Our company is a manufacturer and distributor of finest quality fresh frozen fruits and berries. During the past year we have established successful relationships with U.S. retailers and trusted suppliers both domestic and foreign. Our on-ground and online sales have been gradually increasing together with trust and loyalty of our consumers. Besides, customers from abroad have shown great interest in our product. For this reason, our company plans to export products abroad. After conducting research and analysis of the potential market in Russia and Eastern Europe, we have decided that Russian Federation and Ukraine are the most suitable countries at the moment.
Product: Fresh Frozen Fruits and Berries
Product line is represented by great variety of chemical and bacteria free frozen fruits such as mango, pomegranate, as well as exotic longan and rambutan. Our range of frozen berries comprises strawberries, blackberries, and raspberries. All frozen products undergo quality checks in order to ensure that frozen fruits and berries possess high nutrition value, original sweetness and color, no preservatives, and transportable packing. Minimum temperature in our cold storage facilities keeps fruits and berries safe and fresh.
Groupe Auchan SA, based in France, was chosen as the first major retailer of our products. According to their official website, as of year 2011, the company operates in 16 countries including Russia and Ukraine. Auchan is one of the largest retailers in the world with the network of approximately 750 supermarkets and 450 hypermarkets, which sells primarily food products. Their range of frozen food, in particular, includes vegetable mix products, and frozen fruits and berries.
Currently Auchan operates 38 stores in Russia and 8 in Ukraine. The company has extensive growth plans for 2011, has shown success in adapting to new regions of both countries, and strengthened its position in the last several years. At present Auchan is one of the most popular and fast growing supermarket chain offering their customers affordable prices for quality products.
Overview of the Countries: Russia and Ukraine
Russia and Ukraine have become very important strategic regions. Vast geography of Russian Federation spans 11 time zones (Kirpalani, Kaynak, & Gabarsky, 2008). This country boasts a long rich history, and rapidly growing market economy. The market of Russia and Ukraine is over 140 and 46 million people respectively. The investment climate in these two countries is improving day by day. Therefore, doing business there offers a number of benefits: stable growing market economy, unique geographical location, egalitarian attitude, and large consumer market. Economy of Russia and Ukraine is dynamically developing and attracting new foreign investors. GDP growth in Russia has reached 8.1% during the recent years (Kirpalani, Kaynak, & Gabarsky, 2008). Eastern European businessmen promote equality and value mutual advantage and equally shared benefits. The population represents a well-educated multitude of consumers and skilled workforce. Furthermore, Ukraine is geographically situated in the very heart of Europe, while Russia links Europe with Asia, and has exceptional access to sea.
As we can see, international companies can gain profit, and benefit from similarities in geographic, political and cultural diversity of Russian and Ukrainian societies.
Benefits for Auchan
During the last two years, the market of frozen fruits and vegetables in Russia and Ukraine has experienced significant growth due to the rise in consumer demand as a result of hasty lifestyle, and increasing income and employment level of the population. The two countries our company has chosen are by no means places where fruits and berries grow all year along. Long winters, shortage of fresh fruits and need to diversify daily food ration enhance consumer demand especially during winter and spring months. According to the research conducted by Penza-Moscow International Marketing Center, frozen berries are the favorite frozen product of 28% of Penza’s population (Kirpalani, Kaynak, & Gabarsky, 2008). However, the market of frozen fruits and berries in Russia is underdeveloped, and thus promising. Moreover, the research shown that Russian people are ready to spend money for healthy, quality products with well-preserved nutritional properties.
Challenges and Tools
Approximately 45% of retail outlets in Russia and Ukraine carry frozen fruits and vegetables. Competition in the market segment is quite stiff. Competitors are represented by domestic and foreign producers such as polish Hortex and Zgoda, and German Billa. Among other foreign producers are Agram, Felco, and Bauer. The Russian Brands Four Seasons and Znezhana are one of the strongest domestic competitors, which hold about 22% of the market share. Ukrainian domestic competitors are Silpo and Big Pocket.
In spite of strong competition in the retail market, our company is convinced that increasing popularity of Auchan, and our effective marketing strategy will overcome the difficulties and bring us success in Eastern Europe. Marketing research has shown that major consumers of frozen fruits and vegetables are people with medium to high income, who value taste and quality in all the food they eat. In view of this fact, our company will cooperate with one of the best advertising agencies working in Russia and Ukraine in order to adapt our slogan to the new consumer market, and develop an effective set of marketing activities.
Kirpalani, V. H., Kaynak, E., & Garbarsky, L. (2008). Successfully Doing Business/Marketing in Eastern Europe. Routlege.