Recently, following Kind und Jugend in Cologne, we asked the question “can the British nursery sector make it in Latin America?”. Here we consider the main obstacles faced by this industry and how to overcome them.
- The perception that British is expensive: this relates to the association with quality but also years of a very strong £ sterling. The key here is to be clear and explicit on pricing and how competitive you can be – which is a lot easier when you know the market (competitors, products, retail prices, distributor/agents mark-ups, etc)
- Import duties and other trade barriers: this is probably the toughest obstacle to overcome. Research is key and understanding each country in the region is important. For example, did you know there is a free trade agreement between the EU and Chile? Duties for textiles can range from between 20-45%. Having said this, some British brands such as Natures Purest and MacLaren have made it into these markets – why can’t you? You might actually find that your product falls within a tariff code that might even be exempt from import duty in some countries – wouldn’t you want to find out? It is not just duties that matter (how much your products are taxed when being imported) but the bureaucracy surrounding imports.
- Lack of understanding of the markets: what size bedding do parents require in Brazil? How is the weaning process in Peru? Do parents use baby carriers in Argentina? Are reusable nappies the norm in Chile? Is breastfeeding widely spread in Panama? How long is maternity leave? – you need to know your markets – what people want, how much they are prepared to pay for it, who your competitors are.
- Lack of information on regulations, which are particularly relevant to the sector concerning baby/child and parent safety.
- The difficulty in finding a trusted partner – retailer, agent, distributor, franchisee, licensee or employee – again, the key is to research AND also to think of these markets as a long-term investment. If your brand is not known in these countries, how much will your partners be prepared to invest with you in brand awareness?
Other general obstacles apply – as they do to any sector and into any export market. For example:
- Language (did you know there are 5 different words for “pram” between Mexico and Chile?)
- Culture (did you know that baby showers are very popular in the Dominican Republic but not so much in Paraguay?)
- payment and currency risks (there are over 15 currencies in Latin America but you are likely to be able to negotiated in USD)
- corruption (make sure you know your duties under the Anti-Bribery Act)
In terms of advice, here is what I would say to you:
- Think about these markets, consider them. They are too big and growing to ignore. Some British businesses are making it in Latin America and these countries could even recession-proof your business. What’s stopping you?
- Think about WHY you would be interested in these markets – and how much you are willing to invest since things take time in Latin America, there are no quick-wins. Is your management committed? How much time, money and people can you commit to make things work?
- Don’t go for the first distributor who comes to you at trade show, research your options carefully.
- Research, research, research – your market, your options, your sources of support.
- If right, go for it.
- If not right, think about it in a year or two – and be flexible since things change.
- Have confidence in your own product and its origin – Britishness sells!
We have experience in working with British companies in the nursery sector on their expansion into Latin America. Check out our case studies for two examples on Silver Cross and Tagstrap, and our testimonials, which also include our work with Piccalilly.