Background and Challenge

A leading ASEAN-based food and beverage manufacturer had been contemplating entry strategies into two key emerging markets in Southeast Asia, as the company’s pre-existing export-based model no longer seemed appropriate amidst the rapid market growth which had already taken root in these countries. Other international food & beverage brands had begun to establish local manufacturing, bottling and distribution capabilities earlier and our client needed a well-founded direct entry strategy which enabled them to move quickly and achieve significantly higher volumes on a profitable and sustainable basis.

Given the importance of developing the right entry strategy, the client engaged L.E.K. Consulting to conduct the underlying detailed market research and insights needed for management to formulate specific entry options; evaluate their relative trade-offs; and develop a recommended entry strategy for Board of Directors approval.

Approach and Recommendations

In collaboration with the client, L.E.K. designed a detailed research program covering key food & beverage segments and competitors using in-depth interviews with market participants across multiple cities in each country.  The ensuing research and analysis targeted brand owners, distributors, wholesalers, modern-trade and traditional-trade retailers, and other market experts.

The L.E.K. team then developed detailed insights on the market and competitive outlook; as well as benchmarking the distribution strategies, practices and economics of other international and large local players.

Selected areas covered included:

  • Competitive product assessment
  • Manufacturing and distribution model benchmarking Internal sales and distribution team size and structure
  • Channel pricing and trade terms (for modern vs. traditional trade channels)
  • Key success factors for distribution success

The L.E.K. team also developed preliminary recommendations on potential entry strategies; the relative merits and risks of each, and key imperatives for the client to ensure a successful entry.

Results

The insights generated by L.E.K. were extremely valuable to the client in shaping their eventual market entry strategies in both countries, and continue to serve as a useful reference as the client seeks to establish its presence more fully.