Export Food Small Business Start-up

This is why, in addition to my general small business international trade start-up courses I teach a a specific class on food export.  The information offered everywhere except from me is not only bad, it is downright harmful.  The harm in these articles is people contemplating export expansion say "If that is what it takes, then I cannot do it." Well, what is described in the article is not what it takes. What is described in the article is a whole lotta waste.  The way it is done worldwide is not at all like this article describes.

Someone has to present what really happens in small business international trade.

This article is an example, and start out with a claim that is rather wrong.

While food giants such as P&G, Nestle and Unilever have long operated with a global footprint, it’s only recently that small- to mid-sized companies have been able to effectively tackle these markets.

Small businesses have been exporting food from the United States all along, nothing has changed in recent years, the tools tactics and attitude necessary have been there all along.  Yet the story will tell us about a "pioneer" in this field.

One of those food retail pioneers is Kontos Foods, a mid-sized New Jersey-based manufacturer and distributor of traditional artisan breads and Mediterranean specialty foods. A little over three years ago Kontos began a vigorous overseas expansion program, and now ships its products globally, to a wide range of locations, including Singapore, Indonesia, the Caribbean, Panama, Bahrain, Saudi Arabia, and Dubai.

I've never heard of Kontos Foods, and I am sure they are a fine company.  But what bothers me with these perennial articles telling us about "pioneers" is they never mention cost/benefit...  I can get sales into all of those countries pretty quick too...  at a cost.  The trick is to have sales and maintain a profit, at least as good as what you would have if you expanded domestically.  If Kontos is New Jersey based, then export orders ought to be no more difficult (or costly to acquire) and every bit as profitable as a domestic sale.  And alongside testing the overseas market, one would be obliged to test expanding domestically to compare with the overseas opportunities.

Now, recall the opening false claim that biggies like Nestle and Unilever were the only possible players before.  And who is making this claim?

Before Kontos, I worked at Unilever and my colleague, Kontos Foods’ Global Sales Director Doug Werts, is formerly of Nestle. Combined, we’ve lived and worked in different markets around the world, including the Netherlands, Brazil, and the U.K.
At Unilever, for instance, I spent significant time and resources building market share in Europe and South America. Those experiences, along with our current Kontos research about consumer shopping habits, provided us with the deep consumer insight we needed to target the right products and packaging to shoppers.

So to help a small or mid-sized company break into export markets, the process is the same as for Unilever and Nestle?  This is an internal contradiction: "nothing has changed, things are now different."

Now notice the valentine-to-self slipped in there, "my experience and my time spent on the Kontos dime travelling gives ME deep consumer insights."  Bull$#!+.  Since valid and reliable market information costs tens of millions, any other "experience or insight" is mere anecdote, and the plural of anecdote is not science.  There is a way to test market with spending tens of millions, and getting solid results.  It is search and learn, a process where you discover customers not otherwise discoverable.  But the tool tactic and attitude is utterly contrary to all of the elements this article proffers.  In short:

1. The tool - LCL MOQ FOB ...  if you have specialty, overseas buyers are looking to test this in their market.  They want and need that smallest order rational, not the largest order possible.  They want a pallet load to test, not a 40' container. It is FOB because you will be prepaid before anything rolls out of your warehouse destined for overseas.

2. The tactic:  Your export offer is one-size fits the entire world.  You ship overseas what you ship domestically. All "localization" for the export market is up to the importer overseas.  No good deed goes unpunished, so you never help your buyer by doing localization.  Recall we are talking a one pallet load shipment, and as a tst possibly several of these in sequence.  Why would you foot the cost of "localization" for a test order, in which most test will come up nil?  Don' worry, your importer overseas knows how to localize on the spot if necessary.  I am also an importer, and have had to "localize' many shipments on the spot in which customs has found fault.  it's a small shipment, no sweat.

3.  The attitude:  I came here to sell, why are you here?  At the trade shows, every buyer ought to place an order for your LCL MOQ FOB.  If not, why not?  If the person you are speaking to is not a buyer, end the conversation and move on to a buyer.  If the buyer says no to your one-size-fits-all worldwide offer, then find out why not.  Start a matrix of objections to see if any changes wold be worthwhile in your offer.  This is science, something sorely lacking among those who go to trade shows happy to settle for "trade leads."

What exporting gets down to is a test of the product by the importer overseas to whom you sell.  This article has a lot of moving parts, but bottom line is you find an importer overseas who wants to test your product.  On the one hand all of the rigamarole laid out in this article nets no advantage, and on the other hand you can achieve the same results with none of the rigamarole.

Then on this this:

The problem, however, is that overseas research isn’t cheap: Attending one trade show could cost upwards of $15,000-$20,000. There are nonprofit and government programs to help assist with companies as a means of trying to boost overseas trade. We found FoodExport NorthEast, a non-profit organization that supports international commerce. The organization is designed to help American food and beverage manufacturers attendforeign trade shows, connect with potential customers and learn about consumer trends.

Sigh. It could cost that much, but you can achieve the same results at a fraction of the cost.  Here is the funny thing, it could cost that much if you take the help those orgs offer, because their help is in the form of rebating half your costs if you do things their way, which "could cost upwards of $15 -20K..."

OK, so you spend $15,000 on a trade show and get $7500 back.  And their way is not the optimal way.  And I can do an optimal version the same thing all in for about $5000.   Now what kind of leverage is it when you net net you spent too much to do largely the wrong thing?

With the assistance of FoodExport, we started hitting the global trade-show circuit. They provide exploratory tours to help retailers discover whether a particular market is right for them. These tours offer crucial learning time, where retailers, manufacturers and distributors can quickly learn which regions are worth pursuing. When you’re on one of these tours, I recommend maximizing every minute of your research gathering.
For instance, while in Shanghai for a trade show tour, I learned that people in Northern China prefer bread much more so than their southern countrymen. This helped steer Kontos’ sales efforts to the correct part of the country, saving time and money.  

Any any Chinese food importer would already know this.  Why not just find a competent Chinese importer and have them test your product and provide feedback?  If and when something developes, then you might go visit China.  All this travel and time is expensive.

The international export business is on an upward trajectory. If you plan to join in on an overseas expansion program, gather an experienced team, do your homework and get your passport ready. People are now enjoying Kontos flatbread in Bahrain, Singapore, South Korea, Saudi Arabia and Dubai. Who would have dreamed that three years ago?

As I started out this post asking, where is the cost benefit, I am pretty sure Kontos has gone well into the hole getting those export orders.  The question is when, if ever, it will proven to have been profitable.  For overseas expansion, you need no more talent than a good Freight Forwarder and a solid importer, who may be discovered without ever leaving your office.

Because these articles claiming "small businesses can export just like Nestle now" have been coming out the last 40 years, I offer a corrective course.  No nonsense, the tool, tactic and attitude to find export business no more difficult and every bit as profitable, from the first sale and onward.  You may read about the course here, and enroll now and pay later at the same site.

Tuesday 1/24 - 2/14/2017   Four Sessions

Section One ~ 6 PM to 7 PM Pacific Time

(This would be 7 PM to 8 PM Mountain, 8 PM to 9 PM Central, 9 PM to 10 PM Eastern)

This work can be done either as a proprietor producing food, or an agent representing a food producer.

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Meat Trade

You probably eat a lot of meat, like I do, and I am keen on good meat.  Here is an edifying article on the int'l trade in meat: 

"This week, there will be many remembrances of what we've accomplished in this organization over the past 40 years, and everyone here should take great pride in that, but for most of you, it's not the past that drove you to attend this meeting. It's about what we're going to do today, tomorrow and into the future," Philip Seng, USMEF president and chief executive officer, told attendees.

There is that forty year perspective again, what happened after Nixon took us off the gold standard (lite).  So this article is about "It's not the hand you are dealt, it's how you play the cards."  This is how the meat industry played the ex nihilo credit card, if you'll pardon the double entendre.

According to Seng, the U.S. eclipsed $13 billion in meat exports. “That’s quite an accomplishment when you consider some of the challenges we’ve had over all these years,” he said, adding that the goal is for $20 billion in meat exports in the near future.

Here again, in an ex nihilo credit regime, he who borrows the most wins.

Some recent highlights for U.S. trade include that the U.S. beef industry just surpassed Australia as the number-one supplier in the South Korean market. The U.S. also recently passed Australia in chilled beef exports to Japan, which Seng called a milestone.If there was any doubt that trade is important, Seng pointed out that 80% of the world’s buying power lies outside of the U.S., so “the more we can have this export mentality, (and) the more we can challenge ourselves to do better, the better it is going to be for all of us.”

This is Big Meat talking, the same people who make it criminal to test USA beef for mad cow disease in order to promote exports.  (It's a criminal offense to even own a test kit without a license.) Mad Cow takes anywhere from 2.5 to 5 years to incubate, so USA got rules pushed through for countries to accept USA beef under three years old.  lemme see...  2.5 years to incubate, sell three year old beef....  hmmm... did anyone do the math?

1. They are not sure what it is.

2.  It is hard to spot, making it hard to control.

3. It is hard to kill, and the killing process relieves the meat of most nutritional value.

4. It is 100% the result of cruel and stupid animal farming.

But it makes cheap bovine meat at the cash register, but Big Meat gets so much in up-front subsidies and preferences, plus the cost of the damage done is after the fact, so here again we have the fascist Big Government and Big Industry acting as one, to privatize profits and socialize losses.

(Grass fed beef is natural and popular, and on unused "government land" it can be produced inexpensively.  This is why the FEDS kill ranchers who won't back off from grazing rights, as in Oregon.  This terrorism is employed to smash any competition for Big Meat.)

The Chinese market has provided some success stories for the U.S. Seng noted that there are now nine pork plants in the world’s fastest-growing market for pork. However, challenges remain, as it’s still not easy selling in China, he said, adding, “It’s not the most transparent place, and it’s very hard to follow product in that market.”

Unh... mendacious!  USA pork is fatted up with ractomine, an additive with criminal consequences in every country in the world except the Nafta three.  Since USA Government cannot be trusted with inspections, the Chinese have bought their own pork processing plant in the USA to serve China.  Only Big Meat Americans cannot figure out how to sell to China.  Their only tactic is get subsidies, compete on price.  Also, tracking every pound of pork exported to china is cheap and easy.  Use QR codes.  And QR codes are the small business, specialty meat secret weapon to marketing to China.

"Trade is no longer rising around the world," Seng explained. "Actually, this is the first time since World War II that trade has declined during a period of economic growth. That's why what we are doing in the meat industry — whether it's the beef complex, the pork complex, the lamb complex — the fact that we are increasing our exports (means) we're really going against the grain right now, because most industries are not enjoying robust export sales."

If trade is not rising, this is very good news.  It means that the ex nihilo credit regime is over.  Russia has surpassed USA in wheat exports, when they used to be a importer.  The abominable USA ex nihilo credit regime is dying.  All markets for meat are growing, because people spend their first experience of new disposable income on food.   USA Big Meat product is cheapest at the cash register in China as well as USA.  What with export subsidies, tax advantages and financial engineering, exports give Big Meat Industrial Complex an ability to privatize profits and socializes losses, on steroids (pardon the mixed, but apt, metaphor).

Seng referenced World Trade Organization data showing that 2,100 new trade restrictions were imposed from 2008 to 2016. Sometimes, it may seem like there are fewer trade restrictions and more free trade agreements, but he said, “frankly, we are still in a very protectionist world.”

USA has never signed a free trade agreement, because there is no such thing as a free trade agreement.  If it is an agreement, then it is managed trade, not free trade. And for Mexican Harvard MBAs to write 14,000 pages of "agreement" with Canadian and USA Harvard MBAs, that protect crybaby billionaires from free markets, then you better call it free trade agreements, in case someone notices.

Fifteen countries account for 63% of world trade. “What that means is there are certain countries that are franchised in, and there are certain countries that are franchised out,” Seng said.
"This is one of the challenges we have with the WTO," he said. “There are more losers than actual winners when it comes to trade, just given those 15 countries. Usually, it’s those 15 countries that write the rules, so it’s become quite complicated when we take a look at international trade.”

Oooooh...  I like this guy... he slipped it in.  It's a racket.  He has to be careful not to lead with that point, but he knows well what is going on.

The challenges ahead, according to Seng, include the state of the Korean economy, the impact of Britain's vote to leave the European Union and whether societal norms will begin to affect trade deals.
The paramount question on everyone’s mind, however, is how to deal with the “tsunami of meat” heading toward us, Seng said. It will be key, he said, to focus on what can be done over the next couple years to move more meat, as well as what can be done for demand enhancement in this industry.

As he must well know, it is over for Big Meat.  To have used ex nihilo credit to wipe out the markets for countries that traditional supplied the world such as Vietnam was once king in rice, Argentina in beef, and Russian in wheat (see the Hanseatic league), and so on, USA was able with ex nihilo credit and guns to knock all of those "comparative advantage" countries out of the game.  Winning a this is a Charlie Sheen kind of winning, where you wipe yourself out in the process.  In the USA the runoff from Big Meat is horrifying and invisible, plus expressly not tested for by the EPA.  Massive water is diverted to grow GMO crops such as rice and cotton, distorting the natural economy massively.  Food that is poison, small business wiped out by ex nihilo credit-based costing, malinvestment and misallocation of resources, especially land, and the pollution, have taken a horrifying toll on the USA economy.  The damage is done during the ex nihilo credit boom.  When the bust comes, the only question is "who pays."  Never the people who gained from the damage done.

The solution is simply end the subsidies to Big Meat, and deregulate Mad Cow testing. At the same time, people need to work hard developing markets for USA produced good food, so the good food producers (necessarily specialty) can grow their operations.

One reality is wherever the USA has introduced a market for Meat Industrial Complex compromised products, there is always as specialty market growing alongside.  So where USA exports the most, there is the most likely specialty market.

It cannot be foreseen, it must be searched and learned.  How to is no secret, I learned it from people in the business, and he meta studies confirm how to, it is just apparently i am the only person who teaches it.

If you have a passion for food, and want to start a business doing the urgent work of restoring balance in world trade and protecting specialty food in USA, then I have a hard core online course open to anyone in the world.  The next session is coming up in January.  If you wish to enroll, you may do so here.  If you do not see your local school, you can scroll down to the bottom of the page and enroll directly with me.  I'll bill you the course fee after the course.  Don't worry if you are overseas, the tools, tactics and attitude apply in all countries.  I am happy to have you enroll too.

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India, Gold and a Monetary Event and Some Change

So India is working on what USA has not quite done yet,  but Europe did, and that is eliminate certain bills and when people tried to trade the old for the new, they were obliged to explain where they got all this cold hard cash.

In USA, cash is "probable cause" of a crime at any level any cop says so, and since they get to keep what they seize, "says so" getting less and less every day.  War on cash.

Here is a guy whose reasoning is sound, although I agree with Sennholz that the Hegemon has way too many options, plus the Hegemon does not lose if the system crashes.  When the Soviet system crashed, the same people ended up on top.  The Russians were just smart enough, this time, to let change happen without bloodshed.  With USA having shed so much blood worldwide in this last 40 years, what goes around comes around. (Name a time when the news covered Soviet soldiers in combat.  Just Afghanistan?  That was only ten years long, and the Communists had the decency to self-destruct peacefully after that.  We are at fifteen years now...)

This guy is pointing out that gold is up to $1700 in India, about 40% higher than spot.  A change of currency is a monetary event, and inflation what happens when you print too much currency.  India explicitly here is printing more currency, and inflation is showing up in terms of money (gold.)

It is fun to read a prediction that you'll be able to buy an average house for 2.6 ounces of gold soon, and let the mind work out how easy it would be to buy that much gold and hold it.  This guy sells gold.  If it gets to that, you'll have so many other options, no gold required, that as today a gold play is just one marginal opportunity among countless others.  At one point I had a couple of kilos of gold in my house, plus 1,000 ounces of silver, I accumulated over the 00's, with a view of the "main chance."  I repented of that, and sold it all (at the top it turns out; taxes on gains will impact much getting a house for 2.6 oz of gold, making the play probably risible at that point in the future.)

The stories are black market machinations are pushing the price of gold up in India.  Could be, but I'd stick with printing too much currency.

As to the price of gold in India, the solution to high prices is high prices.  The high prices themselves will widen the smuggling, from petty to grand, and that will solve the problem of state policy failure.

People are still panicking over Trump, and those panicking I still think are doing so becasue they know the ex nihilo credit regime si over.  As to that, Trump is merely the messenger, Hillary would have done what trump will do, just as Obama did What McCain would do.  Just as Obama was used to draw back the disaffected left, so Trump is drawing back the disaffected right.

What is true no president keeps promises, at all, and Trump will be no exception.  What is also true is the iron is hot, and everyone can pointlessly vote, but everyone can also effectively act.  The election is decided, buy how you contribute to forging the iron up to you.

As the ex nihilo credit regime declines inexorably, your action replacing it, at the small business level, is both doing good and doing well.  It is the only reasonable "prepping" that can occur, because entrepreneurship is about the unseen, as Drucker says, "creating customers and innovating."  If you create something, then necessarily it is unseen until you act. When you start up a business, your product is a solution to a problem (and there is no solution that can be improved upon) but you cannot know what that product (or service) will look like around the bend, because its development is by iteration and iteration, based on customer feedback preceding each iteration, something that cannot be plotted linearly.   Whole lotta zig zaggin' goin' on. You have the passion and joy, but you have no idea what your offering will look like in a year, let alone a decade.  Neither does the hegemon (or competitors for that matter) so as fruit to pick you are too high and too far apart to mulct.

(The point of Intellectual Property Rights, monopolies issued by the hegemon, are to set designs in stone, with a promise of riches, so that creativity and innovation is suppressed, especially by threat of litigation if anyone dare improve on a monopolized idea, so we have extremely limited options from which to choose in life.  Car companies could not start in USA after the Big Three pooled patents among themselves, and anyone who tried to start up was obliged to overpay the big three for each automobile function a car needed.  Windshield wipers? Pay us.  Radio?  Pay us.  ABS?  Pay us. )

Obama was elected to stop the wars, the bailouts, close gitmo and fix healthcare.  Of course all of those are far worse today.  In 2010 he announced he wanted to double exports in five years.  Whole lotta ex nihilo credit spent on that, never happened.  If McCain won, it'd be the same.  Obama was against the Standing Rock pipeline, but as you can see from the video, on his watch, whole lotta work got done.


Trump won, meaning the iron is hot.  What gets forged depends on how people act, what they do.

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How To Build Export Sales In Four Steps

Redo your spreadsheets, look for differences.   Here comes the announcement at USITC.gov:

 Aug, 2016 trade data are now posted. Our practice is to update Dataweb as soon as possible after the Census Bureau releases monthly trade data, generally within three business days.Notice: The import and export data on Dataweb for 2010-2015 have been updated as of July 2, 2016 based on the latest official revisions from the Census Bureau (the first official revisions for 2016 data will not be available until June 2017). For the years prior to 2010, Dataweb will continue to show import and export data as originally issued by the Census Bureau with no revisions.

Yes, we begin with passion and joy, and then ground our strengths in what real world trade data (commodity, prices, target markets, trends) to form a scientific hypothesis to test.  Central to proceeding in int'l trade is the rock solid trade data.  Not the pointless junk you can buy at the 4 digit HTS level, but the most specific 10 digit level, which can only be had by gathering and analyzing it yourself, by hand. And in so doing, you have information no one else has.  Knowledge is power.  Five years is enough trend info, and then there is the practical problem wrong numbers stay wrong after five years.

And you must keep up on the trends.  So every year say around April, the full year data may be updated.  But when you find something that just looks dead wrong, like the price of caviar exported from USA (yes, we do...) then you must jump on it and get a review:

From: "M DDate: May 13, 2015 2:38:36 PM PDTTo: "johnspiers@b
Subject: Data Inquiry
Dear Mr. Spiers: This refers to your email concerning the unit price for exports of caviar (Schedule B number 1604.31.0000) to Japan during 2014. We have reviewed the data and have revised the reported statistics. Please make note of the following attachment and revisions to our published statistics. Thank you for your interest in the accuracy of our trade statistics. If you have further questions contact *****  The attached revisions are also available on our website at: www.census.gov/foreign-trade/statistics/corrections/index.html In June, our revised monthly data for the three prior years will be available through our on-line data product, USA Trade. For information on our current revision policy go to: www.census.gov/foreign-trade/guide/revisions.html

So here are the changes made after the challenge:

Corrections to Published Export Data

Month	Year	ACTION	Type	ERRATA	HS	Country	Qty1	Unit1	SWT	FAS Value
April	2014	READS:	Domestic	2016	1604.31.0000	Japan	1,312	KG	1,489	$19,368
		SHOULD READ	Domestic	2016	1604.31.0000	Japan	74	KG	1,489	$19,368
May	2014	READS:	Domestic	2015	1604.31.0000	Japan	15,045	KG	30,804	$222,097
		SHOULD READ	Domestic	2015	1604.31.0000	Japan	589	KG	30,804	$222,097
July	2014	READS:	Domestic	2015	1604.31.0000	Japan	7,986	KG	9,064	$117,896
		SHOULD READ	Domestic	2015	1604.31.0000	Japan	288	KG	9,064	$117,896
September	2014	READS:	Domestic	2015	1604.31.0000	Japan	40,429	KG	21,759	$1,097,248
		SHOULD READ	Domestic	2015	1604.31.0000	Japan	21,847	KG	21,759	$1,097,248
October	2014	READS:	Domestic	2015	1604.31.0000	Japan	24,515	KG	13,517	$970,738
		SHOULD READ	Domestic	2015	1604.31.0000	Japan	12,953	KG	13,517	$970,738
November	2014	READS:	Domestic	2015	1604.31.0000	Japan	19,145	KG	21,729	$282,607
		SHOULD READ	Domestic	2015	1604.31.0000	Japan	637	KG	21,729	$282,607

Source: U.S. Census Bureau, International Trade Management Division, Washington, D.C., 20233

The analysis on the original trade data looked ridiculous.  The client whose first foray into trade data analysis, in this case the trade data on caviar,  rejected it as impossible, evidence of criminal activity, anything except reality.  I advised him to challenge USCensus on the underlying data, and indeed they found it wrong (unlikely a Census problem, most likely a source problem corrupted data at the collection point, etc.)

Now, since we work at the ten digit level in data analysis, the new caviar trader introduces himself with information, at that point only someone in USCensus and he could have, could possibly have (OK< also me, but I am not in caviar), for a month or so.   The trader with this may make news, enhance his image and grow his business, as Ogilvy demands.

Yesterday I received this, in part of an email, from another student...

...the VP of sales I spoke with today told me "obviously you (meaning me) have been exporting for years"!  I explain my plan just as you outlined in your class (did not tell me I just completed my second class with you on Tuesday).
I followed up as you stated and found out the person I tried to contact is no longer with the company so I sent the same information update with the new VP sales contact information and we setup a call to review the opportunity to be a selling agent with them.  Finally schedule this morning.
My first question was are you currently exporting, she said no but do have sells in *****.  I told her from my data ***** and ******* are markets I would not presue because they are NOT growth markets and the price per kilo in on the decline.I explain my test market 1 size fits all (preselected pallet of product) with the MOQ FOB LCL and creating a website for serious buyers only.I told her it will be the same as a domestic order.  Her major question was who pays for all the export fees etc...I told her the buyer who imports that is their responsible.

Just so...  what I present in my classes is what I learned on the job the first decade I worked for others.  I've been self-employed since then.  I teach on the side, and as such have gathered the meta-study data that shows what I teach is also how it is done.  It is no secret, but I am the only one teaching it.  For reasons I can only imagine, no one else teaches what is effective.

The work is also crucial to economic recovery, as in YOUR economic recovery, so I am running another special session of my online seminar:

Fall Special Session  2016 

11/15- 12/6/2016   Four Sessions

Section One ~ 6 PM to 7 PM Pacific Time

(This would be 7 PM to 8 PM Mountain, 8 PM to 9 PM Central, 9 PM to 10 PM Eastern)

The tactics taught here relating to food can be used for any product, but the specificity fits with the brevity.  Here is more info on the course, and you may enroll here.... (scroll down to the bottom of the page and use the form at the bottom of the page for this special session.

eMail me if you have any questions. (Ask John in upper right)

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