East Imperial's Tony Burt shares his insights on navigating the external challenges when embarking on international expansion in the FMCG sector.
The Covid pandemic has re-moulded the way we live, work, and play. We’ve gone from living in what may soon be remembered as the heyday of travel, dining and socialising, to isolating in our homes and entertaining ourselves by baking bread and online shopping. Meanwhile, companies worldwide, especially within the FMCG sector, have scrambled, sacrificed and strategised to adapt to the ongoing external challenges or risk going under.
One of the biggest of these challenges within the FMCG industry has been the disruption to global supply chains and ongoing shipping inflation and delays. Extended lockdown periods and endless travel restrictions have created the perfect storm to hamper trade at every level. Across every industry, supply chains have been strangled, causing major delays and significantly increasing material costs which many businesses have either had to absorb or pass on to the consumer.
Throughout this time, East Imperial has been experiencing a pivotal growth phase of our business looking at international expansion and securing new distributors, as well as preparing to list on the London Stock Exchange.
For other FMCG operators who are forced to keep pivoting at a moment's notice, I want to share my top three insights into how we’ve navigated these external challenges.
1. Prioritise innovation
The businesses that have survived, thrived and grown the most, are those that have stayed fluid and embraced innovation during every stage of the pandemic. A first step should be to review existing manufacturing processes. In the face of global supply chain disruptions, is there a way to streamline your operations?
Late last year, we introduced a new aluminium can format, compared to our traditional glass bottles. What this has meant is we’re no longer paying to transport the weight of the glass for our international exports, we’ve got fewer breakages in transit, and from a consumer perspective, they’ve got more choice when it comes to their product experience.
Currently, we’re in the process of investing in international manufacturing facilities in the same markets we are distributed within, in order to keep shipping costs and taxes down. This is not an overnight remedy but one that has many rewards to be reaped once successful.
Another area we’ve invested heavily in is product development. As we were faced with reduced hospitality and travel, it was important for us to keep our customers happy and interested. This led us to launch a limited product - Coffee & Tonic - which was the first prepackaged iteration of this in New Zealand.
2. Lean into consumer trends
A second step, that seems obvious in hindsight but felt risky in earlier months of the pandemic, is to follow the people. When lockdowns first began in March 2020, ‘work from home’ and ‘Zoom meetings’ quickly became the norm. Students and CEOs alike were congregating in virtual spaces to continue learning, working, socialising and shopping. The latter led to a 52% growth in online spending as compared to 2019, according to an e-commerce report by NZ Post. On average, Kiwi online shoppers spent $3,567 in 2021.
With consumers continuing to rely on online shopping, New Zealand's FMCG industry had to re-strategise their business models and get online. For some, this meant working around the clock to set up door-to-door delivery, click-and-collect options, online payment structures, all while having to continue delivering exceptional food and service. For East Imperial, we could no longer rely on stocking our tonics and mixers in high end luxury bars and hotels. Instead, we focused on adapting our own e-commerce offerings, ensuring we could provide online, contactless delivery through our own, and third party, websites.
3. Localisation is key
As we’ve expanded into more markets, we quickly realised that what worked in one market, was not necessarily working in another. For example, while our Yuzu Tonic is popular with Kiwis, in California health and wellness trends lead consumer demand more towards low sugar options. Ensuring our range of products appeals to the local markets enables us to circumvent shipping delays and high manufacturing costs by producing lines that were actually in high demand in each market.
As we continue to live with restrictions, challenges with reaching customers, accessing materials and shipping goods continues to persist. However, success can be found through continued assessment of how your business can adapt to meet the ever-changing needs of the consumer and by seeking creative solutions to inspire cost-efficiency. Ultimately, for local FMCG players, innovation and a bit of Kiwi ingenuity are the key to continued growth and further cementing New Zealand’s place on the global FMCG stage.
Tony Burt (pictured) is the co-founder and CEO of East Imperial(link is external), manufacturer of premium New Zealand made mixers.
