Southeast Asian Food Buyers Come to Michigan

On March 1, 2000 a group of six specialty food buyers from Southeast Asia came to Michigan. The MDA International Marketing Program sponsored this mission in cooperation with the Midwest trade organization MIATCO. Throughout the first week of March various Michigan companies met individually with the buyers to discuss exporting opportunities overseas. It was a rare chance to meet with potential foreign customers without the time and expense of traveling halfway around the world. The meetings began in the Detroit area on March 1, 2000 at the Fairfield Inn in Livonia, MI. On March 2, 2000 the meetings moved to the Eberhard Convention Center at Grand Valley State University in Grand Rapids, MI. Beginning March 3, 2000

the meetings continued in Chicago, IL at the Hilton Garden Inn. The final meetings with the buyers were on March 5, 2000 prior to the Inter-national Fancy Food & Confection Show held at the McCormick Center in downtown Chicago, IL. The five buyers were primarily interested in any specialty and gourmet foods. The specific buyer profiles are as follows:

	Ms. Martha Tjandra comes from Indonesia and represents Club Store. The company is interested in any high quality food products. However, they mainly import grocery items and frozen products such as meat.
	Mr. Henry Harmon comes from Indonesia and represents P.T. Cosmo Delika Internusa. The company is interested in high quality meats, cheeses, desserts, deli foods, Mexican and Cajun foods, and snack foods.
	Mr. Robert Coombes comes from Thailand and represents Choice Foods Ltd. The company is interested in any high quality U.S. Beef.
	Mr. Jimmy Ling comes from Malaysia and represents Tong Hing Supermarket Sdn. Bhd. The company is interested in meats (specifically U.S. turkey), confectionery items, jellies, toiletries and grocery items.
	Ms. Kentjana Nio comes from Indonesia and represents Sogo Indonesia. The company is interested in baking items, beverages, and house wares.

Evaluations completed by both the companies and the buyers were out-standing. In addition to making valuable business contacts, both sides expect the meetings to result in significant sales. For more information on future buyer missions please contact Steve Kwasnik at (517) 241-1913.

Significant Opportunities are Available to Food Manufacturers Who Understand the Market and Consumer Trends in Western Canada.

The fruit juice category is one of the most dynamic categories in the grocery business today. The market has evolved from traditional fruit juices to more specialty juices, such as Sobe, Snapple, and others. The western Canadian market for juices, drinks and iced teas in 1998 is large as $US 244 million with a growth rate of 12% (1998 A.C. Nielsen 52week J/F 1999). Chilled fruit drinks are a category that falls under alternative fruit juices, because they are healthy and refreshing fruit drink alternatives. It is important to note that the chilled drink category growth remains very dynamic and this has resulted in declines in some of the other drink categories, such as carbonated sparkling juices, powdered juices, an frozen juices. Another new and alternative category with prospects in western Canada is soy and rice beverages. These beverages were the 3rd fastest growing category in Canada in 1998. Consumer demographics are the major driving force behind the rising trend in soy and rice beverages, because of the perception of health and medical benefits of the product. Western Canadians have always been health conscious, and a recent influx of Asian immigrants has created a higher demand for soy products. Innovation in great tasting and refreshing soy drinks in necessary to take full advantage of the market. The Canadian market for tofu and analogue products is valued at $US 21.7 million and is listed with a growth of 29% in 1998. Health conscious Canadians, new innovations, and new entrants into the market are necessary to result in continued strong market growth and substantial sales and profit opportunity.

The frozen meal category provides the family with a quick, healthy, and hot meal is seeing positive results for western Canadians. Today's consumer is finding less and less time to prepare hot meals, especially breakfast. Toaster items such as waffles and pancakes in a variety of flavors are popular. Other manufacturers are taking up the challenge and introducing many new innovative frozen dinner and entrée product offerings.

Nutritious portable snacks are one of the fast growing product categories driven by contemporary consumer trends. Again, these time-starved consumers are demanding easier and more convenient foods. Energy bars have been marketed towards the general public, as opposed to just athletics and fitness seekers. These meals can be eaten on the run, and have found popularity with the health-oriented westerner. Opportunities may also exist to develop competitive distinctiveness that focuses more on the indulgence snack direction, perhaps bridging the gap between NPS and confectionery bars.

Reimbursements for Exporting Companies!

Agricultural cooperatives and small-to medium-sized firms that export food or processed products overseas can apply for funding from the Branded Market Access Program (MAP).

Branded MAP supports companies that promote brand-name foods and agricultural products in foreign markets. Many international marketing and promotional activities are eligible for 50 percent cost reimbursement. These activities may include advertising, product demonstrations and in-store promotions, exhibition fees for overseas trade shows or domestic shows with an international focus, product literature, freight cost for samples, and international travel and label modifications made to meet foreign import requirements.

The program Department of Agriculture's Foreign is funded by the US Agricultural Services and administered in the Midwest by the Mid-American International Agri-Trade Council (MIATCO). MIATCO is a nonprofit coalition of 12 Midwestern states that pursues common marketing opportunities and other export services including trade missions and delegations, as well as product pro-motions.

MAP applications will be available to companies on May 1, with a deadline of June 1, 2000. Michigan companies are encouraged to apply early. The MAP reimbursements will cover promotional export activities between October 1, 2000, to September 30, 2001. Applications may be received by contacting Paul Burke, MDA's International Marketing Manager,  at (517) 373-9710 or online via MIATCO's Web site: www.miatco.org. 

A Door of Opportunities Has Opened for U.S. Products in Guatemala.

U.S. consumer-oriented imports have grown 91.7%, from $35.1 million in 1994 to $67.3 million in 1998. This is due to heightened brand awareness, a favorable shift for supermarkets,

and an increase in the number of supermarket outlets and sales volumes. U.S. exports of con-summer-oriented products to Guatemala in 1998 represented 7.4% of the total retail sales. Supermarkets, hyper marts, and convenience store chains, constitute for the increase in outlets

of exporting of U.S goods, but only represent 25% of total retail sale. The concept of the supermarket has seen tremendous growth in the past five years. From 1994 to present, total

retail food sales have increased from 15% to 25%. Though the concept of the supermarket still has a way to go, this could be the next major source of food products for the population. The main competitors for the Guatemalan imported market are Mexico, Canada, and Chile. However,

the U.S. has been successfully gaining market shares. In 1998 U.S. food imports accounted for 22% of the total food imports. Leading exports from the U.S. are fruits and vegetables, which are showing signs or rapid growth. Quotas exist on many items including apples. Finding a distributor is the easiest and quickest way to gain entry into this market. A distributor should be able to provide market knowledge, guidance on business practices, trade-related laws, and sales contacts. The FAS office in Guatemala maintains listings of companies that represent or distribute U.S. products.

China's Restaurant Industry is on the Rise

China's restaurant industry is on the rise, and currently one of the most dynamic areas of the Chinese economy. The restaurant sub-sector experienced an explosive 15% annual growth in 1998, with total national sales of USD33.7 billion. Shanghai is the center for the large stride made by the restaurant sub-sector, with a massive USD1.1 billion in 1998 revenues, it is the nation's trendsetter.

Use of imported food has surged in recent years. One city in China estimated that U.S. food imported for HRI use totaled $91 million. Food imports currently account for 8% of total food costs, and are expected to rise to 15% during the next few years. U.S. food products are being used in an ever-growing market. Especially since U.S. fast food and restaurant chains are becoming increasingly popular and Chinese restaurants have begun to adopt Western items on their menus.

U.S. food products carry a good reputation for quality, taste, and reliable supply. There are high costs associated with U.S. food products, and distribution to the general public is limited, leaving it to large luxury hotels and high-end establishments. High tariffs on U.S. exports to China make it difficult to directly export goods into China. Privately owned importer-distributors mainly purchase from American consolidators, demand from one hotel to the next differs, and only a combined container can best serve these varied requests. The main suppliers to restaurants are state run and privately owned importer-distributors, along with some wet markets for fresh produce. Franchise operations are often required to purchase food products through an U.S. consolidator selected by the franchiser. Purchasing of food products is difficult be-cause China has a lack of consolidated national distribution companies. As a result, one restaurant will have to deal with a number of different suppliers. Poultry from one, pork from another, and fish from yet another. American exporters utilize privately owned importer/distributors to transfer most goods.

They are major suppliers of imported meats, seafood, condiments, beverages, dairy products, and specialty produce. Another advantage is their access to luxury hotels, foreign and Chinese restaurants. The potential reach of these companies is considerable, and the right product might find a very broad market.

KFC and McDonald's hold the largest portion of the market share, 28% and 15% respectively. The size of the fast food market is now almost half that of the family-style restaurants. Anticipated growth is estimated at 10%-15% annually, as more and more people turn to fast food restaurants as a convenient alternative to preparing meals at home.

The largest competitor that U.S. food exporters face is undoubtedly the Chinese domestic market. The major challenge that U.S. exporters face is generally posed by heir western (European and Australian) counterparts, who offer similar products at relatively cheaper prices. Frozen vegetables have a good sales potential. Sweet corn and peas are easily integrated into common Chinese dishes like sweet corn soup and fried shrimp with green peas. Much of the competition comes from domestic New Zealand products. U.S. fruit for foodservice are Sunkist citrus and California table grapes. Condiments, seasonings, and sauces used by Western-style restaurant are largely imported due to lack of local avail-ability. As Western food gains popularity, so do these ingredients. A broad range of ingredients are now available in China, ranging from ketchup, mustard, mayonnaise, and BBQ sauce. U.S. raisins and prunes are beginning to be 2widely used for Chinese dimsum and Western-style baking. 

First Michigan Hogs Shipped to Canada!

In April, Michigan market hogs were shipped to Canada for the first time in anyone's memory! A change in Canadian policy coupled with Michigan's newly upgraded status for pseudorabies eradication opened the market for shipments.

"We are thrilled that Michigan's ac-celerated five-year program to elimi-nate pseudorabies from swine herds has paid off in a fantastic new ex-port market opportunity for our pro-ducers," Wyant said. "With the loss of hog processing facilities at the Thornapple meat plant in Detroit in 1998, the opening of the Canadian border is crucial to shoring up the swine industry in Michigan."

As part of its commitment to inter-national trade agreements, Canada announced on October 27 that it would begin allowing importation of hogs from US states that had achieved Stage IV in the Federal-State-Industry Coop-erative Pseudo-rabies Eradica-tion Program. Michigan achieved that status in early N o ve m b e r 1999. Since November of '99 Michigan swine produc-ers have been promoting in Canada, and their efforts finally paid off.

"Opening the door to Canada is a tremendous economic success for Michigan swine producers," said Sam Hines, Executive Vice President of the Michigan Pork Producers Association. "It is an accomplishment, occurring a year ahead of schedule, that would not be possible without the strong cooperation of our producers, veteri-narians and state and federal health experts." 

International Promotion Calendar

Asia Calls for Food Standards

A call for food standards is being made in Asia, and also being heard. Korea and Hong Kong are calling better regulation of food products. The Korean market is demanding more organic foods, even though the market for these organic products is relatively small, it continues to grow. Organic production in Korea has shown tremendous growth over the last ten years. Farming in Korea is up 200% from three years ago. An increase in disposable income, and consumer concern over food safety has prompted the purchasing of more fresh fruits and vegetables.

Hong Kong is also concerned with food safety, and genetically modified ingredients are not popular. Hong Kong supermarket changes have to be made to address the concerns of consumers. The opposition to GM foods has brought forth action to label all food GM if their content is over 1% of a genetically modified ingredient. U.S. food exporters doing business in Hong Kong need to heed the signs that retailers are nervous about GM food and are being pushed toward sourcing GM-free products.

Web Site Up and Running

The MDA's International Marketing Program is pleased to announce that our web site is up and running once again. After an extended period of technical difficulties, the site is now fully functioning. With the latest trade leads posted, a comprehensive search engine of Michigan food and agricultural companies, and the latest edition of our newsletter Select Michigan Global, it is a great resource for any company who is currently or has an interest in exporting their product around the world.
The web site can be reached at http://www.mdainternational.com/. 

Taiwan Apples

Taiwan produces around 10,000mt of apples each year, which is less than 1% of total fresh apple consumption. Taiwan's fresh apple consumption reached 158,045mt in 98/99. Consumption levels are expected to drop after the recent earthquake, and because U.S. apple prices are higher than last year.

However, the U.S. market share of fresh apples is just above 80%. The U.S. and Canada are the countries that are not limited to quota limitations. After Taiwan becomes a member of the World Trade Organization (WTO) quantity limitations on imports will be eliminated. Apple imports from Chile, New Zealand, and Australia, will pose a challenge to the U.S. dominance in the market. Year-to-year increases in apple consumption is due to U.S. apple trade associations, which worked to present the apple as an every-day affordable product, as opposed to an item reserved for special holidays. U.S. apples will continue to dominate the Taiwan market as long as the quota system is in place; and, due to the long-standing relationships between Taiwan importers and U.S. suppliers, the reputation for quality of U.S. apples, and a general consumer preference for U.S. products, should continue to play a leading role after the system is eliminated.