If you are Spanish, jump into a taxi in China and your taxi driver happens to know anything about your country there are two things he is more likely to mention: Julio Iglesias or Real Madrid. So, how would you feel if you had secured a contract to sell “Real Madrid” products in China?
Ecstasy is probably what entrepreneurs David Caro and German Torrado from Orienta 7 have been feeling for some time now. Just one year back they managed to become commercial partners with the company that has been licensed to market Real Madrid branded Food and Beverage (F&B) products in Asia. Today, they are ready to launch their product range in China’s main retail chains. This post captures some of the key strategic decisions they made and details about the project development and launch.
#1. “The Aha Moment”: Licensing as a Tool to Gain Instant Recognition with Consumers.
We are both Spanish and Spain is where our best network is, so our Food & Beverage (F&B) business focuses on Spanish products. The problem we face in a country like China is that, even products that are very famous back home are unknown here.
It is difficult to find exporters who understand and are ready to commit to the big promotional efforts required to open distribution channels here. And these channels are also difficult to open if the products or brands are not already well known here… So we needed to find an option that could deliver the sales required to start knocking retailers’ door, but that would not burden us with a huge promotional investment… And that is when the opportunity to sell “licensed” products came up.
#2. “The Battlefield”: We all wanted that License!
Exit Brand Management is the company that has been licensed to market Real Madrid branded Food and Beverage (F&B) products in Asia. For us it was a real victory to become their commercial partners because we were competing with bigger players than us. But our networking and our credentials as entrepreneurs gave us the opportunity to see the deal come true.
#3. All about the Contract: Contract Duration, Product Categories and Geographical Scope.
We have signed a contract for F&B and Cosmetic for five years. The products that we will be initially launching are: a) impulse products: chewing gum, chips, frozen tea and cereal snacks and b) other F&B products: instant coffee, chocolate biscuits, Danish cookies, healthy biscuits, noodles and ice-cream.
The geographical scope of our contract is Greater China, Japan, Korea and Vietnam, but China will be the first country where we launch.
#4. Product Development: A China Business.
This project has been completely developed in China.
During the last year, we have identified suppliers for all the categories we are going to be launching. We have obviously been directly involved in all the product development and the quality control process.
Design & Packaging Development:
We have also developed all design and packaging in China. We commissioned the job to a local design agency. They initially had a bit of trouble capturing the brand identity and what we were expecting from them, but we also got very involved on the design & packaging development and we believe the results are really good.
#5. An Unexpected Delay: Intellectual Property Protection in China.
Chinese Government has become very careful with all IP issues. We did not expect it, but we had to go through a lot of paperwork to prove that not only could we make use of the license but that every individual player also approved it.
#6. “Hot Licenses”: A Distribution Channel “Door-Opening” Strategy
Thanks to the Real Madrid License, one of the most famous “Spanish brands”, we have been able to negotiate the launch of a robust F&B portfolio in the main retail chains and convenience store: Carrefour, Wal-Mart, Lianhua, Family Mart, C-Store… This would have not been possible for us without such a strong brand.
#7. The Launch:
a. Coming Soon…. In main Supermarkets and Retail Chains!
June 2010 will be the launch time for our impulse range in all those supermarkets: chewing gum, chips, frozen tea and cereal snacks. In September, we will extend the launch to other F&B categories: instant coffee, chocolate biscuits, Danish cookies and Healthy biscuits. And we have new categories like instant noodles or ice-cream in the pipeline for next year.
b. Promotional Events.
We believe the launch timing is perfect. There will be a lot of interest and news around soccer, as the World Cup kicks off on June 11th.
Real Madrid team is also coming to China in August so that will be the best possible promotion for our products.
c. Promotional Strategy: Channel Oriented.
The promotional strategy will also be adapted to the different retail environments. Wal-Mart will have a “Real Madrid area” (not huge, as we don’t launch full range at once). Convenience Stores on the other have some space limitations that prevent that type of merchandising.
#8. The Secret Weapon: “Consumer Motivator” vs. Brand.
One of the reasons why we are so confident about this project is the product itself. It is not just Real Madrid branded, but it also portrays the main players. In China, we believe the “consumer motivator” or opinion leader is even more important than the brand, and having players like Raul or Ronaldo recommending your product in the Chinese market is going to be a sure hit.
#9. The Road Ahead: Capitalizing on Distribution for other products they represent.
This project has been a huge investment for us during the last year. We have gone through all the process of securing the deal, developing sourcing and products and negotiating with retail… our own money backing all that and no income so far. But we believe it has been worth all our efforts. We could have never developed the type of relationships we now have with retail chains without this brand. Our plans for the future are to capitalize on this work so that the rest of our business (non Real Madrid F&B business) can also enjoy access to this distribution channels.