and in many cases there is a domestic company supplying what you have. The competition is fierce as everyone wants to sell to the US.”
For those not put off by this he had only one message: “Research, research, research”. Companies needed to find out, “Is there a need?” and “how is that need being covered?”
He said the US couldn’t be considered as a single market and there were many barriers to entry. Research could be done online or in person via trade missions and trade shows. “Talk to UKTI; they are in the markets 365 days a year dealing with companies like yours,” he said. And for those who took the plunge he added: “There are advantages. If you do your homework right it will pay off.”
One company it paid off for was Noble Foods which launched its Happy Egg product in California in 2012. “It’s the most exciting, challenging, rewarding business I’ve ever set up,” said COO David Wagstaff. What anyone going into the market needed to know was that is was “a massive countries of different countries.” If his company had chosen the East coast rather than Northern California to launch the US business he didn’t believe it would be where it is now.
While you had to meet their cultures head on (such as by ditching the suits for jeans) in some ways it paid to be different. “Don’t underestimate the Britannic approach,” he said. The Happy Egg brand was the first free range egg brand in the US and it is now the fastest growing in the country – in 7000 stores; the company aims to be a $100m brand by 2020. There were pitfalls though, Wagstaff said.
“Freight costs are a killer, brokers are a minefield, customers only have one range change a year and it’s expensive.You’ve also got to allow time. It’s not easy but it’s a massive opportunity. Stick at it, put your best people on it and pay them really well.”
Joe Denham of Cambridgeshire and Essex based VegTrug, which supplies raised vegetable growing platforms, mirrored much of what the other speakers said. His company originally went into the US to reduce seasonality, reduce currency exchange exposure and because they wanted to be a global brand. “You won’t win business overnight,” he said. “You need to take five to ten years. Be a Mick Jagger not a Robbie Williams.”
The US market was, he said, in some ways a dinosaur and in others head of the game. “The Amazon model is scaring people and some aren’t changing quickly enough.” Trade shows had been very useful for VegTrug in terms of finding partners and picking up industry knowledge, as well as industry trade associations and UKTI.
“They’ve done it, been there and offer good advice,” he said. His parting advice was to research, target key markets, talk to people, search for grants and take expert advice.