What to be aware of when launching a new product in the German market
How a little bit of upfront information and patience with sales can increase longterm success chances for food & beverage producers.
The German food market is – both for national as well as many international producers & brands – a very appealing, but also challenging market to sell to. Germany opens up great opportunities for growth due to its size, wealthy inhabitants and dense retail and restaurant landscape. However, many companies don´t have an easy time tackling this highly competitive market with a price-sensitive consumer. Today, we would like to shed some light on the different strategies how the German market can be approached and why a little bit of patience in the road-to-market strategy can often pay out in the end.
Market drivers in Germany
When you think about entering the German market with a new food & beverage product, try to think of the market drivers first. Do you meet the criteria? Why and why not, and is that actually ok or a bigger problem? The drivers are without doubt the quality of your product in terms of taste and ingredients/production, a competitive price in its category and a relatively wide assortment (only one product gets boring quickly). If your quality is outstanding, the price can of course be higher, but remember to always check with competitors which price point will be your maximum. No matter how good a product is, food is often not perceived as a luxury item per se, so not every price will be accepted by the German consumer.
Try to be prepared when it comes to these 3 drivers, which means to come across with the best possible taste, a competitive price and an idea how you can broaden your assortment in the coming years. Otherwise, getting listed will become very challenging.
Sales strategy – HORECA, retail or online?
Sales are a crucial part of every company´s success, and especially with food & beverage products, it can be hard to decide which channel to start with.
Retail is of course a big chance for all mass market products, but keep in mind that you need to show a certain shelf rotation, otherwise the first listing will soon be the last. Also be aware of the large market share of discounters in Germany (more than 40%) and if you would like to enter their portfolio, as it might close the doors for listings in the premium stores later.
For many new products, brand building and a sales start in HORECA can be more promising than retail in the beginning, because the buyers are usually more forgiving, marketing budgets can be smaller and the restaurants and bars offer a good test ground for a business case, that can later be used to sell to larger retailers.
The online purchase of food & beverages in the German market is not as high as in other countries (Scandinavia, Netherlands, UK) but is growing steadily, and especially for premium products (wine, caviar, truffles, chocolate etc.) it can be a very good start to invest in online marketing and an own shop first.
When entering the German food & beverage market, it is also good to know which trends are playing an important role for consumers and retailers at the moment. Two of the main trends that have been a hot topic for a couple of years already are healthier eating (friendly to the environment as well) and plastic-free production/packaging. In other countries, some of these are not so much in focus, so it is important to prepare for questions being asked (if your product doesn´t match any of the criteria) or – on the other hand – to play the story right and talk about your great efforts, if you have something nice to say in terms of “healthy ingredients” or “no plastic”.
In one of our next blogposts, we will also shed light on which information platforms to use to learn more about the German food & beverage market and consumers upfront.