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MAHA 2008

UPM-FAMA Program 4: Project 1. Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Europe 15 August 2008 Prof Dr Jinap Selamat Dr Roselina Karim Pr Dr Mad Nasir Shamsuddin Prof Madya Dr Jamil Bojei Dr Rosli Saleh Dr Tan Chin Ping. MAHA 2008.

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MAHA 2008

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  1. UPM-FAMA Program 4: Project 1 Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Europe 15 August 2008 Prof Dr Jinap Selamat Dr Roselina Karim Pr Dr Mad Nasir Shamsuddin Prof Madya Dr Jamil Bojei Dr Rosli Saleh Dr Tan Chin Ping MAHA 2008

  2. FAMA-UPM Program 4: Project 2

  3. World GDP (PPP) FAMA-UPM Program 4: Project 2

  4. GDP (PPP)Definition • Gross Domestic Product (GDP) • GDP of a country is one of the ways to measure the size of its economy • the value of all final goods and services produced within a nation in a given year • Purchasing Powder Parity (PPP) • PPP theory uses the long-term equilibrium exchange rate of two currencies to equalize their purchasing powder

  5. 19.7% USD 14.4 Trillion Agriculture Imports GDP (PPP)

  6. EU Requirement EC No 178/ 2002 1 Jan, 2005 Article 5 of Regulation EC No 852/2004 All food businesses with the exception of primary producers & associated operations 1 January, 2005 HACCP Traceability FAMA-UPM Program 4: Project 2

  7. The ingredient list, must specify • the percentage the ingredients • nutritional facts • serving size • customer service information EU Labeling Requirement FAMA-UPM Program 4: Project 2

  8. 1. Legislation • Regulations: direct applicability in all EU Member States • Directives: binding objective for all Member States, but national authorities decide how to implement • Decisions: measures binding on particular individual, firm or Member State • National laws EU Entry Requirements

  9. 2. Market Requirements • Set of requirements producers or exporters adhere to on a voluntary basis in response to consumer demands pertaining to quality, and environmental and social accountability. 3. Standards • Documented, voluntary agreements, which establish important criteria for products, services, and processes and help assuring that products are fit for their purpose and are comparable and compatible. Sources of EU Entry Requirements

  10. European Regulation (EC) No 178/2002 –The EU Food Law • General principles and requirements of EU food and feed safety • Creation of EU Food Safety Authority • Procedures in relation to food and feed safety • Based on traceability during production, processing and distribution EU Food Regulations

  11. EU Food Regulations: no. 882/2004 • Effective 2006 • Complements 178/2002 • Defines how official controls of EU produced and imported food and feed will be performed • Describes enforcement systems; their application by Competent Authorities.

  12. EU Food Regulations: • Food Hygiene Regulations 852/2004 – pertaining to hygiene of foodstuffs- HACCP requirement • Food Hygiene Regulation 853/ 2004 – pertaining to food of animal origin • EU Regulation No 2092/91 – requirements for agricultural products and foodstuffs including organic production methods

  13. Directive 91/493/EEC and Directive 91/492/EEC pertain to requirements for production and export of fishery products. HACCP requirement. • Directive 2000/29/EC deals with legislation regarding maximum levels of pesticide residues, heavy metals, microbiological and radiological contamination and phyto sanitary inspections B. EU Food Directives

  14. Voluntary by nature • Specific to participating countries and firms • Source of national and EU legislation • Not compulsory for trade with the EU Market Requirements

  15. Organically Produced Food products – covered by EU inspection scheme [Krav (Sweden); NATURLAND (Germany); EKO (Netherlands)] • Good Agricultural Practices (GAP) • Euro-Retailer Producer Group (Eurep-Gap) • British Retail Consortium (BRC) • Social Accountability • Fair Trade Market Requirements

  16. Europeans spend more time building rapport and trust prior to entering partnerships. • Agents and distributors are viewed as partners to a manufacturer Working with Export Partners in the EU

  17. Despite greater entitlement to termination payments, an agent isn't necessarily better than a distributor for the US exporter in Europe. A distributor has control of pricing, whereas using an agent provides a manufacturer with: 1) Control over pricing, and 2) More say in how the product is presented. Agent vs Distributor

  18. Distributors - recommended for companies who are new in a market or seeking to grow • Agents - for a manufacturer's more mature /developed markets. PS: In Germany - a company to set up a direct sales office, due to that market's large size and the competition from European-made products. Agent vs Distributor

  19. Value Added Tax: Imports into the EU will also be subject to a value added tax (VAT) Vat is calculated on the CIF + duty. Go to http://www.trade.gov/td/tic/tariff/eu_vat.htm for EU country specific VAT (Value Added Tax) rates. EU Tariff and Tax Basics

  20. EU Tariff Rates - based on the CIF value (Cost of goods, Insurance, Freight • Tariff rates can be found in PDF format by BITD company or by using the EU Customs Union Online Database(http://europa.eu.int/comm/taxation_customs/dds/en/tarhome.htm) Sources for Duty/Tariff

  21. Market Size and Growth of The Malaysian Processed Food Exports to European Union, 2001 – 2005

  22. Strength • Good Packaging – at par with mainstream supermarkets (e.g. TESCO) • Weakness • Packaging color and design not attractive • Packaging does not guarantee long shelf-life • High production cost - Thailand below the Malaysian. In general, the Malaysian products about 20% more expensive. SWOT Analysis

  23. Too many brands. Lack of unique brand for the Malaysian food products. • No strategic alliances (importers, distributors). No private agents to market the products. • SMI entrepreneurs lack legal/social/cultural environment in the importing countries • Entrepreneurs do not have enough capital to effectively export their products SWOT Analysis - Weakness (cont..)

  24. SWOT Analysis - Weakness (cont..) • Need to identify consumer’s taste and preferences. • Some product branding not accepted globally • Weak in PR networking • Service Centre (distributor) not available • Weak R&D that match SME requirements

  25. SWOT Analysis - Opportunities • Strong government supports for SME development in food processing • Known for halal products • Strong government support in halal products and halal-hub centre • Demand for oriental products (Thailand and Indonesia have a large market share). • Positive growth rate in exports (2001 - 2005): Snacks (6.5%); Beverages (36.2%); Sauce (6%); Cookies (30.5%); Spices (-5%) FAMA-UPM Program 4: Project 2

  26. SWOT Analysis - Opportunities (cont..) • Products at Mainstream Supermarkets categorized into: mainstream, ethnic , halal food products. Malaysia can take the opportunity to market under halal branding • EU consumers are responsive to new product branding such as health food • Main stream supermarket, like Tesco, can have potential to market Malaysian products in the area where there are many Asian ethnic (e.g. in Slough) FAMA-UPM Program 4: Project 2

  27. SWOT Analysis - Threats • Competitor production cost - mainly products from Thailand and Indonesia, are low in price. For certain products, the prices, converted to MR, are below Malaysian production costs FAMA-UPM Program 4: Project 2

  28. Product Selection 28

  29. EU Snacks Nani Fried Sesame Kart Food Steamed Bun Jalen Chilli Bumi Hijau Black Pepper Muslim Salsa Black Pepper Spicy FAMA Sauces 29

  30. Beverages Hobary Pink Guava Perda Guava Juice Cookies DMG Butter Cookies Noraini’s Ginger and Almond FAMA-UPM Program 4: Project 2

  31. Ranking based on overall acceptability of products by respondents in the EU

  32. Ranking based on overall acceptability of products by respondents in the EU

  33. Analysis of Acceptance

  34. Demographic Profile

  35. Demographic Profile

  36. Demographic Profile

  37. Demographic Profile

  38. Characteristic Overall Acceptability- Appearance- Aroma – Smell- Flavor – Sweetness- Texture – Body or viscosity- AftertasteOverall Packaging- Packaging Design- Color- Size of Pack- Overall FAMA-UPM Program 4: Project 2

  39. Consumer Acceptance - Snacks

  40. Consumer Acceptance -Snacks

  41. Consumer Acceptance - Frozen Snacks *Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

  42. Consumer Acceptance -Snacks

  43. Consumer Acceptance - Beverages *Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

  44. Consumer Acceptance -Beverages

  45. Consumer Acceptance -Sauces *Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

  46. Consumer Acceptance - Sauces

  47. Consumer Acceptance - Sauces

  48. Consumer Acceptance - Cookies *Overall Acceptabilit.y(5= Like Extremely, 4= Like moderately; 3= Neither like or Dislike) ** Overall Packaging (5=acceptable and 1=not acceptable) ***Willingness to Buy (5= Definitely would Buy, 4= Probably would buy; 3= Not Sure)

  49. Consumer Acceptance -Cookies

  50. Techno-Quality-Economic Matrix for Export Ready and Product Potential by product category FAMA-UPM Program 4: Project 2

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